Scalable Capacity Building Program on Wage Management Systems

to contribute towards the achievement of a living wage

Background
Wage Management System programs have been implemented to achieve competitive compensation
and closing the living wage gap for garment workers for over a decade. The method is taking workers’
skills, education and responsibility levels into account. It looks at whether wages were paid on time
and if the principles underlying the company’s wage-setting policy were communicated and discussed
with workers. The method is further based on extensive assessments of wage practices at the factory
level through surveys and focus groups with workers and managers. It also includes improvement
and remediation plans to accompany individual suppliers in addressing key challenges and improving
practices.
Wage Management Systems support and enable factories to develop objective, more skill-based and more
transparent routines for individual wage setting (ie. benefits and other additions). Effective wage
management systems include transparent wage grids in their factories, which show workers how they are
rewarded for different skills, tasks, education and seniority. This allows the workers to better understand
what it takes to influence their wage by improving their skill and performance. But it also strengthens
human resources management systems and leads to an increase in motivation, retention and productivity.
Several assessments and research studies have shown that factories that are implementing programs for
improved Wage Management Systems pay higher take-home wages. These increases were seen as a direct
result of program participation. In addition, these factories had higher efficiency levels and as well
increasingly provided workers with non-monetary benefits, such as subsidized or free meals, housing
subsidies, medical insurance plans, free childcare or health services, and transport subsidies. Further,
there are recent indications that the WMS implementation decreases in-factory gender pay gap.
Project Description
As part of their broader approach towards improving working conditions and closing the living wage gap,
Decathlon, H&M Group and Target seek to develop a standardized program on the improvement of wage
management systems at supplier factories. The program shall heavily draw on the brand’s already existing
resources regarding living wage benchmarking and gap analysis, data collection and wage management
system program content and guidelines. The project shall be measurable outcomes driven, scalable,
modular, adaptable to factories’ needs and bring practical knowledge on wage management systems to
factories. A Wage Management System is understood as the policies, processes and practices around
Wages and the wage setting routines at an employer. The definition of a functional Wage Management
System is: A wage management system that at a minimum has the below 4 mechanisms embedded and
executed within its human resource organization.
1. Proper and correct payment of wages according to individual contracts, legal regulations and existing
collective bargaining.
2. Internal development of human resources policies and processes to ensure competitiveness, high
motivation and sustainable social climate in the factory, including reduction of excessive overtime.
3. A progressive and coherent pay system that rewards workers according to their skills, education,
performance and experience.
 4. Proper mechanisms of workers’ involvement in factory decisions that generate a process of
communication and possible negotiations on the content of wages and payment structures. The wage
management system should be a contributing factor towards closing living wage gaps.

Objectives
The overall objective of this pilot project is to improve worker livelihood and factory efficiency in the
garment and footwear industry. In phase 1, the project will be aimed at workers in Vietnam, India,
Bangladesh, China, possibly to be extended to Indonesia, Cambodia, Turkey and other countries. The
objective is to pilot the program with a selection of 10 factories before larger roll out. The objective will
be realized through a capacity building program that will be focused on Wage Management Systems
(WMS) and Social Worker-Management dialogue (take into consideration points 1-4 project
background).
1) Wage management systems
● Wage classification
● Wage grids (of salary structures, wage formation and performance and compensation ratios)
● Upskilling / cross skilling
● Productivity and competitive wages
● HR Policies and practices
2) Social dialogue Worker-Management dialogue
● Worker representation
● Cooperation and dialogue
● Wage negotiations
● Grievance handling

Requested Deliverables
1. Definition of a clear project plan, measurable outcomes, deliverables, KPIs, timeline, budget and
flexible costing model (to enable other brands to join and meet individual factory’s needs), in
coordination with all 3 brands
2. Organization of the project launch
The official launch will consist of an online event with the brands and factory management. The virtual
launch will be followed by an on-site visit to each individual factory by the provider/ capacity building
team. This visit shall also serve to prepare the factory for initiating the baseline assessment.
3. Execution and analysis of baseline assessment
The baseline assessment will be 90% provided by the brands, the provider shall review the proposed
baseline assessment to ensure relevancy and addition of strategic KPIs. The living wage data used for
benchmarking will be Wage Indicator, Typical Family lowest. The provider shall prepare the factories for
baseline roll out and provide the analysis. Local staff of the brands will support the factories with filling
in the data. The provider's implementation team will verify the data remotely (for the final baseline
assessment on site)
4. Development plan
The provider shall present the baseline assessment results and root cause analysis to factories and support
in the development of a concrete and qualitative corrective action plan.
5. Training program
Once previous steps have been executed, we will move to the core of the program - the training of factory
managers and workers representatives.
The provider shall propose an expertise driven, operational, scalable yet modular training approach to
achieve the capacity building objectives:
● Options for factory individual OR collective training (flexible pricing)
● Propose 4 different training modules, which can be taken on a NEEDS BASIS based on the corrective
action plan (menu style pricing)
● Focus on a train the trainer approach (training of managers and worker representatives rather than
workers)
● Possible combination of online & in-person training, but prioritizing in person
● Training for each facility shall be planned to be completed within 12 to 18 months
● Trainings should contribute to the following:
o A functional Wage Management System (as defined above)
o A clear target trajectory towards closing the living wage gap
o Increased knowledge and understanding of wage formation process and the
o importance for competitiveness, skills improvement and retention.
o A wage and/or skill grid with defined and differentiated wage spans/level
o HR policies, including skills need assessments and skill development plans
o Production planning supporting reasonable working hour management

