Christmas thoughts

I wrote the following for BusinessWorld in December 2001. Five years later, I still feel the same.

Social capital and the spirit of Christmas (December 20, 2001)

There are many things I like about our country. The weather is temperate. The cuisine is tasty. And the people are friendly and know how to have fun. Christmas in particular brings all the best things out of Filipinos. This is when we have the most fun. And this is when we are nicest to each other in general and, in particular, especially nice to people we care about. Christmas is, therefore, a great time to build and strengthen ties with people.

Now, why am I making a big thing about being nice to each other, having fun and building ties? Because I think that these are practices that we Filipinos are so good at and yet have not made full use of, whether in corporations or as a nation. Organizational researchers have a special term for high-trust networks of relationships which allow people to work together towards a common goal – social capital.

I’ve often wondered why, despite the vaunted talent of the Filipino, we are conspicuously trailing many of our neighbors in achieving development goals. At the micro level, this kind of underachievement is true even in many otherwise excellent organizations. My theory is that we have run very low in social capital. We have slowly squandered our reservoirs of trust, goodwill and sense of collective fun until we have become in many organizations, and as a nation, socially bankrupt.

Watching the evening news is a daily habit for me and it’s a habit I may have to stop if only to keep from getting depressed. Not a day goes by without a politician leveling the most horrible accusation at another on national television. More recently, a lady from a cause-oriented group deplored how excluded her group felt about the recently held economic summit. A government leader, one of the organizers, explained that they did take the group’s concerns into account during the summit.

And as I watched the exchange on television, I had that strange combination of feelings I often get nowadays: lucky, on the one hand, to have such committed and talented individuals taking the cudgels for our country and sad, on the other hand, that these individuals will never get their act together. Then it hit me. We can’t get our act together because we don’t trust each other. We don’t even like each other. It’s no wonder this country isn’t going anywhere!

How did we get this way? How did a country known for its patient and hospitable people ever get to a point that we have made putting each other down a national pastime and a gladiator sport? How did a country that has produced – and continues to produce – some of the most talented individuals become the collective cellar dweller in the drive towards genuine national development?

It’s the little things, I think. It’s the insistence on being right and the other being wrong. It’s the refusal to really listen and let the other person finish a sentence before we say our piece. It’s the little judgments we make about another person not being one of “us” and, therefore, not being trustworthy. It’s the focus on “me” instead of the “us.” In other words, it’s the fatal mistake of forgetting that in the journey of life, we are all in it together.

But this is history, and Christmas signals the coming of a new year and a new beginning. If we have run out of social capital, we can certainly build it up again. First, we need a collective goal and we certainly have one – the uplift of the dignity and standard of living of the majority of our countrymen. We need to accept that our fates are intertwined; that we cannot truly succeed while others plod along in life. Second, we have to put our talents for niceness and caring to very good use – on each other – and not just during Christmas but all year round.

This will begin the building of collective trust. But it will take time because it will need the establishment of an ethical climate where we, whether as citizens or as members of organizations, act beyond self-interest. And this is only possible if relationships are allowed to build over time. There are some specific steps that we should consider seriously. In companies, this means selecting people more carefully and trying to keep them longer. If as a manager you are considering moves that will result in too many losses of jobs, rethink it. If it looks good on the balance sheet and gives a twinkle in your investment banker’s eye, rethink it even more. You may be profiting by displacing people who have toiled hard on the very strategies you asked them to pursue, only to toss them out when these strategies fail. Is there a more humane way of recovering from the mistake? A fairer way? Can you share in the consequences and the pain? Avoiding the short-cut solution will earn you tremendous trust points (not to mention pogi points) with your people and build company social capital. The next time mergers are considered, managers should look at how much social capital will be lost as people are let go and as relationships are destroyed.

As countrymen, we can start by giving each other more benefit of the doubt, especially on contentious issues. The horrific attacks on the World Trade Center had one good effect – they triggered a global interest in understanding why many Muslims feel so left out. While the President’s declaration of the last day of Ramadan as a national holiday wreaked havoc on my personal schedule, I applaud her intention and hope for more efforts to reach out to our brethren in the South.

Three of my siblings, who long ago migrated to the US, often ask me why I stay. I always say that I love being here. I like the weather, I like the food, and I still like the people. This Christmas, let’s all reflect on how we can begin a new year of rediscovering what makes us special as a people. Who knows – I may even convince my siblings to come back. I’m an optimist.

Merry Christmas, everyone!

Praying for the Common Good

So it's the day before the CBCP-organized prayer rally at the Luneta. The bishops have called the rally to "watch and pray" for the good of the country, especially after the House majority passed the controversial Constituent Assembly resolution in the wee hours of the morning.

Below are postings I made in Manolo Quezon's blog clarifying the need to seek a common ground for dialogue on the current issues and the need to promote the common good:

On the need for Dialogue based on a Common Ground

"I think [with respect to the CBCP Luneta prayer] it’s also possible that people of faith are realizing that a collective appeal to a higher being is a more constructive response to the deterioration they see in the behavior of legislators than an escalation of angry rhetoric or personal attacks. Although I’m a Catholic, I haven’t made up my mind about going on Sunday because I’m not sure how much prayer there can actually be in such a large crowd.

I agree that the religious groups have vested interests in the current situation, although that should legitimately be the promotion of peace and the common good.

I’m hoping the rally can build some bridges between the sectors at conflict and open some real, thoughtful and mutually respectful dialogue."

