The Role of IHRM in The Role of IHRM in Cross-Cultural Ethnical Cross-Cultural Ethnical Issues and Corporate Issues and Corporate Social ResponsibilitySocial Responsibility

Group Members:Group Members:QQiuyi Huang, Shaorong Liao, Juan iuyi Huang, Shaorong Liao, Juan

Kwang Li, Kwang Li, Wen Qiao Li, Yuen KwunWen Qiao Li, Yuen Kwun

Yuen Kwun Wong (Joyce.W)Yuen Kwun Wong (Joyce.W) -- Profile of U.S.A. China and Thailand-- Profile of U.S.A. China and Thailand -- Nike Overview of in the U.S.A. and Asian Pacific Region -- Nike Overview of in the U.S.A. and Asian Pacific Region

Shaorong Liao (Michelle)Shaorong Liao (Michelle) --Subcontracting in IHRM and related issues--Subcontracting in IHRM and related issues --Nike business standard --Nike business standard -- Critiques-- Critiques

Juan Kwang Li (Joyce.K)Juan Kwang Li (Joyce.K) --Case study: Yu Yuen factory in China--Case study: Yu Yuen factory in China

Qiuyi Huang (Ivy)Qiuyi Huang (Ivy) --Case study: MSP Sportswear in Thailand--Case study: MSP Sportswear in Thailand

Wen Qiao Li (Lily) Wen Qiao Li (Lily) --Recommendation --Recommendation --Conclusion --Conclusion

U.S.A. Profile (PCN)U.S.A. Profile (PCN)

U.S.A. Profile (PCN)U.S.A. Profile (PCN)

Government Type:Government Type: Constitution-Based Constitution-Based Federal RepublicFederal Republic

Political Parties:Political Parties: Democratic Party, Democratic Party, Republican PartyRepublican Party

President: President: George W. BushGeorge W. Bush

(Central Intelligence (Central Intelligence

Agency)Agency)

U.S.A. ProfileU.S.A. Profile

Labor Force:Labor Force: 147.4 Million147.4 Million

GDP Purchasing Power Parity GDP Purchasing Power Parity - $40,100- $40,100

Investment (gross fixed):Investment (gross fixed): 15.7% of GDP15.7% of GDP Export: Export: 795 Billion795 Billion Import:Import: 1.476 Trillion1.476 Trillion

(Central (Central Intelligence Agency)Intelligence Agency)

U.S. A. Business SectorU.S. A. Business Sector

0

10

20

30

40

50

60

70

80

Service79.4%

Industry19.7%

Agriculture0.9%

U.S.A.

(Central Intelligence Agency)

U.S. A. Profile U.S. A. Profile (cont.)(cont.)

Literacy rate: 97% Literacy rate: 97% Long-term problems Long-term problems

-- High medical and pension cost-- High medical and pension cost

-- Trade and budget deficits -- Trade and budget deficits

(Central Intelligence (Central Intelligence Agency)Agency)

China ProfileChina Profile

Culture Description in Culture Description in ChinaChina

Important Business Concept :Important Business Concept : “ “GuanXiGuanXi” = Relationship” = Relationship ““GuanXiGuanXi” definition:” definition:

Networking of relationships among Networking of relationships among various parties that cooperate together various parties that cooperate together and support one another and support one another

(Export Information (Export Information

Organization)Organization)

Culture Description in Culture Description in China China (cont.)(cont.)

““GuanXi”GuanXi” in Chinese culture in Chinese culture -- Legalized-- Legalized

-- Not relate to bribery-- Not relate to bribery

-- Quotation: “Connections are more -- Quotation: “Connections are more important than strategy for a company to important than strategy for a company to succeed in Asia”succeed in Asia”

(Export Information (Export Information organization)organization)

Social Description In Social Description In China China (cont.)(cont.)

