Question

Can you explain what Woolworth can do to regain shareholder confidence after receiving a major salary scandal? (200-300 words)

Because according to ASX (2020) the price of Woolworth's shares fell after this news.

Answer 1

The news published was Woolworth undercut salaries for few years.

The first step would be to start computing the real salary for those years as per relevant laws and regulations. Woolworth should properly analyze all the payroll and make provision for payables to employees. Woolworth shall also be prepared for class action suits from employees and provide for the legal fees and settlement fees, if deemed necessary.

The second step would be to find the culprit behind the scandal. The person who has been overseeing the payroll for these years shall be investigated and immediately sacked. This is purely incompetent offence as it is believed that it may not be a scandal but a pure error in the hands of the company made by the employee.

The final step would be to put and devise a strong internal control in place. The company should hire management consultants and audit consultant firms. These firms would try to audit every nook and corner of each transaction taking place in the company. They will be responsible for providing the areas which needs immediate improvement. They will also look for lapses in the authorization and responsibility activities in the company. They will provide their report on the existing controls and management shall take the decision swiftly and help in the transition to company with strong internal controls which would not repeat mistakes of the past and would be able to detect or prevent any material misstatement in future.

In this way, management can try to regain shareholders' confidence