Human resource management and abuse in global supply chains

There is a longstanding debate as to whether humane working conditions improve firm performance. A survey of factory managers indicates that managers believe that humane conditions increase productivity but may not increase profits. These beliefs are supported by existing empirical evidence. Humane conditions of work increase productivity but also increase unit labor costs, leaving an indeterminate effect on profits. The business case for humane labor management, then, has a limited role in promoting social compliance. Rather, social compliance is driven by social factors and managerial capital. Managers of compliant firms believe that they are adhering to an industry social norm. In contrast, managers in noncompliant firms see workers in dehumanized terms. Dehumanization adversely affects the processing of information on conditions of work and the relationship between working conditions and firm performance. Managerial errors, particularly in the design of incentive systems that leave factory, supervisor and worker interests misaligned, contribute to abuse at work such as verbal abuse and sexual harassment.