End of the Line: The Hidden Costs of Global Recruiting

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Featured Guest Post by Gerry Crispin

The hiring process has no minimum acceptable (or unacceptable) standard of practice. Anything goes and many recruiters prefer it that way. Perhaps intuitively we know that people who think of themselves as recruiters (or enjoy being seen as successful recruiters by others), are highly individualistic and, if occasionally a line is crossed, well, it’s easy enough to distance the professionals on the right side from those who fall outside that broad norm.

That ‘norm’ however is typically a US centric perspective at a time when we are moving increasingly toward a global community. Internationally, the ‘practice’ of recruiting isn’t nearly as individualistic and its many forms are often deeply embedded in the culture of the country.

It is here, at the edge, that some forms of recruiting include practices so egregious (when considering the desperation of those seeking work)- practices we could never imagine being associated with what we love doing. In the past, it’s been easy to ignore them. Out of sight, out of mind. In the future, as our business leaders ask us to participate in ‘globally integrating’ our recruiting platforms, maybe it’s not so easy to dismiss.

Postcards from the Edge: Bibek’s Story

Fullscreen capture 152014 105756 AMA recent investigative article published by Bloomberg BusinessWeek in November is a prime example of challenges that may be in store for HR and Recruiting Leaders and suggests why we need a global recruiting standard for what should and what should not be minimally acceptable practices.

The article is an important read on many levels and, not at all specific to Apple who figures in it centrally.

Here are the bare facts of this story that keep me thinking about how far we’ve come…and how far we need to go as a profession that claims both a body of knowledge (content) and its relationship with the values and mission businesses aspire to (standards).  Consider:

  • In 2012 Apple successfully launched the iPhone5 and demand suggested a speedy ramp-up was needed for assemblers and testers.
  • Apple subcontracted with Flextronics, another multinational and one of their top 10 suppliers, to add 1500 workers quickly to a factory near Kuala Lumpur, Malaysia.
  •  Flextronics contacted independent ‘recruiter’ organizations (brokers) including 4 in Nepal (there is a reason that workers were sought outside Malaysia as this country’s employment laws, such as minimum wage, only cover its own citizens, not temporary workers of neighboring countries).
  • The 4 recruiting subcontractors of Flextronics subcontracted to dozens of independent ‘recruiters’ who fanned out to villages throughout Nepal.
  • They found and engaged hundreds of prospects like Bibek Dhong (pictured)
  • Bibek, like all the other candidates, was charged a fee…by EACH subcontractor in the chain- totaling nearly $1000 (plus interest since most candidates must take out a loan to pay). Bibek agreed to go into debt and the job was his. (This, by the way, violates Apple’s ban on the practice- but, in some mysterious way, Apple insists that these fees should not exceed 1 month’s net pay! We would like to meet the person who determined this amount…and wonder if he has his GPHR certification).
  • Apparently all involved (Flextronics and other global outsource vendors) know the practice of selling jobs exists but cannot seem to alter the local ‘custom’. The article speculates that more than 150,000 workers involved in manufacturing and service of multinational firms obtain their jobs through this practice in Malaysia alone.
  • Bibek and his newly ‘hired’ peers are flown to Kuala Lumpur on a 30 day visa. He is driven to a block of apartments (arranged by Flextronics). His passport is surrendered to the factory manager.
  • Bibek is paid $5.80 per day. (Approximately what Mr. Ford paid his workers to assemble cars…in 1914.) Calculating how much Bibek will be able to keep after paying his debt is worth the exercise. Alternatively, calculate how long it will take him to pay off $1000 plus interest if he gives the recruiters ½ his pay.
  • Epilogue: within 2 months (visas were never renewed by Flextronics) the 1500 are let go (given 2 month’s severance) and stranded (illegally) in Malaysia for many more months until they paid their debts to the recruiters. (Some of which was handled when these practices came to light.)

One small concern (but a keen source of embarrassment) is that these modern day slavers are called ‘recruiters’…over and over again. That has to stop. Let’s call them what they are.

Developing Nations, Developing Best Practices

A larger concern is that Recruiting and HR leaders in large multinational firms are conveniently 1, 2 even 3 degrees of separation removed from the actual hiring. They may hold the title of global head of HR or Staffing but are insulated by layers of subcontractors who are, up until now, seldom audited. Try as hard as you want, but employers will never fully shift their responsibility when the conditions of people engaged in making their products or providing their services are brought to light…no matter what logo is over the door.

Fortunately, as more and more quality HR and Staffing leaders get involved and learn what is happening at the trench level, they are pushing their firms to resolve the problems and not hide them away. We should all support their extraordinary efforts to change these practices and encourage them to share their stories as a model for others.

A related concern is that multinationals, in the absence of any acceptable international standards, are left to determine on their own what ‘fair’ and ‘acceptable’ minimum recruiting practices are- and how far they should go in changing the customary sale of jobs. There should be an independent take on these issues. There is, for the first time, an initiative under the umbrella of the International Standards Organization (ISO) begun in 2013 with US participation (ANSI/SHRM) to establish a minimum global standard for recruiting. While compliance with such standards is voluntary, it’s also public knowledge whether companies comply. If the right questions are asked, we can all be responsible in how we spend our money with those who choose not to comply.

Think Global, Act Local is a cliché with valuable but limited ability to guide our actions. In this case, there is no reason why multinationals should ever accept local customs that so obviously violate their stated values.

About the author: Gerry CrispinSPHR is a life-long student of staffing and co-founder of CareerXroads, a firm devoted to peer-to-peer learning by sharing recruiting practices.




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