Tchibo's work on creating a basis for sustainable change at factory level

German coffee and consumer goods retailer Tchibo is piloting a public-private pilot partnership aimed at developing constructive dialogue between workers and their employers in factories in Asia.

Building dialogue at all levels

A key barrier to improving conditions for factory workers is that they are often unable to voice their concerns with management through fully representative structures. This means issues aren't dealt with when they occur, so increasing frustration and tension and sometimes resulting in conflict.

This is compounded by the fact that relations between workers and managers are also often distorted through hierarchical, gender and ethnic differences, which increases the likelihood of misunderstandings and tension and increases workers' vulnerability.

In turn, factories miss out on the opportunity to harness their employees' potential to contribute to the sustainable growth of their businesses.

With recognition now widespread that sustainable change cannot be achieved through social audits alone, many companies are starting to recognise that what really makes a difference is creating a process that gets to the heart of the issue: the relations between workers and managers.

Between 2007 and 2010, Tchibo partnered with the German development organisation GIZ to explore the potential of improving dialogue on the factory floor.

The WE - Worldwide Enhancement of Social Quality (WE) Project piloted a 6-step dialogue process in 40 factories. The specific objectives were to improve working conditions in factories, create cooperation between workers and managers in the workplace and prevent environmental risks and hazards, while simultaneously enhancing efficiency, productivity and quality in production.

Using the '6 Steps' methodology

The '6 Steps' is a recognised management instrument with clearly defined tools and practices for conflict mediation and problem solving. It provides guidelines to workers and managers on how to solve a jointly identified issue.

These include guidelines on analysing the root causes of problems, identifying the factors that can be influenced, brainstorming possible solutions, and finally jointly agreeing an action plan. The cooperative approach ensures that implementation is supported by all parties.

The methods put managers and workers into a situation where they have to engage with each other. Regular practice in a series of workshops and factory visits helps alleviate the imbalance of power existing between the parties, thereby giving workers and their representatives the self-confidence and voice to present their interests.

Managers also learn that they can be more successful in their own job if they harness workers' opinions and proposals. As both parties realise their interdependence in achieving their respective goals, a case for collaboration and change is created.

The outcome: Creating a win-win situation

Despite some initial scepticism at the start of the pilot, managers and workers in all three countries involved demonstrated a growing openness to dialogue-orientated training. The number of participants from all levels of the factory taking part in each workshop increased as the project progressed.

In one production site, a kitchenware factory in the greater Shanghai region of China, the pilot resulted in the election of 18 worker representatives, creating communication channels for workers via roundtables, consultation processes, suggestion systems and worker participatory OHS meetings. Average wages increased by almost 50% over a two-year period, and for the first time paid annual leave was given. Over the same period, the factory recorded a 30% reduction in working hours.

As well as achieving enefits for workers, the pilot also helped enhance overall factory productivity. For example, production volume increased by 10% a year and the net profit of the company increased by 10% annually.

Overall, substantial changes were achieved at the pilot factories, including steps towards effective participation and higher wages.

But achieving full freedom of association and a living wage requires broader social dialogue and the involvement of all relevant parties throughout the supply chain. In scaling up WE, Tchibo is piloting initiatives to address these two aspects more effectively.

Rolling out in the supply chain

Some 40 production plants in China, Bangladesh and Thailand participated in the pilot phase of WE. By the end of 2011, 115 factories had been involved in the training activities. In 2012, another 85 will be included. The program will continuously expand to cover all regular Tchibo suppliers in the medium term. These produce textiles, jewellery, wood, metal, electronics and leather goods for Tchibo. On-the-ground support is largely provided by a growing number of local trainers - currently 24 - who are continuously trained and supported by international consultants.