Nike, Inc. - Labor Compliance Program in Year Two1Overview of the Program
Program Features
- Compliance Systems Developed in Year Two
- Improvements in Implementing the FLA Requirements
Overview of the Program
The goal of Nike's compliance program is to implement Nike's Code of Conduct (which corresponds with FLA's Workplace Code) throughout its supply chain. In Year Two, the Nike Compliance department increased its size to more than 90 full-time and 2 part-time staff members around the world. The Vice President of Compliance, who reports to the Vice President of Apparel Sourcing, oversees the compliance staff, which is based at Nike headquarters and in Nike liaison and production offices overseas. Compliance field staff is organized into four regional teams: Americas, Europe/Middle East/Africa, North Asia, and South Asia.
Nike compliance staff conducts most management audits, which are comprehensive internal monitoring visits. In Year Two, Nike contracted third party monitoring groups to conduct pre-sourcing audits. The company also contracted with third-parties to undertake capacity building programs (click here to see the list of groups Nike worked with in Year Two).
Other members of Nike's staff are involved in the company's compliance activities. For instance, Nike production managers, who make frequent visits to Nike facilities, are responsible for carrying out SHAPE factory assessments (which involve a brief review of factory working conditions - see FLA's Year One report for further explanation) and following up on some factory remediation plans. Nike reports that sourcing staff members are required to spend 10-15% of their time doing compliance-related work. Sourcing managers also use their leverage as buyers to influence factories to move forward with various compliance activities.
Features of Nike's Labor Compliance Program in Year Two1
A. Compliance Systems Developed in Year Two
1. Training and Capacity-building:
According to Nike records, more than 11,000 factory employees have participated in various capacity-building programs sponsored by Nike during the reporting period, from August 2002 through November 2003. Trainings for managers included cross-cultural trainings in the Americas for factories with Asian management and Spanish-speaking employees. Managers participated in trainings on labor law and health and safety in China and Hong Kong, and projects with ISOS in Indonesia, Vietnam and China focused on health and safety. The ISOS health project in Indonesia, for example, included assessments of nine factories' health facilities, and six-week training sessions for the health care providers at those facilities. Global Alliance also offered supervisor trainings in more than 30 Nike contracted facilities.
Workers also participated in trainings. The Global Alliance, ISOS, and other local organizations ran worker development programs that focused on key issues like reproductive health, basic labor standards, and life skills, such as personal finance. Workers from more than 50 factories participated in these programs, most of which were rolled out in Nike contracted footwear facilities. Click here for a list of groups that Nike contracted for capacity-building work.
2. Grievance Reporting Systems
In order to strengthen mechanisms for reporting workplace problems at a local level, Nike cooperated with local organizations to develop grievance reporting systems, one in Indonesia and the other in China. As of the end of the reporting period, Nike had completed phase one of a pilot project that was initiated in July 2003 in cooperation with a local group in Qingdao, China. The project involves multiple steps that aim to put an effective complaints mechanism in place for workers.
As part of its first phase, the group assessed the workers' knowledge of Chinese Labor Law. Next, it designed a peer-training for 50 workers who will ultimately act as trainers for other workers. At the end of the reporting period, the group was in the process of developing grievance communication systems, which include grievance boxes, a hotline, access to the labor union office for consultations, and email addresses. Once the systems are developed, the 50 nominated workers will participate in the trainings that focus on: work hours, vacation/holiday, worker health and safety, labor disputes, labor contracts, and social insurance. Over the long term, the 50 workers are expected to train other workers, and about half of them will participate in the "grievance committee" at the factory where the pilot is taking place. A follow-up assessment is planned at the end of the project in order to measure the degree to which workers' understanding of the Code and grievance procedures has improved.
3. Hours and Wages
Nike reported that excessive overtime and inaccurate computation of overtime wages were two of the top issues that concerned the company's compliance staff in Year Two. Nike's annual report to the FLA discussed various cases in Canada and the United States where the company states that it secured restitution of back pay for workers when they were not paid adequately for hours worked. Year Two FLA independent external monitoring reports provide supporting evidence that overtime issues exist in Nike's North American contracted facilities, and that the company has taken steps in those particular instances to provide back-pay to workers who have not received adequate overtime pay. Click here to access Year Two reports from Nike contracted facilities.
Nike also reported that it was working to address issues of overtime and compensation in Thailand by working with factories to reduce the common practice of keeping double books. In several Year Two monitoring visits of Nike contracted facilities, FLA monitors did indeed observe some issues relating to overtime in facilities; for example, workers did not have a clear understanding of overtime wage calculation and voluntary overtime. In those facilities, Nike worked with contracted factories to institute overtime work and pay policies, which were posted for workers to see. Nike also encouraged factories to alleviate overtime by monitoring production schedules and workers' hours. Click here to access Year Two reports from Nike facilities.
Click here to see the Year One report on Nike.
B. Improvements in Implementing the FLA Requirements
- Nike increased the size of its compliance staff to include more than 90 full-time and 2 part-time staff. At the end of the last reporting period, Nike had approximately 64 staff members. During Year Two, compliance program leadership focused on training the entire compliance staff. Trainings included the "Global Compliance Summit" in November 2002, where the entire compliance staff met for a week; a weeklong "M-auditor bootcamp" for internal monitors; and environment, health and safety training for staff in the Americas and Asia.
- Nike internal compliance staff began to conduct all "Management audits" (in addition to SHAPE audits - see FLA Year One Public Report for more on these different monitoring approaches) throughout the Nike supply chain. Prior to September 2002, these audits were conducted by third party monitors. In Year Two, however, third party monitors were relied upon to conduct pre-sourcing monitoring only, and participated in trainings that introduced them to Nike's new monitoring process.
- At the end of the reporting period Nike was in the process of improving its compliance database so that records could be synchronized between offices in different regions. Records include information about communication between compliance and production managers about specific factory remediation issues.
Click here to review Nike's activities in Year One.
1 Please note that this section in no way seeks to capture all of the compliance activities reported to the FLA by companies. Instead, the FLA considers it an overview of company activities that will provide the reader with a better understanding of each company's approach and focus in Year Two.
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