When we conduct factory inspections, the last thing we want to see is a factory that has the same problem year after year. So, we strive to work with factories to identify ways to help them address some of the root causes of compliance problems.
We regularly hold on-boarding meetings for new vendors and regional trainings for existing suppliers on our Vendor Code of Conduct and the policies outlined in our corporate vendor manual. Our goal is to help suppliers better understand our requirements when they enter into a business relationship with us.
"[When we compare] our operations today to 5 years ago, we believe that communication between the factory management and the workers has improved. Since communication is the key ingredient in a smooth operation, [we have experienced] many positive effects from this improvement, including a lower turnover rate and higher worker satisfaction. In addition, constant management of health & safety issues has improved the working environment."
- A Korean Supplier
On January 1, 2008, the Chinese government implemented a new series of labor laws. Many of our suppliers had trouble understanding how to comply with the new regulations. In October 2008, our global and local team members partnered with Business for Social Responsibility (BSR) and the China Training Institute (CTI) to conduct a labor contract law implementation seminar in Shenzhen, China.
Several experts, including the Chief Officer of China's Human Resource and Social Insurance Ministry Labor Law Research Center, provided guidance to many of our key suppliers in the region. The session sparked an interactive discussion that proved successful in clarifying many outstanding questions about the new Chinese labor laws and helped facilitate a new spirit of synergy and partnership.
In July 2009, we brought together our suppliers in Cambodia to launch our membership in the International Labor Organization (ILO)'s Better Factories Cambodia (BFC) program. Two management representatives from each supplier, along with key ILO representatives, participated in an interactive discussion that outlined the benefits of the BFC program.
We outlined our commitment to BFC and had a lively discussion about what this would mean to suppliers - in particular, that we would be relying on BFC inspection results instead of our own to help reduce supplier "audit fatigue".
We also encouraged suppliers to review the suite of advisory and training services offered by the Better Factories Cambodia team and offered our assistance in helping them to identify or schedule in-factory training that would have real, meaningful impact for their workers.
"It is important for brands to set up programs to help factories continuously improve and to narrow the gap among different brand requirements and legal requirements. [But] we wish more brands would reduce the frequency and duplication of their audits when factories demonstrate that they meet brand requirements."
- A Chinese Supplier
Effective grievance mechanisms are one of the most important tools any organization has to ensure that workers' voices are heard. Unfortunately, many garment factories around the world still have only rudimentary channels for workers to communicate their thoughts and concerns to management. When these channels are ineffective, workers may need to seek out external mechanisms, such as a brand or retailer that contracts with the factory.
In 2011, we launched a pilot project to provide workers in approximately twelve approved garment factories in China with access to an independent hotline managed by two external organizations. The organizations will immediately report to us serious concerns raised by workers. We will also partner with these organizations to provide relevant awareness training in factories based on the issues raised.
Our goal is to encourage the factories in this pilot program to foster an environment in which workers feel comfortable raising and discussing labor and social issues in a constructive manner. We will also work with suppliers to re-design their own internal grievance procedures so that they can ultimately manage effective internal communication channels independently.
We are still in the early phases of this project. We look forward to updating on our progress in future reports.
One of the most challenging issues we face is obtaining access to accurate factory records during inspections. Unfortunately, some factories have adapted to Code of Conduct inspections over the years not by fixing problems but by creating false sets of documents that show perfect (but fake) overtime and wage records.
We believe that this is one of the worst practices a factory can undertake. Resolving non-compliances is never easy - but it is impossible to help factories improve when we can't get a true picture of what is going on inside the factory. In 2010, we took a strong stance on this issue. We informed suppliers that failure to show accurate sets of books would result in a significant penalty - up to and including termination of our business relationship. To promote disclosure, we assured factories that the penalty of not showing accurate records would be far worse than any instances of non-compliance these records might reveal, and that we are committed to working with them to continuously improve whatever problems are uncovered.
The following story from one of our Asia-based team members highlights the challenges we face in this area.
"When talking about false records, I often say that the problem is easy to understand but hard to correct. One factory that we have been working with for two years in China provides a good example of the challenges we face.
From 2009 to January 2011, we visited Factory X in China every four months. During the first few visits, we always found inconsistencies in the factory records. We struggled to convince the factory managers to provide us with accurate payroll information because they didn't fully believe that we wanted to work with them to fix the problems - and that we wouldn't punish them for the non-compliances that the records revealed. We spent a lot of time and effort over many months trying to gain their trust, explain our approach, and help to change their mindset. Finally, they agreed, and gave us the true payroll records.
As expected, we found some wage and hour problems, but we are now working together with factory management on a corrective action plan. We've asked the factory to update us monthly on their progress. In addition, the factory management decided to establish a committee with direct oversight for workplace health and safety- because health and safety was another area where they were having repeated non-compliances. The factory management successfully identified that the root cause of those problems was that no one had direct responsibility for health and safety issues in the factory.
After two years, we are finally starting to see positive, incremental improvement on wage, hour, and health and safety issues in Factory X. There is still more work to be done, but I believe by gaining the trust of Factory X's management and working with them to identify the root causes of issues, we have overcome the hardest part of the problem."