Step 4. Corrective Action & Systems Improvement Plans

Fair Hiring Toolkit for Brands

For Governments
 
This section provides a tailored introduction to the materials for governments and public policy actors, including an overview of the most relevant tools and guidance with an explanation of how these tools can support the work of governments and other public policy actors. These tools complement national and international regulatory efforts to promote fair hiring, reign in abusive labor recruiter practices, and establish rigorous protections for migrant workers.
For Advocates
 
This section of Verité’s Fair Hiring Toolkit provides a tailored introduction to the materials for labor rights advocates and labor unionists. An overview of the most relevant tools and guidance is provided, with an explanation of how these tools can support their work. The tools provided here are broad and multi-faceted, providing guidance on a range of issues linked to forced labor and human trafficking. You are encouraged to explore the material provided here and discover how you can put it to use in your own work.
For Investors
 
This section provides a tailored introduction to the materials for investors. An overview of the most relevant tools and guidance is provided, with an explanation of how these tools can support the work of investors. These tools can support investor campaigns, corporate advocacy and dialogue, and investment analysis of risks of forced labor and human trafficking in company operations and supply chains.
For Auditors
 
This section of Verité’s Fair Hiring Toolkit provides a tailored introduction to the materials for social auditors and certifiers. An overview of the most relevant tools and guidance is provided, with an explanation of how these tools can support their work. The Toolkit is extensive and multi-faceted; it provides guidance on a range of issues. Auditors are encouraged to explore the complete set of materials provided.
For Multi-Stakeholders
 
This section provides a tailored introduction to the materials for multi-stakeholder and multi-brand initiatives. An overview of the most relevant tools and guidance is provided, with an explanation of how these tools can support the work of multi-stakeholder and multi-brand initiatives.
Step 4. Taking Corrective Action & Developing Systems Improvement Plans

Forced labor and human trafficking are crimes under international human rights law and in most countries around the world. They are among the worst forms of abuse in the world of work.

A suspected case of forced labor in the supply chain must be dealt with immediately, firmly and comprehensively; and the response must consider the needs and well-being of the affected worker(s) first and foremost.

Many companies have the means and mechanisms to respond and react to non-conformance issues surfaced during social audits, but they may not be well-positioned to anticipate and avoid these problems in the first place, or to prevent them from happening again. Taking a reactive approach to problems can be more costly in the long run, and facility audits have shown that social responsibility problems tend to persist when remedial or corrective actions are either poorly maintained or are not implemented at all.

Developing a systems improvement plan that includes corrective and preventive measures helps brands and their suppliers to take both effective action against and proactively prevent practices that can lead to trafficking or forced labor for migrant workers.

Corrective action should provide for the full protection of the worker, and measures should be taken to support their rehabilitation (including physical and mental health), their repatriation (if desired by the worker), and/or their reintegration into the labor market and community. Wherever possible, cooperation should be forged with public or non-governmental victim service providers with expertise in supporting victims of human trafficking.

Taking action should be based on immediate corrective measures and longer-term systems improvement strategies. These should be formalized into a written plan that can include mechanisms and guidance to respond to immediate problems and proactive measures to anticipate and avoid them. It should also include guidance on preventing a recurrence of abuse. Developing a broad strategy of this kind can help brands to take effective action against forced labor and work with their suppliers to establish good practices to prevent the conditions that may enable or result in such forms of abuse.

In general, a systems improvement plan must:

  • Detail the company’s specific responses to the issues (ensuring at all times that vulnerable workers are protected, that contingencies are in place to respond to issues where they happen);
  • Address the root causes of the issues, including the policies and practices that contributed to the problem;
  • Map out the risks and their sources – the particular business processes, operational functions, or structural gaps from which the risks arise; and
  • Feed the results into a management systems improvement plan.

The tools to the right offer more guidance on corrective action and systems improvement planning, where the trafficking or forced labor of migrant workers is concerned.

