Has Nike hit peak crisis yet?
After the loss of four more top executives, the culture at Nike is under continued scrutiny. How the situation is handled could impact brand loyalty, trust and the bottom line.
At what point does an exodus earn that label? Is it when the first man leaves and there's the hint of more to come, or by virtue of its definition does it require a certain number? Generally speaking, an exodus is a mass departure, with no thought spared to the prominence of the people being ushered out the door.
But if a company with roughly 74,400 employees loses approximately 10 top executives in less than two months, the moniker seems to fit.
Nike is in such a position. After brand chief Trevor Edwards stepped down amid misconduct allegations in March, the blows kept falling. Jayme Martin was the next to go, followed closely by Antoine Andrews and Greg Thompson and — most recently — five more executive departures announced on Tuesday. And in the midst of all those departures a New York Times profile dropped detailing longstanding "toxic" culture issues at the company.
Even if Nike manages to rid itself of every hire tainted by misconduct or discrimination allegations, it's an open question how much damage the brand will suffer from an exodus that reflects poorly not only on how the company treats employees, but also on the sports sector in general.
Locker room talk
It was October of 2016 when President Donald Trump called his remarks about sexually assaulting women "locker room talk," and many have disputed the suggestion that athletes are more prone to make these comments since then. Nevertheless, the veracity of the analogy is rearing its ugly head as sports retailers become the target of scrutiny for discrimination and misconduct allegations among some of their top executives.
Retail's #MeToo moment arguably began shortly after Hollywood's Harvey Weinstein allegations. Donna Karan came under fire for supporting the producer and jeopardizing her brand in the process. Since then, Guess, Signet Jewelers and Victoria's Secret have stumbled over tarnished brand images.
Trevor Edwards, president of the Nike brand and widely seen as a possible successor for CEO Mark Parker, resigns amid misconduct allegations.
Jayme Martin, vice president and general manager of global categories at Nike, leaves the company.
Antoine Andrews, vice president of diversity and inclusion at Nike, leaves the company.
Greg Thompson, vice president of Express Lane Footwear at Nike, leaves the company.
Nike promotes Amy Montagne to vice president of global categories, replacing Jayme Martin. Nike also promotes Kellie Leonard to chief diversity and inclusion officer, replacing Antoine Andrews.
Nike promotes Rosemary St. Clair to vice president, general manager of Global Women's and Cesar Garcia to vice president, general manager of global running.
Nike announces the departures of Steve Lesnard, head of running in North America; Helen Kim, who was in charge of Eastern North America; Simon Pestridge, head of marketing for the performance categories; Tommy Kain, director of sports marketing. The New York Times reported a fifth executive, Ibrahem Hasan, a senior creative director, also left the company that day.
Nike's executive shakeup
But the sports sector has been thrown a surprising number of discrimination-based accusations lately. February marked the first of these when Lululemon's CEO Laurent Potdevin was ousted under unclear circumstances, throwing the female-oriented brand into a temporary spiral. Nike's troubles seem to have overshadowed Potdevin's departure for now, along with Adidas' recent experience with Kanye West, whose comments about slavery threw that brand into the spotlight as well.
It's hard not to see the attention as part of a wider culture problem at sports retailers, Mark Lipton, graduate professor of management at The New School and author of "Mean Men, The Perversion of America's Self-Made Man," told Retail Dive in an interview.
"In a word: yeah," Lipton said, when asked if there's a reason sports retailers in particular are facing this issue. "When you've got companies that cater much more to masculine-identified sports, yeah, I think it's a pattern … These are really high testosterone guys. I'm not oversimplifying it by calling it a hormone thing."
The timing could hardly be worse for Nike, either. The company just announced efforts to better connect with its female customers in March, promising more sneaker designs targeted towards women, as well as more women involved in the marketing and design process. In the past, the athletics retailer has also touted its image of equality through ad campaigns urging customers to "take the respect and fairness they see on the field and translate it off the field."
While gender equality is an issue at a host of organizations, not just retailers, and certainly not just Nike, this culture investigation hits the athletics retailer particularly hard because the company is at odds with its own values, Deb Munster, executive director at Diversity Best Practices, told Retail Dive in an interview.
"When you have instances like this, where an entire demographic is hurt, or suffers as victims, then they risk the brand reputation of who they are as a company," Munster told Retail Dive, noting that women make up a significant portion of consumer goods purchases in retail and Nike should be careful to align its exterior brand message with what it's doing internally.
Is it too late now to say sorry?
It should be noted that one mistake won't kill a business. Still, short-term consumer sentiment can be nudged by less pervasive mishaps than Nike's cultural review. Two days after Kanye West's slavery comments, for example, social sentiment surrounding Adidas was trending 71% negative, per data from Digimind emailed to Retail Dive.
Nike will likely face similar short-term repercussions, but there is a path out of this cultural review that doesn't lead to a total loss of brand trust and loyalty. According to Lipton, though, that path does not lie through another Mark Parker apology. Customers and employees both will expect more from the CEO next time around.
"I don't want to hear Mark Parker apologize again. What I want to hear is: 'what are you doing to change things?'" Lipton said, noting that Parker should be 'over-communicating' with customers on this. "Cultures change with notorious slowness: they're like molasses … He should be feeling like there's a gun to his head and pulling every lever that he can to start that process moving."
Munster agrees, saying that the next move for Parker should be to make some concrete changes to work culture, including talking to minorities to form firm guidelines on what behavior is accepted in Nike's work environment and what's not. Otherwise, Nike risks ending up at the other end of the spectrum, with employees being let go for allegations that don't amount to sexual assault or misconduct.
"It's great that they are promoting women but it is not enough," Munster said, pointing out that in the 1980s, many similar gender equality issues were raised, dealt with and, in some cases, forgotten about by companies. "What's happened with the #MeToo movement, because there's been an empowerment of women and others who have been sexually abused, there's this strong empowerment by these very public figures coming out and the fact that people were being held accountable [for] it, now you're finding people being much more vocal about it."
Whether or not more executive departures are announced, the worst that Nike can do is stay silent. Consumers notice — especially young ones, on whose loyalty brands like Nike are in many ways reliant. A study from August of last year noted that the majority of Gen Z, in particular, think it's important for brands to be held accountable, and trying to sweep culture troubles under the rug would only make things worse for the athletics brand.
Transparency and noticeable actions could ensure that other organizations or activist groups don't start actively discouraging shoppers from buying from Nike in the future, which could elevate the retailer's current problems to a "crisis," Lipton notes.
"This could be a bottom line issue if you don't do anything about it and I'm not hearing what you're doing about it," Lipton said. "My sense is, he needs to respond to this before any of these external voices start saying: 'What are you doing? Are you doing anything besides firing more guys?'"
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