When a poster expressed doubt about the possibility of building "bridges", I explained:

"By bridge, I meant common ground among people in seeming conflict. For example, is it possible that people on different sides of the Cha-Cha issue may actually love this country? Or that they want a bright future for their children? Or desire the upliftment of more Filipinos? Or believe in a God of love? I think so. If so, these can be starting points for dialogue and creative problem. Who knows where things can go after that? Still, I find that more appealing than a spiral downwards to chaos, factional hatred or, dare I say, civil war.

I’m not a historian so Manolo might give his inputs here, but it seems to me that the countries we now acknowledge as stable and well-developed went through their own political crises and WORKED THEM THROUGH. It wasn’t always neat, and oftentimes it was preceded by bloodshed, but real progress occurred only when people and their leaders took responsibility for the common good, not just their sectoral interests while simply branding others. I think we can reach this level of thinking and we can really BE a nation, instead of just being co-located accidentally in 7000 islands. IMHO, common ground and dialogue are not only possible for progress, they are necessary. Especially since I presume we prefer a non-authoritarian route. Prayer and discernment can open our minds to these possibilities."

On the Common Good

When a poster questioned whether anyone could or should actually speak about the common good since good can vary among different individuals, I explained that:

"While Oxford dictionary may be right about there being no “strict” definition of the common good, may I offer for your consideration two definitions from two Johns which may be useful for our discussion here. I think that talking about the common good is important because the CBCP often speaks of the common good and a consensus on the common good is basic to nation-building — which is why the phrase appears in the Preamble of the Philippine Constitution as in “We, the sovereign Filipino people, imploring the aid of Almighty God, in order to build a just and humane society and establish a Government that shall embody our ideals and aspirations, promote the common good, …”

The definitions:

1. From Harvard philosopher John Rawls, author of A Theory of Justice: “certain general conditions that are . . . equally to everyone’s advantage”

2. Originally from Pope John XXIII in the papal encyclical Mater et Magistra (Mother and Teacher)and reemphasized in the Compendium of the Social Doctrine of the Church: “the sum total of social conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily”

The similarity between the two Johns’ definitions is striking considering that Rawls is secular while Pope John is Catholic. This indicates that there tends to be consensus on the common good.

Common examples of conditions which are part of the common good range from the physical (such as clean air and good roads) to social services (such as free basic education and social security) to institutions (such as free markets and the rule of law ), etc. A quick check of the examples against the definitions of the two Johns will clarify why they are part of the common good.

The government has the DUTY to promote the common good because it promotes the dignity and development of every citizen.

The danger in the current situation is that private good or special interest (some say “vested”) is being mixed up with or is harming the common good. This needs to be guarded against and is why the Church is against the recent acts of the House majority — these were seen as brazen acts which harm the common good, i.e., the rule of law, in this case. It is important for ALL citizens, faithful or otherwise, to understand, promote and defend the common good. It is a foundational principle of our republican democracy.

By the way, republic comes from “Res Publica” which is Latin for “the public thing” and refers to what individuals in a community hold in common or place above their self interest."

I think that the concept of the common good is critically important during these times in our country.

Main thesis of humanistic management

I tried summarizing the main ideas of humanistic management for my friend Mela Lazatin and it went like this:

The person is the most important entity in the world and therefore in any organization because Christ is in him/her. The most important purpose of any organization is to preserve the dignity and facilitate the integral human development of every person. Therefore, a manager should be a strategist for human development.

People are social by nature and attain their full potential in association with each other. A manager should be a community builder.

Therefore, work that is humane and which creates socially useful services/products is essential to human growth. A manager should be a designer of humane work in the service of society.

Unfortunately, in the absence of humane managers, organizations begin to be centers of power struggles and personal interest. Indignities are tolerated and even multiplied, wittingly or otherwise. Work becomes unduly burdensome and makes people lose balance in their lives -- even leading to health damage for many. Work atmospheres become characterized by low trust, poor communication and alienation. Products and services produced are often not socially useful, if not actually damaging to people's character or bodies.

We need more humanistic managers.

Decent work

The economy has been growing at an average rate of about 5% for the past few years. But why has the poverty situation not improved during the same period? One possible answer is that the economic growth has not brought more jobs for those who badly need them. "Jobless growth" is happening in many countries, even in the US. A more subtle answer to the question is that economic growth, even when it has produced jobs, has not produced decent jobs.

In a country where many consider themselves lucky to have any job at all and many employers consider themselves saints for just hiring, it's almost a fantastic proposition to even talk about "decent work". But this is exactly the concept the International Labour Organization has proposed and which the Philippine government has officially adopted. The country is among eight to join the ILO pilot program for the measurement of decent work.

Decent work was the topic of an interesting conference entitled "Measuring progress in Decent Work", sponsored by the Philippine Statistical Association and held at the Asian Development Bank last October 9. Teresa Peralta of the DOLE Bureau of Labor Employment Statistics (BLES) presented the promising work of her team in developing the Philippine Labor Index -- a first attempt at developing a local, country-level measure of decent work. Ms. Peralta’s team estimated PLI for 2004 to be 73.58 out of a maximum of 100. Though still at the developmental stage, I laud the DOLE’s initiative to better monitor the quality of Filipino jobs.

To appreciate the measurement of decent work, we need to understand the concept itself. What is decent work? The ILO web site explains that “decent work sums up the aspirations of people in their working lives. It involves (1) opportunities for work that is productive and delivers a fair income, (2) security in the workplace and social protection for families, (3) better prospects for personal development and social integration, (4) freedom for people to express their concerns, organize and participate in the decisions that affect their lives and (5) equality of opportunity and treatment for all women and men”.

