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BrewDog’s “toxic” culture claims a cautionary tale for multinational employers
17/06/2021
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BrewDog pub in Covent Garden, London
Authors
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John VDLD
John van der Luit-Drummond is editor-in-chief of International Employment Lawyer

A “culture of fear” in which workers were bullied and “treated like objects” is how former BrewDog employees have described the management of the multinational brewery and pub chain in an open letter published on Twitter last week.

“Put bluntly, the single biggest shared experience of former staff is a residual feeling of fear,” the letter, which has now been signed by around 300 former workers, says. “Fear to speak out about the atmosphere we were immersed in, and fear of repercussions even after we have left.”

Taking aim at company co-founder James Watt specifically, the ex-employees under the banner “Punks with Purpose” write, “toxic attitudes towards junior staff trickled down throughout the business from day one, until they were simply an intrinsic part of the company”.

“It is with you [Watt] that the responsibility for this rotten culture lies. Your attitude and actions are at the heart of the way BrewDog is perceived, from both inside and out. By valuing growth, speed and action above all else, your company has achieved incredible things, but at the expense of those who delivered your dreams. In the wake of your success, people are left burnt out, afraid and miserable.”

The Scottish brewery has since issued a statement acknowledging some failings. “As a fast-growing business, we have always tried to do the best by our team – we do have thousands of employees with positive stories to tell as a result,” Watt said, adding that the open letter nonetheless “proves that on many occasions we haven’t got it right”.

“We are committed to doing better, not just as a reaction to this, but always; and we are going to reach out to our entire team past and present to learn more. But most of all, right now, we are sorry.”

The war of words between the brewery and its disgruntled former workers shows no sign of abating, however, demonstrating that employers are under increasing scrutiny to do more than simply apologise for the workplace culture they engender; evidence of change is needed. But before change can be made, how can an organisation, especially multinational employers, recognise behaviour that is harmful to workers and stop matters from boiling over?

“Sometimes the signs are obvious,” says Dave Palmer, a senior associate in Herbert Smith Freehill’s employment, pensions, and incentives practice in London. “Grievances being aired; staff complaining on social media; customer complaints; high staff turnover; employee litigation; problems flagged in exit interviews; poor workforce diversity; and soured relationships with trade unions and other representative bodies. But sometimes the signs are less obvious.”

Palmer cites waning productivity, stilted department meetings, poorly attended workplace events, and higher than expected staff absence rates as other red flags to watch out for. “It can be difficult to spot that these are symptoms of a toxic workplace,” he adds. “Sometimes what starts as a one-off incident becomes something a number of people raise which then becomes a question of a cultural issue.”

It is rare, though not impossible, to have an overall toxic culture, but more likely to be pockets of a toxic micro-culture

“Be open to the possibility that the culture that is presented to you as the leader, may be different to those experienced by more junior members of staff or who work in a different division,” says Emma Richardson, director of Worksphere at Lewis Silkin. “It is rare, though not impossible, to have an overall toxic culture, but more likely to be pockets of a toxic micro-culture, enabled by a senior leader or some who hold the balance of power because of their length of service. Their poor behaviour may cascade downwards, but is seldom seen by their boss.”

To understand a company’s culture, Richardson says leaders must ask some soul-searching questions. “Are you listening? Really listening? Can individuals report matters anonymously via a whistleblowing or similar helpline? What is your data telling you? Be curious. Gather and analyse recruitment, retention, promotion data. Why is one team more successful than another? Look at data from Pulse surveys, anonymised employee assistance programme reports. What are your health insurers telling you about the uptake of managing stress or counselling services? Is there a peak of mental health concerns, centred around particular teams, which seems at odds with what might be expected?

“Do you hear people acknowledging the contribution of their team, advocating skills, and the experience of individuals? Despite a challenging 18 months, are team members accessing training resources, learning new skills, are you seeing innovation at the front line? Or is the leader disregarding the efforts and output from the team?”

Unfortunately, large corporations are not always set up in such a way that staff will readily be able to spot and acknowledge the signs of a toxic working environment, and then propose steps to remedy the situation. “This can be a complex problem,” says Palmer. “Often it is junior HR professionals who are the first to twig that there might be a pattern of behaviour across a workplace that points to an underlying toxic environment. They then have to raise these concerns with senior HR personnel, and then the message needs to be passed on to senior management. 

“The problem is that, if there is the fear of blame  – another symptom of a toxic workplace – that may prevent senior individuals from accepting there is a problem and identifying its root cause. It takes a strong manager to admit that a workplace has become toxic under their watch.”

...we often see decision paralysis, a crisis scenario has never been worked through in advance and people are scrabbling to gather data and thoughts and ultimately an action plan

For Palmer, it is fairly uncommon for an employee to make an outright allegation that a workplace is toxic. “What is more common is that one or more employees raise grievances about the way they have been treated. Commonly these are accusations of bullying, favouritism, harassment, or discrimination. The specific allegations need to be addressed via the employer’s grievance or whistleblowing policies and procedures.