TOOL 1: A Guide to Corrective Action & Systems Improvement Planning

Forced labor and human trafficking are crimes under international human rights law and in most countries around the world. A case of this abuse discovered in the supply chain – among the worst forms of exploitation in the world of work – will demand immediate corrective action on the part of the brand, its supplier and the recruiter involved. Abuse of this kind will always be treated as a major breach of code compliance.

Corrective action will need to be comprehensive and systematic, involving both short and long term strategies. It should be focused on the needs and well-being of the trafficking victim(s) first and foremost, and involve key stakeholders such as victim service providers, health care professionals, and other public or civil society organizations, wherever necessary. This is a clear case where brands and their suppliers should strongly consider joint multi-stakeholder engagement in the best interests of the workers concerned.


IMMEDIATE ACTION
If a case of forced labor or human trafficking is identified in the supply chain (for example as a result of a social audit or another means of assessment), it is essential that the brand respond immediately and unequivocally. This should involve an immediate investigation and site visit by brand representatives, a clear identification of the workers affected, and a full understanding of the nature of the abuse. The brand will need to determine the extent and form of the problem before it can institute the full protective measures that will be required.

It will be necessary for the brand to act quickly to remediate the problems that have occurred and to reverse the cycle of abuse. Workers may need to be paid back wages; excessive recruitment fees may need to be reimbursed; and passports may need to be returned. Whatever the nature of the abuse, the brand will need to monitor this process closely to ensure that comprehensive corrective action is taken. To help with this process (and to ensure a full and timely response), it may be necessary to draw up a plan of action – a corrective action/performance improvement plan – that identifies priorities, responsibilities and timelines for each of the actors involved: the brand, supplier and recruiter.

At the center of the brand’s response may be the need to consider repatriation for migrant workers. These workers – if they have suffered deception and abuse in the recruitment and hiring process – will have the right to return to their country of origin, if they desire. They may also require important assistance in reintegration into local labor markets and their communities of origin. A key element in ensuring the success of remediation efforts and a full transition for the migrant worker out of forced labor is the transition of that worker into free and fair employment.


In Focus: Nike’s Action Against the Abuse of Migrant Workers in the Supply Chain
In July 2008, an Australian news channel reported that a garment factory in Malaysia producing t-shirts for Nike was employing hundreds of migrant workers in unacceptable conditions. These conditions included overcrowding in dormitories, unhygienic toilet facilities, passport retention and the garnishing of workers’ wages to pay for work permits.

Nike’s immediate response was to investigate. It confirmed many of the reported conditions and found serious breaches of its own code of conduct. The company met immediately with factory management, and required a series of actions to resolve the violations. The following steps were taken:

      • Workers were provided free access to their passports;
      • All wage deductions made for work permits were stopped, and an installment plan was established to pay workers back what they had already paid;
      • Dormitory conditions were improved;
      • A system was established to reimburse migrant workers for the recruitment fees they had paid; and
      • The factory committed to pay the full repatriation cost of any worker affected by the violations.

ADDRESSING ROOT CAUSES: FROM CORRECTING PROBLEMS TO PREVENTING THEM
To fully address an issue like forced labor, it isn’t enough to take immediate and short-term measures like these, as important as they are. It is also essential to consider the longer-term actions that should be taken to ensure that the problem does not recur.

The brand will need to consider a few things. First, how is it that forced labor and human trafficking are present in the facility in the first place, and do they exist elsewhere in the brand’s supply chain? Second, what needs to be done to ensure that these problems are solved and the brand is no longer at risk?

To answer these questions, it will be necessary to look beyond the supplier in question and the specific case of abuse. The brand will need to take a thorough look at its own systems and protocols, policies and assessment procedures, and other aspects of its social responsibility program to determine the root causes of what went wrong and where. As part of this, it may be advisable to conduct a thorough review and risk assessment across the supply base.

Whatever the nature of the abuse, a review of this kind will lead to stronger policies and procedures, and move the brand away from piecemeal, reactive engagement towards proactive and preventive engagement. Responding in this way and developing new protections for migrant workers to promote fair hiring and recruitment, will promote a cycle of continuous improvement that will benefit both the brand and its supplier.