An employer who is sincerely concerned about workers will find a lot of basic guidance from the above enumeration. However, a self-critical evaluation will not be so simple and will take a lot of real thinking on the employer’s part. On the matter of fair pay, for example, an employer could ask whether it’s right to pay an average rank-and-file employee 1/100th the pay of the CEO. 1/50th? The highly respected US-based furniture manufacturer Herman-Miller limits this ratio to 1/20.

What about giving workers the freedom to express their concerns and to participate in decision-making? How many top executives who protest Malacañang’s “heavy-handed” treatment of dissenters can welcome honest but critical feedback from the rank-and-file. Not many, I suspect.

Many employers in the Philippines, faced by the relentless onslaught of globalization or simply aiming to maximize investor profits, have taken the low road and given jobs which provide no stability or future to workers. This may be sensible as a short-term survival strategy but is unsound -- even anti-social -- as a core business strategy.

With some vision and a sense of solidarity with their countrymen, employers should consider graduating to high value, high creativity markets where committed and well-trained long-term workers can make a big difference. But are they up to the challenge? Or are they more interested in the low risk of cookie-cutter businesses which require no imagination, but only plenty of capital and docile workers? How employers respond to these questions ultimately reflect not only the decency of the work they provide but their own.

Published in Manila Times' Managing for Society, October 24, 2006

Employee welfare: The missing piece in CSR

Corporate social responsibility (CSR) is hot! The business magazines and the business sections of the broadsheets give it ample coverage. BizNews Asia's September 25 issue shows the Lopez's beaming on the front cover, apparently quite pleased with themselves given the magazine's assessment that "few Philippine CSR projects have the breadth, depth and reach of the Lopez Group's Knowledge Channel..."

Reviewing the annual reports of the top Philippine corporations, one is struck by how CSR has reached such prominence given its complete non-mention ten years ago, to a few token lines a few years ago, and now a separate annual report just on CSR being issued by companies such as Manila Water. Boy, have we really come a long way!

I can't help but be pleased, naturally. I've always found the Milton Friedman position that the only social responsibility of business was to increase its profits not only unsound but downright anti-social. Friedman would, I suspect, have only one thing to say to the Lopez's and all the top corporate managers in the local CSR movement: "You are stealing from the shareholders!"

Of course, the local Friedmanites couldn't possibly state this charge out loud because many of the local corporations prominent in the CSR scene are doing it with the blessing of the controlling (often, family) interest as in the case of the Lopez's. They couldn't very well be stealing from themselves, now could they? The minority shareholders could make the charge but ,given local corporate dynamics, that would be another whole different story.

The CSR picture isn't perfect, though. Even if I set aside the suspicion of some that the whole CSR thing is one huge PR extravaganza hiding old-fashioned corporate greed, I do have one big concern. Most of the CSR activities proudly narrated by CEOs and chronicled in the glossy materials given out during the increasingly frequent CSR conferences are missing one stakeholder as a beneficiary: the employees. The recent Asian Forum on Corporate Social Responsibility is a typical case in point. A scan of its program does show the mention of "employee" but only in the context of volunteerism. In other words, in local CSR-speak, the employee is mainly a giver, not a receiver.

Now this is a strange situation indeed. A major social responsibility of corporations has always been the provision of meaningful employment so that more people will benefit from the fruits of capitalism to better their lives, build families and help build our great nation. Why the conspicuous non-mention? I know for a fact that many companies are doing great things for their employees. What bothers me is that they dont' talk about it in relation to CSR. Is the employee not part of "society"?

This contrasts with the treatment of the book 1981 "Perspectives on the Social Responsibility of Business" which featured the thoughts of business leaders of the day such as Vicente Jayme, Sixto Roxas and Vicente Paterno. The book featured the Code of Ethics for Business then recently developed by the Bishops-Businessmen's Conference for Human Development. Jayme, reflecting on the importance of the Code wrote that "we can begin asking ourselves the kind of questions which will lead us to the ways by which we can 'humanize' the business firms we run. ... If I believe in respecting the dignity of my worker, how do I bring about the full promise of his potential? How am I promoting his spiritual and intellectual development? His technical competence? How am I making his work more fulfilling and meaningful for him? What kind of working conditions am I providing him? What else can I do to make my personal commitment to his dignity more real?"

I would certainly love to hear managers proudly explain their answers to Jayme's questions. I would grant that getting employees to volunteer for outreach projects surely enobles them and can even make their work more meaningful. But shouldn't companies be reporting on their "inreach" activities, too? Shouldn't management's concern for their fellowmen begin right at home, as shown by the improvement in the quality of lives of their own employees?

I'm intereted to see how the growing outreach-oriented CSR activities of the top companies will eventually reconcile with the growing contractualization, reduction in employee numbers, and creeping overwork in some of the same companies. The Philippine CSR boom is definitely a welcome development. We have moved forward in many ways but, perhaps, we have moved backward in a crucial way. And as long as the quality of work and family life of employees is not given the prominence it deserves, the "S" in CSR is missing a very important piece.

A tiresome false dilemma

I have always found it puzzling and frustrating that when the matter of the increasing exploitation of Filipino workers in the private sector comes up -- mainly through the loss of basic rights such as security of tenure, self-organization for collective voice, and living wage compensation -- the most common argument to justify the state of affairs is: "At least these people have jobs and income. Would we prefer that they don't have jobs at all?" The implication for workers is either they work (even while suffering indignities) or they starve. There is no middle ground.

