Advertisement

Blog

Dell’s Standards for Labor Practices

In its report on corporate responsibility, Dell Inc. says it uses the electronics industry's EICC Code of Conduct to ensure high work standards and ethical behavior. This is the same guideline Hewlett-Packard uses, in part, to measure worker safety and fair labor practices among its business partners.

Dell, Hewlett-Packard, and NEC are among the companies cited by a third-party watchdog for employee rights violations. (See Dell, HP & NEC Partner Flagged for Labor Practices.) This is second in a series of blogs I'm doing to look at the labor policies these companies have established, how they are measured and audited, the results of any such audits, and what corrective actions they may have taken.

Every Dell supplier is mandated by contract to operate in full compliance with the laws, rules, and regulations of the countries in which it operates and is required to adopt and actively pursue conformance to the EICC Code of Conduct. Using the industry-standard tools that have been developed by the EICC and the Global eSustainability (GeSI) Initiative, including the Self-Assessment Questionnaire, Dell asks suppliers to provide documented evidence of their commitment to implement Dell's supplier principles through a self-assessment tool. The tool covers commitment and policy, implementation and operation, self-monitoring and corrective action, management review, and continuous improvement. Dell reports 93 of its suppliers are on an improvement trend.

According to Dell's report:

    Our commodity managers complete a quarterly business review (QBR) scorecard that includes measuring suppliers’ social and environmental performance. The key issues of supplier noncompliance focused on labor issues (such as excessive working hours), occupational health and safety, and environment (for example, wastewater discharge). Dell worked with the suppliers identified to define and implement management systems or corrective actions. Dell also has raised supplier awareness regarding conflict minerals and requested due diligence in avoiding procurement of known conflict minerals.

Dell's policy is hitting all the right notes but is lacking one key criterion: There's no mention of audits conducted by Dell or any other organization. Based on the report, it appears Dell's supply chain chiefly self-polices its adherence to labor standards. I've asked Dell whether it has conducted any audits of its business partners' operations, and I'll post an update as soon as I hear back.

Of the reports I've reviewed so far, Dell's is the weakest. While the company goes to great lengths to outline its expectations for itself and its business partners, its 2010 report lacks detail and follow-through. It is possible that Dell keeps such information confidential, and that may be appropriate. But it also highlights the issue we've raised in previous blogs: Minus an auditing body, how certain can companies — and their shareholders — be that their foreign partners are treating their workers fairly?

At the very least, Dell should visit offshore factories and not rely on self-audits as assurance of compliance. Better yet, the electronics industry can take the EICC Code a step further and license third parties to monitor facilities. I'm sure there are all sorts of problems with this — national laws, for example, may prohibit this, and countries will use their own versions of the US's OSHA instead.

For better or worse, Apple's recent report has opened the door to increased public scrutiny of labor practices, and companies that aren't as forthcoming risk future criticism. (See What Did Apple’s Supply Chain Audit Uncover? Part 1.)

8 comments on “Dell’s Standards for Labor Practices

  1. SP
    February 24, 2011

    If HP,Dell and NEC all follows the same code of conduct, I guess someone should review whats laid down in the code of conduct booklet. I feel times have changed, electronic industry has undergone a tremendous change in outlook and business wise if we compare 10 years back. But are these booklets that judges labor safety and working condition gone through any revolution. Its good that press or journalism is very active now that they can bring out the loopholes in policies and procedure. And no matter how big is a company if they indulge in violating labor ethics they will face public scrutiny. Will wait to read what Dell has to say.

  2. jbond
    February 24, 2011

    It seems like the biggest problem these companies are having is following the local standards in the countries that these facilities are located in. Yes, by relying on these self audits instead of making physical visits, they are not doing as much as they could be. Some of these countries don't exactly have stringent laws and agencies set up to protect the workers. By meeting the minimum rules of the country, they might not be giving these workers the protection that is needed. They need to stop using these rules as policies and go above and beyond them. They need to have company safety regulations set up like they would have here in the U.S.

