Annex 3: How to Set Up a

Social Management
System (SMS)
This annex of the amfori BSCI System Manual guides amfori BSCI participants
and their business partners on how to set up a functioning social management
system (SMS) to support their efforts to translate the amfori BSCI Code of
Conduct into practice. Furthermore, it provides guidelines to auditors, which
complement the amfori BSCI System Manual Part III, The amfori BSCI auditing
interpretation guidelines.

DEFINITION
A SMS is the set of policies, processes, and procedures that allow a business to manage its social
performance on a continuous basis in order to track improvements.

An effective SMS will help a business to:

 Demonstrate its business maturity as a responsible enterprise

 Consolidate reputation vis-à-vis clients, customers and investors
 Early detect, monitor, and remedy any adverse impact of its business activities

Each business will adapt the social management system to its size, sector or business culture.
However, the basic principles of the SMS remain the same.

BASIC PRINCIPLES

Engagement: The development and implementation of an effective SMS cannot be made in

isolation, but require a regular engagement of several functions within a business enterprise.

The crucial functions to engage with are:

 Human resources
 Occupational health and safety
 Quality and compliance

If the business is a micro or small enterprise, chances are that these functions are executed by the
same individual. Nevertheless, coordination between these functions must exist to ensure the SMS
works.

Cyclical: A SMS is not static, but needs to be continuously adjusted based on the verification of its
effectiveness. This approach can be summed up as:

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  Plan: Identify the practices in the business
enterprise that may need improvements to be
socially responsible (e.g. identify lack of policies,
processes, and procedures).
 Do: Identify and implement necessary changes.
This may require appointing responsible individuals
or teams to implement the necessary changes.
 Check: Monitor the success of the implementation
in relationship to possible improvements.
 Adjust: Move towards agreement and take the
necessary corrections to continue the improvement
process.

Systemic: an SMS is meant to interconnect areas within

a business, thus preventing individuals working and acting in isolation. This interconnection will
stimulate cost efficiencies and overall synergy within the business.

Setting up an effective SMS is not an aim in itself, but a tool to support business enterprises in their
endeavour to boost their social responsibility.

SOCIAL POLICY AND PROCEDURES

An effective SMS has to be supported by a credible social policy and internal and external functioning
procedures.

Setting a Social Policy

A social policy acts as a compass within the business enterprise. It sets the vision, the position, and in
some cases even the strategy that a business has about its responsibility towards human and labour
rights.

A social policy does not need to be a long and technical document, but rather a policy that is easy to
understand by both internal and external stakeholders.

amfori BSCI recommends producers:

 Use the amfori BSCI Code of Conduct and Terms of Implementation as a reference
 Assess if there is no contradiction between the social policy and the law and if any specific law
or regulation needs to be stated explicitly to ensure consistency and transparency
 Have one policy for the entire business, instead of separate policies per topic, in order to avoid
confusion and contradiction between areas and individuals within the business

Drafting Procedures

If the social policy acts as the compass within the business enterprise, procedures are the different
avenues needed to move the policy from paper to reality. Procedures ensure that the social policy is
implemented in a systematic way within the daily operations of the business.

Procedures provide clarity to managers and workers on:

 The appropriate decision-making level: Who decides what?

 Operational level: Who implements what?
 Timeframe: How often? How long?

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Procedures don’t need to be complex or technical documents. Rather, they should aim to be as clear
and accessible as possible for the targeted audience.

In cases where the workforce does not have a good command of the local language(s), the procedures
need to be translated. Using infographics and/or pictures are some examples of how to make
procedures more accessible, increasing their user friendliness.

A business enterprise, particularly those that may be monitored (a producer), should be able to explain
to the auditor(s):

 How does the business enterprise define and review their social improvement goals?
 How are social risks and impacts assessed? Who defines what is risky for the business? Who
is responsible for taking risks?
 How are business practices updated in order to meet relevant legal requirements?
 How does the business enterprise ensure workers’ awareness about and competence within
the company’s social policy and objectives?
 How does the business enterprise define responsibilities within the workforce?
 How does the business enterprise deal with internal corruption? How is it defined? How is it
mitigated?