PopulationPopulation

--1.3 Billion --1.3 Billion Literacy RateLiteracy Rate:: 86% 86% Problem: Drug Abuse, Problem: Drug Abuse,

Corruption ,Violation of Property Corruption ,Violation of Property Rights and PollutionRights and Pollution

(Central Intelligence (Central Intelligence Agency)Agency)

Economic Description In Economic Description In ChinaChina

Labor Force: Labor Force: 778.1 Million778.1 Million GDP:GDP:

---- Real Growth Rate: 9.1% Real Growth Rate: 9.1%

-- Per Capita: Purchasing Power Parity - -- Per Capita: Purchasing Power Parity - $5,600 $5,600

Investment (gross fixed): Investment (gross fixed): 46% of GDP46% of GDP Exports: Exports: 194.7 Billion194.7 Billion Imports: Imports: 158.8 Billion158.8 Billion

(Central Intelligence Agency)(Central Intelligence Agency)

Business Sector in ChinaBusiness Sector in China

05

101520253035404550

Agriculture49%

Service 29%

Industry22%

China

(Central Intelligence Agency)

Political Description In Political Description In ChinaChina

Government type: Government type: CommunismCommunism Political parties:Political parties: Chinese Communist Chinese Communist

Party, 66.35 million members; 8 minor Party, 66.35 million members; 8 minor parties under communist supervisionparties under communist supervision

President: President: Hu Jin TaoHu Jin Tao

(Central (Central Intelligence Agency)Intelligence Agency)

Important Recent Important Recent Changes in ChinaChanges in China

1989: Student Movement in Tiananmen 1989: Student Movement in Tiananmen Square Square

2001: Joined the World Trade 2001: Joined the World Trade OrganizationOrganization

2003: General Secretary 2003: General Secretary Hu Jin TaoHu Jin Tao was was elected as President elected as President

(Bureau of East Asian and Pacific Affairs)(Bureau of East Asian and Pacific Affairs)

Challenges to the Chinese Challenges to the Chinese Expatriate and IHRMExpatriate and IHRM

CorruptionCorruption Intellectual Property RightsIntellectual Property Rights CrimesCrimes

(Bureau of East Asian and (Bureau of East Asian and Pacific Affairs)Pacific Affairs)

Thailand ProfileThailand Profile

Culture Description In Culture Description In ThailandThailand

Important Business Concept:Important Business Concept: Cooperate StructureCooperate Structure

-- Powerful connection is respected-- Powerful connection is respected

-- Family comes first before business-- Family comes first before business

Ex: Top management is often familyEx: Top management is often family

(FGI (FGI world)world)

Social Description In Social Description In ThailandThailand

Population:Population: 65,444,37165,444,371 Literacy rate:Literacy rate: 97.1% Male, 93.9% 97.1% Male, 93.9%

FemaleFemale Problem:Problem: AIDSAIDS

(Central Intelligence (Central Intelligence

Agency)Agency)

Economic Description In Economic Description In ThailandThailand

Labor Force: Labor Force: 34.9 Million 34.9 Million GDPGDP -- Real Growth Rate: 6.1% -- Real Growth Rate: 6.1% -- Per Capita: Purchasing Power Parity - $ -- Per Capita: Purchasing Power Parity - $

8,100 8,100 Investment (gross fixed)Investment (gross fixed) --22.5% of GDP--22.5% of GDP Export:Export: 75.99 Billion 75.99 Billion Import:Import: 65.3 Billion 65.3 Billion (Central (Central

Intelligence Agency)Intelligence Agency)

Business Sectors In Business Sectors In ThailandThailand

05

101520253035404550

Service 46.7% Industry 44.3% Agriculture 9%

Thailand

(Central Intelligence Agency)

Political Description In Political Description In ThailandThailand

Government type: CGovernment type: Constitutional onstitutional monarchymonarchy

Political parties: Political parties: Multi-party system and Multi-party system and Communist Party is prohibitedCommunist Party is prohibited

Executive-king: Executive-king: Phumiphon AdunyadetPhumiphon Adunyadet

(Central Intelligence (Central Intelligence Agency)Agency)

Important Changes in Important Changes in Thailand Recent HistoryThailand Recent History

1988: 1988: Chatichai ChoonavanChatichai Choonavan, the leader of , the leader of the Thai Nation Party (democratic party) the Thai Nation Party (democratic party) was first elected as prime minister was first elected as prime minister

1996: Chuan formed a coalition 1996: Chuan formed a coalition governmentgovernment

2001: Telecommunications 2001: Telecommunications multimillionaire Thaksin Shinawatra and multimillionaire Thaksin Shinawatra and his Thai Rak Thai (TRT) party won victory his Thai Rak Thai (TRT) party won victory on platform of economic growth and on platform of economic growth and development. development.

