(Rommel's story always reminds me that the simplest concepts are those that succeed.)
Published in Business Mirror
Having fun and making money are two things that Rommel Juan can mix quite easily.
Even during his college years, he was able to cash in on his fun ideas to make a quick buck. So when he opened Binalot and called it the “pambansang tsibugan,” he knew people would come in to sample the food and bask in its humor.
Binalot started as a food delivery service in 1996, when Rommel, then 24 years old, decided to embark on the business “for fun” and “because I had extra time in my hands.” Until then, Rommel was involved in the family’s automotive business, handling sales and marketing.
The decision to go into business was not surprising. Rommel comes from an entrepreneurial family, “where we discuss business each waking moment.” Pacita Juan, the genius behind the Figaro Coffee chain, is an aunt. Even when he was in grade four, Rommel was peddling stickers to his classmates. He was, however, not really money-savvy. In fact, he was a mere “agent” of his brothers, who financed the sticker business, and who could only scratch their heads when Rommel’s collections would fall short of sales. “Money didn’t turn me on. I did those things for the interaction with people. I didn’t even know how to count change,” he recalled.
Rommel says he set up Binalot “as a creative outlet.” He was into cartoons, comic books and always did the flyers and ads of their family business. “I’m really corny. I say things like what’s wrong, polo barong? What’s the matter, peanut butter? Binalot is really an extension of me.”
Rommel confesses that he didn’t know much about the food business when he started Binalot in 1996. He didn’t know how to cook, and had to ask the help of a family friend, Aileen Anastacio, in creating the dishes. Initially, Binalot was limited to food deliveries. “Ako mismo ang naglalako,” he related. Business was good. Then the Asian crisis struck, and the next thing Rommel knew, his sukis in the offices were all gone as many companies closed down. He was already mulling closing down the business, when, in act of divine intervention, Shangri-La Mall offered him space in its food court.
Though unsure of its prospects, Rommel grabbed the opportunity. “I said this is make or break for me, but I won’t fall in love with the idea (of the business). If it wouldn’t take off, then Ie would not hesitate to just close down the entire thing.”
Binalot’s opening day performance decided the company’s fate. “On the first day, there was the longest line I have ever seen,” he recalled. It was obvious. “This was our second lease on life.”
Binalot’s offerings of rice topped with Filipino favorites, served with achara (pickled papaya), tomatoes and salted eggs, all wrapped in banana leaves, became an instant hit with the lunch crowd who have obviously had enough of burgers and spaghetti. Binalot’s menu consisted of tried and true Pinoy favorites such as adobo, tapa, bangus, bistek, tocino and longganisa. Its humorous names – bistek walastik and adobonanza -- also became a hit with the crowd.
Encouraged by his initial success, Rommel opened more Binalot outlets in mall food courts. Unlike the food delivery business, he says, “sales are steadier in retail, and it is much more easier to plan for.”
As business grew, Rommel explored new business possibilities. “When we reached six stores, I realized that we actually had a brand.” However, he also recognized that his responsibilities were mounting. “I realized, marami na tao ko, hindi na laro ito. This boy playing has lives depending on him.”
To better take stock of things, he took up a Masters in Entrepreneurship at the Asian Institute of Management. This allowed him to have “a bigger outlook.” For the first time, he “saw the forest” which was just as well, because as he himself declares, “I am all about branding.”
Following this, Rommel ventured into franchising. First, he had to make sure that the business was replicable and that its systems were robust enough to be transplanted elsewhere.
In 2003, Binalot opened its first franchise outlet in Intramuros. This step, he said, was pivotal to Binalot’s growth. The franchise route allowed Binalot “to grow exponentially.” Today, Binalot has 30 outlets and Rommel is confident it would surpass 40 outlets within the year.
Rommel says Binalot’s success is rooted in the efforts of its people. “I keep it enjoyable for all our people,” he says, not hesitating to ask them “are you still having fun?” during their one-on-one performance reviews. He likewise makes sure that his people are empowered so they become more accountable for their actions.
Binalot is heavily invested in training its people. At the same time, it makes sure it treats its people well and pays the minimum wage. Rommel admits that “people management is the hardest part of running a company” and makes sure he is attuned to their needs and thoughts.
As a result, he is able to count his peole as his steady allies. “I bring my people together to help.” In fact, Binalot has its own corporate social responsibility (CSR) program, which it calls the “dangal at hanapbuhay para sa nayon” (dahon) program. Under this program, Binalot has commissioned a community from the Southern Tagalog region to provide it with a steady stock of banana leaves. The program has allowed erstwhile idle women to make as much as P200/day. The Binalot staff derives obvious pride from the knowledge that they are able to help many families.
Of course, Rommel recognizes his role in growing the Binalot brand. “The key success factor was that I loved it. I have the passion for it, which means I never had to work a day in my life.” //
Tuesday, January 8, 2008
Monday, January 7, 2008
Toy Recalls, Circa Philippines
Published in BusinessMirror
Perspective Section
December, 2007
To many children, Elmo, the much loved furry red monster from Sesame Street, is more than just a plaything. To children ages two to five years old, Elmo is a trusty playmate -- a friend to lug around the playground; one who won’t complain when hugged, pinched or smothered with kisses. For parents, Elmo even makes a good teacher. How many children from all over the world have learned the letters of the alphabet or mastered numbers one to ten from this ticklish little creature? Children eat orange and broccoli because Elmo does, too.
