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The April 2013 collapse of the Rana Plaza building in Dhaka, Bangladesh, in which 1,129 garment workers died is being called the worst industrial disaster in the country’s history.
In fact, Bangladesh is no stranger to workplace tragedies. In November 2012 more than 100 workers died when a fire broke out in a Tazreen Fashions factory on the outskirts of Dhaka. More than 1,000 workers have been killed and 3,000-odd injured in as many as 275 factory accidents between 1990 and 2012.
Most of these accidents have occurred in Bangladesh’s booming garment factories, which manufacture clothes for leading international brands including H&M, Esprit, Gap and Wal-Mart. Safety advocates and labor unions claimed that lack of worker representation, inadequate industry oversight and government inaction led to the extremely dangerous working conditions.
An international outcry has since led to calls for action from the governments of Bangladesh and the U.S., the European Union and global retail companies.
On July 15, 2013, the Bangladeshi parliament approved legislation aimed at strengthening employees’ rights and improving workplace safety. Meanwhile, nearly 100 U.S. and European retailers that contract with Bangladeshi factories announced they would improve working conditions in Bangladesh over the next five years—perhaps setting a precedent in supply chain management—including adopting a collective workplace safety standard and auditing plan, allowing independent building and fire-safety inspections, publishing inspection reports, creating worker-led health and safety committees, and providing commitments that the brands profiting from the industry will pay for building renovations .
Not one but two supply-chain-safety plans have been initiated to improve working conditions in Bangladesh. On July 8, 2013, the Accord for Fire and Building Safety in Bangladesh announced a five-year implementation plan signed by 81 mostly European retailers.
Then, two days later, the Alliance for Bangladesh Worker Safety, made up of American brands and led by Wal-Mart and the Gap, was announced. Together, the plans encompass financial commitments of almost $250 million, plus up to another $100 million in low-cost loans to help pay for building upgrades.
The Accord on Fire and Building Safety in Bangladesh
The signatories to the accord agreed to establish a fire-and-building-safety program in Bangladesh for five years. Participating brands are mostly European, such as Benetton, H&M and Esprit, but there are U.S. companies as well, including Abercrombie and Fitch, Sean John and Phillips-Van Heusen (owner of the Calvin Klein, Izod, Arrow and Tommy Hilfiger brands).
Overseen by the International Labour Organization (ILO) to ensure it gets implemented, the accord is based on a multistakeholder model and involves representatives from the companies and unions.
“This historic, legally binding accord will effect tangible change on the ground and help make the Bangladeshi garment industry safe and sustainable,” Jyrki Raina, general secretary of global union IndustriALL, said in a statement. The union represents 50 million workers in 140 countries and was a signatory to the accord.
“Voluntary initiatives have proved insufficient,” Raina said. “A profound change is possible only with a strong coalition between trade unions, international brands and retailers, Bangladeshi authorities and employers, and with worker involvement in the workplace with guaranteed freedom of association.”
The accord is a welcome move, agreed Rashmi Venkatesan, a worker-safety advocate based in Bangalore, India. “It is time that the buyers took some serious steps to mitigate human rights risks in their supply chains. Companies need to be proactive and do more to prevent accidents by investing in better working conditions instead of waiting for another large-scale disaster to occur.”
“One problem with the impact of the accord is its limitation only to the signatory companies and their suppliers,” she noted. “Factories producing for the growing domestic market or for lesser-known local and regional retailers will not benefit.”
Wal-Mart, Gap Launch Independent Plan
Facing criticism for refusing to join the Accord on Fire and Building Safety, 20 North American apparel retailers and brands have joined together as the Alliance for Bangladesh Worker Safety to develop and launch the Bangladesh Worker Safety Initiative, a binding five-year undertaking with the stated intent of improving safety in Bangladeshi garment factories.
Collectively, the alliance represents a majority of North American imports of ready-made garments from Bangladesh, produced at more than 500 factories.
The group includes The Children’s Place, the Gap, Hudson’s Bay Co., J.C. Penney, Kohl’s Department Stores, L. L. Bean, Macy’s, Nordstrom, Sears, Target and Wal-Mart.
The alliance is supported by the American Apparel & Footwear Association, Canadian Apparel Federation, National Retail Federation, Retail Council of Canada, Retail Industry Leaders Association and United States Association of Importers of Textiles & Apparel.
Elements of the group’s plan include:
The alliance is also making a financial commitment, “including an initial worker safety fund, currently $42 million and growing, and the additional availability of over $100 million in access to low-cost capital funding to improve fire and structural safety in Bangladeshi factories,” the alliance said.
Backers of the Accord on Fire and Building Safety in Bangladesh swiftly criticized the alliance’s plan as weak on sanctions for noncompliance, crafted without worker involvement and “another company-controlled audit scheme like those which have failed in the past.”
IndustriALL Global Union’s Raina said: “The Accord on Fire and Building Safety signed between global unions, more than 80 global fashion brands and NGOs provides assurance through a legally binding process that the commitments to inspect and improve garment factories will be carried out. This is the highest possible standard and one the Wal-Mart/Gap initiative should be seeking to replicate. Instead what it provides is a pale imitation in terms of commitment and transparency.”