(Bureau of East Asian and Pacific Affairs)(Bureau of East Asian and Pacific Affairs)

Challenges to the Challenges to the Expatriate and IHRM In Expatriate and IHRM In

ThailandThailand Language BarriersLanguage Barriers Religion IssueReligion Issue Thai People Are Not OrganizedThai People Are Not Organized Strict CustomStrict Custom

(FGI (FGI

World)World)

Culture Gap Between U.S.A. Culture Gap Between U.S.A. (PCN) and China & (PCN) and China &

Thailand (HCN)Thailand (HCN)

 

IndividualiIndividualismsm

Power Power DistanceDistance

UncertaintUncertainty y AvoidanceAvoidance

AssertivenesAssertivenesss

Long-Long-Term Term OrientatiOrientationon

United United StatesStates 9191 4040 4646 6262 2929ChinaChina 2525 7070 8585 3939 118118ThailandThailand 2020 6464 6464 3434 5656

(FGI World)

Nike In The U.S.A.Nike In The U.S.A.

Contract FactoryContract Factory

----109 apparel contract factories109 apparel contract factories

--12 equipment contract factories--12 equipment contract factories 14% of Nike apparel was made in the 14% of Nike apparel was made in the

U.S. Cole Haan,U.S. Cole Haan, Hurley and Converse Hurley and Converse are subsidiaries in us region.are subsidiaries in us region.

Store: Store: More than 80 storesMore than 80 stores

(Nike)(Nike)

Asia Pacific Region Of Asia Pacific Region Of NikeNike

Employees: Employees: 3,000 3,000 First First subcontracted factories are in subcontracted factories are in

Taiwan and Korea (1977)Taiwan and Korea (1977) Nike Office: Nike Office: Australia, China, Hong Kong, Australia, China, Hong Kong,

Japan, Korea, New Zealand, Southeast Asia Japan, Korea, New Zealand, Southeast Asia (Singapore, Malaysia, Philippines, Thailand), (Singapore, Malaysia, Philippines, Thailand), and Taiwan. and Taiwan.

Factory: Factory: 150 150

(Nike)(Nike)

Subcontracting In IHRMSubcontracting In IHRM

Implementations on monitoring Implementations on monitoring subcontractorsubcontractor

--Assign expatriate staff in host country--Assign expatriate staff in host country

--Hire country-based investigator to monitor --Hire country-based investigator to monitor implementation of the company’s code of implementation of the company’s code of conductconduct

--Use inspector from the company headquarter--Use inspector from the company headquarter

(IHRM, 2005)(IHRM, 2005)

Nike Code of ConductNike Code of Conduct

Management practices that respect the Management practices that respect the rights of all employees, including the right rights of all employees, including the right to free association and collective to free association and collective bargainingbargaining

Minimizing our impact on the Minimizing our impact on the environmentenvironment

Providing a safe and healthy work placeProviding a safe and healthy work place Promoting the health and well-being of all Promoting the health and well-being of all

employeesemployees(Nike)(Nike)

Specific Standard Of Specific Standard Of ConductConduct

Forced LaborForced Labor Child LaborChild Labor CompensationCompensation BenefitsBenefits Hours of Work/OvertimeHours of Work/Overtime Environment, Safety and HealthEnvironment, Safety and Health Documentation and InspectionDocumentation and Inspection

(Nike)(Nike)

Specific Standard Of Specific Standard Of Conduct Conduct (cont.)(cont.)

