Social Responsibility and Sustainability

COVID-19 Shines New Light on Working Conditions in Supply Chains

Michael Toffel discusses how the coronavirus pandemic has renewed concerns about how suppliers treat employees, and how a new online resource can help.

Tightly packed workers and other weak protections allowed COVID-19 to sweep through American slaughterhouses during the past year, infecting at least 45,000 employees and killing an estimated 240 people.

To Harvard Business School Professor Michael Toffel, who has studied working conditions for more than 20 years, the devastation in meatpacking is just one example of how lax regulation can make a grave situation deadly. The lack of safety guidance from the US Occupational Health and Safety Administration (OSHA) nearly a year after the pandemic began continues to add chaos to an already-stressful situation—not only for factories, but for corporate offices, schools, and other organizations, Toffel says.

“Why is it that every school system has had to develop their own standards and policies for masks, for ventilation, for distancing, and so on? And why is it every workplace is trying to invent their own standards?” he says. “It's because federal and state safety regulators haven’t set up clear rules and guidance.”

We recently talked to Toffel, the Senator John Heinz Professor of Environmental Management, about how the pandemic has spurred companies and consumers to think more broadly about working conditions in supply chains. Toffel also shared information about his newly launched website, which he hopes will be a helpful resource for business practitioners seeking guidance about monitoring suppliers.

Danielle Kost: How is the pandemic revealing new shortcomings in the working conditions along supply chains?

Michael Toffel: In the US, this has probably been the most pronounced in the meatpacking industry, where folks work pretty closely together and weren’t really cared for in a robust way.

And companies have had to figure out on their own how to manage the safety issues, due to the fact that US OSHA hasn’t developed standards to govern these issues.

[US President Joseph] Biden has just tasked OSHA with doing just this, and the Centers for Disease Control and Prevention (CDC) is also now finally working on standards for domestic airline flights. So it will be interesting to see what they come up with.

Kost: Are companies actively evaluating the working conditions of their suppliers?

Toffel: In some industries, it has become really quite common. In the US, it dates back to scandals, really. So, whether it be Nike or the Kathie Lee Gifford clothing line, or boycotts at universities by students who go to their own administrators and say, “You have to ensure that our sportswear isn’t made with sweatshop labor.”

All those companies and organizations with brands to protect have to focus on this because activists have been pretty effective at linking their brands to the working conditions of the suppliers who produce their branded products.

This has resulted in brands creating supplier codes of conduct, which is the first piece. Then those brands need to actually hold suppliers accountable for meeting these codes, first by linking to it in their terms of purchase in their contracts, and also by having the brand’s staff or a third party audit these supplier factories to check.

Kost: Do you think that consumers are aware of the working conditions among the suppliers for their favorite brands?

Toffel: Consumers become aware when there are scandals, like when Apple was the subject of a New York Times feature about working conditions at its supplier, Foxconn.

When you have the hundreds of workers killed in a garment factory fire in Pakistan or the collapse of a factory building in Bangladesh, these things really make headline news. And then the question is: In the wreckage of a collapsed building, whose labels do you find? Often, the activist community will point their fingers at the brands for basically enabling those factories to exist and to persist with very risky working conditions.

This is more within the consciousness of today's 20-year-olds than it was a decade ago, which I think is great.

On a daily basis, when you go to Zappos or Amazon to shop for sneakers, I don’t think working conditions are on many people's minds. But the week after a scandal, it certainly will be on people's minds. And I think these stories and brands’ reputations on this issue are increasingly on the minds of the branded companies’ own employees—and on job candidates.

Kost: I wonder if people think about the human and environmental toll of “fast fashion,” the mass production of trendy clothes at low cost, for example?

Toffel: This has been interesting to see in the classroom. We were talking about fast fashion from a supply chain perspective in my Technology and Operations Management course. And in the middle of class a student raises his hand and says, “Aren’t we going to talk about the environmental impact of fast fashion?” And I was like, “Yes, let's talk about that.” I love talking about that.

It seems to me that this is more within the consciousness of today's 20-year-olds than it was a decade ago, which I think is great.

Kost: You just launched a new HBS microsite on research about working conditions in supply chains. What do you hope to achieve?

Toffel: The microsite is meant to be a resource to managers working on global supply chains, including the brands who are sourcing products, auditors who are assessing factory working conditions, and non-governmental organizations focused on this area. The site contains succinct descriptions of empirical research to provide their key insights in everyday language. For example, visitors to the site can learn about various audit approaches that are more or less effective under different circumstances. We also describe research that highlights which types of factories are more likely to improve working conditions over time, for example.

UC Hastings Professor of Law Jodi Short and I have also crystallized in a Harvard Business Review article a summary of what is known as of this moment on those particular questions. The microsite is meant to address a broader set of issues and to be a living, updated database of curated research insights, translated into plain language, focusing on the managerial takeaways.

The site also lists NGOs [non-governmental organizations] and intergovernmental organizations, like the World Bank, that are working in this area. It struck me that there was no resource to connect academic research with practice. If you wanted to make that connection, you had to go to the managerial conferences and talk to practitioners during coffee breaks or during the sessions.

The practitioners are full of anecdotal evidence based on their own experience, but they’re not set up to gather the anecdotes from all of their staff in order to come up with generalizable insights. So, I thought, how can we bridge the gap between the insights that research is producing with the managers who we’re trying to learn from and inform? And so this website is an attempt to do this at scale. I’ll be tweeting new insights as we add them to the microsite, and invite everyone interested to follow me @miketoffel on Twitter.

About the Author

Danielle Kost is the editor-in-chief of Harvard Business School Working Knowledge.
[Image: iStockphoto/andresr]

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