  3. itguyphil
    February 24, 2011

    Unfortunately, the only standards these large companies will follow are the ones that result in LARGE fines or worse if the rules are broken. Other than that, they are not going to go above and beyond. If they do, it's simply to look good compared to other industry rule-breakers.

  4. Ms. Daisy
    February 24, 2011

    Barbara, thanks for looking into these labor practices by participants in the electronic supply chain.

    Laws and Practice codes are only as good as how they are enforced. Here we go again with another manucturers smokes screen. It is pitiful to hear that these organizations only have the labor codes in their contracts. I guess it is a start, but there has to  be meaningful enforcement and third party audits of contractors. The local labor laws are often none existent in these developing countries and the contractors often laugh at the standards for labor practices proposed by US companies. This disregard for the welfare and dignity of workers often stems from the lack of care by the local governments  compounded by greed of the governing agencies. Unfortunately outsourcing companies feed into this abuses by turning a blind eye or doing the minimum just to have on record that “something” is being done.

    Companies in the supply chain cannot be complacent or simply give up because of the negligience of the host countries. Follow through and constant reminders of the contractors of the importance of worker wellbeing with effective consequences for violation to match each violation will at least be deterrents.

  5. AnalyzeThis
    February 24, 2011

    I do think it's kind of unfair all the criticism Apple has taken for its overseas labor practices when the majority of companies — both in the tech industry and outside it — operate more like Dell than like Apple.

    In an ideal world — well, in an ideal world there would be less outsourcing… — but in an ideal world that utilized lots of outsourcing, companies would closely monitor and audit the labor practices of all their overseas partners.

    But in reality, that doesn't happen. Even companies that do audit and keep a close eye on things may only, say, audit their largest overseas partner and ignore their smaller suppliers.

    You ask how companies can be certain that their foreign partners are treating their workers fairly, and that's a question without an easy answer. Two points: you get what you pay for. Do you really think the cheapest supplier is not going to cut corners on their labor? Secondly, I suppose the only way you can nearly-guarantee that your workers are being treated well is to employ them yourselves and be within easy supervising distance.

    And even then, that's still not a 100% guarantee.

  6. tioluwa
    February 25, 2011

    DennisQ has a really good point

    “you get what you pay for”

    Labor issues have been on the increase in the tech industry lately and it shows and says alot.

    I personally visited a number of tech companies and factories early this year in china and i can say not everyone is doing what they should be doing.

    Imagine factory workers in sub-zero temperatures working with absolutely no form of indoor heating what so ever.

    Now when companies get cheap quotes from such companies, they are happy, but do they know exactly what goes on there?

    I totally agree with Barbara, if anyone is serious iwth Standards, there must be clear cut audit measures, carried out, with reports, else, let everyone drop the “noise” about what labour laws they are putting in place.

     

     

  7. Ms. Daisy
    February 25, 2011

    Dennis Q

    I really don't believe the criticism is just for Apple alone. it is for Dell, tech companies and others that are outsourcing for maximum profit without regard for the workers who are exploited to make these enormous profits. The responsibility should not be left to the contractors. These companies that outsource to China and other developing economies should share the blame and also be more responsible for assuring the welfare of the workers because they should know better. After all many of these companies are American companies that do business here and have to maintain US Department of Labor standards.

  8. Ashu001
    February 27, 2011

    Barbara,

    Loved your review in its entirety…

    Dell's policy is hitting all the right notes but is lacking one key criterion: There's no mention of audits conducted by Dell or any other organization. Based on the report, it appears Dell's supply chain chiefly self-polices its adherence to labor standards”

    The points you mentioned above are most striking…

    A lot of company insiders will tell you self-policing is the best way to get to the root of the problem.I for one am not so sure.Its a well known fact that critical outsiders tend to uncover much more holes in a company's processes than insiders will ever do.For that reason I always prefer listening into third party reports rather something that comes from insiders.

    So yes,what you said here was most accurate and insightful.Dell's reports were by far the weakest…

    Regards

    Ashish.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.