BUYER GUIDANCE: OUR FACTORY SERVICE MODEL

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1 BUYER GUIDANCE: OUR FACTORY SERVICE MODEL OCTOBER 2015

2 Introduction In April 2015, Better Work began introducing an adjusted model for the delivery of factory services. The revised approach is based on ongoing consultations with actors from across the supply chain and is designed to maximize impact, sustainability and scale. It will do this by: Stimulating improvements in areas of non-compliance Creating higher levels of factory ownership and responsibility Strengthening mechanisms for worker-management communication Providing platforms for shared learning between factories Focusing on root causes through a management systems approach Establishing greater accountability through public reporting Differentiating factories based on performance The revised approach is... designed to maximize impact, sustainability and scale. To help our Buyer partners understand key elements of the adjusted model we have developed cheat sheets on the following subjects: Initial advisory Assessments Progress reporting by factories Integrated training services Service differentiation Public reporting on factory compliance For each topic, we highlight how buyers can support their factories and the effective delivery of Better Work factory services. BETTER WORK. OCTOBER PAGE 2

3 Figure 1. First cycle after the launch of the adjustments (effective from April 2015) Figure 2. Second cycle after the launch of the adjustments BETTER WORK. OCTOBER PAGE 3

4 Initial advisory and self-diagnosis What happens during the initial advisory phase? Once registration is complete, factories begin the initial advisory phase. During this period of approximately 100 days, Better Work will work with the factory to create (or work with an existing) worker-management committee to discuss and resolve workplace issues. In parallel, Better Work guides factories through a process of classifying their current circumstances and identifying learning needs, with a focus on developing management systems that will support sustainable improvements. This process is referred to as selfdiagnosis. Self-diagnosis enables factories to develop their own goals for the improvement process. Two or or three factory visits by a dedicated Better Work Enterprise Advisor and at least one industry learning seminar help support the factory through the self-diagnosis phase and strengthen the worker-management committee. Self-diagnosis enables factories to develop their own goals for the improvement process. In reporting results of self-diagnosis, factories are not expected to list or address all of the issues they may have identified, particularly in the first year. Self-reporting is a first step. The goal is to give factories time to strengthen their reporting and gain confidence that they will not be penalized for being transparent. Buyers are requested not to penalize factories for incomplete data or discrepancies between a factory s self-diagnosis and their Assessment Report. You are instead encouraged reinforce your support for transparency when communicating with factories. BETTER WORK. OCTOBER PAGE 4

5 What should we say to our factories during this phase? During the initial advisory (as soon as possible after factory registration) : Explain to factories that they are expected to engage constructively in the initial advisory phase Highlight the self-diagnostic process as an opportunity to demonstrate that the factory is proactive and committed to improvement Encourage the factory to be transparent and senior management to involve the bipartite committee in the self-diagnostic process, as well as in the follow-up improvement activities after the assessment Request that the factory s Better Work their initial improvement plan two to three months after the start of the process (in the future this will be available to you through STAR) Explain that you are looking forward to the first progress report, which must be released by the factory (and will be accessible to you through STAR thereafter) The self-diagnostic process as an opportunity to demonstrate that the factory is proactive and committed to improvement. Factories are expected to release an overview of the results of their self-diagnosis to their buyers within three months of the start of the cycle. If this is not done, the buyer should enquire why the self-diagnostic process has not yet been completed and reiterate the points above. After receiving the self-diagnosis results: Thank the factory for releasing the results from its self-diagnostic process Ask the factory for clarification or explanation regarding areas where further details are needed If the worker-management committee was not fully involved in the self-diagnosis, request the factory to strengthen the committee so that it helps drive the improvement process If the worker-management committee has been fully involved the self-diagnostic process, encourage the factory to continue working on the issues with its worker-management committee after the Better Work assessment If you or your colleagues find additional needs for improvement during factory visits, ask the factory to add these issues to the improvement plan so that the worker-management committee can address them BETTER WORK. OCTOBER PAGE 5

