Bangladesh and Corporate Social Responsibility

In the three weeks since an eight-story garment factory building in Bangladesh collapsed and entombed more than 1,100 workers, there have been lots of media reports about the responsibility of American and European retailers and brand name companies to be more proactive in monitoring and demanding greater safety in the factories that inexpensively produce goods to be sold throughout the world at prices that would be far beyond the reach of the women and men who make them for an average monthly wage of just $37.  

The scramble is on. The scramble to avoid the appearance of insensitivity. Retailers and their brand name suppliers are scrambling to distance themselves from multiple tragedies in Bangladesh and Pakistan, even as worker-advocates press them to force their foreign manufacturers to be more conscious of safety and living wage measures (http://www.nytimes.com/2013/05/11/business/global/clothing-retailers-pressed-on-bangladesh-factory-safety.html?ref=business&_r=0). 

They don’t want their good names sullied by horrific misfortunes half a world away. Yet, like our politicians who often kick the can down the road rather than tackle controversial issues such as social security or tax reform, the retail community rarely takes decisive action. My 30-plus years covering the industry, reinforced by my reporter’s sensibilities, make me a cynic. Sadly, my feelings can be summed up by the last paragraph in The NY Times story linked above: 

“Kellie A. McElhaney, an expert on corporate social responsibility at the Haas School of Business at the University of California, Berkeley, predicted that these pressures would hardly sway the companies. ‘They are feeling a lot of pressure, but it’s not coming from consumers. It’s coming from N.G.O.’s,’ she said, referring to nongovernment organizations. ‘They’re not feeling it in the marketplace. I believe they’re going to do the bare minimum. The N.G.O.’s need to make more consumers aware of this.’”  

Here’s why I’m a cynic: Perhaps 10 to 15 years ago my magazine co-produced a conference called Making It Right. We worked with several corporate social responsibility NGOs to raise awareness about the sordid conditions many foreign workers were forced to toil under as they prepared apparel, sporting goods and other products Americans eagerly consumed because they were less expensive than they would be if U.S. workers produced them, or if higher wages were provided to the populations in Sri Lanka, Pakistan, Bangladesh, Vietnam, China or any of the other Third World countries exploited for their cheap labor. Meeting at the Tenement Museum on Manhattan’s Lower East Side to plan the event, our conference advisory board had representatives from Gap, J.C. Penney and other retailers. Held at the Grand Hyatt Hotel in New York City, the conference attracted several hundred industry attendees. It was a thematic success, but little of any progress was made.

My takeaway from that conference was that price was the overwhelming driving force behind corporate decisions where sourcing would originate. For a few scant pennies per item, manufacturing contracts would shift from one country to another. Bangladesh became the second largest apparel producer in the world, behind China. If tragedies persist, and they surely will, the result most likely will not be safer standards or higher wages in that impoverished country. Rather, the people of Bangladesh, who rely on the garment industry for much of their economy, will be hurt by the desertion of apparel contracts as retailers and brand name companies migrate production to countries with low wages and labor conditions not (yet) under the media spotlight.

Though there have been some reports consumers are becoming more conscious of where and how their purchases are produced, I’m not optimistic there will be a tidal wave of change. I don’t profess to be any better than the next person. I’d rather spend less on everything I buy, assuming the quality is comparable. But I do believe retailers, especially large companies like H&M, Wal-Mart, Target, Nike, Gap, and their important suppliers, such as Ralph Lauren and Calvin Klein, can demand more accountability from their overseas factories, even to the point where they underwrite safety improvements. The few pennies more each of us in America and Europe would pay to prevent catastrophes would hardly impact our way of life. But it would go a long way into assuring a better life, maybe even continued life, for those faceless workers who make our lives easier and more fashionable.

   

A Sense of Higher Purpose

Among the most e-mailed recent articles listed by The NY Times was a piece on Apple’s store employees titled, “Apple’s Retail Army, Long on Loyalty but Short on Pay” ( http://www.nytimes.com/2012/06/24/business/apple-store-workers-loyal-but-short-on-pay.html?_r=1). 

As someone who covered retailing for more than three decades, I learned very little from the extensive reporting. It was not news to me that Apple, like most retailers, pays its store staff little more than minimum wage despite counting on them to rack up among the highest, if not the highest, sales per square foot among chain store retailers. 

Buried deep in the article was the following paragraph which explains to a large degree why Apple can get away with low hourly wages: “The phrase that trainees hear time and again, which echoes once they arrive at the stores, is ‘enriching people’s lives.’ The idea is to instill in employees the notion that they are doing something far grander than just selling or fixing products. If there is a secret to Apple’s sauce, this is it: the company ennobles employees. It understands that a lot of people will forgo money if they have a sense of higher purpose.”

That last sentence—”It understands that a lot of people will forgo money if they have a sense of higher purpose”—really got me. It brought me back several decades to a presentation by then CEO and founder of Crate & Barrel Gordon Segal. Asked by a Wall Street investment analyst to explain the success of his home furnishings chain, Segal attributed much of it to the dedication of store associates, men and women often with a degree in art or design or teaching. They had a talent for connecting with people and for feeling good about their work. That transcendent feeling, Segal said, allowed Crate & Barrel to keep salaries low because the staff received inner fulfillment from their work in lieu of demanding higher wages.

That’s the same management philosophy that for years buttressed the belief that public employees—firemen, police, social workers, sanitation workers, teachers, nurses, even the military—could be hired at low starting salaries. The tradeoff many of these workers, and government officials, accepted was better health care and retirement benefits. Now slash and burn governors, mayors and their legislative henchmen are trying to balance the books on the backs of government workers. 

Sure, there were and are some malingerers among them. What industry doesn’t have its share of goof-offs and people who take advantage of the system? But do we seriously believe teachers are not among the most important members of society and thus should be valued and paid appropriately? Does anyone seriously want to haul trash—even if it’s just their own trash— in the frigid dead of winter or the blazing hot summer? How about running into a burning building to save someone who might not even be inside the inferno, but firemen go in anyway because a family member or friend suspects a loved one is inside? How many of us are ready and willing to put our lives on the line each time we don a uniform to protect our cities or to safeguard our nation from attack in foreign lands? 

Perhaps what we need is a little more introspection about the good government workers bring to our standard of living.