Further guidance on taking a step-by-step approach to corrective action is provided in the next tool: Developing a Strategy for Corrective Action & Systems Improvement Planning. Review it to learn more about analyzing the problem, identifying root causes and brainstorming possible improvements.


In Focus: From Corrective Action Plans to Systems Improvement Planning
In cases where a specific problem has occurred, it will be important for the brand to develop a Corrective Action Plan to ensure that remedial action is effective, timely and organized, and involves all the key players. In other cases, where no problems have been identified but where a potential for risk is present, a brand may nevertheless wish to take a proactive approach and conduct preventive action planning. In this case, the company may wish to take the necessary steps to develop a strategy for taking preventive action before problems occur. This means the brand will be prepared to meet a problem head on, should one occur in the supply chain.


LONG-TERM ENGAGEMENT: TACKLING COMPLEX CAUSES
Corrective action taken to address a specific incident of forced labor or human trafficking is likely to be immediate and time-bound. The brand will seek to identify the problem and its root cause(s) and address it quickly, working with its supplier and the recruiter in question.

For some “red flags” of forced labor, this is an appropriate strategy. The company can work through the problem directly, address the key issues, develop new policies and procedures, prohibit bad practice and thereby ensure greater protection for migrant workers. In other cases, however, problems are too complex for a “quick fix” approach and will demand a more nuanced and long-term strategy. In these cases, the brand may need to look beyond its own operations and those of its suppliers to address broader, industry-wide or even nation-wide concerns. This will involve tackling the fundamental causes of workplace or recruitment-based problems, and necessitate a multi-stakeholder or partnership approach. The following case from the Gap illustrates longer-term thinking in developing systems solutions.


In Focus: Tackling the Fundamental Causes of Child Trafficking in India
In October 2007, Gap faced allegation in a UK-based newspaper that a subcontractor making clothes destined for GapKids was using “slave” children in India. The report described conditions of long hours of unwaged work and children sleeping on the factory rooftop.

Gap investigated the report, confirmed the allegations, and reacted swiftly to implement a series of corrective actions to protect the children involved. It initiated a thorough review of its own policies and procedures, putting in place new safeguards to prevent similar violations from occurring in the future.

Gap also took a longer term view of the problem. It initiated a program to address the fundamental causes of child trafficking in the garment sector in India, collaborating closely with government, other brands, suppliers and civil society groups. Along with supporting multi-stakeholder awareness raising events in the country, Gap led the way in establishing a multi-stakeholder Think Tank in July 2008 to promote public private partnerships to prevent and combat human trafficking.

A broader vision and strategy is needed to tackle the complex and diverse manifestations of forced labor and human trafficking in the supply chain effectively and sustainably. The solution to the fundamental causes of these problems lies beyond the reach of any single company or stakeholder. Broader engagement on a national or industry-wide basis, with peer companies, public policy actors and civil society can help brands and other business actors engage more effectively to root out these problems from their own supply chains and from economies around the world.


For more guidance on engaging stakeholders and public policy actors, review the following tools provided elsewhere in the Toolkit: Encouraging Multi-Stakeholder and Multi-Brand Engagement – A Guide to Public Policy Advocacy

TOOL 2: Developing a Strategy for Corrective Action and Systems Improvement Planning

This tool sets out the steps that brands and their suppliers can take to develop and implement plans to address identified cases of forced labor and human trafficking in the supply chain. These steps are contextualized in the example of “Company ABC” and its approach to remediating issues of passport retention, deposits and forced savings.

The material herein is drawn from Verité’s in-depth training on Problem Solving and Decision-Making for Social Responsibility.


STEP 1: REVIEW ASSESSMENT FINDINGS
The first step to take is to review the findings of a supply chain audit, self-assessment or other form of assessment, taking the most recent one as the starting point, but also considering past assessments of the same supplier. Examine both internal and third party assessments, and identify the key gaps or problems you need to address and where they occur in recruiter or supplier operations, including recruitment, hiring and management of migrant workers. A review of assessment findings may reveal specific problems like passport retention that are likely to affect migrant workers only, or it may reveal bigger problems that affect the whole workforce at the facility.