Critics point out that the alliance plan does not extend the right of workers to refuse dangerous work and does not require brands and retailers to pay for improvements.
Both plans are strong, said Wal-Mart Senior Vice President and Global Chief Compliance Officer Jay Jorgensen in a July 10, 2013, statement.
“The next step is for all of us to work together—in collaboration with government, factory owners and NGOs—to change [and] increase safety and improve the quality of life of the women and men in our supply chains whom we depend on to make our products.”
There are flaws in both plans, Venkatesan contends. “And their competing nature makes implementation all the more challenging. But they are an important step forward for workers in Bangladesh.”
The State’s Duty to Protect
The Bangladesh government has been under intense international pressure to overhaul labor safety laws in the wake of the recent tragedies.
On June 27, 2013, President Barack Obama announced his decision to suspend Bangladesh’s trade benefits with the U.S. in view of its government’s insufficient progress toward affording Bangladeshi workers internationally recognized worker rights. The European Union threatened to revoke Bangladesh’s trade privileges, as well.
The U.S. Bureau of International Labor Affairs announced that the U.S. would pursue additional concrete actions, “such as increasing sanctions for labor violations sufficient to deter future misconduct, publicly reporting on the outcome of union-registration applications, establishing an effective complaint mechanism for labor violations, and ending violence and harassment of labor activists and unions.”
On July 15, 2013, three weeks after their nation lost trade privileges with the U.S., Bangladeshi lawmakers amended the country’s labor law. According to reports, under the new law, permit requirements to add floors to factories will be strengthened, workers will no longer need approval from factory owners to form trade unions, and insurance will be mandatory.
And owing to recent fires that killed workers who were unable to flee, it will be illegal to padlock factory exit doors.
The role of the state in preventing fire and safety accidents is critical and irreplaceable, said Venkatesan. “There are only about 52 factory inspectors to oversee more than 26,000 registered factories across the country,” she said. “While the companies have a vital role to play in improving working conditions in the sector, industry-driven mechanisms have serious inherent limitations. Laws and their implementation need to be strengthened to ensure workplace safety and prevent industrial accidents.”
Accidents of this nature, however, go beyond the garment sector and expose the shoddy implementation of building laws and safety regulations in general, she said. “The government has to be accountable to all its citizens. This is not a problem peculiar to Bangladesh. Similar accidents are sadly common in the entire region, including India.”
What Can HR Do About It?
Traditionally, risk management has been the stronghold of risk managers. However, when it comes to people risks, HR can play a significant role in their identification and mitigation, said Sally Evans, research manager with Aon Hewitt’s regional performance, reward and talent team based in Singapore.
“Providing insight into potentially unscrupulous employment practices and inadequate health and safety standards would enable the organization and supply chain directors to facilitate sustainable change to poor labor conditions in low-wage countries,” she said.
Evans noted that companies could take broad swipes at the issue, such as halting production and withdrawing operations or prohibiting suppliers from outsourcing to third parties.
But HR’s action role of “identifying, prioritizing and working to mitigate people risks could improve working standards, fairness and safety” for those employees working in unsafe conditions, she said.
“Most American multinationals are attempting to install the concepts of safety in the workplace, whether it’s in their domestic or overseas operations,” observed Ron Pilenzo, president and CEO of The Global HR Consultancy, based in Hobe Sound, Fla., and former president of the Society for Human Resource Management. And the safety function in many companies is an inherent responsibility of the HR function because of its integrated human factors component, he said.
“Safety should be considered an integral part of an MNC’s supply chain process that includes safety inspections and programs of both a physical plant but also the plants, offices and other operations of suppliers, vendors and others who provide products or services to or for an MNC.” The governments of these foreign countries often hold the multinational corporation responsible, regardless of whether or not it’s guilty, he said.
“Organizations operating and sourcing in emerging markets need to have culturally competent auditors visit the locations multiple times,” advised Neal Goodman, president of international HR consultancy Global Dynamics. Building trust and positive working relationships is critical for success, he said. “When audits are done in a foreign culture, much of the reality is hidden due to cultural and linguistic differences and misunderstandings, plus possible intentional misrepresentations. We have trained many auditors who work globally, and they are always very appreciative of how their new skills allow them to ‘see’ things that they were missing, build better relationships and trust with their local counterparts, and do their jobs more effectively with more valid results.”
Among all companies there should be an inherent sense of responsibility for the well-being of employees. The reasons for this are many: worker safety, program costs, instilling a corporate safety culture, and installing programs that will protect company assets and an organization’s bottom line, Pilenzo said. “One terrible accident may result in the permanent or temporary closing of an important facility responsible for generating significant profits. Consider the fact that the bottom line can be seriously impacted by the lack of a safety-conscious culture as well as specific safety programs generated by a forward-looking HR function.”
Roy Maurer is an online editor/manager for SHRM.
Follow him on Twitter @SHRMRoy.
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