CompensationCompensation --Provide at least the minimum wage or --Provide at least the minimum wage or

the prevailing industry wage, whichever is the prevailing industry wage, whichever is higherhigher

--Provide each employee a clear, written --Provide each employee a clear, written account for ever pay periodaccount for ever pay period

--Eliminate deduction on employee pay --Eliminate deduction on employee pay for disciplinary infractionsfor disciplinary infractions

(Nike)(Nike)

Specific Standard Of Specific Standard Of Conduct Conduct (cont.)(cont.)

Hours of Work/OvertimeHours of Work/Overtime --Comply with legally mandated work hours--Comply with legally mandated work hours --Compensate overtime fully according to --Compensate overtime fully according to

local lawlocal law --Inform employee if mandatory overtime is a --Inform employee if mandatory overtime is a

condition of employment at the time of hiringcondition of employment at the time of hiring --Provide one day off in seven, no more then --Provide one day off in seven, no more then

60 hours per week, or complies with local 60 hours per week, or complies with local limits if they are lowerlimits if they are lower

(Nike)(Nike)

Subcontracting Issues in Subcontracting Issues in IHRMIHRM

Not enough implementation on Not enough implementation on monitoringmonitoring

Local buying agents and quality control Local buying agents and quality control representatives to do the monitoringrepresentatives to do the monitoring

The code of conduct is not really being The code of conduct is not really being enforced by the subcontractorsenforced by the subcontractors

--Subcontractors would further subcontract to --Subcontractors would further subcontract to other local firms other local firms

--The foreign-owned contractor and its --The foreign-owned contractor and its expatriates impose their own work practices expatriates impose their own work practices upon the host country workforceupon the host country workforce

(IHRM, 2005)(IHRM, 2005)

Subcontractor in South Subcontractor in South ChinaChina

Yue Yuen Industrial Holdings Co. Yue Yuen Industrial Holdings Co. Ltd.Ltd.

--Locates in Dongguan--Locates in Dongguan --Established in 1989--Established in 1989 --Belongs to the Taiwanese shoe company, --Belongs to the Taiwanese shoe company,

Pao Chen CooperativePao Chen Cooperative --Produces for Nike, Reebok, Adidas, --Produces for Nike, Reebok, Adidas,

Clarks and new BalanceClarks and new Balance --Employs total 140,000 workers and --Employs total 140,000 workers and

12,000 are producing for Nike12,000 are producing for Nike

(China (China Labor Watch)Labor Watch)

Nike’s Nike’s Subcontractor in Subcontractor in

ChinaChina

Yue Yuen Shoes FactoryYue Yuen Shoes Factory

A giant shoe manufacturer branch under A giant shoe manufacturer branch under BaoCheng GroupBaoCheng Group

A giant shoe manufacturer branch under A giant shoe manufacturer branch under BaoCheng GroupBaoCheng Group

Location: Gaobu Town, Dongguan City, Location: Gaobu Town, Dongguan City, Guangdong Province, ChinaGuangdong Province, China

Labor Force:12,000 workersLabor Force:12,000 workers

Ethnical Issues in Yue Ethnical Issues in Yue Yuen FactoryYuen Factory

ContractContract DiscriminationDiscrimination Work hours & OvertimeWork hours & Overtime CompensationCompensation

DiscriminationDiscrimination

Since 1999, the factory has adopted a Since 1999, the factory has adopted a policy of mainly employing female policy of mainly employing female workersworkers

The factory only employs female workers The factory only employs female workers aged from 18 to 25. aged from 18 to 25.

Male workers are only employed with the Male workers are only employed with the specific approval of section managers; specific approval of section managers; Ratio: 1 of 15Ratio: 1 of 15

Why is discrimination an Why is discrimination an issue?issue?

China’s Labor Law: China’s Labor Law: Laborers shall not be Laborers shall not be discriminated against in employment due to discriminated against in employment due to their nationality, race, sex, or religious belief. their nationality, race, sex, or religious belief.