Imagine parents’ shock, then, when Mattel announced a massive global recall of toys in August this year that included Elmo, Big Bird and Dora the Explorer toys, among others. On August 1, Mattel’s Fisher-Price division announced that it was recalling 1.5 million preschool toys because of lead paint. That action included 967,000 toys sold in the United States between May and August. Two weeks later, it announced that it would be recalling 19 million toys worldwide, mainly Chinese-made toys that either had excessive amounts of lead paint or had small magnets that could easily be swallowed by children. It announced that further recalls could follow, as it began investigations and production checks in its factories in China.
Toy recalls are nothing new in America. For the past two decades, monthly recalls have been issued covering all kinds of toys and children’s equipment for an assortment of reasons – high lead content, having loose buttons or small parts that can come off, being made without fire retardants, among others. Almost every toy brand has experienced having its items pulled off the shelves for reasons that Filipinos typically do not worry about, but which American consumers have been trained to regard as a possible health hazard. The average Filipino consumer, for instance, would not worry about a teddy bear with loose button for eyes, or fret over drawstrings longer than 2 inches on a toddler’s shirt. American regulators, though, would see those loose buttons as a possible choking hazard, and the drawstrings as a possible strangulation threat.
High lead content, ingestion of which can lead to developmental delays and learning difficulties, is the top reason why toys are pulled off the shelves. American consumers are, in fact, relatively well informed in matters involving product recalls, and trooping to the store to return a crib or a doll that fails product safety standards is almost a non-event for many. US retailers, for that matter, do not question a customer who walks in to return or exchange a toy for whatever reason. Tired of Piglet? Here’s Pooh Bear instead.
The August toy recalls, though, were troubling for their scale. Never before have parents seen so many of the children’s best-loved toys being labeled as a health hazard. For many, it was agonizing to think that those Elmo stacking rings their babies have mouthed with aplomb actually contained dangerous levels of lead. Even before trade officials could get moving, parents all over the world were already emptying their children’s toy boxes to flush out the toys they deemed to be everything but dangerous. The recall scare did not spare the Philippines, especially affecting those parents who normally pick up toys in their travels to the United States. The response, though, was more subdued than the frenzy experienced in other countries.
Unlike the full-blown recall carried out in the United States, the Philippine recall was much more limited in scale. Fortunately for Mattel’s toy distributors in the Philippines, Richwell Trading and Ban Kee Corporation, the toy stocks in their warehouses were not among the flagged toys. According to a Mattel press statement, the Philippine recall was limited to three main lines, including 16 lines of Polly Pocket toys with magnets made in 2006 and earlier (Pollyworld Dial a Style; Polly World Rocking Theme Park set, Quick Click Playset, Quick Click Penthouse, Quick Click Boutique, among others.); Magna Battle Armor, Batman and Fight Wing Batman Magnet Lok system figures; as well as Sarge die-cast cars from Disney/Pixar. The recall announcement was made through print ads in major Filipino dailies as well as through notices in the customer service counters of major toy retailers.
Of course, there were many questions raised, especially among those who had purchased some of the recalled toys in the United States. Filipinos taking to the net were also surprised to find some of their old toys in the recall lists of the past years, and could only shake their heads in dismay.
But unlike American parents who frantically pulled out the toys from their children’s toy boxes, Filipino parents, after their initial shock, were far more relaxed about the whole recall to-do. Perceptions, Inc., a public relations firm tasked to handle the Mattel recall hotline in the Philippines, was initially deluged by calls from worried consumers but the tumult soon petered out. Rhea Bautista of Perceptions reports that out of more than 100 calls made to the Mattel hotline since August, less than half of the callers have followed through on their complaint. In fact, the on-ground team has been busy following up these callers, but many are no longer keen on following up on their complaint, even if the toys can be picked up by courier. “Di bale nalang,” was a common refrain.
Bautista notes that there have been zero returns for the Batman figures, and negligible figures for the Barbie kitchen and living room sets. The most returns were for Polly Pocket dolls, whose magnets were found to easily detach from the toys and which could cause a choking hazard if swallowed. Majority of the callers, she notes, came from the upper socioeconomic classes, which is not surprising considering that toys made by Mattel are priced above the reach of the mass market. Whether Filipino parents simply do not give much weight to the hazards of lead ingestion, belittle the possible dangers posed by these toys in their bedrooms, or are inured to having the developed world dump toxic products dumped in their children’s bedrooms, is something that only they can determine.
Bautista points out that it is far easier to exchange or return recalled toys through the Mattel hotline. Unlike retailers who still require the official receipt, and sometimes even the original packaging of the toys, Mattel is ready to pick up any toy that bears the right product code or at least fits the description of the toy in question. Bautista adds that even toys bought in other countries, including the Dora and the Sesame Street line, are now being received and processed through the Philippine hotline.
Of course, returning toys has not always been this easy in the Philippines. The first wave of recalls, which covered the Dora the Explorer line, had to be processed through Mattel’s Malaysia office. A parent who tried to return her daughter’s Dora toy found it simpler to dump the toy in the trash bin instead.
Today, Mattel’s Southeast Asia office in Malaysia still oversees recall operations in the Philippines, which will run up to February 2008. The Department of Health is the government agency closely monitoring the pull-outs, while the Department of Trade and Industry is simply assisting the involved retailers.
DTI Undersecretary Zeny Maglaya notes that Mattel “pulled out quickly” following the recall announcements. Toy manufacturers and importers, on the other hand, are voluntarily seeking and presenting laboratory results attesting to the safety of their toys, especially those toys that are being packaged with kiddie meals by fast food chains.
