MANAGEMENT APPROACH
A sustainable approach starts at home, with safe workplaces, mutual respect and common values. The Group’s values and foundation helps Electrolux realize this approach and comprises both operational and core values.
For achievements and objectives regarding labor practices, refer to the performance reviews of People and operations (Ethical Business), performance reviews of Stakeholders and society (Responsible sourcing) and to Community for insights into shifting production to low-cost regions.
The Electrolux Foundation, or the Group’s operational values, affirms the corporate culture and commitment to sound and universal ethical business practices. They are defined as ethics, integrity, respect, diversity, environment and safety. Electrolux aligns its management of labor and human rights with the Foundation through Group codes and policies, both internally and along the supply chain.
Relevant codes include the Electrolux Code of Ethics and the Code of Conduct (CoC), supported by the Workplace Standard. The Standard outlines mandatory practice to ensure CoC compliance. All sustainability-related policies and procedures affirm the Group’s endorsement of the UN Global Compact principles on human rights, labor, the environment, anti-corruption and the respect and support of labor rights as set out by the ILO Declaration on Fundamental Principles and Rights at Work. The CoC and Workplace Standard apply in equal measure to Electrolux operations and along the supply chain. The revised CoC and Workplace Standard were approved and launched in 2014.
Electrolux has a number of ways of ensuring that the Code of Conduct is fulfilled within its operations and along the value chain and these are described in Auditing and monitoring.
As each unit’s line management has particular responsibility for active implementation of the CoC and Workplace Standard, they play a crucial role in implementation. This includes communicating CoC requirements within their unit on a regular basis through training and annually assessing the unit’s CoC performance. Responsibility also includes ensuring that practices and processes align with the CoC. Suppliers are required to uphold the same standards, and are audited, based on risk of non-compliance, as described in the Human rights management approach section of this report.
Oversight of training programs is provided by Human Resources. Responsibility for CoC training and, awareness rests with local line management. Performance is followed up through the CoC audit program.
In 2014, training on the revised Code of Conduct and the Industrial Relations Strategy was rolled out to all Sector Leadership teams apart from North America where it will be carried out early in 2015. Training is tailored to a variety of audiences, targeting in particular line managers at unit level in plants and purchasing managers world-wide.
Ethics at Electrolux is an ethics program comprising training and a whistle-blower facility – The Ethics Helpline. Educational materials use scenarios to explore ethical dilemmas employees may encounter in their work. The program is a cross-functional initiative, led by Sustainability Affairs together with Human Resources, Group Legal and the internal audit function Management Assurance and Special Assignments (MASA).
The Purpose is a program that encourages all employees in the company to contribute to developing smart, resource-efficient solutions, and creating value beyond market and financial objectives. It has also been a means to support integration of the sustainability strategy. To date, approximately 4,200 employees have been engaged in purpose workshops held across the company. The program will continue in 2015.
The annual ALFA (Awareness-Learning-Feedback-Assessment) and CoC audit program and their follow-up processes are described in Auditing and monitoring. They ensure management attention to the CoC and Workplace standard, and help identify improvement areas. The ALFA assessment gives a broad overview while the internal CoC audit program is designed to achieve a deeper understanding of CoC compliance.
As outlined in Auditing and monitoring, the selection of facilities for auditing is based on factors such as the human rights risk level of the country, historic audit performance of the unit, Helpline calls, customer requests and the nature of activities. In 2014, 12 (22) of 24 (27) facilities in high-risk countries were audited. Aggregated audit outcomes indicate an improvement and the number of findings per audit decreased from ten in 2013 to five in 2014.
Additionally, the global ISO certification program for environment and quality encompasses annual audits of all manufacturing facilities, with recertification audits every third year. For selected sites, the audits also cover OHSAS for health and safety.
The results from the 2014 ALFA assessment indicate that there are opportunities to improve Code of Conduct compliance in the areas of supplier management, security arrangements and monitoring.
The ALFA 2014 assessment was updated to include the new requirements in the revised Code of Conduct and Workplace Standard. Strengthened and clarified requirements have led to reduced alignment with the Code in the areas of ‘Supplier’ and ‘Freedom of association’. Alignment with the new CoC section ‘Security arrangements’ also indicates room for improvement. Additionally, ‘Monitoring and compliance’ continues to be one of the weaker areas, as a few sites report that they lack efficient processes in place to assess CoC compliance annually. The ALFA will be used to monitor progress on implementing the new CoC and Standard in the next few years.
Electrolux conducted 12 (22) internal Code of Conduct audits.
In markets increasingly vying for top talent, continual alignment to business priorities is the key focus area for talent management. Electrolux has a group-wide HR plan—the people plan—that will help realize the company ambition to find the right people in the right jobs, and thereby support execution of the business strategy. In 2015, the HR plan will maintain a focus on three core priorities:
The plan promotes strong leadership aligned with the business strategy, focusing on building a learning organization and strengthening capabilities and competences in prioritized areas. Electrolux has group-wide processes in place to support the development and execution of the key areas identified above.
Electrolux has various human resource-related policies in addition to Codes and standards. They include the Appointment of Senior Managers Policy, the Recruitment and Internal Transfer Policy, and the Grandparent principle—all designed to ensure fair and transparent hiring practices—as well as the Compensation Policy and Pension and Other Benefits Policy, defining a consistent approach to remuneration.
