Archive for July, 2013|Monthly archive page
Top Retailers Sign New Bangladesh Safety Initiative
Filed under: accountability, brands, corporate citizenship, disaster, employees, human rights, international, retail, rights, safety, standards, supply chain, workplace safety |
Comments (2) Workers in Bangladesh will be the beneficiaries of yet another massive effort to improve their lot. Will it work? And will it mean anything for workers in countries other than Bangladesh? It’s a welcome move, but it also raises questions.
According to a press release, an alliance of leading North American retailers has committed to a new plan, The Bangladesh Worker Safety Initiative, intended to “dramatically improving factory safety conditions in Bangladesh.” The coalition includes Walmart, Target, Canadian Tire, Gap, Hudson’s Bay Company, and a dozen other major retailers. That means, according to the press release, that the Initiative covers the “overwhelming majority of North American apparel imports.”
This new Initiative should not be confused with the Accord on Fire and Building Safety in Bangladesh, a labour-led agreement that was announced in May, less than a month after the collapsed the collapse of Bangladesh’s 8-story Rana Plaza collapse, a tragedy that eventually claimed 1,129 victims. Signatories to that Accord included Europe’s two biggest clothing retailers, as well as Tommy Hilfiger, H&M, and Canada’s Loblaw, but there were notable abstentions. Walmart, for instance, was criticized for declining to sign on.
The new Initiative “sets aggressive timelines and accountability for inspections, training and worker empowerment.” Of particular note: “Within one year, 100 percent of all factories that conduct work with an alliance member will be inspected,” and members of the alliance have committed to refusing to do business with any factory deemed unsafe. And, in a worthy commitment to transparency, the alliance will make semi-annual progress reports public.
There is, of course, plenty of room for skepticism. Some will see this new Initiative as a PR move, albeit a rather expensive one. Members of the alliance have already committed $42 million, though of course that number has to be put into context by comparing it to the vast profit the alliance members derive from doing business in Bangladesh. The Bangladeshi garment industry is a $19 billion-a-year industry. (Quick math: that means the size of the Alliance budget amounts to roughtly 0.2% of the size of the industry. That’s not necessarily the most relevant comparison, but it gives you a sense of scale.)
Another source of skepticism, for some, is that this is an entirely business-driven initiative, unlike the May Accord, which was driven by labour and which will be guided by a Board that includes representatives of both corporate and labour interests. The Board of the new Initiative is perhaps less clearly unbiased: the 9-member board will consist of “four retailers, four stakeholders who provide specific expertise, and an independent board chair.” Interestingly, however, the Initiative does include specific provisions not just to look after workers, in the paternalistic sense, but to empower them: it calls for members to support the election of Worker Participation Committees at all factories, along with the provision of anonymous worker hotlines to be administered by a third party.
I continue to wonder and worry that both the new The Bangladesh Worker Safety Initiative and May’s Accord on Fire and Building Safety in Bangladesh represent a kind of Bangladeshi exceptionalism. Why are major retailers joining together in now two big agreements to improve conditions in Bangladesh, but in Bangladesh alone? Admittedly, Bangladesh is important — as far as the garment industry goes, it is second only to China among countries exporting Western brands. But still: it worries me that a factory collapse that could have happened in an number of developing nations has apparently drawn attention only to the fate of garment workers in one, admittedly needy, nation.
Transparency and Corruption, 2013
Transparency International has just released its latest, the “2013 Global Corruption Barometer.” It’s a fascinating read (and the website is brought to life by a bunch of great infographics). And it’s an important topic for anyone with a serious interest in what makes business work, or fail. Corruption after all is corrosive to markets. It’s not just a political problem, but a business problem. Corruption of all kinds drains money from more productive uses, and makes the ‘playing field’ of business uneven and muddy. The GCB is a measure of just how muddy and uneven the playing field is perceived to be in each of 107 countries.
The GCB includes lots of interesting findings, such as the following:
- In Sierra Leone, 84% of people said they had paid a bribe to someone in a position of authority in the last twelve months, compared to just 3% in Canada and 7% in the U.S. (Not coincidentally, Sierra Leone is one of the poorest countries on the planet.)
- In Afghanistan, about the same number of respondents felt that NGOs are extremely corrupt (34%) as thought that business is corrupt (34%).
- In the U.S., 60% of respondents thought that corruption had increased there over the previous year (compared to only 10% who thought corruption had decreased.)
- In Canada, the most mistrusted institution is political parties (62% of Canadians think those are either corrupt or very corrupt), followed by business (48%), parliament (47%), and the media (39%).
It is worth emphasizing that the GCB is a measure of opinion. To generate this report, TI surveyed 1,000 people in each country (or 500 people in small countries) to ask them about whether they feel, for example, that corruption has gotten better or worse in their country in the last 12 months. So the report doesn’t (and of course couldn’t) measure actual corruption. Still, the report is meaningful. It is of course possible that the people in a given country are systematically mistaken about levels of corruption. But even if that were the case, it would say something interesting about that country. And in the end, when it comes to corruption, perception matters: even perceived corruption is enough to corrode trust, and without trust meaningful commerce simply cannot happen.
Witnessing (but not reporting) Unethical Workplace Behaviour
A new study of ethics in Canadian workplaces suggests that 42% of workers have witnessed ethical breaches in the workplace, and nearly half of them failed to report such misconduct.
