Human Rights: Employment Relations and HRM in the Supply Chain

Over the last decade an extensive literature on employment relations and human resource management in MNCs has developed. However, this is usually limited to the organizational boundaries of a corporation and does not extend to the supply chain. In regard to employment practices in the supply chain, CSR has emerged as a norm that MNCs have to adhere to, for which the term human rights has become widely used. This paper analyses based on Sustainability Reports to which extent MNCs conform to these expectations and the HRM policies they have developed.

Human rights violations regularly make headlines as corporate scandals (Greve et al., 2010). While the involvement of the national states in human rights issues is long established (UN, 1948) in recent years there is a growing body of literature from different disciplines discussing the role of multinational corporations (MNCs). In the HRM literature, however, there is so far a scarcity of research concerned with Human Rights issues. In particular there is hardly any research on the role of HRM in regards to basic minimum standards of health and safety, child labour and the right to organize that are often not adhered to in supply-chain operations in developing countries (Jackson and Schuler 2014, Muller-Camen & Elsik, 2015). This is surprising at a time, when there is increasing social as well as political pressure on corporations to respond to Human Rights violations (Greve et al., 2010) and as most of these social issues are people management issues.

Human Rights has already entered the discourse of MNCs themselves. While accountability for Human rights violations was rejected on basis of lack of control mechanism of outsourced manufacturers and suppliers in the 1990s, MNCs have come to terms with extending their responsibility to their suppliers’ working conditions along the whole supply chain since the 2000s. Furthermore, external pressures from the media, NGOs and consumer groups in the wake of corporate scandals resulted in a higher awareness for and reporting of Human Rights responsibility along the supply chain instead of the single organisation which is in accordance with a multi-stakeholder instead of single-shareholder focus. Another impact is the growing reporting about workplace social standards. As Roper, Szigetvari, Parsa and Muller-Camen (forthcoming) show, this is largely driven by the increasing adoption of the Global Reporting Initiative (GRI).

Methods

This paper applies a documentary analysis and uses sustainability reports as main data source. The reports were selected on basis of the Forbes Global 2000 - which comprises the worldwide largest MNCs. Such reports are suitable sources for researching Human Rights issues on a discursive level as they visible address Human rights issues because these are part of the GRI standard and UNGlobal compact which MNC apply on a wide basis. Further the analysis was conducted at a company and an industry level. Automotive and retail were chosen as industries with different supply chain issues to be compared.

Sustainability reports of MNC are commonly drawn up for an external audience and used as information for shareholders, potential investors, rating agencies and/or the general public. Hence, reports are a form of self-representation of MNCs to external audiences in contrast to codes of conduct for example which are mainly directed towards employees as internal audiences. As reports are publicly accessible on the corporations’ websites they are an approved and a reliable source of the official and formal MNCs perspective on applied Human rights issues (Bondy et al., 2004).

The data analysis proceeded in three steps. In a first step the reports were screened for human rights sections. As Human Rights are one of the core areas of sustainability reporting standards, some reports contain a human rights section of several pages. Further a systematic keyword search was conducted to identify all relevant sections in the reports. The keywords included human rights and human rights issues according to UN Global Compact and GRI (Hahn & Figge, 2011; Global Reporting Initiative, 2014) such as child labor, forced compulsory labor, freedom of association, collective bargaining, non-discrimination, working hours and last but not least, wages. The next step consisted of coding all identified text passages with a coding scheme containing human rights issues - as applied by GRI and UN Global Compact- and HRM practice applying a thematic content analysis (ATA). Following our research interest we focused on human rights issues referring to HRM practices and classified those issues accordingly. HRM practices are divided into planning and recruitment, selection and staffing, training and development, rewards and performance appraisal and last but not least communication. In a third step HRM practices concerning human rights issues are differentiated on basis of the persons, either suppliers/supply chain or employees within the MNC, they targeted. Further, we coded whose responsibility the HRM practices on human rights were. The analysis process has been carried out in an iterative manner and the sensemaking process was assisted by writing memos (Miles & Huberman, 1994).

First Results

The results of a preliminary analysis of ten reports highlight the importance of a more active role of HRM in regards to Human Rights. Although companies describe HR practices in their reports, our analysis indicate that they do not fulfil the need to manage the risk of exploitation in the supply chain. Furthermore our discussion on the reasons for HRM contributions and the significance of HR activities in the report potentially provide a missing link between MNC´s promises and reality.