I have heard this argument from businessmen, business leaders, business students and, to my eternal puzzlement, business faculty.

The argument is, of course, false in its face. This black-and-white fallacy has been around since the great Greek philosophers. The Sophists, whom Plato and Aristotle held in contempt, often tried to use such verbal maneuverings to trap people into thinking that there is no middle ground. For example, Plato described how the Sophist Euthydemus convinced the youthful Cleinias that he was either "wise or ignorant," offering no middle ground when indeed there should be.

The debate about contractualization of workers often brings up such sophistry. I define contractualization as the trend towards the use of temporary contract workers for jobs previously or usually done by permanent workers. While the law allows such a business practice in specific cases, my objection to it is if it is used to or results in the deprivation of workers of their rights to security of tenure, a living wage or a collective voice.

So, if the question is "Would you prefer that people have jobs or that they starve?" The simple answer is I prefer that they have decent jobs which provide what they need.

But what about the survival of the business? This is the second topic where fallacious reasoning comes in. In the first place, many business resorting to worker exploitation are nowhere near a "survival" type of situation. So it's not as if they are exploiting workers because the business is on the verge of collapsing.

But anyway, for the sake of argument, let's see where it brings us. So the argument is posed this way: "What would you prefer? That the workers are given what they need but the business collapses OR that the workers are constractualized but the business survives?" Again, the simple answer is that I would prefer that the workers are given what they need AND the business survives." To any discerning person, it must be patently clear that business collapse does NOT necessarily follow from humane treatment of workers.

Of course, I don't pretend to know a sure way of achieving such a middle ground. (Any businessman interested enough need only refer to the many business cases in the literature which demonstrate that companies may even improve its competitiveness by treating people right. This is not a guarantee of profitability, of course, but it suffices to show that treating people right does not necessarily harm profitability.) Nor is it my burden to show such a way since the challenge of running a humane business is the burden of the business person. The challenge has to be faced -- just like other business challenges such as ensuring steady supply of materials, ensuring that the competitive value of product/service offerings are attractive to customers, etc. -- and no amount of fallacious reasoning can be used to evade it. So can we stop the sophistry already and apply our creative thinking to how our businesses can humanely treat workers as partners in the enterprises they help run?

Unless, of course, the real reason for exploiting workers is not logical confusion but unmitigated greed. This is something else, entirely.

The Psychology of Labor and Employer Viewpoints

I wrote this for Manila Times' Managing for Society column last July 11

The Psychology of Labor and Employer Viewpoints
Ben Teehankee

From June 29 to July 2, De La Salle Professional Schools hosted the Annual Meeting of the Pacific Asian Consortium for International Business Education and Research (PACIBER) in Cebu. The consortium is composed of business schools from different countries who come together to network and to share research findings and teaching strategies This year’s theme was a look at emerging global practices in outsourcing and related work arrangements.

During the meeting, I moderated a panel session on Investment Decisions and Labor Concerns where Mr. Cedric Bagtas, Deputy Secretary-General of the Trade Union Congress of the Philippines (TUCP), gave an interesting picture of the local labor situation.

I always find it worthwhile having forums where employers and representatives of labor can share perspectives. Mr. Bagtas’ discussion on a number of issues on which labor and employers don’t see eye to eye was particularly informative and gave me insight on the challenges facing industrial relations in the country. By reflecting on how each side looks at these issues, I got clues on the psychology underlying the labor and employer positions, respectively.

The first issue is on the matter of hiring and firing. Mr. Bagtas explained that while labor prefers quick regularization, employers would prefer liberal hiring and firing rights -- employment-at-will, in other words. Employees need to plan their lives in order to meet their basic needs and to achieve certain life aspirations. For this reason, they need to be able to count on regular, sufficient and predictable income. Thus, they seek the legal protection that regular status is supposed to provide.

Employers, for their side, deal with various types of risks such as those that involve their markets, suppliers or even the political environment. Their concern for achieving acceptable returns given such risks lead them to manage labor as a risk. Employers lose expected returns when people they hire become uncooperative, fail to produce needed results, or simply become too expensive to maintain compared to the competition. They, therefore, want the safety valve of being able to let people go as needed.

On the matter of strikes, labor prefers the removal of restraints on the right to strike while, expectedly, employers would prefer to have a moratorium on strikes. Mr. Bagtas reported that actual strikes conducted in the country had steadily gone down from 581 in 1986 to 22 in 2005. It would appear that the country has become a haven of industrial peace. The underlying tension remains, however. Labor perceives a systematic weakening of their ability to legitimately strike because of anti-union tactics of companies. Employers worry about the ever looming threat of militancy in unions.

By examining these two issues, one sees that the underlying thinking of each side is not so different. Each side is simply managing risk. Interestingly, though, each side sees each other as a source of insecurity and strategizes accordingly. This thinking is reminiscent of the doctrine of MAD or mutually assured destruction which held between the US and the Soviets during the Cold War.

What will it take to move out of this low-trust thinking between labor and employers? What will be the symbolic equivalent of the fall of the Berlin Wall for these two sides? I don’t think it lies in better tactics for neutralizing each other as threats. I think that the mind-shift will come when labor and employers finally realize that their fates are intertwined. When this happens, both sides will know that a true social partnership between labor and employers is the only way to unleash the productivity that the country needs to achieve the development it deserves.

