In the early 1990s， Haas developed global guidelines addressing specific workplace issues， such as length of work periods， fair wages， respect for the environment， and prohibitions against child labor. To add muscle to these guidelines， the company began sending inspectors around the world on surprise visits to look for violations. It was during one of these global audits that Haas discovered some manufacturing contractors in Asia employed underage workers， a clear violation of the guidelines. However， most of the children were significant contributors to family incomes， and losing their jobs would force them into more inhumane ways of earning money. Wanting to retain Levi Strauss as their customer， the factory owners asked Levi's management what to do. Some companies with strong values confronting this issue might simply instruct contractors to discharge underage workers. But Levi Strauss devised a unique solution with positive benefits for everyone.
The contractors agreed to suspend underage workers but still pay their salaries and benefits. For its part， Levi Strauss paid for school tuition and other education-related expenses with no obligations. When the children reached working age， they were all offered full-time jobs in the manufacturing plants. Everyone gained. The children were able to continue their education and their family income contributions， the contractors kept their good customers， and Levi Strauss retained its quality contractors while protecting company values.
Levi's faced more ethical problems in China， where widespread abuses of human rights clashed directly with the company's ethical principles. So Haas decided to phase out most of Levi's operations in that country over a period of several years. Although some critics argued that the move was just a public relations stunt， and that losing its $50 million annual business in China was small compared to the favorable publicity the company would receive， Levi’s maintained that its only objective was to uphold its own ethical standards. “Our hope is that conditions will change and improve so that we can revisit our decision at some time in the future，” stated one Levi's executive.
The company could turn to its established ethical guidelines to handle the challenges it faced in Asia， but the another challenge would be harder to deal with. Demand for Levi's products was sagging， so the company had far more manufacturing capacity than it needed. The problem had several causes： （1） The company had failed to notice certain fashion trends that competitors recognized early （such as teenagers' preferences for extra-baggy jeans）， （2） the company had no consistent marketing message （which resulted in its blue jeans being perceived as “preppy” or for older generations）， （3） the company's slow product-delivery and restrictive pricing policies angered many retailers and prompted some to carry more competing brands， and （4） many competitors produced the majority of their products overseas using more advanced production technology and thus requiring fewer employees， which enabled them to undercut Levi’s prices.
To overcome these threats， Haas began a new campaign to listen to the needs of consumers， cut production costs， improve relations with retailers， and refocus its marketing message. Unfortunately， the situation required Hass once again to face the difficult task of laying off large numbers of workers. In early 1997 the company laid off 1，000 management and clerical employees to save $80 million in costs. Nine months later the announcement was made that Levi's would close 11 U.S. plants and lay off nearly 6，400 production workers， a full one-third of its U.S. work force. The decision was not an easy one， but Haas and the rest of Levi's senior managers saw it as necessary in order to keep the company profitable in the years ahead. Nevertheless， Haas was not about to let employees just walk out into an uncertain future. Some had been with Levi's for many years. So true to the company’s high standards for social responsibility， Levi's spent $200 million on severance pay and additional benefits.
Under the generous plan， each laid-off worker received 8 months' paid notice before the job cuts took effect； up to 3 weeks of additional pay for every year of service with the company； a $500 bonus upon finding a new job； paid health benefits for 18 months； and a $6，000 allowance for relocating， retraining， or starting a new business. In addition， Levi's provided career counseling to employees for up to 6 months， and the Levi Strauss Foundation gave $8 million in grants to assist communities affected by the plant closings.
Conventional wisdom holds that the costs of these progressive solutions placed Levi Strauss at a competitive disadvantage. But Bob Haas believes that decisions emphasizing costs alone do not serve a company's best interests. And Haas has taken action on this belief time and again.
The contractors agreed to suspend underage workers but still pay their salaries and benefits. For its part， Levi Strauss paid for school tuition and other education-related expenses with no obligations. When the children reached working age， they were all offered full-time jobs in the manufacturing plants. Everyone gained. The children were able to continue their education and their family income contributions， the contractors kept their good customers， and Levi Strauss retained its quality contractors while protecting company values.
Levi's faced more ethical problems in China， where widespread abuses of human rights clashed directly with the company's ethical principles. So Haas decided to phase out most of Levi's operations in that country over a period of several years. Although some critics argued that the move was just a public relations stunt， and that losing its $50 million annual business in China was small compared to the favorable publicity the company would receive， Levi’s maintained that its only objective was to uphold its own ethical standards. “Our hope is that conditions will change and improve so that we can revisit our decision at some time in the future，” stated one Levi's executive.
The company could turn to its established ethical guidelines to handle the challenges it faced in Asia， but the another challenge would be harder to deal with. Demand for Levi's products was sagging， so the company had far more manufacturing capacity than it needed. The problem had several causes： （1） The company had failed to notice certain fashion trends that competitors recognized early （such as teenagers' preferences for extra-baggy jeans）， （2） the company had no consistent marketing message （which resulted in its blue jeans being perceived as “preppy” or for older generations）， （3） the company's slow product-delivery and restrictive pricing policies angered many retailers and prompted some to carry more competing brands， and （4） many competitors produced the majority of their products overseas using more advanced production technology and thus requiring fewer employees， which enabled them to undercut Levi’s prices.
To overcome these threats， Haas began a new campaign to listen to the needs of consumers， cut production costs， improve relations with retailers， and refocus its marketing message. Unfortunately， the situation required Hass once again to face the difficult task of laying off large numbers of workers. In early 1997 the company laid off 1，000 management and clerical employees to save $80 million in costs. Nine months later the announcement was made that Levi's would close 11 U.S. plants and lay off nearly 6，400 production workers， a full one-third of its U.S. work force. The decision was not an easy one， but Haas and the rest of Levi's senior managers saw it as necessary in order to keep the company profitable in the years ahead. Nevertheless， Haas was not about to let employees just walk out into an uncertain future. Some had been with Levi's for many years. So true to the company’s high standards for social responsibility， Levi's spent $200 million on severance pay and additional benefits.
Under the generous plan， each laid-off worker received 8 months' paid notice before the job cuts took effect； up to 3 weeks of additional pay for every year of service with the company； a $500 bonus upon finding a new job； paid health benefits for 18 months； and a $6，000 allowance for relocating， retraining， or starting a new business. In addition， Levi's provided career counseling to employees for up to 6 months， and the Levi Strauss Foundation gave $8 million in grants to assist communities affected by the plant closings.
Conventional wisdom holds that the costs of these progressive solutions placed Levi Strauss at a competitive disadvantage. But Bob Haas believes that decisions emphasizing costs alone do not serve a company's best interests. And Haas has taken action on this belief time and again.