Here are some examples of social policy procedures that are looked for during the amfori BSCI audit:

 Anti-corruption procedure
 Responsible human resources management (e.g. responsible recruitment, fair remuneration,
adequate disciplinary measures, respectful dismissal)
 Grievance mechanism (e.g. procedure and granting access)
 Responsible supply chain management (e.g. selection of business partners in a way that
respect to the amfori BSCI Code of Conduct has been taken into consideration)
 Remedy procedure (e.g. how root cause analysis is performed, how different responsibilities,
and feasible budget are allocated)
 Occupational health and safety risk assessment procedure
 Access and eligibility for workers’ training

GOOD RECORD KEEPING SYSTEM

An effective SMS has to be supported by a good record keeping system.

The table below shows the characteristics of a good record keeping system. ISO-certified businesses
are already familiar with these requirements.

Record
Keeping Explanation
Should Be…
The record keeping system is in
line with the legal and
administrative requirements
Compliant for the jurisdictions in which they
operate, including specific
documentation, operational, and
reporting requirements.
Examples
 Does the business keep the records as
long as required by law?

 Does the business respect privacy and
information security regulations?

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 The record keeping system is
directed by policies with
assigned responsibilities, along
Responsible
with formal methodologies and
procedures for their
management.
 Does the business have procedures in
place about how records need to be kept?

 Who is the responsible for each set of
records? (e.g. accident records;
compliance records; payrolls)

The record keeping systems are

employed consistently in the
normal course of business and
Implemented record keeping follows the
defined policies and procedures.
The records are legitimate and
not a face-saving exercise.
 Does the business adjust the system to
the way in which business is conducted?

 Is decision-making based on the relevant
records that are kept for that purpose?

 Regarding evidence on business partners,

The record keeping system
processes the information in a
Reliable consistent and accurate way,
to ensure that the records they
hold are credible.
does the business have specific measures
to ensure that the information is and
remains credible?

 For example, concerning age verification:
does the business have additional
measures to check the validity of identity
cards?

 Would the business, if that business is a

The relevant person can find
relevant information in the record
Available
keeping systems in a timely
manner.
producer involved in amfori BSCI, be able
to provide information on demand if
requested to do so during an
‘unannounced audit’? Or during a buyer’s
visit?

A good record keeping system must file and make accessible all procedures drafted to implement the
social policy and relevant records concerning:

 Employees’ contracts, remuneration, working hours, training (e.g. for migrant workers,
seasonal workers)
 Agreements with recruitment agencies
 Occupational health and safety risk assessments
 Accident records
 Machine maintenance
 Licenses, certificates
 Internal monitoring and Remediation Plans
 Human rights impact assessments (including of the supply chain)
 Grievance mechanism tracker, including the way the issue was solved

INTERNAL MONITORING AND PERIODICAL ADJUSTMENT

Internal monitoring is the most cost-effective method that business enterprises can implement to:

 Conduct checks: For example, monitor the success of the implementation and possible
improvements.

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  Make adjustments: For example, agree upon and take the necessary corrections to continue
the improvement process.

When internally monitoring the social management system, the responsible person(s) will assess the
system from at least three angles:

 Intent: Does the social management system fit its purpose? Are all the elements of the social
management system in place?
 Implementation: Were the targets achieved? Have the procedures being followed? If not,
why? Do the responsible people have sufficient knowledge, competence, and engagement? If
not, why not?
 Effectiveness: Has the business’s social performance improved since the implementation of
the social management system? If not, why not? Does the company observe the law? If not,
why not? Are there practices or procedures that need to be improved?

The business enterprise should, at the very minimum, assess:

 Overall success of every item of the policy

 Remediation plans and the effectiveness of their implementation
 The suitability of procedures
 Effectiveness and practicality of forms and records keeping
 Effectiveness of the grievance mechanism
 Possible adjustments based on risk assessments
 Priorities defined for the next three, six, and twelve months
 Resources approved by senior management

The person(s) responsible for internal monitoring is advised to assess historical records in order to
support and quantify improvements made over time, for example:

 Wage level increases

 Frequency of disciplinary measures
 Frequency of absenteeism
 Frequency of complaints

Based on the outcomes and lessons learned through the internal monitoring process, the business
enterprise should expect to adapt the social management system.

The frequency of the internal monitoring and relevant adjustments will depend on the maturity of the
business practices and the severity of the shortcomings. For example, a cycle of every three months is
appropriate at the beginning of setting up a SMS. Later, monitoring once a year is sufficient after the
business is well established.

The evaluation of the internal monitoring and discussion of possible adjustments should engage
workers. The minutes of these meetings, which must include the key topics discussed and the decisions
made, shall be kept in writing in the central record keeping system.

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