(China Labor Law, Ch.2, Article (China Labor Law, Ch.2, Article 12)12)

Nike’s Code of Conduct:Nike’s Code of Conduct: There shall be There shall be no discrimination based on race, creed, no discrimination based on race, creed, gender, marital or maternity status or political gender, marital or maternity status or political beliefs, age or sexual orientation.beliefs, age or sexual orientation.

(Nike)(Nike)

Contract Contract

Nike’s Code of ConductNike’s Code of Conduct: N/A: N/A China’s Labor LawsChina’s Labor Laws: :

An employees’ probation period should An employees’ probation period should not exceed six months. Moreover, if a not exceed six months. Moreover, if a worker accumulates ten years service worker accumulates ten years service at his or her place of employment, the at his or her place of employment, the employer is obliged to sign a long-term employer is obliged to sign a long-term contract with the employer contract with the employer

(China Labor Laws,(China Labor Laws, Ch.3, article 20) Ch.3, article 20)

Contract Contract (Cont.)(Cont.)

China’s Labor LawsChina’s Labor Laws: : The draft collective contract shall be The draft collective contract shall be

submitted to the workers representative submitted to the workers representative assembly or all the employees for assembly or all the employees for discussion and passage. Collective discussion and passage. Collective contracts shall be signed by and between contracts shall be signed by and between the labor union on behalf of the the labor union on behalf of the employees and the employer.employees and the employer.

(China Labor Laws, Ch.3, (China Labor Laws, Ch.3,

article 33)article 33)

Why is contract an issue? Why is contract an issue?

Only “group leaders” sign the collective Only “group leaders” sign the collective contracts in the name of the workerscontracts in the name of the workers

The workers never see the contract and The workers never see the contract and not aware of the details of the contractnot aware of the details of the contract

Many workers have been working at the Many workers have been working at the factory for over ten years, but remain factory for over ten years, but remain employed on annual basicemployed on annual basic

Work Hours & Overtime Work Hours & Overtime

Through its private connections, the Through its private connections, the factory was granted permission by factory was granted permission by Dongguan Labor Department to have the Dongguan Labor Department to have the workers work as many as 82 hours of workers work as many as 82 hours of overtime.overtime.

Workers have to work 8 hours on Workers have to work 8 hours on Saturdays, the legal rest days.Saturdays, the legal rest days.

Work Hours & Overtime Work Hours & Overtime (Cont.)(Cont.)

7:30 to 11:30a.m. Working7:30 to 11:30a.m. Working 11:30 to 1:00p.m. Lunch11:30 to 1:00p.m. Lunch 1:00 to 5:00p.m. Working1:00 to 5:00p.m. Working 5:00 to 6:00p.m. Dinner5:00 to 6:00p.m. Dinner 6:00 to 8:30p.m. Overtime6:00 to 8:30p.m. Overtime

Work hrs: 10.5 hrs/day (M-F)Work hrs: 10.5 hrs/day (M-F)

Saturday: 8 hrs/day overtimeSaturday: 8 hrs/day overtime

Total: 60.5 hrs/wk; 242 Total: 60.5 hrs/wk; 242 hrs/mo.hrs/mo.

(China Labor Watch)(China Labor Watch)

Why is working hours an Why is working hours an issues? issues?

Nike’s Code of Conduct:Nike’s Code of Conduct: The contractor The contractor complies with legally mandated work hours; complies with legally mandated work hours; No more than 60 hours of work per week on a No more than 60 hours of work per week on a regularly scheduled basis, or complies with regularly scheduled basis, or complies with local limits if they are lower.local limits if they are lower.

(Nike)(Nike)

China’s Labor law:China’s Labor law: The state shall practice a The state shall practice a working hour system wherein laborers shall working hour system wherein laborers shall work for no more than eight hours a day and work for no more than eight hours a day and no more than 44 hours a week. The work time no more than 44 hours a week. The work time to be prolonged shall not exceed, however, 36 to be prolonged shall not exceed, however, 36 hours a month.hours a month.

