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Our Insights 26 May 2016

Giving Workers a Voice: Well-Being in Supply Chains

By Aiste Brackley

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Company approaches to supply chain well-being are increasingly centered on technologies and research that enable workers to express their concerns and give honest and open feedback of factory conditions.

Globalisation, one of the most preeminent trends of the past several decades, has profoundly influenced how people communicate, travel and consume and how companies do business. It has brought new jobs and plentiful economic opportunities to developing nations in Asia, Latin America and Africa and has enabled multinational companies to cut costs and offer lower prices. Outsourcing has also brought challenges and companies have struggled to gain full transparency of increasingly complex and geographically dispersed supply chains and to maintain fair working conditions in factories. As advancements in technologies open new opportunities, a growing number of companies are turning to direct employee engagement to gain better visibility and improve worker well-being in supply chains.

Defining Worker Well-being

Northern California-based non-profit organisation Good World Solutions helps companies gain better visibility into working conditions at their supply chain factories and improve worker lives with the help of its mobile phone survey tool, Laborlink. It recently launched China Factories Survey, a pioneering partnership with 10 leading brands to increase retention rates and improve working conditions in 70 factories.

Executive Director Heather Franzese says that Good World Solutions boiled down its definition of worker well-being to two key areas – safety and respect. Safe is the minimum standard that every company should provide and ensure. Respect encompasses such standards as no verbal abuse, harassment and realistic production targets, although these goals remain aspirational for many companies.

Global toy manufacturer Mattel, which employs more than 35,000 workers in its supply chain in 40 countries, primarily in China and the Asia-Pacific region, and is a participant in the China factories project, focuses on health and safety issues in its worker well-being programs. According to corporate responsibility manager Katrice McCorkle, the company recently revamped its labor conditions and human rights program and launched the Play With Care campaign in 2015, which encourages employees to take responsibility for their safety and the safety of their co-workers.

Safety, Overtime and Stress Are Top Concerns

Concerns of supply chain workers vary depending on factory and geography but often focus on safety, stress level, overtime and pay. Furthermore, they are highly dependent on gender.

According to Vodafone, managing health and safety continues to be the most common area identified for improvement in supplier factories by far, followed by working hours. Working hours is a common industry issue, says Vodafone. From the 157 workers it recently surveyed in one of its supplier factories, 45% said one to three days a week they worked more than 10 hours, while 27% worked overtime on four or more days. At the same time, 94% of workers said they wanted to work as many hours as possible or were willing to work overtime sometimes.

According to Franzese, when asked about their needs, workers in China often express a preference for more training, education and career advancement opportunities. In South Asia, women tend to request better childcare, while men express a preference for better transportation. In response to these concerns, many companies enhance internal communications with the aid of helpdesks and internal chat platforms. At one China-based footwear factory surveyed by Good World Solutions, workers wanted improvements of dormitories and the cafeteria food. When these needs were addressed, job satisfaction jumped by 24%.

For the China Factories Survey, which is the first collaborative initiative of its kind, Good World Solutions partnered with 10 major brands including Walmart, J.Crew, C&A and M&S. Michael Widman, Vice President of International Labor Standards at The Walt Disney Company, which extended financial support to the project and is also a participant, said that the initiative provides a scalable, innovative approach that gives voice to factory workers. The data collected from 37,000 workers in early 2016 (see box) represents the first stage of the project and will serve as a benchmark for companies as they make improvements and continue to track worker opinions on job satisfaction and worker-management communication.

Technology, Transparency Driving Change

One of the key factors driving greater transparency on working conditions is the advance of technologies and what they make possible – not only enabling the media and other stakeholders to have better visibility of supply chain conditions but also providing new tools to companies to drive positive change.

Franzese believes that in five to 10 years time, there will not be a successful apparel or electronics company that does not have direct worker engagement as a core part of their supply chain strategy.

Although not always the case, supply chain working conditions are also slowly becoming a competitive issue for some sectors. Companies such as Levi’s have positioned themselves as clear leaders, raising the bar for everyone. By partnering with vendors and stakeholders, Levi’s has been able to tailor its programs to meet the individual needs of each factory community with progress made on a rage of issues from women’s health to financial inclusion. Levi’s argues that investing in workers also makes business sense and its suppliers have seen a significant return — up to $3 for every $1 invested in the program.

Franzese says that the case for investing in worker well-being is particularly strong in countries like China, where turnover can be as high as 20% a month. It places a big cost and burden on factories to rehire and retrain the workforce.

Path Forward – In Search of Solutions

While progress has been made on improving supply chain conditions, many outstanding issues remain. The key challenge that many brands face is gaining better visibility of working conditions beyond directly operated and owned facilities. It is in those subcontractor factories and other formal and informal facilities further down the supply chain where most egregious violations, such as forced and child labor, occur. According to some estimates, China alone has more than 30 million informally employed homeworkers that often work long hours for little pay and have no protection of their rights, while another study from Stern Business School estimates that a third of all factories in Bangladesh are informal.

Given that the brands are often not the ones employing the workers, it is really important to ensure factory buy-in if the well-being programs are to succeed. If the factory does not take ownership of it, they will find a million ways to sabotage it, says Franzese. In contrast to audits, solutions like Laborlink provide tools to factories to directly engage with the workforce that are not meant to be going over their head or circumventing them.

According to Mattel’s McCorkle, scaling of worker safety and well-being programs across their entire operations is another key challenge facing companies given the sheer size of global supply chains and geographic dispersal of factories. Engaging stakeholders such as NGOs and local governments is key, says McCorkle, as no single company can meet this challenge alone. Moreover, directly engaging the workers is critical but so is securing buy-in and support from the brand’s senior leadership.

Franzese believes that the business community has come a long way on acceptance that workers deserve a seat at the table and their voice is important – not only in terms of improving their well-being but also for business outcomes. As this becomes more universally recognised, hopefully we will see larger numbers of companies directly engaging with workers and scaling solutions to improve their well-being.

This article was originally published in Radar Magazine.

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