Last November, the DOH issued a circular requiring importers and manufacturers to present their laboratory results to the DOH-attached Bureau of Technology and Health Devices following a six-month transition phase, during which consultations will be made.
In the meantime, the public could only hope that toy manufacturers and government agencies could at least conduct independent audits at different points of the supply chain, whether it be at the manufacturing, shipping or retail levels. Third party laboratories and testing facilities should also be identified. Filipino retailers could undertake their own safety checks on toys, similar to what retailer SM did for the Christmas lights sold in its stores. Product registration cards should also be included in toy products to ensure the success of future recalls.
Maglaya believes the recall wave has made Filipino consumers more aware of the need to ensure product safety and quality. “The China recalls was a wake-up call. More calls were made to our consumer direct line,” she added. That, she says, is a “good sign” which means that no matter how slow, Filipinos are somehow on the road to consumer vigilance. //
Perspective Section
December, 2007
To many children, Elmo, the much loved furry red monster from Sesame Street, is more than just a plaything. To children ages two to five years old, Elmo is a trusty playmate -- a friend to lug around the playground; one who won’t complain when hugged, pinched or smothered with kisses. For parents, Elmo even makes a good teacher. How many children from all over the world have learned the letters of the alphabet or mastered numbers one to ten from this ticklish little creature? Children eat orange and broccoli because Elmo does, too.
Imagine parents’ shock, then, when Mattel announced a massive global recall of toys in August this year that included Elmo, Big Bird and Dora the Explorer toys, among others. On August 1, Mattel’s Fisher-Price division announced that it was recalling 1.5 million preschool toys because of lead paint. That action included 967,000 toys sold in the United States between May and August. Two weeks later, it announced that it would be recalling 19 million toys worldwide, mainly Chinese-made toys that either had excessive amounts of lead paint or had small magnets that could easily be swallowed by children. It announced that further recalls could follow, as it began investigations and production checks in its factories in China.
Toy recalls are nothing new in America. For the past two decades, monthly recalls have been issued covering all kinds of toys and children’s equipment for an assortment of reasons – high lead content, having loose buttons or small parts that can come off, being made without fire retardants, among others. Almost every toy brand has experienced having its items pulled off the shelves for reasons that Filipinos typically do not worry about, but which American consumers have been trained to regard as a possible health hazard. The average Filipino consumer, for instance, would not worry about a teddy bear with loose button for eyes, or fret over drawstrings longer than 2 inches on a toddler’s shirt. American regulators, though, would see those loose buttons as a possible choking hazard, and the drawstrings as a possible strangulation threat.
High lead content, ingestion of which can lead to developmental delays and learning difficulties, is the top reason why toys are pulled off the shelves. American consumers are, in fact, relatively well informed in matters involving product recalls, and trooping to the store to return a crib or a doll that fails product safety standards is almost a non-event for many. US retailers, for that matter, do not question a customer who walks in to return or exchange a toy for whatever reason. Tired of Piglet? Here’s Pooh Bear instead.
The August toy recalls, though, were troubling for their scale. Never before have parents seen so many of the children’s best-loved toys being labeled as a health hazard. For many, it was agonizing to think that those Elmo stacking rings their babies have mouthed with aplomb actually contained dangerous levels of lead. Even before trade officials could get moving, parents all over the world were already emptying their children’s toy boxes to flush out the toys they deemed to be everything but dangerous. The recall scare did not spare the Philippines, especially affecting those parents who normally pick up toys in their travels to the United States. The response, though, was more subdued than the frenzy experienced in other countries.
Unlike the full-blown recall carried out in the United States, the Philippine recall was much more limited in scale. Fortunately for Mattel’s toy distributors in the Philippines, Richwell Trading and Ban Kee Corporation, the toy stocks in their warehouses were not among the flagged toys. According to a Mattel press statement, the Philippine recall was limited to three main lines, including 16 lines of Polly Pocket toys with magnets made in 2006 and earlier (Pollyworld Dial a Style; Polly World Rocking Theme Park set, Quick Click Playset, Quick Click Penthouse, Quick Click Boutique, among others.); Magna Battle Armor, Batman and Fight Wing Batman Magnet Lok system figures; as well as Sarge die-cast cars from Disney/Pixar. The recall announcement was made through print ads in major Filipino dailies as well as through notices in the customer service counters of major toy retailers.
Of course, there were many questions raised, especially among those who had purchased some of the recalled toys in the United States. Filipinos taking to the net were also surprised to find some of their old toys in the recall lists of the past years, and could only shake their heads in dismay.
But unlike American parents who frantically pulled out the toys from their children’s toy boxes, Filipino parents, after their initial shock, were far more relaxed about the whole recall to-do. Perceptions, Inc., a public relations firm tasked to handle the Mattel recall hotline in the Philippines, was initially deluged by calls from worried consumers but the tumult soon petered out. Rhea Bautista of Perceptions reports that out of more than 100 calls made to the Mattel hotline since August, less than half of the callers have followed through on their complaint. In fact, the on-ground team has been busy following up these callers, but many are no longer keen on following up on their complaint, even if the toys can be picked up by courier. “Di bale nalang,” was a common refrain.
Bautista notes that there have been zero returns for the Batman figures, and negligible figures for the Barbie kitchen and living room sets. The most returns were for Polly Pocket dolls, whose magnets were found to easily detach from the toys and which could cause a choking hazard if swallowed. Majority of the callers, she notes, came from the upper socioeconomic classes, which is not surprising considering that toys made by Mattel are priced above the reach of the mass market. Whether Filipino parents simply do not give much weight to the hazards of lead ingestion, belittle the possible dangers posed by these toys in their bedrooms, or are inured to having the developed world dump toxic products dumped in their children’s bedrooms, is something that only they can determine.