“The tricky part is then that the persons dealing with the initial allegations have to realise that there is a systemic problem which needs to be considered and addressed. At that point, a wider investigation can be carried out and a framework should be put in place so that senior management can be advised of any issues or failings identified and then remedial action can be taken.”

As BrewDog demonstrates, all organisations should plan what they might do in a crisis, particularly one that might be played out under the gaze of the media and potentially involve senior leaders. Karen Baxter, head of Lewis Silkin’s investigations and regulatory group, says: “If it is your CEO, does the rest of the board know what to do? The actions within the first 12 hours of an allegation being made – publicly or otherwise – are critical. This is impossible to achieve unless you have a group of people who are empowered to act, understand the risks, and know what is expected of them. 

“When advising our clients we often see decision paralysis, a crisis scenario has never been worked through in advance and people are scrabbling to gather data and thoughts and ultimately an action plan. Knowing who makes decisions and what external advisers can be called upon, if a board member brings the organisation into disrepute is key.”

Investigating wider cultural issues comes with its own challenges, including how best to investigate, explains Palmer, whether large number of employees should be interviewed, whether to use employee surveys to identify issues, and how to make the process appropriately comprehensive but manageable. And, according to Baxter, consideration should also be given to whether an organisation has the right resources and expertise available internally to investigate issues, or whether an external specialist investigator should take over. 

“Investigations can be time-consuming and need to be handled appropriately from an employment law and data protection perspective, as well as in a way which maintains trust in the process,” she says. “The organisation should think about who will determine the scope of the investigation and who the investigator will report back to as the investigator should not normally be the ultimate decision-maker if action is needed.” 

It is important that any investigator can investigate without fear or favour, so employers should question whether a proposed investigator is sufficiently impartial, adds Baxter: “This is a particular challenge when allegations are against very senior employees, or several individuals. The organisation should also consider what output it expects, for example, will the investigator be asked to make recommendations?”

There are many examples where the reputational damage of workplace allegations has been far greater than any legal liability

Businesses need to be aware of both the immediate and future risks of not acting quickly and effectively. The legal risks can be numerous, including employee claims of unlawful discrimination; harassment; constructive dismissal; investigations by regulators; client complaints; as well as the real risk of industrial action in addition to wider reputational damage.

“When a workplace is toxic, the worst-case scenario can be catastrophic,” says Palmer. “Many institutions and companies have gone bust due to the actions of their staff which went unchecked until a fatal problem arose or a regulatory or law enforcement agency cracked down. Such actions do not necessarily need to be unlawful for catastrophic consequences to follow. But they are usually a combination of behaviours which are risky, unethical, immoral, inappropriate, and short-sighted. Of course, if the staff have acted unlawfully, the risk of a bad outcome is greatly increased.

“There are many examples where the reputational damage of workplace allegations has been far greater than any legal liability,” adds Palmer. “For example, compensation for discrimination in many jurisdictions can be quite low, but the reputational damage to the business or senior leaders can lead to fatal losses of trust with customers and clients (reflected in lost revenues) as well as regulators.”

Catherine Leung, an employment partner in Lewis Silkin’s Hong Kong office, adds: “Short-term, your products and services are impacted, there may be a negative impact on the share price or a deal may be put on hold or be withdrawn. Longer-term, securing the best candidates for talent acquisition becomes more challenging, key employees who never considered moving on now take calls from headhunters, and investors may start making demands about the board and company structure.”

Finally, for multinational employers, a key question is how to ensure your culture is consistent throughout the territories you operate in and whether company culture and local customs can coexist together.

“This is a balance that requires constant attention. But a global brand and social media means bad news travels fast,” says Leung. “Most will try to operate to a global standard, irrespective of the local legislation. Personal safety has to take precedence, and organisations need to ensure that local custom and global policy does not put local or visiting overseas employees at risk. Training can help here, but those who have already anticipated an issue, listened to concerns, and carefully considered next steps will fare better than those who adopt a rigid global policy.”

“The general approach in multinationals is for company culture to mandate both minimum standards of behaviour and aspirational standards of behaviour; for example, a floor and a soft ceiling,” says Palmer. “Local company culture must reinforce these standards, but can exceed them.

“It is not easy to impart company culture across nations and typically it is a job for the senior leadership, who are tasked with imparting the core values and ethos of the business in all of their workplace communications and interactions with staff. However, this is a ‘top down’ method of imparting culture which, while still relevant today, is increasingly challenging in businesses with flatter transnational structures.”

Sharing traditions and values, and maintaining open communications across offices, is a common way to unite values, adds Palmer. “Perhaps the most important thing for preserving culture in a large organisation is ensuring that every member of staff knows the purpose of the business. Workplace cultures tend to be better when this is the case.”

Red flags you may have a toxic workplace
1. When employees are tired, burnt out, stressed, and are often taking sick leave.
2. Employees who lack enthusiasm and who do not seem to be motivated, which could stem from distrust with the organisation, a lack of communication, and poor leadership.
3. If employees are constantly resigning or frequently being terminated.
4. Employees do not appear to be collegiate and there does not seem to be genuine friendships among workers.
5. Persistent office rumours and gossip.