7-Eleven Scandal an Ethical Failure of Leadership

The ABC Four Corners and Fairfax joint investigation into the systematic wage rorting and exploitation of employees within 7-Eleven’s Australian franchised stores is an example of an ethical failure of leadership.

Gary RyanThe investigation uncovered widespread evidence of staff being underpaid and ‘forced’ to work long hours. Many of those staff were international students who’s visas only allow them to work 20 hours per work. It appears that many of those students were effectively blackmailed by their Franchisee that if they complained to Fair Work Australia about being underpaid, they would be ‘dobbed in’ to the authorities for breaking their visa regulations and therefore risk being deported.

The evidence produced by Four Corners and Fairfax indicated that these systemic issues have been going on for at least six years, which has included several investigations and findings by Fair Work Australia. Yet the behaviour has continued.

7-Eleven Australia has attempted to distance itself from the problem suggesting that the issue has been caused by a small number of Franchisees. The ABC Four Corners and Fairfax story argues that the problem is not limited to a small number of Franchisees. The story also highlights the plight of the Franchisees, many of whom are people whom have migrated to Australia. In simple terms, the joint investigation by ABC Four Corners and Fairfax suggest that the franchise business model is not one that can work in Australia if the Franchisees pay the wages they are meant to pay according to Australian Law.

7-Eleven Australian stores are generally open seven days per week, 24 hours per day. Given penalty rates etc., the wage costs of operating such a store would be significant. According to the report, Franchisee financial reports are supplied to the 7-Eleven Australian Head Office. In an example highlighted during the story, a financial statement indicated total wages of a little over $64,000 for six staff. Ex ACCC boss Professor Allan Fels says that in his view the only way a Franchisee could ‘make a go of it’ is to underpay their staff.

No doubt the marketplace will hold the leadership of 7-Eleven Australia to account, even if the law doesn’t.

Let this be a lesson for all leaders. It is not ethical to maintain a system that cannot operate profitably when following the law. Despite the law appearing to not have many consequences for the leaders and owners of 7-Eleven Australia, they cannot hide from their ethical failure. Washing their hands of their Franchisees behaviours is simply not good enough. They presided over a system that under most circumstances could not work. Human beings have been negatively affected. These are simple, hardworking people who are just trying to get ahead like you and I. For their sake, I hope some good comes from the courage of the whistle-blowers whom have taken great personal risks to ensure that this story has been told.

Gary Ryan enables talented professionals, their teams and organisations to move Beyond Being Good®

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