Strategic Compensation in the Supply Chain

We believe that a skilled, valued and engaged workforce is key for growth and sustainability. Nike is committed to working with our suppliers around the world as they seek to develop strategic compensation capabilities (i.e., competitive wage and benefits systems that progressively meet their employees’ basic needs, including some discretionary income), because every employee has the right to a standard of living that adequately supports them and their families.

Our Approach is Research-Based.

In 2015, we started engaging more deeply with our strategic suppliers to develop new compensation and benefit models. We created a hands-on pilot with one of our supplier’s factories in Thailand, synthesized our learnings in partnership with the University of California at Berkeley’s Institute for Research and Employment, and began facilitating shared learnings across our strategic suppliers. Since then, we’ve transitioned from testing new ideas to exploring opportunities for scale. We now create forums to help facilitate best practices sharing across strategic suppliers to understand their most common challenges in enabling competitive pay. In doing so, we help suppliers assess the different capabilities needed to enable mature compensation approaches as part of their overall strategic human resource management (“HRM”) systems. Best practices include having integrated IT systems, benchmarking with the local labor market, aligning incentives and incorporating worker voice.

Transparency is Key.

Enhancing our visibility into worker take-home pay and factory compensation structures through our partnership with the FLA has strengthened this work even further. By the end of FY20, 13 of our suppliers’ facilities in six different countries (China, Vietnam, Indonesia, Malaysia, Honduras, and El Salvador) had completed the FLA’s Wage Data Collection Tool, which allows suppliers to evaluate their wage data relative to external benchmarks, such as legal minimum wage, national poverty lines and estimates of living wages (where available). To supplement the FLA data, we’ve worked with an external organization to secure data on local apparel and footwear manufacturing wages in key countries. This research helps inform our understanding of wages in our supply chain, in general, and how and where to focus our support for suppliers in developing their compensation systems.

We’re Looking Ahead.

In the future, we will seek to expand the scope of our wage data collection to help us better support suppliers in evaluating wage levels for their facilities and to provide us with a more comprehensive understanding of pay packages and compensation structures. Strategic compensation is a key priority that we will continue to articulate to our suppliers as part of our broader work on HRM, and in doing so, we emphasize two important elements — supporting workers’ livelihoods and remaining competitive employers of choice in local labor markets.