Bautista points out that it is far easier to exchange or return recalled toys through the Mattel hotline. Unlike retailers who still require the official receipt, and sometimes even the original packaging of the toys, Mattel is ready to pick up any toy that bears the right product code or at least fits the description of the toy in question. Bautista adds that even toys bought in other countries, including the Dora and the Sesame Street line, are now being received and processed through the Philippine hotline.
Of course, returning toys has not always been this easy in the Philippines. The first wave of recalls, which covered the Dora the Explorer line, had to be processed through Mattel’s Malaysia office. A parent who tried to return her daughter’s Dora toy found it simpler to dump the toy in the trash bin instead.
Today, Mattel’s Southeast Asia office in Malaysia still oversees recall operations in the Philippines, which will run up to February 2008. The Department of Health is the government agency closely monitoring the pull-outs, while the Department of Trade and Industry is simply assisting the involved retailers.
DTI Undersecretary Zeny Maglaya notes that Mattel “pulled out quickly” following the recall announcements. Toy manufacturers and importers, on the other hand, are voluntarily seeking and presenting laboratory results attesting to the safety of their toys, especially those toys that are being packaged with kiddie meals by fast food chains.
Last November, the DOH issued a circular requiring importers and manufacturers to present their laboratory results to the DOH-attached Bureau of Technology and Health Devices following a six-month transition phase, during which consultations will be made.
In the meantime, the public could only hope that toy manufacturers and government agencies could at least conduct independent audits at different points of the supply chain, whether it be at the manufacturing, shipping or retail levels. Third party laboratories and testing facilities should also be identified. Filipino retailers could undertake their own safety checks on toys, similar to what retailer SM did for the Christmas lights sold in its stores. Product registration cards should also be included in toy products to ensure the success of future recalls.
Maglaya believes the recall wave has made Filipino consumers more aware of the need to ensure product safety and quality. “The China recalls was a wake-up call. More calls were made to our consumer direct line,” she added. That, she says, is a “good sign” which means that no matter how slow, Filipinos are somehow on the road to consumer vigilance. //
Monday, December 10, 2007
Kids Spending Reaches P37 Billion Yearly
Published in the front page of Business Mirror,
December 10, 2007
http://www.businessmirror.com.ph/12102007/headlines02.html
Filipino kids represent a potential powerhouse consumer segment. With an estimated P37 billion in spending money annually, they represent the modern consumer who is eager to assimilate new technologies and embrace change.
The New Generations Philippines 2007 survey, conducted by research firm Synovate for Cartoon Network, revealed that kids in the 7-14 age group have a combined spending power of P37 billion annually from pocket money and gift money alone. Total pocket money received by kids was placed at P30.6 billion yearly. Money received as gifts, on the other hand, was placed at P6.3 billion.
It also showed kids in greater numbers taking to the Internet, with Internet usage doubling between 2005 and 2007, following a compelling rise in computer use within the same time period.
Interestingly, the study revealed, more kids now have access to technology right in their own rooms, with the number of those having Internet access, computers, TV sets, handheld video games, video consoles, Ipods and DVDs growing markedly between 2005 and 2007. Not surprisingly, kids are relying on these gadgets not just for entertainment, but also to complement their social lives.
Released late last month, New Generations 2007 is a quantitative study that provides insights into the minds and habits of Filipino children. It was conducted through face-to-face, in-home interviews in Metro Manila, Cebu and Davao with 1,000 kids aged 7-14 and one of their parents. For the 2007 study, a booster sample of 200 moms of younger kids aged 4-6 was added.
The study showed that 94% of parents with kids in the age 7-14 group give pocket money to their children. This incidence is similar across age, gender, location and socio-economic class. Further, 92% of parents give pocket money on a daily basis.
Among the age 4-6 group, 46% of kids receive pocket money.
Average weekly pocket monthly was placed at P169. Girls (P172) got more pocket money than boys (P165). Older kids got more pocket money than younger ones, with those aged 13-14 receiving an average of P245 weekly. Kids in the 11-12 age bracket got P165, those aged 9-10 had P139 while kids aged 7-8 got an average weekly pocket money of P125.
Quite expectedly, kids in the AB socioeconomic bracket got more pocket money than their counterparts in the CD segment. Average weekly pocket money in the AB class stood at P348, compared with P186 in the C and P142 in the D segments. Kids in Manila also had more pocket money than their counterparts in the Cebu and Davao, with the Manila-based kids averaging P175 as opposed to Davao’s P151 and Cebu’s P125 weekly.
Besides pocket money from their parents, kids also receive money for gifts during birthdays and holidays. The study estimates that kids get an average of P1,800 annually in gift money. From pocket money and gift money combined, kids have an average annual income of P10,588. Combining pocket money and gift money and scaling it up to the 3.7 million kids that the study represents, kids thus have a staggering P37 billion to spend annually.
Kids could be a good market to target, given their consumption patterns. The study showed that kids frequent malls, with 99% of parents saying they visit malls with their children. Over 54% of parents of kids from the AB segments visited malls weekly, while 36% from the C and 18% from the D segments do so weekly.
