Connecting productivity to corporate social responsibility

July 25, 2007


Amy Wong, in an article for China Business Review (www.chinabusinessreview.com), suggests western buyers to rethink their auditing approach to support corporate social responsibility amongst their Chinese supply chain. Her articles advocates for those efforts focused “on tracing the root cause of [labor standards] violations to core business processes and management systems that may be absent or weak, rather than on simply identifying checklist of violations. For example, if a factory has poor quality control, it will likely have a high rate of defective products, requiring workers to spend extra time to remanufacture or repair the defective units. Moreover, if the factory must ship the order on a tight deadline, its employees may need to work overtime beyond what is legally permitted. But those workers may not receive overtime pay because the only way for the factory owner to make a profit is to withhold the extra compensation. This example shows that excessive overtime and wage arrears, two common violations reported by auditors, can result from poor quality control, a core business process”.

Amongst the initiatives that have pioneered this approach in China is Impactt’s Overtime Project (www.impacttlimited.com), the Factory Improvement Training 5 program of TUV Rheinland Group (www.tuv.com), BSR’s China Training Initiative (www.bsr.org) and the Global Suppliers Institute Program of the Kenan Institue (www.kenan-flagler.unc.edu).