(China’s Labor Laws, Ch.4, article 36 & (China’s Labor Laws, Ch.4, article 36 & 41)41)

Compensation Compensation

Nike’s Code of ConductNike’s Code of Conduct: The contractor : The contractor provides each employee at least the minimum provides each employee at least the minimum wage, or the prevailing industry wage, which wage, or the prevailing industry wage, which is higher.is higher.

(Nike)(Nike)

China’s Labor Law: China’s Labor Law: The employer shall The employer shall pay laborers wages no lower than local pay laborers wages no lower than local standards on minimum wages.standards on minimum wages. (Dongguan:RMB 450/mo.)(Dongguan:RMB 450/mo.)

(China’s(China’s Labor Laws, Ch.5, Article 48) Labor Laws, Ch.5, Article 48)

Compensation Compensation (Cont.)(Cont.)

No less than 150 per cent of their wages if No less than 150 per cent of their wages if the laborers are asked to work longer hours the laborers are asked to work longer hours

No less than 200 per cent of their wages if No less than 200 per cent of their wages if no rest can be arranged afterwards for the no rest can be arranged afterwards for the laborers asked to work on days of rest laborers asked to work on days of rest

No less than 300 per cent of their wages if No less than 300 per cent of their wages if the laborers are asked to work on legal the laborers are asked to work on legal holidaysholidays

(China’s Labor Laws, Ch.5, Article 44 )(China’s Labor Laws, Ch.5, Article 44 )

Why is compensation an Why is compensation an issue? issue?

Reality:Reality: Monthly wage RMB 512/mo. Monthly wage RMB 512/mo. Including overtime paid (U.S. $62.4)Including overtime paid (U.S. $62.4)

Should:Should:

Monthly minimal: $54.8/mo.Monthly minimal: $54.8/mo.

Weekdays overtime:$23.50/mo.Weekdays overtime:$23.50/mo.

Saturdays overtime: $19.84/mo.Saturdays overtime: $19.84/mo.

Total minimum wage: $98.14/mo.Total minimum wage: $98.14/mo.

(China Labor Watch)(China Labor Watch)

The FactThe Fact

Assume one pair of Nike Jordan sells for Assume one pair of Nike Jordan sells for $130…. How much money goes to the $130…. How much money goes to the workers who made the shoes?workers who made the shoes?

Answer: $1.5Answer: $1.5

(China Labor (China Labor Watch)Watch)

Nike Subcontractor in Nike Subcontractor in ThailandThailand

MSP Sportswear Co, Ltd.MSP Sportswear Co, Ltd.

-- Locating in Huatalea Moung, -- Locating in Huatalea Moung, NakornrachaseamaNakornrachaseama

-- Managing by the Austrian director-- Managing by the Austrian director

Nike Subcontractor In Nike Subcontractor In ThailandThailand

Owner: Owner: Mr. Peter KrautlerMr. Peter Krautler Location: Location: Huatalea NakornrachaseamaHuatalea Nakornrachaseama

Why Forming an Union?Why Forming an Union? Increasing quota without increasing payIncreasing quota without increasing pay Compulsory overtimeCompulsory overtime Poor quality of drinking waterPoor quality of drinking water Verbal abuse and body searchesVerbal abuse and body searches Forming an union on 9 November 2003Forming an union on 9 November 2003

History of Union History of Union Organizers’ DismissalOrganizers’ Dismissal

Samai Kongtaler was dismissed a ‘reduction in orders’Samai Kongtaler was dismissed a ‘reduction in orders’

On 24 November 2003,Ms Atchara Sophon and Kongtalei were dismissedOn 24 November 2003,Ms Atchara Sophon and Kongtalei were dismissed submitting worker’s demands to management submitting worker’s demands to management

On 12 October 2004, the union was registered, but when the union On 12 October 2004, the union was registered, but when the union launched a campaign for new members on 29 the same month, three union launched a campaign for new members on 29 the same month, three union

executives were dismissed the company believed that the union executives were dismissed the company believed that the union would destroy the company ‘-a totally unfounded claim.would destroy the company ‘-a totally unfounded claim.