Technology pretty much dictated the tempo of these kids’ daily lives, made possible by their improved access to technology. The study showed a phenomenal growth in access to digital technologies in kids’ homes between 2005 and 2007. The increase was most significant for handheld video games, which jumped 90% to 38% in 2007 from 20% in 2005, and MP3’s and Ipods, which soared 164% during the same period. Home internet access likewise rose by 53% to cover 23% of the surveyed homes, as were access to computers (up 40%), digital cameras (62%) and DVDs (56%). Ownership of mobile phones among kids also grew 62% in the last two years, with 67% of kids in the AB group claiming mobile phone ownership. In Metro Manila, 26% of kids own a mobile phone.
Internet usage among kids has nearly doubled in the last two years, with 46% having used the internet in the past 30 days this year, compared with just 27% in 2005. Among computer users, 65% of kids are Internet users, with usage increasing with age (84% of 13-14 age group; 75% of 11-12 age group; 50% of 9-10 age group; 39% of 7-8 age group; and 29% of 4-6 age group) and income class (71% of AB segment, 66% of C and 64% of D segments). Interestingly, more kids are online in Davao (74%) than Metro Manila (65%) and Cebu (60%). Favorite online activities were online gaming (91%), making or updating a homepage (76%), visiting video websites (72%) and playing multi-player games (68%).
Increased internet usage came about with greater computer use. Seventy percent reported using a computer in the past 30 days, a 45% rise from 2005. In the AB segment, computer use was placed at 91%.
Television, however, continued to eclipse everything else as the kids’ most favored leisure activity, with 96% of kids saying they watched TV yesterday as opposed to 54% who read books (excluding text books), 46% who played with toys, 20% who played sports, 18% who used the internet and 18% who played games online. //
December 10, 2007
http://www.businessmirror.com.ph/12102007/headlines02.html
Filipino kids represent a potential powerhouse consumer segment. With an estimated P37 billion in spending money annually, they represent the modern consumer who is eager to assimilate new technologies and embrace change.
The New Generations Philippines 2007 survey, conducted by research firm Synovate for Cartoon Network, revealed that kids in the 7-14 age group have a combined spending power of P37 billion annually from pocket money and gift money alone. Total pocket money received by kids was placed at P30.6 billion yearly. Money received as gifts, on the other hand, was placed at P6.3 billion.
It also showed kids in greater numbers taking to the Internet, with Internet usage doubling between 2005 and 2007, following a compelling rise in computer use within the same time period.
Interestingly, the study revealed, more kids now have access to technology right in their own rooms, with the number of those having Internet access, computers, TV sets, handheld video games, video consoles, Ipods and DVDs growing markedly between 2005 and 2007. Not surprisingly, kids are relying on these gadgets not just for entertainment, but also to complement their social lives.
Released late last month, New Generations 2007 is a quantitative study that provides insights into the minds and habits of Filipino children. It was conducted through face-to-face, in-home interviews in Metro Manila, Cebu and Davao with 1,000 kids aged 7-14 and one of their parents. For the 2007 study, a booster sample of 200 moms of younger kids aged 4-6 was added.
The study showed that 94% of parents with kids in the age 7-14 group give pocket money to their children. This incidence is similar across age, gender, location and socio-economic class. Further, 92% of parents give pocket money on a daily basis.
Among the age 4-6 group, 46% of kids receive pocket money.
Average weekly pocket monthly was placed at P169. Girls (P172) got more pocket money than boys (P165). Older kids got more pocket money than younger ones, with those aged 13-14 receiving an average of P245 weekly. Kids in the 11-12 age bracket got P165, those aged 9-10 had P139 while kids aged 7-8 got an average weekly pocket money of P125.
Quite expectedly, kids in the AB socioeconomic bracket got more pocket money than their counterparts in the CD segment. Average weekly pocket money in the AB class stood at P348, compared with P186 in the C and P142 in the D segments. Kids in Manila also had more pocket money than their counterparts in the Cebu and Davao, with the Manila-based kids averaging P175 as opposed to Davao’s P151 and Cebu’s P125 weekly.
Besides pocket money from their parents, kids also receive money for gifts during birthdays and holidays. The study estimates that kids get an average of P1,800 annually in gift money. From pocket money and gift money combined, kids have an average annual income of P10,588. Combining pocket money and gift money and scaling it up to the 3.7 million kids that the study represents, kids thus have a staggering P37 billion to spend annually.
Kids could be a good market to target, given their consumption patterns. The study showed that kids frequent malls, with 99% of parents saying they visit malls with their children. Over 54% of parents of kids from the AB segments visited malls weekly, while 36% from the C and 18% from the D segments do so weekly.
Technology pretty much dictated the tempo of these kids’ daily lives, made possible by their improved access to technology. The study showed a phenomenal growth in access to digital technologies in kids’ homes between 2005 and 2007. The increase was most significant for handheld video games, which jumped 90% to 38% in 2007 from 20% in 2005, and MP3’s and Ipods, which soared 164% during the same period. Home internet access likewise rose by 53% to cover 23% of the surveyed homes, as were access to computers (up 40%), digital cameras (62%) and DVDs (56%). Ownership of mobile phones among kids also grew 62% in the last two years, with 67% of kids in the AB group claiming mobile phone ownership. In Metro Manila, 26% of kids own a mobile phone.
Internet usage among kids has nearly doubled in the last two years, with 46% having used the internet in the past 30 days this year, compared with just 27% in 2005. Among computer users, 65% of kids are Internet users, with usage increasing with age (84% of 13-14 age group; 75% of 11-12 age group; 50% of 9-10 age group; 39% of 7-8 age group; and 29% of 4-6 age group) and income class (71% of AB segment, 66% of C and 64% of D segments). Interestingly, more kids are online in Davao (74%) than Metro Manila (65%) and Cebu (60%). Favorite online activities were online gaming (91%), making or updating a homepage (76%), visiting video websites (72%) and playing multi-player games (68%).
