A poor Tele-performance

Teleperformance saw its share price fall by 33.8% at one point last week, and trading was temporarily suspended following allegations of poor workplace practices. The company announced a €150 billion share buyback and held a call with investors to settle nerves. It is a remarkable turn of events for the French tech firm, but also a demonstration of the increasing financial materiality of labour issues.

It is alleged that many of the 41,000-strong workforce in Colombia (its third largest in the world) are paid very poorly paid for shifts that span six days and night shifts (worth less than US$10 per day), and to unrealistic performance targets and extensive surveillance. Teleperformance is involved in TikTok moderation, with workers having to watch extremely graphic and disturbing videos of the most heinous types – allegedly with very little psychological support on offer.

The company disputes the extent of these claims, and after a probe into work practices was announced by the Colombian government, representatives have since offered to meet with officials from the country’s labour ministry. But after Edwin Palma Egea, the minister responsible, tweeted an invitation to “all workers and trade unions in the country to provide us with evidence of alleged violations of labour standards” there is a risk that further poor labour practices could come to light.

Teleperformance’s CEO and Chair Daniel Julien and other members of the leadership team held an investor call last week focusing on the allegations arising from its Colombian operations. The company faced numerous questions from analysts over the lack of union recognition in Colombia.

The use of ‘workforce satisfaction’ surveys was cited by Julien. In seeking to push back against negative stories about worker dissatisfaction, he claimed that “the last [survey on workplace satisfaction] for the whole company was 85% engagement score, which is way above all benchmarks [at 65%].”

But as PIRC has noted previously in our report Exposing Social Washing, the use of such surveys has severe limitations, and if the allegations against Teleperformance are upheld, only serve to undermine their use as a legitimate means of measuring and ensuring workplace satisfaction.

There is little consistency as to what survey methods are used, a lack of transparency around methodology, or verifiable measures such as employee turnover and pay ratios, no collective views, and claims of employee confidentiality ring hollow when management is involved in survey dissemination.

As our report notes, “their significance as a marker of employee experience should not be overplayed. In most cases, scores are unlikely to provide a reliable measure of what the workforce at large thinks, or how they are treated. As such their use as a social performance indicator or target, especially if unsupported by other measures, offers little meaningful insight to investors. Worse still, there is a risk they are concealing underlying problems.”

This isn’t the first company to face a precipitous share price fall in light of labour concerns. Boohoo’s shares fell by up to 15.4% following allegations of poor working conditions at its’ Leicester factory in 2020, whilst Sports Direct’s fell more than 40% over three months of Guardian revelations into working conditions in 2016. And look at the Deliveroo IPO flop – while undoubtedly the result of a variety of factors, the risk bound up with the company’s employment model was in the mix, and laid out in the prospectus document.

There is growing evidence that labour concerns are moving from a peripheral issue to one higher up the investor agenda.

There are various reasons for this: at the extreme, labour abuses run the risk of inviting investigations and legal action by authorities within jurisdictions, and the threat of sanction and trading restrictions from without. When allegations of the mistreatment of workers at Top Glove’s Malaysian factories came to light, the US imposed an import ban on its rubber gloves in March 2021 (since lifted). Its North American sales fell by 68% in the March-May period compared to 2020, damaging its returns and share price.

For public facing brands the reputational risk has the potential to hit sales, but even for those selling services to other businesses can find themselves in a world of pain. Companies do not like getting caught in the crossfire when labour abuses are exposed in their supply chain.

Over the past few years PIRC has enhanced our research and stewardship activity related to workforce issues because we believe that they are becoming more important, and financially material, for investors. This latest example shows how tricky these can