Last week, P&O Ferries dismissed 800 of their UK staff who worked on their ships between the UK, Ireland and the European continent. Staff were in some cases forcibly remove from the boats with security personal employed to “facilitate” that process. In place of the 800, P&O has hired “agency staff” who will work under less favourable terms and conditions. £2.60 an hour is being quoted as the new wage rate. Many will come from eastern Europe or south-east Asia and will work for well below UK minimum wage.
The company explained that this move was essential because P&O Ferries is losing so much money (£100 million a year) and the business would be unsustainable without drastic action. However, others have pointed out that parent company, Dubai-based DP World, last week reported record full-year ebitda of $3.8bn. There are also questions about money owed to the workers’ pension fund and about furlough payments received from the government during the pandemic.
The whole unsavoury affair raises many questions. It is ironic that the RMT trade union which represents the sacked workers campaigned FOR Brexit, saying it would bring more job security for British workers. That didn’t work out too well, did it? Workers in other European countries have kept their jobs with P&O. But avoiding that and other Brexit related questions, and also leaving questions of employment law for another time, issues around “business purpose” and basic questions of motivation and economics do arise.
In terms of motivation, some commentators have even suggested that DP World has taken this action to hurt the UK and please Russia - DP World recently announced a joint venture with Rosatom to develop Russian north-coast ports. That seems unlikely to be honest, so lets focus on those questions of purpose and business.
It is important to say that being a purposeful organisation and supporting ESG, sustainability or whatever else we want to call it is not just about setting some far-off net-zero emissions target and maybe signing up to a modern slavery charter*. It should mean behaving in an ethically sound manner across all your business activities, and being aware of your wider social, environmental and economic responsibilities beyond short-term profit maximization. On that basis, P&O Ferries and DP World have failed.
I’ve argued before that firms adopt purposeful and sustainable approaches NOT for “fluffy”, soft reasons – to make themselves feel better, if you like. They follow these strategies for hard business reasons, that link back to their own stakeholders and what those groups want and expect to see. In the Procurement with Purpose book, we identify 5 key stakeholder groups:
· The customers of the organisation
· The Business owners
· The organisation’s own staff
· Government and regulatory bodies
· Other interested and expert parties – charities, media, pressure groups, academia… etc.
Now in this case, we can assume that P&O has taken these actions to satisfy one stakeholder group – the shareholders. But every other group feels much more negative about the firm, and that will have consequences perhaps for years to come. It could well rebound on sharehodlers too.
Customers may vote with their feet – on social media, there is already talk of boycotting the firm. Many existing P&O staff (you would hope) feel horrified by the way this has been handled. Would you take a management job with the firm now? How do procurement professionals at P&O or DP World feel? I wonder who put the contract in place with security firm - if that was a CIPS member, might they read the ethical statement they signed up to and wince a little, at least?
Although DP World has been a major investor in the UK through its wider logistics business, the UK Government is none too happy either. There are calls for DP World to be excluded from future UK public sector contracts; for instance, a potential role around new “freeports” may now come under pressure. And of course the media, the union movement and other interested parties are all expressing their disgust at how this was handled. “DP World risks UK reputational damage with P&O sackings”, says the Financial Times. You don’t say!
So very sad for the staff who were fired via a Zoom call, and an interesting case study in terms of how not to behave, I would argue. We’ll see in coming months and years what long terms effect it has on DP World, but it feels (at best) like poor judgement at the moment.
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* Here is the DP World modern slavery and human trafficking statement (with my highlighting).
“DP World aims to ensure a secure and resilient society in the communities where we operate. Our data-driven logistics transform business and help us lead the future of global trade, enabling the most productive, efficient, sustainable and safe trade solutions globally. This is as important commercially as it is to the societies where we live and work. As a global employer, DP World strives to play a role in improving people's lives, strengthening communities and protecting the environment. This means we do not tolerate slavery, servitude, forced labour or human trafficking anywhere in our operations or those of our suppliers”.
Sultan Ahmed Bin Sulayem, Group Chairman and Chief Executive Officer