Terry Nelidov, project manager of BSR's DR-CAFTA Responsible Competitiveness Project, recently talked with University of California, San Diego Professor Richard Feinberg, a senior advisor to the project, about his insights gained from developing the case studies for it in BSR’s new compendium “Stories From the Field.” In excerpts below from the conversation, Professor Feinberg highlights both overall learnings from the three-year project and practical tools that companies anywhere in the world can apply to their labor and competitiveness strategies.
Nelidov: What were some of the benefits—economic, reputational, and otherwise—that companies saw from undertaking labor demonstration projects?
Feinberg: As can be expected, outcomes varied across industries, companies, and countries. However, when all was said and done, each project resulted in tangible benefits—either immediate or anticipated—to workers and companies. For example, decreased rates of injury, less costs associated with first-aid treatment, and reduced worker absenteeism were typical of projects that undertook health and safety assessments at the factory or farm level. Such was the case with the sugar company Tres Valles in Honduras and the coffee-production cooperative Coocafé in Costa Rica.
Meanwhile, company-worker communication is typically a thorny issue in Central America. What we found in the banana industry, as in the AgroAmérica banana farm in Guatemala and the Tropical farm in Honduras, is that the introduction of even basic communication mechanisms contributed a great deal to enhanced worker-company dialogue, reduced labor-management tensions, and improved labor productivity. Likewise, a bottom-up approach that gives workers a voice in company decision-making contributed to increased employee loyalty and overall satisfaction, as illustrated by our projects with the Costa Rican Chamber of Information and Communication Technologies and the Grupo CASSA sugar company in Honduras.
Similarly, a baseline survey of working conditions in CAEI’s sugar plantations in the Dominican Republic proved to be an eye opener for company management, helping them galvanize internal support for key improvements. Including external stakeholders in the discussion of ergonomics at the Gildan apparel factory in Honduras shed light on how to best sequence innovations.
Nelidov: What about beyond the factory or farm gate? What is the role of public policy and public-private partnerships in promoting improved competitiveness through better working conditions?
Feinberg: At an industry level, we found that public-private partnerships can be a great way to share implementation costs and promote synergies that companies can’t achieve when acting alone. In El Salvador, the partnership—including the Sugar Association, the International Labour Organization, and the Coca-Cola Company—developed a multi-pronged approach to eradicating child labor that included not only strict enforcement of minimum-age requirements in the fields but also raising awareness with parents and guaranteeing access to education for the children. Each actor in the partnership had a unique role and contribution to make. We also partnered with the Ministries of Labor of El Salvador and Costa Rica to design a “whole-of-government approach”—including public policy, regulation, government procurement, and company incentives—to harness the entire government apparatus to improve working conditions and thus promote the country as a lower-risk destination for international sourcing.
Nelidov: What are your top insights from these case studies that you feel would help other BSR member companies tackle these issues in Latin America, Asia, or anywhere else in the world?
Feinberg: The “Stories From the Field” case book is replete with anecdotes, examples, challenges, and learnings along the way. If you’re looking for practical impact on company strategy and operations, then I’d highlight the following as absolutely key from everything we observed:
- Leadership is vital. Be it a mid-sized, family-owned farm in Nicaragua—or Indonesia, for that matter—hierarchy remains the dominant organizational modality in many countries, and middle management is particularly sensitive to signals sent from the top. Executive-suite leadership, which sometimes means the patriarch or matriarch themselves, is essential to motivating change. But it’s also critical that management buy-in spreads beyond the initial driver of change to other senior executives and to middle management, where management-worker relations are most intense (and potentially most productive) on a day-to-day basis.
- Investment in your own employees is often the lowest hanging fruit. Too often, firms under-invest in training for fear that employees will move their skills elsewhere, or because the returns in higher productivity are realized only over time. These cost-benefit realities justify external, public-sector subsidies to education. But firms shouldn’t lose sight of the multiple, sometimes less obvious, returns on training. To more easily convene workers in a familiar, friendly setting, training programs should leverage existing networks of providers, such as those used to provide farmers with technical assistance.
- Use best practices as a benchmark—both next door, and around the globe. Larger firms that participate in global supply chains are well served to benchmark their practices against international standards. Local ministries of labor seeking to enlist the leverage of other government and/or private agencies to catalyze responsible labor can look to the practices of other governments for inspiration. For example, the U.S. procurement code, which demands compliance with labor standards, applies widely across federal entities and could serve as an example to other governments looking for international best practices. However, in some cases, local firms are the most relevant—and most accessible—benchmarks. The lesson learned was to look for best practices, or simply good practices, among your peer companies locally and then launch out into the global marketplace.
- Open dialogue among management and workers can bring tangible results. Open channels of communication among executives, middle management, and workers can foster worker loyalty and solidarity and motivate bottom-up innovations. Company relations with the surrounding community are also likely to benefit. While causal relations can be difficult to measure with certainty, managers and workers in several of our DR-CAFTA projects attributed increased productivity to the simple fact of better communication. More open channels of communication may begin with management leadership but should be formalized through regularly scheduled meetings, the routine sharing of information, and procedures that ensure that workers’ suggestions are addressed seriously and in a timely manner.
- Sustainability must be a core goal from a project's inception. Over the years, far too many development projects have left little trace once the funds ran out and external consultants departed. We have learned that sustainability must be: 1) built into the company’s core business model; 2) bolstered by incentives both internal and external to the company; 3) embedded in durable public and private institutions; and 4) funded from regenerating sources. Most importantly, the long-term results of this type of labor project will hinge upon continued leadership from managers, workers, union representatives, and government officials.
BSR will continue this type of work on labor issues in Central America—as well as on a broad range of corporate responsibility and sustainability issues—through the presence of Regional Manager Luis Garnier, based in Costa Rica and serving member companies in Central America and Mexico.