Time of Transparency - InformationWeek

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Time of Transparency

Companies must act as if they're always being watched - because they are.

The Gap deserves major kudos for baring its supply-chain soul. In mid-May 2004, the clothing retailer posted on the Internet a detailed review of the working conditions in the more than 3,000 factories in 50 countries that supply its Gap, Old Navy, and Banana Republic stores.

The news wasn't good. Despite the company's insistence on humane working conditions for garment factory employees, the report found that "few factories, if any, are in full compliance all of the time."

Nevertheless, the company should be proud of its accomplishments to date. Its report is the first credible attempt by a clothing retailer to publicly rank how well suppliers comply with the company's code of conduct.

What's particularly important about The Gap's initiative is that it wants to work with its suppliers to raise their compliance ratings, and the company is willing to be transparent on its failures as well as successes. Usually a company facing media scrutiny for its suppliers' substandard working conditions claims ignorance of the issue and promises to sever all ties with the offending supplier.

Celebrity Expose

Consider the initial response of rap star Sean "P. Diddy" Combs last October when details surfaced as to how a Honduran factory making his Sean John clothing line was a classic low-wage sweatshop.

The National Labor Committee, an employee advocacy organization, charged that workers were subjected to regular body searches, contaminated drinking water, and 11- to 12-hour daily shifts. Workers were paid 24 cents for each $50 Sean John sweatshirt they sewed. Pregnancy tests were mandatory, and any woman found pregnant was fired immediately.

Combs' reply was swift: "If there is any proof of any wrongdoing, we will terminate our relationship with this factory immediately. I will not tolerate any violation of labor laws at any facility where Sean John is manufactured."

But that's not the response the beleaguered factory workers wanted to hear. Instead of throwing them all out of work, they wanted Combs to insist that their working conditions be improved and wages be raised.

"This is an appeal to Mr. Combs to do the right thing," said Charles Kernaghan, the executive director of the National Labor Committee, the organization that first disclosed the sweatshop conditions in Honduras. "These women need these jobs. And they are willing to work very hard, but they want to be treated like human beings."

Instead of simply walking away from the problem and abandoning the workers, sweatshop critics asked Combs to roll up his sleeves and get his hands dirty by digging in and working to make the employment conditions much better.

The National Labor Committee had some powerful tools to help Combs see the light. One old standby is media pressure. Accordingly, the Committee flew a former employee of the Honduran factory, Lydda Elie Gonzalez, around the country to talk to local media and support groups. She repeated her story about life in the factory. "We are totally slaves. We live inhumane lives."

Drumming up traditional media attention was once essential to the success of pressure campaigns on corporations. Organizations such as Greenpeace are enormously skilled at stunts to attract coverage. And sure enough, more than 500 media outlets picked up the sweatshop allegations against Combs.

But today's activists are increasingly less dependent on the traditional media. They have their own medium: the Internet.

Cause Celebre

In Combs' case, the National Labor Committee put online documentation it said proved the allegations it made against the factory. The Committee's Web site had fact sheets, photos, testimony, and research bolstering its arguments.

The National Labor Committee's Web site is just one node of a far-reaching stakeholder Web that is now keenly interested in Combs' behavior. The rap celebrity has always been a hot topic online, particularly on youth and music sites. But with the disclosure of sweatshop suppliers, interest in him had soared.

This was the most important battleground on which Combs had to defend his reputation. When he created the Sean John clothing line, he insisted: "It's not just a label, it's a lifestyle." Hip customers wanted to know what he meant by that. Many expected Combs to display leadership on the sweatshop issue, and if he didn't, they would complain loudly.

It didn't take long for Combs to realize that he could run but not hide. So he didn't sever his relationship with the Honduran supplier. Instead, he insisted the working conditions be improved, which is what happened. The National Labor Committee's Web site, which previously skewered Combs, now sings his praises.

Life in a Goldfish Bowl

C-level executives of every corporation should put goldfish bowls on their desks to remind them of the new world in which they operate. If there are misdeeds within their company, or the companies with which they do business, it's really only a matter of time before the truth will out.

Don Tapscott is the author of 10 books about technology and society, most recently (with David Ticoll) The Naked Corporation: How the Age of Transparency Will Revolutionize Business (Free Press, 2003).

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