Company ABC received a fairly good audit report from one of its brand clients, but was told that it immediately had to correct the following company practices:

  1. passport retention
  2. deposits and forced savings

STEP 2: ANALYZE THE PROBLEM
Companies should analyze the identified problems or gaps for root causes that may underlie them. Many non-conformance issues in the supply chain are manifestations or symptoms of larger problems. In addressing compliance violations, it is important to tackle not only the symptom but the root cause as well. Approaches that do not address root causes may prove inadequate, leaving underlying issues unaddressed and resulting in the recurrence of old problems and the creation of new ones.

There are many tools available to help you with systemic analysis, including:

  • Fishbone Diagram (or Cause and Effect Analysis);
  • Force Field Analysis;
  • KATTAR root cause analysis;
  • 5Ws/2Hs (Who, What, Where, When, Why & How Many, How Often);
  • Fault Tree Analysis; and
  • 5 Whys

Company ABC identified several causes for the passport retention issue. It also found that one of these causes – the fear of workers “running away” from the facility – was driven by the threat of government penalties to the facility in the event that migrant workers overstayed their visas. (The facility was the visa sponsor for the migrant workers.) This concern was also found to be the root of the practice of securing deposits and forced savings.


STEP 3: BRAINSTORM POSSIBLE CHANGES AND IMPROVEMENTS TO SOLVE THE PROBLEM
Once it is clear where a problem comes from, brands should act on the most immediate causes, working with their supplier to do so. Many problems have more than one root cause and, in most cases, companies may need to address more than one issue to inspire real change. When brainstorming these improvements, make sure there is a broad cross-section of people involved from different parts of the company and levels of the supply chain, with different perspectives and expertise.


STEP 4: DECIDE ON THE BEST CHANGE AND IMPROVEMENT OPTION OR DECISION ANALYSIS
Issues and decisions like these should be examined at policy, process and task levels to ensure that strategic thinking and decision-making is not only taking place at the operational level. This will ensure that suppliers are addressing problems in a systematic way and not just responding to issues as they occur.

Company ABC arrived at the following solutions:

  1. Cease the practice by suppliers and recruiters of withholding workers’ personal documents.
  2. Return workers’ passports, and provide workers with a lockable safety deposit box where they can keep their passports and other important documents. Put these boxes inside the factory.
  3. Cease the practice of deposits and forced savings.
  4. [To address the concern that migrant workers might “run away” if the facility no longer holds their passports] Improve worker retention by improving worker satisfaction:
    • Conduct worker satisfaction surveys
    • Benchmark practices of other companies for improving worker retention
    • Improve worker communication and feedback systems
      • Identify migrant workers’ concerns by ensuring that they have good access to worker communication and feedback mechanisms
      • Ensure that all grievances from migrant workers are responded to and resolved in a way that is mutually beneficial to management and workers
    • Provide supervisory training on grievance handling, communication, and techniques for positive motivation.

STEP 5: DEVELOP A PLAN FOR IMPLEMENTING THE DECISIONS
Having identified an effective change and improvement option, you should work with your supplier to:

  1. Identify whether policies and procedures need to be developed or revised to support the change;
  2. Identify “change owners” at policy, procedural and task levels;
  3. Discuss a realistic timeframe for implementing the change;
  4. Identify performance indicators to measure effectiveness of the change; and
  5. Revise or design a complementary monitoring mechanism.

STEP 6: ANTICIPATE POTENTIAL PROBLEMS
After articulating the new plan, you should consider identifying:

  1. Potential roadblocks to efficient and effective implementation.
  2. Preventive actions and contingent actions.

STEP 7: SUPPORT IMPLEMENTATION OF THE PLAN


STEP 8: DETERMINE MILESTONES AND MONITORING SCHEDULE

Review the Guide to Corrective Action & Systems Improvement Planning

 


 

Humanity United LogoVerité gratefully acknowledges Humanity United for their generous support on this research and communications initiative.