6 Assessment When does the assessment take place? Better Work will carry out an independent, unannounced assessment roughly 100 days after the beginning of the annual cycle. The final assessment report is released to factories and buyers, with authorization from the factory, via the portal, approximately one month after the assessment. 1 What is the purpose of the assessment? The assessment provides a comprehensive overview of factory performance in meeting core International Labour Standards (freedom of association and collective bargaining, child labour, forced labour and discrimination), national labour laws (occupational safety and health, contracts, compensation and hours) and in the development and implementation of effective management systems on workplace health and safety and human resource management. 2 Self-diagnosis is intended as an on-going process to build capacity and accountability. While buyers are encouraged to review the Assessment Report, you are requested not to use it to assess the validity or quality of self-diagnosis, which should not be seen as equivalent to a self-assessment. Self-diagnosis is intended as an on-going process to build capacity and accountability, but may not reflect all issues a factory is facing. Buyers are also requested not to focus on (or give penalties for) discrepancies, but rather to reinforce their support for transparency in communication with factories. What should we say to our factories during this phase? Inform the factory that you have received the assessment report and thank them for their cooperation with this process Highlight which areas you expect the factory to prioritize during the improvement process Ask them to address these issues through the bipartite committee, with timeframes agreed by the committee Request that the factory keeps its improvement plan in the template provided by Better Work, to allow for easier review Where possible, suggest ways in which your company could support the factory in the ongoing improvement process, for example, by reinforcing its support to senior management or observing worker-management committee meetings with a Better Work advisor State that you are looking forward to the first progress report, which must be released by the factory no later than one month after the assessment report has been issued 1. Since the initial advisory phase before the assessment is key to Better Work s process of giving ownership to factories and building trust, it is not possible to carry out an assessment earlier. This means that requests for rushed or pre-sourcing assessments prior to completion of the initial advisory phase cannot be met. 2. Better Work s assessment tool (known as the Compliance Assessment Tool, or CAT) was developed to ensure assessments focus on key areas, acting not as a test but as a benchmark of current performance. The generic CAT against which factories are assessed is available on the Better Work website. There are versions of the CAT available for each country to reflect differences in national laws. BETTER WORK. OCTOBER PAGE 6

7 Progress reports What is Progress Report One? In the fifth month of the cycle, the factory will release a progress report to buyers, known as Progress Report One. Progress Report One includes the Improvement Plan, which features an overview of the initial progress made on issues identified during self-diagnosis and the assessment. The factory will also indicate in the report how it plans to continue making progress, improve workplace cooperation and strengthen internal management systems. Factories are responsible for preparing Progress Report One using the template provided by Better Work. Although an Enterprise Advisor will offer guidance to the factory on completing the report, it will not contain any recommendations from Better Work. The only report content Better Work will verify relates to publically-reported non-compliances which the factory states have been fully rectified. This is done to provide you, our buyer partners and participants, with the assurance you need, as well as to give the factory clarity on the key issues where improvements are still needed. What is Progress Report Two? Progress Report One includes the Improvement Plan, which features an overview of the initial progress made on issues identified during self-diagnosis and the assessment. In the eleventh month of the cycle, Better Work will release Progress Report Two, detailing where improvements have taken place. Better Work will use Progress Report Two to follow up on steps outlined by the factory in Progress Report One and further substantiate progress in terms of resolving non-compliances, setting up effective management systems and establishing sound social dialogue. BETTER WORK. OCTOBER PAGE 7

8 Why is self-reporting important? Self-reporting is key to building factory capacity and accountability. It may, however, take time for factories to develop the skills and confidence to do this well. Buyers are asked to support factories as they make this transition. What should we say to our factories about the progress reports? If no progress report is released by the factory within the fifth month of the cycle: Enquire why the progress report has not been completed Reiterate keeping buyers informed about the improvement process and submitting Progress Report One is a requirement of the Better Work programme Explain that they are expected to engage constructively in the ongoing improvement process after the assessment and that improvements will be validated during the next Better Work assessment Encourage them to release the improvement plan as soon as possible Self-reporting is key to building factory capacity and accountability. After receiving the progress report: Check if the progress and planned next steps outlined in the first progress report are sufficient Where needed, encourage the factory to engage more actively in the process, for example when it comes to involving senior management, allocating sufficient resources or supporting the worker-management committee Refer to specific issues in the Improvement Plan, including enquiring about the status of pending issues and encouraging factories to address priorities identified in a timely manner Encourage continued self-reporting by the factory Encourage the factory to continue the improvement process by working through the bipartite committee BETTER WORK. OCTOBER PAGE 8

