Matthew Dunckley, 21 March 2016
The newly appointed chief executive of 7-Eleven believes workers are still being ripped off in some of the embattled chain’s stores but has vowed to take action wherever wage fraud is discovered.
Angus McKay, who was appointed to the job on Friday, said at the weekend despite efforts to stamp down on pay standards it was probable problems persisted.
In 2015 a Fairfax Media-Four Corners investigation uncovered widespread wage fraud, with the company’s workforce, mostly migrants, paid well below legal minimum rates.
That scandal prompted the resignations of the chief executive Warren Wilmot and chairman Russell Withers, although Mr Withers still owns the company with his sister.
“What we were dealing with here was something that was pretty deep-seated. Let’s not be naive . . . I wouldn’t be surprised if this is still going on out there,” Mr McKay said.
“I’m not going to say it’s finished and shut up shop – it’s behind us. We haven’t suddenly put the plug in and it’s not happening,” he said.
Mr McKay’s assessment is backed by recent evidence from workers that a “cashback” rort is still operating, where franchisees pay workers correct wages but then demand some of the money back in cash.
Mr McKay said the cash-back scam, or any other attempt to pay incorrect wages, would not be tolerated.
“Our job will be to make sure we close that down,” he said. “None of those things will be tolerated while I’m chief executive.”
Asked to nominate his top priorities, Mr McKay said strengthening the company’s culture to guard against future scandals was key.
“The first big bucket is culture that goes to the root of everything that’s been written about this business in the last few months,” he said.
Former Australian Competition and Consumer Commission chairman Allan Fels is running a compensation program for 7-Eleven workers and Mr McKay, who most recently was working as chief executive of listed labour hire company Skilled Engineering, said the company was “whole-heartedly” committed to seeing that process through.
Mr McKay said he thought working for such a well-established company in need of obvious repair was a “remarkable carrot” for a chief executive.
Commitment to solution
“I’m looking at a wonderful brand and a aboard and a family committed to getting this problem solved properly,” he said.
“Fundamentally businesses don’t work unless people do things and behave in the right way.”
Mr McKay said although he did not have direct retail experience he had worked on the retail supplier side at Foster’s and Diageo.
“I’ve got a better-than-passable knowledge but make no mistake, I’m not a retail franchise expert,” he said.
“That’s not my prime role. This is about building a business.”
Mr McKay said he would like 7-Eleven to expand by increasing same-store revenue and its network of more than 600 stores.
He defended 7-Eleven’s franchise structure, saying there were no short-term tweaks to the system looming beyond the changes implemented in the wake of the scandal, which gave franchisees a bigger cut of profit.
The scandal had damaged the company’s standing with its customers, he said.
“We would be naive to think our customers haven’t been negatively influenced by what’s gone on.”
Mr McKay’s comments came as the Australian Securities and Investments Commission’s Greg Medcraft said large companies needed to improve their culture or face tough scrutiny from regulators and deserting customers.
Extracted in full from The Age.