Outsourcing and the employment relationship

This was the column I wrote for BusinessWorld's View from Taft last July 5.

From June 29 to July 2, De La Salle Professional Schools hosted the Annual Meeting of the Pacific Asian Consortium for International Business Education and Research (PACIBER) in Cebu. This year’s theme was a look at emerging global practices in outsourcing and related work arrangements.

During the meeting, I was privileged to moderate an informative panel session on Investment Decisions and Labor Concerns. During the session, Mr. Abhik Ghosh, Senior Labor Administrator and Labor Relations Specialist at the International Labor Organization’s (ILO) Manila office, gave an update on the new ILO recommendation covering the Employment Relationship.

This is a timely contribution from the ILO since, with the increasing popularity of outsourcing and contingent work, we have seen various types of work arrangements which have blurred the nature of the relationship between employer and employee. As a result, the legal protection of worker rights as well as the responsibilities of employers in protecting such rights have weakened.

Interestingly, as more service companies around the world learn to unbundle and distribute the various components of their value delivery process facilitated by information technology around the world, it has become more difficult to define who the employer is. Triangular employment relationships, where the work or services of the worker are provided to a third party (the user) has increasingly become the norm. Unfortunately, such arrangements can render employees vulnerable to violations of their rights as workers. Worse, companies can be tempted to deliberately hide the true legal status of their employees precisely to escape responsibility for honoring employee rights.

Take call center agents, for example. During the early call center years, it wasn’t unusual to hear tales of random dismissals among permanent employees. Such employees, young as they were, had very rudimentary notions of their rights under the Labor Code. And given the absence of any labor organizing in the call center industry, similar abuses can easily continue. Certainly, it would be interesting to see how the legendary unhealthy working hours in the outsourcing industry will be addressed in the near term.

Thus, the ILO recommendation is an attempt to address the above difficulties. It is a natural progression following the 1998 ILO Declaration of Fundamental Principles and Rights at Work.
With increasing liberalization of international trade, including that of services, some sectors hope that labor standards would help mitigate the adverse effects on workers. This is especially crucial given that under the impetus of globalisation, some countries, including the Philippines, motivated by market-oriented economic doctrine and by a perception of unions as being obstructive to economic efficiency, are sorely tempted to pursue policies which put aside the rights of workers.

Mr. Ghosh explained that the recommendation encourages countries to create national policy that clarifies the existence of an employment relationship given the increasingly complex arrangements now available. Such policies may be based on, among others, the fact that work (1) is carried out according to instructions and under another party’s control, (2) involves integration of the worker in the organization of the enterprise, (3) is performed solely or mainly for the benefit of another person, (4) is performed personally by the worker, (5) is performed within specific working hours or at a workplace specified or agreed by another party is of a particular duration and has a certain continuity, and (6) requiring the worker’s availability involves provision of tools, materials and machinery by party requesting work. In addition, an employment relationship exists when there is periodic payment of remuneration to the worker and such payment is the worker’s sole or principal source of income.

I hope that countries will respond positively and firm up their local policies to make it easier to protect employee rights under the newer work arrangements. It remains to be seen how effective ILO standards can be, or how willing ratifying countries are to enforce the standards, in an increasingly globalized business environment. Locally, there are strong reasons why outsource companies should take care of protecting worker rights to decent work. The employees tend to be young and relatively unsophisticated, and thus vulnerable, about matters pertaining to rights at work. Secondly, turnover rates are extremely high, especially in the call center industry. Any improvement in employee treatment can only reduce such turnover and lead to improved efficiencies and service quality.

During the open forum, Mr. Ghosh was asked whether the protection of labor rights intended by the ILO recommendation is still relevant given the rigors of the globalized environment. He explained that the recommendation is based on the principle that labor is “not a commodity”. And here lies the root of the issue. Globalization pressures companies to precisely treat labor as a commodity in their pursuit of efficiency. Economic models on which company strategies are based assume that labor is a commodity.

There is little doubt that freer trade and the outsourcing trend in particular has become an economic boon for many in the country. It is gratifying that many of our educated young who are computer-savvy and fluent in English can gross P15,000 a month in their first job. It is encouraging that the local outsourcing industry leaders are taking initiatives to improve the working conditions of employees. It must be emphasized, however, that economics should never trump justice and the requirements of decent work. And one way to ensure this is by reminding employees and employers that they have a relationship which carries with it certain mutual obligations at all times.

Can corporations learn to care about people?

(Note: This was my Managing for Society column in
Manila Times on February 21, 2006.)

Time and again, public harms have been caused by
corporate activities. A short list of corporate
misbehavior includes harming the environment through
factory emissions, harming employees through the
contractualization of essential jobs, and harming
customers through misleading or debasing promotional
practices or the sale of substandard products and
services.

What strikes me most about corporate misbehavior is
not that they happen, because any person can make a
mistake and the corporation is an artificial person,
after all: It's the fact that such misbehaviors keep
happening. Could this be because corporate leaders
are incorrigible in their greed and completely
insensitive to society's expectations? I doubt it.
Basic decency seems sufficiently, if not abundantly,
available among corporate leaders. I believe that at
the root of the problem are flaws in the basic nature
and design of the corporate entity itself. These
flaws make it very difficult, if not impossible, to
ensure the decent behavior of corporations no matter
the character of their leaders.