9 Integrated training services What are Integrated Training Services? Learning drives the Better Work approach to continuous improvement so, from January 2016, training will be included in the service package offered to factories. This means that all Better Work factories will have an assessment, advisory services and up to either 15 or 25 participant days of training per service cycle depending on the country. A participant day means one person attending one day of training. To meet demand, 15 days of training will be offered by country programmes with more than 100 suppliers registered, while 25 days will be offered by country programmes with fewer than 100 suppliers registered. Learning From January 2016, training will be included in the service package offered to factories. Factory visits Training Assessment Industry seminars The 15 or 25 participant days of training can be used in many ways. If a factory has been allocated 25 days, they can choose to send 25 participants to a one-day training or split up their allocation differently, sending fewer participants to trainings that last for several days, for example. During the initial advisory visits, the Worker-Management Committee will develop a learning plan to meet specific needs identified in their factory s improvement plan. The learning plan should then help guide training priorities for the factory. progress report 2 con evalua on factory visits (approx. 4) start start cycle 1 cycle (FV1) industry factory seminar 4 visits (approx. 1) nued advisory BETTER WORK FACTORY ini industry seminar 1 factory visits (approx. 3) training up to 25 days per cycle industry seminar 2-3 al advisory assessment improvement plan improvement plan assessment report progress report 1 BETTER WORK. OCTOBER PAGE 9

10 What training is available? All Better Work country programmes offer the following training courses: Training for workers and managers on the Performance Improvement Consultative Committee (or equivalent Worker-Management Committee) Supervisory Skills Training Occupational Safety and Health Human Resource Management Introduction to Workplace Cooperation Other courses are available on a case-by-case basis. Country programmes will share a menu of services to their factories, based on what they offer. More information on the training courses available can also be found on the respective country programme websites. Country programmes will share a menu of services to their factories, based on what they offer. Can factories use fewer, or more, training days than they are allocated? Factories are responsible for signing up for Better Work trainings to use the 15 or 25 participant training days they are allocated. Participant days not used during the one year cycle will be lost. In addition to the 15 or 25 participant training days offered, factories can still purchase additional training days at the normal rate. What should we say to our factories about the training? Encourage factories to use their full allocation of Better Work training days Help ensure that the training courses chosen relate to needs identified in the improvement plan Encourage the factory to send the most relevant participants to the training course Help factories understand that this is a key opportunity for the factory to engage with Better Work beyond the PICC BETTER WORK. OCTOBER PAGE 10

11 Service Differentiation What is Service Differentiation? From 1 October 2016, Better Work will tailor its services to factories depending on their stage of development and performance. This will enable us to effectively target our interventions at the level that is most appropriate to the factory. Based on information collected during two consecutive assessments, Better Work will evaluate whether factories meet the required criteria to be classified as Stage Two. Better Work will classify factories as being in Stage Two if they consistently demonstrate high levels of compliance, a mature level of social dialogue, effective management systems and a commitment to learning. As part of the differentiated approach, Better Work will decrease repetitive assessments for Stage Two factories. These factories will receive one assessment every 24 months, provided that they continue to meet all of the required criteria. From 1 October 2016, Better Work will tailor its services to factories depending on their stage of development and performance. In addition, Better Work will offer Stage Two factories the following benefits: Targeted advisory services Exclusive access to special projects and publications Enhanced visibility to buyers, including access to networking events Through advisory and training services, we will offer support to all factories interested in working towards achieving Stage Two status. There will be no public communications from Better Work regarding which factories have been classified as Stage Two, though buyers in the programme will be able to identify these factories through the Better Work Buyer Portal. BETTER WORK. OCTOBER PAGE 11

12 What should we say to our factories about service differentiation? Encourage proactive action: Explain Better Work s approach towards service differentiation to all your factories in countries where we are active Highlight the benefits offered by Better Work, and any additional incentives that you wish to offer to the factory Inform the factory that Better Work s advisory and training services can support them in achieving Stage Two status Encourage factories to work proactively through its bipartite committee to identify and realize actions needed to ensure that the criteria for Stage Two are satisfied If the factory has not yet been classified as Stage Two: Reassure the factory that it will not be penalized for not achieving Stage Two status Encourage the factory s bipartite committee to identify areas in which improvements are needed for them to be classified as Stage Two, including developing action plans that can be executed with Better Work s support during the continuing advisory process Remind the factory that they have another opportunity to reach Stage Two during the next assessment Better Work s advisory and training services can support (factories) in achieving Stage Two status. If the factory has been admitted to Stage Two: Congratulate the factories that have demonstrated outstanding performanc Reward factories with good compliance levels Advise your sourcing colleagues to continue relations with the factory Support the reduction in repetitive and duplicative monitoring through audits every two years BETTER WORK. OCTOBER PAGE 12