(Clean Clothes (Clean Clothes Campaign)Campaign)

Due to

Due to

Due to

Center for Labor Information Service and Training

NIKE Faire Labor Association

Urged them to discussThe matter directly with CLIST

and the fired workers

On November 23,04

Informing Of The Matter With Relevant Associations

(Clean Clothes Campaign)

Initial Negotiation Between Initial Negotiation Between Representatives From Each Representatives From Each

GroupGroup On 14 December 2004On 14 December 2004 Attendants: a conciliator from the Welfare and Labor Protection Attendants: a conciliator from the Welfare and Labor Protection

Department of the Ministry of Labor Thailand , two company Department of the Ministry of Labor Thailand , two company representatives, three dismissed workers, CP Nothong Union and Nike representatives, three dismissed workers, CP Nothong Union and Nike

representativesrepresentatives Conciliator:Conciliator: the company has clearly violated the right to the company has clearly violated the right to

organize, and attempted to destroy the labor unionorganize, and attempted to destroy the labor union The owner: Mr. Peter Krautler no intention to rehire the The owner: Mr. Peter Krautler no intention to rehire the

dismissed workersdismissed workers The mother of one of the union activists who was dismissed to be a The mother of one of the union activists who was dismissed to be a

continuation of the company’s intimidation tacticscontinuation of the company’s intimidation tactics

stated

stated

appeared

Respond From NikeRespond From Nike On the 23rd of DecemberOn the 23rd of December Nike informed CLIST-They had Nike informed CLIST-They had

requested the conciliator to identify the requested the conciliator to identify the appropriate next stepsappropriate next steps

After getting in touch with CLIST, After getting in touch with CLIST, conciliator provided two options for conciliator provided two options for union dismissed workers:union dismissed workers:

Higher compensation Higher compensation Follow the standard legal procedure based Follow the standard legal procedure based

on the Labour relations committeeon the Labour relations committee

(Clean Clothes (Clean Clothes Campaign)Campaign)

Union’s Executive and CLISTUnion’s Executive and CLISTDisappointed at Nike’s Disappointed at Nike’s

RespondRespond If at the end of the day workers get referred back If at the end of the day workers get referred back

to the existing legal procedures then what is the to the existing legal procedures then what is the use of having a Code of Conduct?use of having a Code of Conduct?

If this means that Nike’s Code of Conduct has no If this means that Nike’s Code of Conduct has no relevance if the legal procedure is followed, then relevance if the legal procedure is followed, then why bother having a code at all?why bother having a code at all?

(Clean Clothes Campaign)(Clean Clothes Campaign)

Updated Negotiation Between Updated Negotiation Between Representatives From Each GroupRepresentatives From Each Group

THE DISMISS

WORKERS

AMRC

ACILS

FLA

NIKE

CLIST

MSP UNION

DISMISSAL

On February 16th Met in Bangkok

Three union activities dismissal not related To the quality of their

work

The company believed that “the union would destroy the company-a totally unfounded claim

Result of NegotiationResult of Negotiation On March 18th,2005On March 18th,2005 CLIST and Nike have been CLIST and Nike have been

reached the agreement with three reached the agreement with three dismissal workers: all three dismissal workers: all three workers will be rehired, workers will be rehired, including full back pay to the including full back pay to the date of dismissal for two of the date of dismissal for two of the workers (the third one accepted workers (the third one accepted settlement money which came to settlement money which came to a higher amount). a higher amount).

(Clean Clothes Campaign)(Clean Clothes Campaign)

CritiquesCritiques

Lack of monitoring to its Lack of monitoring to its subcontractorssubcontractors

Lack of training on code of conduct Lack of training on code of conduct in its subcontractorin its subcontractor

--To the management & workers--To the management & workers

Nike Monitoring System Nike Monitoring System (cont.)(cont.)