The first flaw is that corporations treat human beings
as commodities. To a corporation people are things
with a monetary value: employees are pieces of
expenses and customers are pieces of revenue in an
income statement. A commodity is a thing that can be
bought, used, replaced or disposed of, as needed. In
this view, employees are best when they can be as
cheap, replaceable and disposable as possible. Also,
if they don't like the conditions of their employment,
the argument goes, they can always leave. Similarly,
the unhappy customer faced with an unsafe or
substandard product can always choose to buy a
competing product.

In a market-oriented, commodity world, there are no
commitments to people. Relationships are contractual,
temporary and purely utilitarian. David Ellerman,
former World Bank economist, takes very strong
exception to this view of people as things and likens
it to slavery. Arguing in particular against the
commodity treatment of employees, he says that "the
capitalist, like the slave owner, has used a legalized
fraud, which pretends the worker is an instrument...."

The second flaw is that the corporation is designed by
law to be mainly accountable to shareholders and,
therefore, tends to downplay the welfare of the people
it affects. Joel Bakan, law professor at the
University of British Columbia, asserts that the
modern corporation, with its tendency for relentlessly
pursuing profit even at the expense of others,
perfectly fits the profile of the psychopathic
personality. The chilling cost-benefit analysis used
by managers in a well-known car manufacturer in the
70s to justify the sale of what they knew to be an
unsafe car model illustrates Bakan's point. The
perverse corporate logic goes: it is often cheaper to
allow harm to people and just pay for it later, should
one get caught.

Can the corporation be reformed to care more for
people? In 1973, UP law professors Guevara, Campos
and Bautista proposed that corporations be allowed to
include in their bylaws the right of employees to
choose among themselves a representative who will sit
in the board. Strangely, the provision did not make
it to the final version of the Corporation Code in
1979. In Germany, partly through the efforts of the
Catholic labor movement and the Christian Democrats,
corporations with more than 2,000 employees are
required to have equal representation of employees and
shareholders in the board.

For the Philippines, the only Catholic country in
Asia, it is unconscionable not to give a voice to
employees in the governance of the corporation. Such
a revision to the corporation code is long overdue and
may usher the way for a more humane corporation.

The ethics of Wowowee

The recent ULTRA stampede tragedy, where more than 70 fans of the ABS-CBN program Wowoweee died, has triggered widespread discussions on the duties and accountabilities of business, especially large corporations. I haven't made up my mind about the incident although I've always been concerned about aggressively marketed TV programs whose main appeal is easy money.

I have reproduced below a code of ethics for business prepared by the Bishops-Businessmen's Conference for Human Development in 1979. It could be a useful document for doing a sober, principle-based analysis of the ULTRA tragedy.

Under the section on Towards the Customers is the principle that "business shall, in the production of goods and services, avoid anything that would be detrimental to the health, safety or growth of the proper user or beneficiary of such goods and services." Did the managers behind Wowowee observe this principle?

Under the section on Towards Society in General is the principle that "business shall pay proper regard to the environmental and social consequences of their business activity, with special attention to the duty of renewing resources where possible and minimizing waste and pollution, and not sacrifice safety or efficiency in the interest of short term profitability." Did the managers behind Wowowee observe this principle?

I am interested to find out.

Meanwhile, we all grieve for the victims. May their souls find eternal rest.

A CODE OF ETHICS FOR BUSINESS[1]

Prepared by the Bishops-Businessmen’s Conference for Human Development, October 23, 1979. Preamble added 1994.

P R E A M B L E

This code of Ethics has been formulated impelled by the belief that man has a dignity that must be respected, and that all the resources of the earth have been created for his growth and development.

As here presented, this Code is considered a major step in the on-going and changing process of understanding the growing role of business activity in the development of man and, as such, is open to further improvement.

This Code seeks to express systematically and coherently the principles of business practices accepted and professed by Philippine business at its best, and seek to apply these to current and changing needs.

It is the hope that this Code will serve as a general stimulus to renew and develop or amend existing standards, and that individual entities will expand and adopt it to the specific needs of their own organizations.

It is a general Code intended to be influential rather than coercive. It is hoped that individual entities will consciously adopt and embrace it as a statement of principles and, having done so, will be unwilling to incur the sanction of adverse public opinion through failure to live up to the Code.

Finally, it is a Code for all peoples, formulated on the premise that the modern manager must be a strategist for human development, and that the business is to build an enterprise oriented to the development of man.

THE CONCEPTS

Business, which embraces commerce and industry, is not an accidental human activity but an integral element of the social order; its primary purpose is to meet society’s human needs by providing goods and services as efficiently as possible. Those engaged in business should, therefore, recognize the following basic concepts:

• All business is essentially an expression of human relationships; not only with those who work in the enterprise, but also with those who own and provide financial resources, with those who supply it with materials and services, with those who buy its products or services, with the government, and with the wider public whose lives are affected by the business activity. The interests of all those members of society must be taken into account in formulating business policy. These interests, in themselves legitimate, will at times conflict. While conflict and tension can of themselves be constructive, the aim of business must always be to reconcile opposing interests in a balance of justice and mutual concern.
• The owners, management, the work force, the suppliers and sub-contractors, the customers, and government contribute to the performance of the business enterprise, and are therefore entitled to receive the proper worth of their contributions.
• The resources employed by a business enterprise are financial, technological and human. The human resources have a unique quality and should be employed in a manner consistent with personal dignity. The individual should be given opportunity to use and develop his facilities in his work. His contribution to the success of the enterprise should be properly recognized and rewarded.
• Business enterprise has a public responsibility to use all its resources efficiently. Profit in a system of free enterprise is a fundamental incentive, and is necessary for the maintenance and growth of the enterprise, for raising the quality of life, and for helping meet the broader needs of society.
• Competition and inventiveness are essential for the maintenance and continuing improvement of the quality of goods and services, for growth and for technological progress. However, to guard against unfair form of competition, a consistent standard of business behavior must be established and observed.
• In business, as in any other institution of society, any right or authority enjoyed by or entrusted to business presupposes, and is justified by, corresponding duties, responsibilities, and performance.
  