Increased internet usage came about with greater computer use. Seventy percent reported using a computer in the past 30 days, a 45% rise from 2005. In the AB segment, computer use was placed at 91%.
Television, however, continued to eclipse everything else as the kids’ most favored leisure activity, with 96% of kids saying they watched TV yesterday as opposed to 54% who read books (excluding text books), 46% who played with toys, 20% who played sports, 18% who used the internet and 18% who played games online. //
Sunday, December 9, 2007
People I Admire Series: Deck Go
(Ten years ago, I interviewed and wrote about Deck Go. He had just joined Robinson's then. It was amazing to see how much he has changed. He was no longer tentative, but decisive and so much more knowledgeable, yet he was still humble. He proudly showed me an article written about him ten years ago in Men's Zone magazine. It carried the byline of Athena Mitra. That was me. Athena Mitra was my Labrador Retriever. I used that pseudonym for the longest time.)
Published in Personal Fortune Magazine, 2007
Philippine real estate is on an upswing. Drawing strength from the swelling ranks of overseas workers, backstopped by falling interest rates, the real estate sector is sprinting at a pace not seen in the past decade.
Its renewed vigor has spawned a new set of winners, and among these, Robinsons Land (RLC) is undeniably the biggest. With a market capitalization of P55 billion, it is hard to believe that fourteen years ago, RLC was just a one-mall operation, the fledgling in JG Summit’s nest of companies. A decade or so down the road, it has become the indubitable crown jewel of the JG Group in the Philippines.
Those who have witnessed RLC’s remarkable growth in this short span attribute much of this to the efforts of Frederick Go, who recently assumed the twin posts of president and chief operating officer of the company. Under the mentorship of his uncle James Go, Deck has bloomed from doer to leader, his vision and understanding of the market made stronger and deeper by the sheer experience of steering the company towards growth in the face of numerous challenges, including the Asian crisis. Today, under the able direction of his cousin Lance Gokongwei, Deck has definitely hit his stride. Whereas fourteen years ago, Deck, fresh from a stint at the Manila Times, was obsessing over the details of its mall’s theme parks or combing the countryside for a new business opportunity, today, he presides over the collective goals of a group that is poised to leap forward from a springboard of great ideas and a commitment to growth.
“It’s definitely more challenging going forward,” Deck reckons, more so because RLC has crossed the great divide from near-obscurity to veritable market leader. Today, RLC is the second largest diversified real estate conglomerate in the Philippines, with 18 malls, 17 residential subdivisions, 15 residential condominiums, 6 office buildings and four hotel properties to its name. It is the largest office landlord, the second largest shopping center operator, the third largest residential condominium developer and the fourth largest hotel operator in the country.
With total assets of P37 billion, annual revenues of over P9 billion and an EBITDA of P4 billion, plus the highest return on equity among its peers, RLC is not surprisingly the darling of stock market investors. Its high dividend payout policy is another welcome bonus. In fact, the company recently raised P11 billion from foreign investors for a public offering, with the book fully covered even before Deck, along with other RLC officers, had finished with their overseas road show presentation.
Presiding over a dynamic organization comes naturally to Deck, who nowadays finds himself also managing investor relations, as well as helping out in business development and marketing, as the situation commands. Naturally charismatic and brimming with enthusiasm, Deck admits he enjoys his work. “I like the challenge of starting a business, especially when you start with just a concept or idea. There is always the excitement of starting a project and seeing it become a successful reality.”
Buoyed by the dynamism of the real estate sector, Deck is nevertheless not allowing investor euphoria to taint his reading of the market. Instead, he chooses to view things from a safe distance. “This may be part of a cyclical boom; some say it’s just the beginning, some say it’s the middle of an uptrend, and some think it has only a couple of years left” he notes.
Structural changes have helped the Philippine economy recover and expand. Steady consumption growth, rising purchasing power, and enhanced aspirational or lifestyle spending have underpinned the expansion of the real estate sector in the past years, aided largely by developers’ access to cheap capital. Sudden upticks in land prices, however, have also conjured fears of a real estate bubble, dreaded by every developer and investor.
Fortunately, RLC is in a “unique position to manage both opportunity and risk.”
Nimble and quick to the draw, RLC can swiftly spring into action to take advantage of emergent opportunities, without taking its eye off lurking dangers inherent to the real estate sector. Deck recognizes that agility and resilience are hallmarks of RLC. “What matters is that as a company, we are not just ready to take advantage of opportunities that may arise, but have the ability to mitigate risks along the way,” he says.
Recurring income from RLC’s office, mall and hotel operations evens out the erratic income stream from the development business. Ideally, Deck points out, “development income and recurring income should be balanced.” RLC’s clean balance sheet, with zero net debt, gives the company a host of alternatives. “We are open for more gearing,” Deck discloses, pointing out how RLC “manages for the allocation of resources, to make sure the portfolio is balanced.”
Given the current trend, RLC will, in all likelihood, take a more aggressive stance going forward. “The economy looks good and the global investing world is looking positively at the Philippines, something that has not happened for a long time. The outlook appears bright. It’s our job to capitalize on these opportunities.” He identifies the leisure and retirement business as a field replete with opportunities.
The blueprint of growth entails a keen eye for detail – something that Deck has harnessed in all the years he has been in the industry, meeting with those who make the business move -- draftsmen and architects, investment bankers and stock analysts, salesmen and brokers. This is doubly important because he also manages the Gokongwei family’s private property business in China, consisting of large-ticket projects in Shanghai, Xiamen and Chengdu.
