Investing in Good Working Conditions Brings Real Rewards

Poong In Vina garment factory in Vietnam is reaping the business benefits of having good compliance and systems.

Since 2007, Pham Thi Thanh has watched in awe as the Poong In Vina garment factory where she works doubled, tripled, then exploded in size from 200 workers in 2007 to more than 3,200 workers today.

She watched as salaries increased, accidents declined and satisfied workers, including Thanh herself, racked up seniority, staying at the factory year after year and bolstering the enterprise’s robust base of skilled and trained workers.

They are doing something right,” says Thanh, who works in the ironing section. “I watched them grow from Poong In 1 and 2 to Poong In 3, 4 and 5, even when the economy was not good.

That business success, says general manager Kim Ji Hwan, is rooted in the company’s belief that being good to workers is ultimately good for business.

We wanted to set good working conditions from the beginning and get it right,” – Hwan said.

So when the Korean company opened its doors seven years ago on a spit of open land off a dusty road in Tan Uyen District, Binh Duong Province, 45 kilometers south of Ho Chi Minh City, the company set competitive wages and rolled out a dashboard of employee benefits that not only attracted workers to the factory, but kept them there. Managers hoped good working conditions would not only engender loyalty among employees but also attract international clothing brands eager to do business with factories that respect workers’ rights.

As garment factories across Vietnam jockey for a foothold in the country’s flourishing garment industry, sharply increasing competition for big name buyers such as Gap, H&M and Levis, Poong In knew it needed help to hold onto its competitive advantage. So when the Better Work programme launched in 2009, Poong In was among the first to sign up for services. The global initiative’s focus on bringing garment factories in line with local and international labour standards, reinforced Poong In’s business philosophy that creating and maintaining safe, clean and equitable working environments for factory workers is a win for both workers and the companies that employ them.

Although Poong In followed buyers’ requirements of hewing to labour laws, the company didn’t take compliance to the next level of making real change, says Le Vu Hong Quan, Human Resources Manager at Poong In.

Before joining Better Work, we followed buyers’ requirements, but we were not very active in improving conditions,” says Le Vu. “Better Work helped with advisory services to create improvement plans. Guided by Better Work, buyers were more comfortable working with us.

It’s that trust and credibility of the Better Work name among buyers that was the biggest selling point for Poong In from a business standpoint, Hwan said. Poong In considers Better Work a trusted partner in bringing disparate stakeholders together to focus on solutions that break through employer-worker impasses. And there are an array of smaller benefits, Hwan adds, such as helping Poong In managers understand labour laws, and how they can best observe those laws.

One of the biggest value added benefits of working with Better Work, Hwan said, is the Performance Improvement Consultative Committee (PICC). PICCs are created after Better Work assesses a factory and creates the critical space managers and workers need to discuss concerns on either side. The committee is comprised of an equal number of management and worker representatives who meet monthly, create an improvement plan, and then work to put that plan into action.

Communication, and understanding workers’ concerns and how to navigate them, has been essential to Poong In’s progress, says Hwan, who speaks fluent Vietnamese and regularly eats lunch with workers so he can hear from them directly what their concerns and issues are, and try to head off problems before they become too big.

The business benefits to good working conditions through manager-employee collaboration are evident, Hwan says. When factories provide more nutritious and quality food, workers are more productive. When incentives such as merit-based pay raises are offered, staff turnover rates decline. And when managers and workers communicate more effectively with each other, crises that threaten to disrupt workflow are often diverted.

Yet the successes at Poong In have not come without some growing pains. A strike in 2008 following a government spike in fuel prices and workers’ demands for an increase in transportation allowance, and then a sit-in in 2012 when a new policy banned workers from wearing big jackets (which many used to smuggle snacks onto the factory floor) left workers angry and resentful. Conflicts like these cost the company in both lost production and strained relationships, managers say.

The lessons learned from both instances are clear to Hwan and his management team:

“Relationships are very important,” Hwan said. “If we can increase workers’ satisfaction and keep them a long time, that improves productivity.”