6. Closing baseline assessment

Mandatory Requirements
 Local staff is available in the pilot countries and can support pilots in local language
● The provider has proven expertise in training (at factory level, incl factory mgmt and worker reps), are
well experienced in management, worker representation, social dialogue, Industrial relations, wage
related topics, in wage management systems and living wage projects, including at local level (or support
can be made available locally)
● The provider is able to provide a scalable and flexible pricing model (development cost is clearly
separated from roll-out cost)
● The provider has experience on project management in garment, footwear and/or sportswear sectors
● Proposal includes a detailed proposal of a training day on wage management system, demonstrating the
provider’s expertise on the topic and understanding of the practical application of the training program
under sector specific conditions.

Offer Requirements
● The offer must be submitted by February 20 - late proposals will not be considered

● The offer must explicitly address all above listed requirements

● The offer may be provided in collaboration with other organizations, but these must be listed

● The offer must detail the credentials of the main individuals that will be running the program and
providing training on site.

● The offer must include a detailed cost table in USD and explanation of the pricing approach

● The offer should include an indication of costs after the pilot phase, ideally costs should be given per
site (e.g. in case of roll-out to 30 sites, the cost per site is …

About RBC
Executive Summary
Statement of Work
Project Background
Brands and retailers play a key role in the long-term success of sustainable practices and communicating
the value of sustainable fashion to consumers globally. Consumers are becoming increasingly interested
in supporting brands and retailers that are socially and environmentally sustainable and transparent
about these practices.

1. Proper and correct payment of wages according to individual contracts, legal regulations and existing
collective bargaining.

2. Internal development of human resources policies and processes to ensure competitiveness, high
motivation and sustainable social climate in the factory, including reduction of excessive overtime.

3. A progressive and coherent pay system that rewards workers according to their skills, education,
performance and experience.
 4. Proper mechanisms of workers’ involvement in factory decisions that generate a process of
communication and possible negotiations on the content of wages and payment structures. The wage
management system should be a contributing factor towards closing living wage gaps.

Factories making product for H&M and other brands are increasingly required to participate in industry
programs aligned with the Higg Index and the Social and Labor Convergence Project. These two unique
requirements align with key performance metrics which brands use for both for internal and external

purposes. The key areas for RBC to collect include the following topical areas:

1)

2)

3)

4)

5)

Scope Statement
The project is aimed at workers in Vietnam, India, Bangladesh, China, possibly to be extended to
Indonesia, Cambodia, Turkey and other countries.

Objective
The overall objective of this pilot project is to improve worker livelihood and factory efficiency in the
garment and footwear industry with selection of 10 factories

Development of capacity building program that will be focused on Wage Management Systems (WMS)
and Social Worker-Management dialogue

1) Wage management systems

● Wage classification

● Wage grids (of salary structures, wage formation and performance and compensation ratios)

● Upskilling / cross skilling

● Productivity and competitive wages

● HR Policies and practices

2) Social dialogue Worker-Management dialogue

● Worker representation

● Cooperation and dialogue

● Wage negotiations

● Grievance handling
Project Deliverables
Proposed Approach
1. Proper and correct payment of wages according to individual contracts, legal regulations and existing
collective bargaining.

2. Internal development of human resources policies and processes to ensure competitiveness, high
motivation and sustainable social climate in the factory.

3. A progressive and coherent pay system that rewards workers according to their, skills, education,
performance and experience.

4. Proper mechanisms of workers’ involvement in factory decisions that generate a process of

Project Plan
Outcome
Key Performance Indicators
Timeline
Budget
Costing Model
Human Resource Plan

Cost Baseline