Building the company in this increasingly turbulent global environment requires much from any corporation, and RLC is rising up to the challenge. Deck realizes that past corporate successes are not indicative of future performance. On the contrary, they simply spawn copycats who can easily duplicate a company’s success. RLC’s innovative spirit, though, ensures that it will always stay ahead.
But even innovation has its limits. In a world where change is the only permanent challenge, few things can be more important than a company’s name and track record – something that the company has painstakingly built through the years, from the choice of tiles that go into its buildings to the prudence with which it conducts its financial dealings. “Competition is always there, and the only way to really differentiate ourselves is through our name. We emphasize our brand, our reputation in the market. Brand is the one thing that will make us stand out from the rest.”
The RLC brand is something that Deck wants to continuously develop and never tarnish. He explains: “We want to build a brand that is globally recognized and respected; a brand that commands a significant value premium over other products and services offered by competitors. We want our customers, suppliers and business associates to cherish their relationship with RLC and make us their preferred business partner.”
Similarly, it expects no less recognition for its brand in the capital markets. “We want to be recognized as a blue-chip property counter, with strong management, a sound business model, and good corporate governance.”
Brand-building, of course, never happens by accident. Behind every sterling brand is the collective energy and commitment of the people behind it. For RLC, this is no less true. Deck is always profuse in extending his gratitude to the people who have helped him take RLC to where it presently stands. “There is no way we could have achieved this without the RLC team. With the team working together, we were able to build up a real estate conglomerate, and we are very proud of what we have accomplished.”
He adds, with obvious pride, that RLC has the “resources, particularly the management bench, to compete with the larger and more established players.” RLC continues to harness its human capital for maximum results. “To be successful, we have to bring in the right talent, the right management team.” The cycle of motivating them and pushing them towards more triumphs is a never-ending affair.
Deck, of course, is optimistic that RLC will carry on with its great track record. “We had the vision to build the business. We were ahead of the curve. We always see the trend before others see it, and we have been innovating to make sure we are always a step ahead.” Riding high on momentum but anchored by commitment, RLC is all set to outdo itself in its never-ending quest for growth and excellence. //
Published in Personal Fortune Magazine, 2007
Philippine real estate is on an upswing. Drawing strength from the swelling ranks of overseas workers, backstopped by falling interest rates, the real estate sector is sprinting at a pace not seen in the past decade.
Its renewed vigor has spawned a new set of winners, and among these, Robinsons Land (RLC) is undeniably the biggest. With a market capitalization of P55 billion, it is hard to believe that fourteen years ago, RLC was just a one-mall operation, the fledgling in JG Summit’s nest of companies. A decade or so down the road, it has become the indubitable crown jewel of the JG Group in the Philippines.
Those who have witnessed RLC’s remarkable growth in this short span attribute much of this to the efforts of Frederick Go, who recently assumed the twin posts of president and chief operating officer of the company. Under the mentorship of his uncle James Go, Deck has bloomed from doer to leader, his vision and understanding of the market made stronger and deeper by the sheer experience of steering the company towards growth in the face of numerous challenges, including the Asian crisis. Today, under the able direction of his cousin Lance Gokongwei, Deck has definitely hit his stride. Whereas fourteen years ago, Deck, fresh from a stint at the Manila Times, was obsessing over the details of its mall’s theme parks or combing the countryside for a new business opportunity, today, he presides over the collective goals of a group that is poised to leap forward from a springboard of great ideas and a commitment to growth.
“It’s definitely more challenging going forward,” Deck reckons, more so because RLC has crossed the great divide from near-obscurity to veritable market leader. Today, RLC is the second largest diversified real estate conglomerate in the Philippines, with 18 malls, 17 residential subdivisions, 15 residential condominiums, 6 office buildings and four hotel properties to its name. It is the largest office landlord, the second largest shopping center operator, the third largest residential condominium developer and the fourth largest hotel operator in the country.
With total assets of P37 billion, annual revenues of over P9 billion and an EBITDA of P4 billion, plus the highest return on equity among its peers, RLC is not surprisingly the darling of stock market investors. Its high dividend payout policy is another welcome bonus. In fact, the company recently raised P11 billion from foreign investors for a public offering, with the book fully covered even before Deck, along with other RLC officers, had finished with their overseas road show presentation.
Presiding over a dynamic organization comes naturally to Deck, who nowadays finds himself also managing investor relations, as well as helping out in business development and marketing, as the situation commands. Naturally charismatic and brimming with enthusiasm, Deck admits he enjoys his work. “I like the challenge of starting a business, especially when you start with just a concept or idea. There is always the excitement of starting a project and seeing it become a successful reality.”
Buoyed by the dynamism of the real estate sector, Deck is nevertheless not allowing investor euphoria to taint his reading of the market. Instead, he chooses to view things from a safe distance. “This may be part of a cyclical boom; some say it’s just the beginning, some say it’s the middle of an uptrend, and some think it has only a couple of years left” he notes.
Structural changes have helped the Philippine economy recover and expand. Steady consumption growth, rising purchasing power, and enhanced aspirational or lifestyle spending have underpinned the expansion of the real estate sector in the past years, aided largely by developers’ access to cheap capital. Sudden upticks in land prices, however, have also conjured fears of a real estate bubble, dreaded by every developer and investor.
Fortunately, RLC is in a “unique position to manage both opportunity and risk.”