In addition, the Group applies tools for strategic recruitment, performance management, talent management and leadership development to develop human resources long-term.
A new global Industrial Relations Strategy was developed in 2013 and introduced in 2014. Dialog with international unions such as IndustriAll and IF Metall, learnings from experiences in emerging markets and engagement with investors informed the strategy process.
LA 2 and 4: Rate of employee turnover and collective bargaining coverage
| 2014 | 2013 | 2012 | 2011 | 2010 | |
|---|---|---|---|---|---|
| Total emplyees - Male1) | 28,258 | 33,195 | 41,053 | 26,283 | 27,997 |
| Total employees - Female1) | 15,258 | 16,800 | 18,425 | 15,042 | 15,404 |
| Employee turnover - All employees (%)1) | 27% | 14% | 12% | 20% | 16% |
| Employee turnover - Male (%)1) | 27% | 16% | 12% | 23% | 18% |
| Employee turnover - Female (%)1) | 27% | 12% | 12% | 15% | 12% |
| LA4 Employees covered by collective bargaining (%)2) | 63% | 63% | 63% | 68% | 69% |
1) Data cover 53 production facilities, 24 warehouses, and 30 offices corresponding to 43,516 employees.
2) Employees at production facilities covered by collective bargaining agreement. 22,805 of 36,154 employees at 53 production facilities were covered by collective bargaining agreements.
As regulated by Swedish law, labor relations starts at the top. The Board of Directors comprises non-executive members, the President and three employee representatives together with their three deputies. Working within the guidelines of the global Industrial Relations Strategy, Labor relations are primarily managed at the national and local-site levels in accordance with the CoC and Workplace Standard.
The CoC stipulates that all Electrolux employees are free to exercise their legal rights to form, join or refrain from joining organizations representing their interests as employees. In addition, Electrolux insists that all operations and those of its suppliers respect employees’ right to collective bargaining. The revised CoC and Workplace Standard are further aligned with OECD Guidelines for Multinational Enterprises and ILO core conventions in these regards.
Swedish Board union representatives visit select regions within the Electrolux sphere on a needs basis to educate local union representatives and share best practice on union work.
In those regions where worker associations are not possible or not yet fully developed due to national praxis, each unit and supplier is expected to find appropriate and legal mechanisms through which workers can effectively express workplace concerns to management. Records are to be kept from these formalized consultations and made available upon request.
Freedom of association provisions include parallel means, which are to be put in place in countries where the right to freedom of association and collective bargaining is restricted. Every unit must have mechanisms in place to ensure that workers can express their concerns to management and that records are kept from formalized consultations.
As of 2010, Electrolux has an International Framework Agreement (IFA)] in place, signed together with the Swedish trade unions IF Metall, Unionen and the federation formerly known as the International Metalworkers Union (now IndustriAll). Through this, Electrolux and key unions underline the Group’s commitment to maintain the same standards in all the countries where it operates, and specifying core ILO conventions.
In fulfillment of agreements, CoC compliance is reviewed and discussed with employee representatives on an ad hoc and annual basis. Dialog covers outcomes of the CoC assessments and internal audits, an overview of cases reported through the Ethics Helpline and general improvement areas.
The group-wide accident rate was reduced by 10% (10%) this year, taking the company a few steps closer to realizing its vision of accident-free facilities. This data encompasses all Group factories, warehouses and newly acquired operations.
The Group’s work with OHS primarily focuses on the safety of workers in production and secondly to raise awareness on health and wellbeing of office workers.
All employees in production are covered by a system for monitoring incidents and worked hours. Employees in Major Appliances are covered by the OHS Safety Management System assessment process, as described in Auditing and monitoring. Major Appliances has a goal to operate 25% of its plants at OHS best practice levels (TCIR of less than 0.25) by 2015.
Three of four Small Appliance factories use the same reporting system as Major Appliances.
Electrolux Professional, consisting of some 2,600 (2,600) employees, has its own program aligned with Group ambitions, yet tailored to operational challenges of dealing with more hand-crafted products. Performance is disclosed in group-wide data collection.
Within Major Appliances, each manufacturing facility develops a one to three year safety action plan based on minimum global standards. Each month, the management team at each facility meets with employees to review safety and environmental incidents and develop prevention actions. They identify both risks on site and mitigation plans.
The Major Appliances global safety team is responsible for the development and implementation of the health and safety recording system. It collects safety statistics monthly and incident reports daily for every manufacturing facility on a monthly basis, thereby identifying commonalities between production groups, regions and by product line.
Another focus is on setting minimum standards for high-risk tasks across the business.
Global Safety Day, designed to engage Major Appliances employees and demonstrate management commitment, is an increasingly important event in factory calendars, where ‘best performing’ and ‘most improved’ regional facilities are recognized. Global Safety Day is part of a larger plan to increase performance at all plants. Each facility has developed a plan to contribute to the group-wide goal. The overriding aim is to prevent injuries and environmental incidents from occurring in the first place.
In of 2014, the group-wide Employee Engagement Survey (EES) measured safety awareness levels among all factory workers. Survey outcomes indicate a high degree of safety awareness among employees. Improvement areas include more active ‘leadership by example’ from managers and Health and Safety training.