The survey was conducted by Ipsos Reid for ClearView Strategic Partners Inc., a Toronto-based ethics whistleblowing advisory firm.
The survey also drilled down to ask respondents what kinds of questionable behaviour they had witnessed. According to Clearview,
…28% of respondents witnessed the misuse of company property at their current employer, 25% saw harm to employees, 17% observed privacy violations, 17% were aware of fraud, 13% witnessed conflicts of interest, 9% knew about bribery or corruption, 12% observed environmental violations, and 11% had knowledge of the misrepresentation of financial results.
It’s a provocative study, but one that raises more questions than it answers. For starters, as is often the case in such surveys, the proportion of respondents saying they had witnessed unethical behaviour is implausibly low. Only 42%? Presumably that means people were thinking only of a narrow range of fairly serious infractions, and ignoring commonplace wrongs such as petty lies, employees shirking their responsibilities, and minor thefts from the company’s supply closet. My guess is that there is some serious under-reporting going on here. The interesting question: just which kinds of ‘minor’ wrongdoings are likely to be most under-reported in a survey like this?
Another question: do the people surveyed understand well the definitions of the forms of wrongdoing they say they witnessed? For example, when they say they witnessed conflicts of interest, just what do they mean? A study I co-authored a decade ago found that many people in the organization we studied could not provide a clear definition of the term “conflict of interest,” even though they had a clear understanding that such conflicts posed ethical problems. If respondents to Clearview’s survey are equally confused about the definition of (for example) conflict of interest, are they more liable to be over- or under-reporting having witnessed it?
Finally, there are interesting questions to ask about what the study says is the widespread failure to report misconduct (i.e., presumably to report them to someone in a position of authority). According to Clearview, 69% of respondents indicated a “lack of faith that investigations will be conducted properly,” 66% said they didn’t believe that disciplinary measures would be applied consistently, and 23% said that they feared “retaliation or negative consequences.”
There’s nothing surprising about those answers, but Clearview’s press release doesn’t make clear whether those answers were the ones given spontaneously by respondents, or whether they were on a menu of options provided for respondents to select from. Notoriously absent among them are other, seemingly likely factors, such as misguided loyalty or apathy, or the sort of tunnel vision that makes many of us focus on our ‘missions’ at all cost. Of course, most people are unlikely to give such answers, since they reflect as poorly on the respondent as they do on the wrongdoer. It is probably far easier to get people to admit to having seen wrongdoing, and indeed to having failed to report it, than it is to get them to admit having failed for truly blameworthy reasons.
No, Blacklisting Corrupt Construction Firms is Not Unfair
Under Quebec’s new Integrity in Public Contracts Act (Bill 1), companies that want to bid on government contracts must pass a fairly stringent legal and ethical sniff test. In the wake of the ongoing Charbonneau Commission (the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry, in Quebec) the government of Quebec has begun using Bill 1 to blacklist construction companies.
First on the chopping block was engineering firm Dessau. The company was blacklisted recently and so it won’t be able to bid on public-sector contracts in Quebec for the next five years.
Some say this is unfair. Dessau employs thousands of people, some of whom will surely be put out of work if their employer is unable to bid on big public contracts. And since the vast majority of those employees presumably have nothing to do with the company’s shady dealings, they are in effect being punished for someone else’s crimes.
There is undoubtedly some injustice, here. It is, on the face of it, a bad thing to suffer for someone else’s wrongdoing. But the question, really, is whether the loss that will be suffered by some Dessau employees is an intolerable injustice. And whether an injustice is intolerable or not very much depends on the qualities of the overall system under examination.
One of the key features of the legal status of modern corporations is that the liability of employees is limited. If the company you work for goes bankrupt, all you lose is your job. For most people, that’s not trivial, but it’s a far cry from having someone from the court show up to repossess your car or foreclose on your mortgage to help pay your employer’s debts. One of the things that makes large corporations — and hence, our entire economic system — viable is that in seeking employment with a corporation you are not thereby putting everything you own at risk. This makes the the legal situation of an employee quite different from that, say, of a partner in a firm. Partners are in principle personally liable for the financial effects of each other’s wrongdoing or mismanagement.
Second, it is worth considering that if injustice is being done to the employees of companies like Dessau, such injustice must be placed into perspective by comparing it to the prior injustice done by such companies to employees of other companies. When companies succeed through bribery and illegal political donations, they do so at the expense of honest companies and their employees. In order to understand the Quebec government’s penalties, you need to look not just to the interests of identifiable individuals like Dessau’s employees, but to the interests of the hard-to-identify individuals who are harmed by the corruption that penalties like this are intended to remedy.
Third, it is worth noting that the Quebec government’s decision here is not beyond appeal. There is a process for reinstatement, which includes things like a requirement stop (and presumably to show evidence of stopping) fraudulent practices, to dump executives implicated in wrongdoing, and to “implement sound management practices, good governance and an ethical framework.” So if jobs are in jeopardy, they are not in jeopardy forever. It depends on whether managers at Dessau can clean house, and do it quickly.
Ultimately, if the employees of companies like Dessau are being wronged, the blame lies at the feet of executives who mismanaged the company. And make no mistake: engaging in corruption is a form of mismanagement. It counts as mismanagement not just because it can result in legal penalties or because it can result in significant financial losses. Engaging in corruption counts as mismanagement because it amounts to an admission that managers were unable — insufficiently smart or talented — to win while sticking to the rules of the game.
The Business Ethics Blog 