SOME PRINCIPLES FOR THE CONDUCT OF BUSINESS

Towards The Employees

Those responsible for business policy should consider not only the interests of those affected by the activities of the business.

Business shall recognize the unique position of employees as individuals with a vital stake in their work and at the same time with inherent obligations to their own families, and provide:

• For recognition that, although rates of pay may often be determined by union, economic and legal pressures, wages and salary policy should be based on the right of the employees to a fair and improving standard of living, irrespective of race, sex, age and creed;
• For a fair recruitment practice that affords equal opportunity to all qualified job-seekers;
• For job security, adequate compensation for employees in cases of separation and retirement, and for opportunities for fringe benefits;
• For a safe and healthy atmosphere in the work environment conducive to the physical and moral well-being and growth of the employees;
• For conditions in which human potentials and relationships can be developed at all levels of the work force, with a view to providing therein a sense of purpose and achievement; and
• For participative element so that the knowledge, experience and creativity of all whom work in the enterprise may contribute to the decision-making process.

Towards The Customers

Business shall, in the production of goods and services:

• Strive after a quality that will enable them to serve their purpose efficiently and effectively;
• Avoid anything that would be detrimental to the health, safety or growth of the proper user or beneficiary of such goods and services; and
• Seek to apply or make use of the discoveries and inventions of science with adaptations that will improve their products or services, thereby benefiting customers/users and increasing their number.
  
  In its marketing arrangements, business shall;
  
• Deliver the product or service in the quality, quantity, and time agreed upon, and at a reasonable price, and avoid the creation of artificial shortages, price manipulation, and like practices;
• Establish an after-sales and complaints service commensurate with the kind of product or service supplied and the price paid;
• Ensure that all mass media, promotional, and packaging communications be informative and true, and take into account the precepts of morality and the sound cultural values of the community, and manifest respect for human dignity.
  

Towards The Suppliers

Business shall ensure:

• That the terms of all contracts be clearly stated and unambiguous, and honored in full unless terminated or modified by mutual consent;
• That abuse of economic power in dealing with a smaller concern be avoided, and that, in all cases, terms of payment be strictly and fully observed. In general, payment should always be made promptly at the agreed time or, if no specific time is agreed upon, as quickly as may be reasonable, given the circumstances; and
• That no supplier be encouraged to commit his resources for apparently long-term purposes unless there are reasonable guarantees that the orders he receives from the business enterprise will not be terminated arbitrarily.
  

Towards The Owners and Other Providers of Capital

In the interest of the Owners and other Providers of Capital, business shall:

• Provide an adequate rate of return to those contributing capital to the enterprise, and ensure the security of their investment;
• Use their financial resources to provide goods and services responsibly and efficiently;
• Furnish the owners and other providers of capital such information as they may reasonably require, provided that it does not adversely affect the security or efficiency of the business; and
• Pursue the specific objectives of the Owners and other Providers of Capital provided these do not run contrary to any of the principles stated herein.

Towards The Local and National Government

Although it is the responsibility of government to enact legislation and formulate implementing policies and programs, it is the duty of business:

• To participate in the discussion of proposed legislation and/or its implementation affecting sectoral, regional, national and international interests; and
• To propose sound policies in the use of human and material resources.

Towards Society in General

Businessmen shall recognize in their decision-making the interest of the general public and, realizing that they are utilizing, to an important degree, the nation’s resources, shall:

• Take regular stock of their response to the basic needs of society and thus ensure that these needs are taken into account in all policy-making decisions;
• Do their best to ensure that the way they deploy their resources benefits society in general and does not conflict with the needs and reasonable aspiration of the communities in the areas where they operate;
• Pay proper regard to the environmental and social consequences of their business activity, with special attention to the duty of renewing resources where possible and minimizing waste and pollution, and not sacrifice safety or efficiency in the interest of short term profitability;
• As corporate citizens make such contributions as their resources will allow, to research, development and application of indigenous technology, and to the financing of social development projects;
• Consider the human and social costs of mechanization and technology;
• Establish a policy allowing employees, within reasonable limits, to contribute to the public and community service during the work time.

SOME ETHICAL PRINCIPLES FOR THE PROFESSIONAL MANAGER

The concepts and principles for the conduct of business outlined in this document are commended to the managers of business enterprises. Thus, although the manager is expected to act in the best interests of the business, he cannot be expected to act in a manner that is contrary to the law or to his conscience.

In particular, a manager should:

• Acknowledge that his role is to serve the business enterprise and the community;
• Avoid all abuse of executive power for personal gain, advantage or prestige;
• Reveal the facts to his superiors whenever his personal business or financial interests become involved with those of the company;
• Establish a policy regarding conflicts of interest based on the principle that decisions should be made in the best interest of the business enterprise, and decision makers should b on their guar against allowing personal consideration to distort their judgment; and
• Not tolerate any form of illegal data-gathering or any form of inducement that tends to distort normal commercial judgment;
• Be actively concerned wit the difficulties and problems of subordinates, treat them fairly and by example, lead them effectively, assuring to all the right o reasonable access and appeal to superiors;
• Recognize that his subordinates have a right to information on matters affecting them, and make provision for its prompt communication unless communication is likely to undermine the security and efficiency of the business;
• Fully evaluate the likely effects on employees and the community of the business plans for the future before taking a final decision; and
• Cooperate with his colleagues and not attempt to secure personal advantages at their expense.
  

