Brewdog, corporate governance and a toxic culture hangover
22nd June 2021

In the space of a few days Scottish brewer Brewdog went from self-styled ‘punk’ business champion to a situation perhaps best described as #Haveadrinkonmetoo. Serious complaints by ex-employees of a toxic work environment and bullying, misogynistic behaviour at craft beer giant BrewDog went viral first on social media and then buzzed through the major media outlets.
The result – other than co-founder and CEO James Watt scurrying around the news channels to both apologise and promise action (but also suspiciously sound like an always-on pitch for his “fast-growing business” with a “commitment to sustainability”) – is that Brewdog has appointed its first ever chairperson, managing director of TSG Consumer Partners, Blythe Jack.
Its move comes amid a slurry of damaging allegations made against the beer firm by an initial 60 disenchanted former staff members, who accused the brewer of cultivating a “culture of fear” and a “toxic attitude” towards junior employees.
In an open letter, widely circulated on social media, it said: “You spent years claiming you wanted to be the best employer in the world, presumably to help you to recruit top talent, but ask former staff what they think of those claims, and you’ll most likely be laughed at.”.
When sorry seems like the hardest word
In fairness, Watt responded to the backlash with a wide range of interviews, including one with the BBC where he said: “It’s very clear, looking at the feedback, we haven’t always got things right here. We have to see this feedback as an opportunity to get better. We have to learn, we have to act. We have to take it on the chin.”
However, like fast fashion retailer Boohoo before it, the overriding sense is that this is a company which has started from small beginnings but, as it has rapidly expanded, has failed to address the need for policies and governance infrastructure required to ensure that the image it provides to the consumer is also seen behind closed doors.
Our view is that start-ups and young, entrepreneurial companies should put strong governance on their agenda right from the start, because good practices breed good principles and avoid exactly the problems encountered by Boohoo and Brewdog.
Failure to embed these guiding principles results not only in the potential for hugely damaging negative publicity but also expensive and time-consuming reactive moves to address the reputational and commercial fallout. Quite simply, ensuring that you are a good business, is good for business.
In its case, Boohoo had to call in independent consultants to provide a report advising it on the path forwards and ultimately sacked a plethora of sub-contractors who could not provide the necessary assurances over its supply chain ethics and staff payment levels.
For Brewdog, the initial crisis response has been followed by the rapid appointment of Blythe Jack to the board and Watt told This is Money: “We have appointed our first ever chairperson to lead our board. That will be Blythe Jack and we are delighted she will be leading our business at board level. This is effective immediately.”
Jack, a private equity veteran, has specialised in investing in consumer brands in her 11 years at TSG, a US private equity firm that has held a 23% stake in BrewDog since 2017, for which it paid £185million. She was made a director at the brewer when TSG took its stake.
Female chair points to new direction
Clearly, the appointment of a woman as BrewDog’s first chair will be viewed as an attempt to address some of the criticisms and has opened up the debate about an overly masculine culture within the craft beer industry as a whole. But Jack’s status as an existing BrewDog director and her role at one of its top investors inevitably also raises questions over her independence.
To that end, Watt, whose job title is ‘Captain’, said BrewDog had also appointed an independent beer industry diversity specialist, consultant Ren Navarro, and the company intends to appoint its first mental health and wellbeing ambassador.
BrewDog is also carrying out an anonymous staff survey of its culture and will commission an independent review of its company culture and HR practices in moves that sound very similar to those taken by Boohoo.
While laudable and necessary actions, had the right guiding principles, structures to ensure accountability, good behaviour and positive company culture, been in place from the outset, then Brewdog would have avoided all these damaging headlines and, more importantly, ensured that its internal culture lived up to its claims.
Good governance should be a central, founding pillar of any start-up business. Failure to do so might just result in the sort of corporate hangover Brewdog now faces.
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