13 Public reporting on factory compliance What is public reporting? Public reporting refers to the posting of selected compliance and non-compliance information, along with a factory s name, on the Better Work public website. As assessment reports are finalized, Better Work will publish information on factory compliance (or non-compliance) with core labour standards, basic legal requirements relating to wages and worker safety, mechanisms for workplace dialogue as well as certain country-specific issues. The list of issues subject to public reporting can be found in the box opposite. Public reporting helps provide a balanced view of the industry. Why is Better Work using public reporting? Public reporting helps provide a balanced view of the industry. It shows both the positive and the negative, and ensures the reputation of both individual factories and the industry as a whole are not damaged by a minority of poorly performing factories. It also enables buyers to reward factories with good compliance levels and allows governments to use their resources more effectively to target those with poor performance. Public reporting has already been tested and refined and proven to be successful in Cambodia and Haiti. When will public reporting begin? From 1 April 2016 onwards, all Better Work factories where at least two assessments have been conducted will be subject to public reporting. Public reporting will be launched on 1 October 2016, initially covering the six month period from 1 April to 30 September From that point on, when an assessment report is released, factory compliance and noncompliance will be posted publically on the Better Work website. A factory s compliance findings remain on the website until a new assessment report is published the following year. The website is updated continuously as assessment reports are released, so it will reflect the factory s most recent assessment data. Factories can upload documents and photos on the website at any time to make clarifications and demonstrate progress or actions taken. BETTER WORK. OCTOBER PAGE 13

14 Publicly reported issues Child Labour Workers under the legal age for employment under national law Discrimination Terminating workers who were pregnant or on maternity leave or forcing them to resign Gender discrimination (conditions of work) Sexual Harassment Forced Labour Forced overtime under threat of penalty Free exit from the workplace at all times, including during overtime Freedom of Association/ Collective Bargaining Attempt(s) to interfere with, manipulate or control the union(s) Punishment of unionists Termination or non-renewal of worker s employment contract due to union membership or activities Freedom to form and join a union Requiring workers to join a union Implementation of collective agreement Punishing workers for participating in a strike Occupational Safety and Health Periodic emergency drills Accessible, unobstructed, and/ or unlocked emergency exits during working hours, including overtime Number of emergency exits Fire detection and alarm system Storage of chemicals and hazardous substances Mechanisms to ensure cooperation between workers and management on OSH matters Providing drinking water Compensation Payment of minimum wage for regular workers Informing workers about wage payments and deductions Payment for maternity leave Payment for overtime Contracts and Human Resources Limits on the use of fixed term contracts Bullying, harassment or humiliating treatment of workers Process Integrity Two instances of refusal to allow Better Work to conduct an assessment (except in cases of force majeure or where there is more than one non-better Work other audit on the same day) Note that specific issues may vary somewhat from country to country BETTER WORK. OCTOBER PAGE 14

15 What should we say to our factories about public reporting? Encouraging proactive action: Explain Better Work s approach towards public reporting to all factories in countries where the programme is active Inform factories that Better Work advisory and training services can support them in addressing non-compliance issues in a timely fashion Encourage factories to be transparent with Better Work from the outset so that they can work with us to address issues during the initial advisory process, before the assessment takes place Assure factories that you will not penalize them for being transparent about problems, provided that they demonstrate a commitment to make sufficient and timely progress If non-compliance will be publicly reported: Request that the factory prioritizes publically-reported, non-compliant issues for improvement Ask the factory to address these issues through the bipartite committee and to report on their status in the Better Work improvement plan Encourage the factory to demonstrate progress by posting regular updates on all noncompliant issues on the public reporting website Do not penalize the factory, negatively rate them or reduce or cancel orders, provided they are demonstrating a commitment to make sufficient and timely progress Encourage the factory to demonstrate progress by posting regular updates on all non-compliant issues on the public reporting website. If no publicly reported issues have been found in noncompliance during assessment: Congratulate the factory on its performance and encourage the factory to work towards Stage Two status (please see the Service Differentiation guidance sheet for further details) Reward factories with good compliance levels. Ask your sourcing colleagues not to terminate relations with the factory BETTER WORK. OCTOBER PAGE 15

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