What would you do if you discovered modern slavery in your supply chain? The role of psychological distance…

In a recent article published in the Journal of Operations Management (“The role of psychological distance in organizational responses to modern slavery risk in supply chains“), I along with a team of co-authors from Australia and Finland worked to understand how supply chain executives are able to distance themselves from the reality of slavery and forced labor in their supply chains.  It is estimated that more than 40 million individuals are exploited through various forms of modern slavery globally.

The paper involved interviews with 41 global organizations, and we spoke frankly with senior executives about what their real attitude was towards slavery in supply chains.  We asked them a hypothetical question:  how would you react if you discovered that there was forced labor or other forms of slavery going on in one of the suppliers within your network?

The responses we received varied considerably, and varied widely.  Here are some sample responses:

• “A light speed hustle to get away from it.”
• “I think it would come out in the audit. But we probably need to get out and see our suppliers on the ground.”
• “We would use our quality system to self identify a mistake. Would move the work as fast as humanly possible, including shutting down the product line and that we would report them to whatever relevant authority and scream it from the mountaintops that I could what they were doing.”
• “If we ever found it, we would stop using that supplier right away.”
• “I don’t have an answer at this stage which is what frustrates me the most.”  What level should I go to?  How deep should I go into this?”

The latter response was typical – many executives simply don’t know what they would do if they discovered slavery in their supply chains!  Individual responses had a lot to do with a concept called psychological distance.  This refers to the condition where executives tend to create more “abstract” visions of things like slavery – whereas lower level people, who are conducting the site inspections, will have a much more “concrete view of what is going on in factories.  Thus, executives who are “further” from the reality of the situation have “greater psychological distance (PD)”.  As PD increases, objects, events, persons and ideas will be represented in more abstract ways and decision-making will rely more on abstraction.

So what does this mean for supply chains?  As supply chains become more global and dispersed, the impact of psychological distance between buyers for large brands and companies in the US and their suppliers working in low cost countries has grown.  Many companies characterize slavery as a “risk” – and thus rely on public and private databases and AI methods, that are typically relying on visible data such as media incidents, or audits of faciality designs.  Most of these are hopelessly out of date. Likewise, relying on third party audits or supplier self reporting leave such perceptions vulnerable to fraudulent auditing, bribery, or deception by suppliers.

We discovered that most supply chain executives we interviewed were in the early stages of really understanding what global slavery was all about. and lacked awareness of modern slavery’s complexities.  Many doubted whether THEIR suppliers could be involved in exploitation or conceal it, that workers would hide abuses in their communities, yet also realized that the traditional methods for managing supply risk were not suited to modern slavery risk.   Many also relied on codes of conduct embedded in supplier contracts as the foundation for their belief that this alone would suffice to hinder any non-compliant labor activities from going on.

A smaller group of organizations were in fact working to create a new approach, that relied on a multitude of different forms of engagement, including situation specific strategies tailored to the country and region in which the work is occurring.  These managers understand that exploitation is often embedded in communities, and part of the employer-employee relationship.  This unique mix of supplier and worker conditions requires a customized approach, including audits for seeking indirect information and target specific area, working with governments, trade, or buying groups, and improving suppliers’ understanding of their expectations.  They invested in communities, local education systems or support systems for workers.  The focus of these companies is on monitoring the factors that foster and embed abuses, rather than simply reporting on incidents.  Global slavery is a complex phenomenon – and those organizations that are committed to first understanding it will also comprehend the complexity of the solution for addressing it.