Fair Labor AssociationFair Labor Association Oversight of the Oversight of the monitoring monitoring

--Selected and paid for by Nike--Selected and paid for by Nike --Only 10% of Nike factories selected to the --Only 10% of Nike factories selected to the

assessment assessment

Global Alliance for Workers and Global Alliance for Workers and CommunitiesCommunities

----A partnership between Nike, the World Bank and the A partnership between Nike, the World Bank and the International Youth FoundationInternational Youth Foundation

--Whether any particular standards are being met?--Whether any particular standards are being met? -- “Monitoring” to protect workers human rights?-- “Monitoring” to protect workers human rights?

(Clean Clothes Campaign, (Clean Clothes Campaign, 2000)2000)

Nike Monitoring SystemNike Monitoring System

Expatriate product manager Expatriate product manager Site Site visits on a yearly basis visits on a yearly basis

(Nike)(Nike)

PriceWaterhouseCoopers PriceWaterhouseCoopers “Independent” monitoring“Independent” monitoring

--Announced --Announced

--Selected workers to speak--Selected workers to speak

(Clean Clothes (Clean Clothes Campaign, 2000)Campaign, 2000)

Training On Code Of Training On Code Of ConductConduct

Are the workers be trained or Are the workers be trained or informed of the code of conduct?informed of the code of conduct?

Are managements of the Are managements of the subcontracting firms receiving subcontracting firms receiving enough training of conduct?enough training of conduct?

Do the subcontracting firms Do the subcontracting firms implement the code of conduct?implement the code of conduct?

Does the IHRM of Nike implement its Does the IHRM of Nike implement its conduct enough overseas?conduct enough overseas?

Recommendations on Recommendations on Nike’s HR Nike’s HR

Nike should explain and enforce the Nike should explain and enforce the Code of Conduct aggressively.Code of Conduct aggressively.

----Education of Code of Conduct Education of Code of Conduct • Emphasize the importance of Nike’s “Code” as Emphasize the importance of Nike’s “Code” as

covenant covenant • Display Nike’s “Code” in public places in clear Display Nike’s “Code” in public places in clear

language language

----Training on Code of ConductTraining on Code of Conduct • Hold training sessions on the Code of Conduct every Hold training sessions on the Code of Conduct every

three monthsthree months • All workers in the training will receive a card with All workers in the training will receive a card with

the Code of Conduct in their local languagethe Code of Conduct in their local language

(Andrew Young (Andrew Young Report, 1997)Report, 1997)

Recommendations on Recommendations on Nike’s HR Nike’s HR (cont.)(cont.)

Nike should improve their Nike should improve their Monitoring System.Monitoring System.

----Form a monitoring team within the Form a monitoring team within the HR department for internal monitoringHR department for internal monitoring

• Conducts periodic “checking” visitsConducts periodic “checking” visits• Oversees external monitors and auditors where Oversees external monitors and auditors where

used used (IHRM, 2005, Chapter 8)(IHRM, 2005, Chapter 8)

----External monitoringExternal monitoring• ““Ombudsman” modelOmbudsman” model

(Andrew Young Report, (Andrew Young Report, 1997)1997)

Recommendations China Recommendations China CaseCase

Being knowledgeable about Code Being knowledgeable about Code of Conduct and sensitive to local of Conduct and sensitive to local law.law. For example: CompensationFor example: Compensation

Pay Legal Minimum Hourly Wage RMB Pay Legal Minimum Hourly Wage RMB $2.70 (US $0.33)$2.70 (US $0.33)

Reward those who meet expectations to Reward those who meet expectations to motivate the workersmotivate the workers

Stop disciplinary fines to avoid Stop disciplinary fines to avoid discouraging the workersdiscouraging the workers

Recommendations Recommendations Thailand CaseThailand Case

PCN or HCN should respect the PCN or HCN should respect the rights of employees to have free rights of employees to have free associationassociation

Promote the development of Promote the development of “Worker representatives”“Worker representatives”

Conclusion:Conclusion:

Multinationals should learn lessons Multinationals should learn lessons from Nikefrom Nike

BeBe careful to enforce their Code of careful to enforce their Code of Conduct Conduct

Minimize ethical issues.Minimize ethical issues.

Thank You Thank You

Questions?Questions?