Well known Harvard Business School Professor Michael W. Toffel recently published the results of three studies into CSR/social auditing, including what makes an audit valuable and how to help plants actually learn from the audit results. Prof. Toffel narrates the key insights in this 4-minute video.
Our main takeaways were:
- Toffel states that “We assume that most clients want the auditors to tell them the unvarnished truth. Obtaining accurate information from these auditors is critical to enable brands to manage this risk.” We are not sure this is universally so and impacts how plants respond to audit findings.
- They found a relationship between three aspects of audit team makeup and the number of audit findings reported:
- Returning auditors tend to have fewer findings than an auditor who has not audited the site previously.
- More years of auditing experience and training means a higher number of findings than auditors with less experience/training.
- Female audit team members tend to identify more findings than male auditor team members.
- The biggest improvements came when a highly-trained team performed an announced audit.
- Audits are a critical method for knowledge transfer “and for knowledge to be transferred effectively, you have to have a knowledgeable auditor, but you also have to have a receptive factory manager.” The receptiveness of a plant manager is linked to Point #1 above.
- Factories in countries with greater press freedom were substantially likelier to improve.
- Audit teams seem to have fewer findings where the factory pays rather than the brand. While Toffel suggests this may be a result of conflict of interest, we believe there is another side that is more prevalent. Factories are subject to enormous cost pressures and tend to select the lowest cost providers, which translates to less experienced/trained auditors not fully prepared to identify complex situations and findings.
The direct linkage between qualified auditors and the quality of audit results is a drum have been beating for years, but in the current environmental of increased supply chain transparency – and liability – companies should rethink the value, make-up and execution of supplier audits. Call us to discuss our views on this further