Management communication PDF

Running head: Management Communication
Management Communication
-7 Eleven wage scam
Name of the Student
Name of the University
Author Note

1Management Communication
7 Eleven is a Japanese owned, American convenience store chain, whose headquarters
are based in Texas, USA. It is a global brand, with more than sixty thousand locations around
the world, in several countries (7-eleven.com 2018). In Australia, 7 Eleven operates about
620 retail stores, and is ranked 132 among the top 2000 companies in Australia. The industry
generates majority of its income from Food Retailing. The company generated revenues of
2.7 billion dollars in 2017, and employed 349 employees (7eleven.com.au 2018). In 2011, 7
Eleven faced charges of wage scam, in which the franchisees were blamed of underpaying or
even not paying their employees. The reports were made by several employees of the store
chains across most of the 7 eleven stores in Australia, who claimed that they were getting
paid below the minimum wage levels (of $20 per hour), stating they were paid as less as $10,
and were given no special pays for night shifts or working on weekends (Pha 2015). Many
employees stopped receiving any pays for weeks on end. There were also reports of
fraudulent documentation that hid the fact that the employees were getting underpaid. Few
employees also complained that they were blackmailed to prevent them from reporting these
malpractices to the authorities. Many of these affected employees were students (mostly
foreign students) and visa holders, who were afraid to leave the job, as it was their only
means to make the ends meet (news.com.au 2015; Terry-Armstrong 2017).
When the wage scandal was exposed by Four Corners, in 2015, the 7 Eleven
management’s first reaction was to go into damage control. According the reports of Four
Corners, 7 Eleven were running ‘sweatshops at every corners’, and they quoted a & Eleven
insider claiming that the business principles on which 7 Eleven was built was not very
different from slavery, and it depended on the exploitation of its workers to make gains
(Ferguson et al. 2015; Pha 2015). The company’s statements plainly denied such accusations,
claiming that they do not exploit their workers, and even allow ‘painless exits’ for their
franchisees if they are struggling to perform. The Chief executive also added that the

2Management Communication
company has a policy of paying back the franchise fee, and even helps the franchisee to sell
the store if they have made a goodwill payment. The disputed the claims of insufficient
finances in the stores, stating that each store delivers a net profit of 165 thousand dollars
along with a yearly growth of approximately 9%, which eliminates the possibility of these
franchisee performing poorly. They cited such figures to emphasize that the viability of the
organization is not dependant on the franchisee underpaying their workers. The chief
Executive also promised that the franchisee who is indulging in such misconduct will be
‘weeded out’ of the system, as they plan to make their audits and monitoring systems more
stringent (insidesmallbusiness.com.au 2017). The first step towards their damage control was
to announce the setting up on an independent committee to investigate these claims. This step
was taken in response to the reports of the employees and franchisee of 7 Eleven preparing to
take a class action against the Head Office (retailworldmagazine.com.au 2015). During the
Four Corners investigation, pressure inside the organization increase4d to take measures to
prevent further damage to the company’s image, and according to reports by Fairfax Media,
the management tried to cover up the information that can support the exploitation of its
employees (news.com.au 2015). The media reported that it had leaked documents that proved
that staff at the head office of 7 Eleven were well aware of the malpractice of underpayment
or non payment of wages at its franchisee. Owner of a 7 Eleven store in Melbourne even
admitted to the practice of falsifying documentations, and ripping off its employees of thirty
thousand dollars. He reported that he learnt the process of manipulating the employee payroll
from another 7 Eleven franchisee owner at a 7 Eleven conference. There were several other
reports of now the 7 Eleven franchisee exploited and underpaid many of its employee
hundreds of dollars, many of whom were students from abroad, and were afraid to complain
against the franchisee as they fear that they will be reported to the Immigration Department.
This fear was justified since most of these individuals were working more than 40 hours