Erik Nesler: Takeaways from the recent Papa John’s disaster

Thursday, September 6, 2018 - 4:38pm

Papa John’s has received significant media attention in the past couple of months, largely due to their outspoken leader, John Schnatter. Schnatter made headlines in December 2017 after he criticized the NFL’s handling of the national anthem protests. He infamously termed the whole affair a “debacle,” ignoring the purpose of the protests — which were intended to call attention to the disgraceful policing practices throughout African-American communities. Investors and consumers reacted to his remarks: Papa John’s shares fell 11 percent and sales dropped an estimated 5 percent in the weeks afterward. Schnatter, feeling the pressure, stepped down as CEO but retained his position as chairman of the board.

Schnatter made headlines again in July 2018 when the media reported on his use of the N-word, along with other controversial remarks, during a conference call with an external marketing firm. During the call, he claimed he wasn’t a racist but ended up using the racial slur, “explaining that KFC founder Colonel Sanders used that word, but Papa John’s didn’t.” Schnatter resigned as chairman the day after the story broke, but he has been fighting the board to try and come back ever since. In July, the company’s sales suffered a 10.5 percent decline in its North American market. 

Along with covering his use of the N-word, Forbes released “The Inside Story of Papa John’s Toxic Culture” by reporter Noah Kirsch. The piece shed light on the problematic culture found at Papa John’s and at organizations across the globe. Kirsch wrote about the “bro culture” that was pervasive at the company. Female employees were mocked and asked time and time again if they were menstruating. Male executives made repulsive references to “gangbangs” and comments about whether women wanted “to jump on the train.” Employees at the firm explained that it was Schnatter’s close circle of male executives that perpetuated this despicable culture.

Forbes’s coverage of Papa John’s is of particular importance for two reasons. First, it’s clear that racism and racial insensitivity is alive and well even in the 21st century. People can choose to believe that racism is a thing of the past, but Schnatter’s remarks — at least in my mind — demonstrate the unwillingness of certain individuals to realize the social impact of their ignorance. Second, the culture that permeates through Papa John’s likely permeates through scores of other organizations. The degrading and disrespectful remarks, which contributed to the “bro culture” at Papa John’s, can certainly be overheard at other organizations.

You can say that one man doesn’t speak for an entire organization – that Schnatter’s remarks shouldn’t define the abstract entity that is Papa John’s – but I would disagree. Leaders — especially leaders of multinational corporations with thousands of employees and millions of consumers — must recognize the impact they have on how individuals think and act. Instead of perpetuating arrogance, ignorance and dominance, leaders like Schnatter should use their global platforms to encourage more positive and constructive values.

The #MeToo movement has played an important role throughout the coverage of cultural failings at not only Papa John’s but also several notable organizations. Earlier this year, The New York Times published a piece about the firing of several male executives at Nike after women revolted over the company’s inhospitable culture. The authors discussed the company’s culture by mentioning that staff outings often ended at strip clubs and bosses were reported to have “referenced a staff member’s breasts in an email.”

Nike’s corporate culture may not have been much different than Papa John’s, but leaders at each respective organization could not have acted more differently. Leaders at Nike decided to act and reform themselves internally before the bad publicity hurt its bottom line. The company has even been able to maintain stable stock price growth since The New York Times first published the piece in April.

Nike should serve as an example for organizations everywhere on how to react to the increasing social awareness and consciousness in our current society. Gloria Feldt, co-founder and president of Take the Lead, wrote an incredible piece in Time magazine about how organizations should respond to the #MeToo movement. She writes, “…leaders will have to create work environments where women aren’t objectified and where implicit bias is at least recognized and at best eliminated from recruiting, hiring and retention practices.”

I hope the coverage of Papa John’s, along with the ongoing coverage of the #MeToo movement, will cause more companies to reform themselves. I hope this serves as a warning sign to organizations across the globe that racial insensitivity and “bro culture” are not sustainable principles to maintain in our current society. Leaders can choose to do the right thing — while avoiding embarrassment — by reforming themselves and their organization’s culture.

Erik Nesler can be reached at egnesler@umich.edu.