HUMAN RESOURCE AND WORKERS EMPOWERMENT

Our Approach The apparel, footwear and equipment industries have remained fairly low tech, employing low-skilled labor in emerging markets. This model, however, is being challenged to its core. One legacy of this model is immature local management systems for suppliers, with human resources policies that place a low value on workers. Today, that view is going through a fundamental shift, and Nike's supply chain is taking a lead on this transformation. We are working with contract manufacturers to apply lean manufacturing, an approach that delivers the highest-quality product while eliminating all types of waste, including lost time and material. Nike's approach to lean includes worker empowerment - giving factory workers the skills and abilities needed to manage production and immediately address issues as they arise, such as quality or process improvements. These changes put decisions closer to the worker, and require a high level of support to ensure they have the skills and confidence to consistently produce quality products. We believe lean holds great promise for worker empowerment and provides opportunities for workers to increase their skills and contribute to continuous improvement. Our work with manufacturers to promote lean manufacturing is part of our fundamental shift away from monitoring and toward building manufacturing capacity for selfmanagement. We believe this will ultimately be a more successful and sustainable approach to stimulating systemic change and improving the lives of workers. Culture of Empowerment Model

The HRM curriculum is based on the Culture of Empowerment Model, adopted from Toyota's Human Systems Model as described in "Toyota Culture, the Heart and Soul of the Toyota Way" (Jeffrey Liker and Mike Hoseus, 2008). The curriculum contains 10 modules that each focus on a key area of the Culture of Empowerment Model. Each module is designed to share HRM best practices related to lean manufacturing, and contains interactive exercises that allow factory managers to assess their current state and identify improvement opportunities in areas including recruiting, selection, employee development, performance management, worker-management communication and retention. The curriculum also contains instruction and exercises on lean problem solving and planning tools including PDCA (plan, do, check, act) and A3 reports, which facilitates knowledge sharing and collaboration in a concise document. These tools are used throughout the capacity building to define follow-up projects that factory managers implement after completing the training. How We Build Capacity A key tool of lean manufacturing is human resource management (HRM). In FY07 we began a process to develop and pilot HRM programs with contract manufacturers. The programs, described in detail below, encompass training for contract manufacturing management on HRM best practices that are aligned with lean manufacturing, surveying workers to provide insight into key issues and learning what steps are needed to ensure we create an empowering work environment. The participatory training includes direct interaction with focus factories and identifies issues for further action through the development of action plans. Nike training establishes guidelines but does not set details. The details are determined by the needs of the factories and workers. By working with contract manufacturing management, we aim to create a sustainable framework for improving working conditions by identifying and addressing the root cause of issues as they arise. We also address manufacturing management buy in, cultivating a more skilled and competent work force and achieving a consistent approach to human resource management across all factories. Our HRM program is designed to help manufacturers understand the benefit of lean manufacturing and the value of an empowered work force. It requires significant change for many contract manufacturers that lack fundamental HR systems or practices, are underresourced in the HR function and/or lack comprehensive senior leadership understanding of and support for HRM. We believe this approach is innovative: no other capacity-building program in our industry integrates HR and support of lean manufacturing in this way, addressing both the needs of the factories and workers, as well as the business.