A WAY TO USE THE CODE

The foundation of any business enterprise is its people and the character of its people. It has been proven, time and again, that a business succeeds and grows over the long term when the policy makers inculcate a tradition of sound management policies based on honesty, integrity, fairness and a respect and concern for its employees, the community in which it operates, and the public it serves. This booklet covers the essential principles to guide the policy makers in developing human resources for maximum effectiveness and growth.

As with any Code, only through a thorough understanding of its principles, and day-to-day use of policies and procedures stemming from these principles, can this Code be of any real value to a business enterprise.

Accordingly, it is suggested to those engaged in business that maximum benefit can be derived by three simple steps. These steps would hold true for any business enterprise regardless of size, whether private or public, whether a partnership or a sole proprietorship.

The first step would involve examination, understanding and acceptance of the Code by the policy makers. Assuming acceptance, then the code would be adopted officially, as is or with suitable modifications, as being a fundamental part of the running of the business enterprise and its principles would be disseminated to its employees.

As the Code deals with basic principles and cannot cover every conceivable situation nor is it sufficiently explicit to guide an individual in every instance, the next step would be for the policymakers to develop detailed guidelines and policies for use by their employees. The BBC plans to organize workshops which interested officials of any business enterprise would be free to attend and participate with the objective of formulating specific guidelines.

The third step would be necessarily an evaluation and regular audit of the implementation of the Code and its attendant policies and guidelines. This could be established as an annual procedure and serve to ensure adherence to the Code as well as to appraise the performance of the enterprise and its employees.

This entire process will take time but as the Code is assimilated and practiced and as its use becomes widespread, it is hoped that a high degree of professionalism, higher standards of conduct and justice will characterize all dealings in business. This, in turn, undoubtedly will contribute toward the basic premise of the Code – that through the application of its principles human development will prosper in our society and with it grater economic growth and prosperity for the people will be attained.

[1] Except for the Preamble, the code comes from Aquino, Rosemary (Ed). (1981). Perspectives on the social responsibility of business. Metro Manila: The Bishops-Businessmen’s Conference for Human Development, pp. 323-328.

The problem of contractualization

Wrote this piece for the Manila Times today. I think it's hightime for constructive solutions to the contractualization situation in business today. What do you think?

Lean and mean
MANAGING FOR SOCIETY
By Ben Teehankee, DBA

SUSAN (not her real name) works as a crewmember in one of my favorite fast-food places. She has a nice manner about her. She’s quick to smile, attentive and moves with a quick step. I complimented her on this while chatting with her. “How long have you been a regular employee?” I asked. Her expression changed quickly as she explained, with obvious discomfort, that she was on her third five-month contract and isn’t sure if she will ever be made regular. I quizzed her on why she accepted this arrangement and she replied, expectedly, that she couldn’t complain because it’s tough getting jobs nowadays.

Susan is just one among countless Filipinos who do essential jobs in companies who do not give them regular employment status. It’s probably my sheltered academic background, but I’m deeply bothered by the sight of fully capable humans turned into practical serfs by their employment situation. And this form of contractualization is a growing trend in the growth industries such as retailing and food services.

Why do companies do it? Some managers say that they do it to survive. They can’t afford to do otherwise. This is a compelling reason because, after all, even employees benefit from the long-term survival of the firm. A lack of job security seems a reasonable price to pay for the preservation of a troubled company. What makes this reason tough to swallow (putting aside the basic concern that the practice is blatantly against the law) is that even companies who are making a lot of money are moving toward more contractualization of essential jobs—often under elaborate “arms-length” subcontracting arrangements.

Other managers candidly admit to more basic reasons. For one, they feel the need for more flexible hiring arrangements given the unpre­dictability of our increasingly global business and financial markets. How can a company with a high fixed payroll cope with a business downturn? Surely, the managers reason, they must ensure the long-term survival of the firm.

Secondly, managers find it extremely difficult to stay price competitive when they hire regular employees because of mandated minimum wages and benefits. Cheap products from other countries are flooding the liberalized local markets like a tsunami and the reflex reaction is to scale down on payroll costs through contractual employment.

While the business reasoning is understandable, increasingly contingent employment causes real harms to employees. The lack of job security and the resulting loss of representation on their basic rights demean employees and make them docile. The lack of benefits and financial safety nets endanger employee health and, ultimately, their families. The long-term social costs of this trend will be very high as more employees are trapped in jobs without security and personal growth.

I think that managers need to have more social commitment and imagination in approaching the threats of global competitiveness. Hiring selectively, giving job security and developing people to be competent and flexible can unleash much needed creativity for delivering better-value products and services. This will not give the quick bottom-line results that cost minimizing does, but it takes the higher road which is better for people and the country in the long run.

The government should not sit idly by as this trend grows. The people need protection from the ravages of the market place. Government must broker continuing dialogues between labor and management for creative long-term solutions to move us out of the contractualization trap, which threatens to worsen our current social inequality even more.

Does the need to be lean justify being mean? I don’t think so. Susan deserves more. She is a human being and she is a Filipino.