Nimble and quick to the draw, RLC can swiftly spring into action to take advantage of emergent opportunities, without taking its eye off lurking dangers inherent to the real estate sector. Deck recognizes that agility and resilience are hallmarks of RLC. “What matters is that as a company, we are not just ready to take advantage of opportunities that may arise, but have the ability to mitigate risks along the way,” he says.
Recurring income from RLC’s office, mall and hotel operations evens out the erratic income stream from the development business. Ideally, Deck points out, “development income and recurring income should be balanced.” RLC’s clean balance sheet, with zero net debt, gives the company a host of alternatives. “We are open for more gearing,” Deck discloses, pointing out how RLC “manages for the allocation of resources, to make sure the portfolio is balanced.”
Given the current trend, RLC will, in all likelihood, take a more aggressive stance going forward. “The economy looks good and the global investing world is looking positively at the Philippines, something that has not happened for a long time. The outlook appears bright. It’s our job to capitalize on these opportunities.” He identifies the leisure and retirement business as a field replete with opportunities.
The blueprint of growth entails a keen eye for detail – something that Deck has harnessed in all the years he has been in the industry, meeting with those who make the business move -- draftsmen and architects, investment bankers and stock analysts, salesmen and brokers. This is doubly important because he also manages the Gokongwei family’s private property business in China, consisting of large-ticket projects in Shanghai, Xiamen and Chengdu.
Building the company in this increasingly turbulent global environment requires much from any corporation, and RLC is rising up to the challenge. Deck realizes that past corporate successes are not indicative of future performance. On the contrary, they simply spawn copycats who can easily duplicate a company’s success. RLC’s innovative spirit, though, ensures that it will always stay ahead.
But even innovation has its limits. In a world where change is the only permanent challenge, few things can be more important than a company’s name and track record – something that the company has painstakingly built through the years, from the choice of tiles that go into its buildings to the prudence with which it conducts its financial dealings. “Competition is always there, and the only way to really differentiate ourselves is through our name. We emphasize our brand, our reputation in the market. Brand is the one thing that will make us stand out from the rest.”
The RLC brand is something that Deck wants to continuously develop and never tarnish. He explains: “We want to build a brand that is globally recognized and respected; a brand that commands a significant value premium over other products and services offered by competitors. We want our customers, suppliers and business associates to cherish their relationship with RLC and make us their preferred business partner.”
Similarly, it expects no less recognition for its brand in the capital markets. “We want to be recognized as a blue-chip property counter, with strong management, a sound business model, and good corporate governance.”
Brand-building, of course, never happens by accident. Behind every sterling brand is the collective energy and commitment of the people behind it. For RLC, this is no less true. Deck is always profuse in extending his gratitude to the people who have helped him take RLC to where it presently stands. “There is no way we could have achieved this without the RLC team. With the team working together, we were able to build up a real estate conglomerate, and we are very proud of what we have accomplished.”
He adds, with obvious pride, that RLC has the “resources, particularly the management bench, to compete with the larger and more established players.” RLC continues to harness its human capital for maximum results. “To be successful, we have to bring in the right talent, the right management team.” The cycle of motivating them and pushing them towards more triumphs is a never-ending affair.
Deck, of course, is optimistic that RLC will carry on with its great track record. “We had the vision to build the business. We were ahead of the curve. We always see the trend before others see it, and we have been innovating to make sure we are always a step ahead.” Riding high on momentum but anchored by commitment, RLC is all set to outdo itself in its never-ending quest for growth and excellence. //
Monday, September 17, 2007
The War for Talent
http://www.businessmirror.com.ph/09132007/perspective01.html
Published in BusinessMirror, September 13, 2007
Today’s companies face five critical business challenges: globalization, technology, the quest for profitability through growth, intellectual capital constraints and the exigencies of continuous change. Regardless of their industry, size or location, these challenges require these organizations to continuously build new capabilities—a responsibility which, University of Michigan School of Business professor Dave Ulrich writes, human resources (HR) should embrace for these organizations to last.
For Philippine companies, these challenges are no less important. The growth of the global economy, particularly of the Asia-Pacific region, has vastly changed the business landscape. As tariffs crumble and technology blurs geographic lines, the Filipino enterprise now finds itself as part of the global supply chain, competing with businesses from all over the world. Slightly disadvantaged in terms of capital and infrastructural support, Filipino firms at least have that precious resource few other countries have: human capital.
This resource, though, is slowly being depleted by the global war for talent, intensified by the growth of economies around the world and the growing recognition of the Filipino worker’s skill and attitude. As a result, human capital has become a perilously rare commodity in a growing number of sectors, such as in engineering, IT, education and the health sciences. And yet, in a sad irony, unemployment remains at a constant high.
In the global village, where knowledge has become the most important currency, the truism about people being a company’s source of competitive advantage rings truer than ever. In the new economy, Ulrich writes, “Winning will spring from organizational capabilities such as speed, responsiveness, agility, learning capacity and employee competence. Successful companies are those that are able to quickly turn strategy into action; to manage processes intelligently and efficiently; to maximize employee contribution and commitment; and to create the conditions for seamless change.”
All these, of course, can only be done by having the right people in place.
HR evolves
AT no other time has the war for talent been as fierce. The search for the right talent has become such an essential function that it has forced the evolution of the HR function.
“Whereas HR used to be very traditional, generating systems and procedures and focusing on administrative functions, today, it is more strategic in nature,” notes Rey Silvestre Canilao, vice chairman and managing director of Global Executive Solutions Group, a human consulting company servicing multinationals and global firms. It is now oriented toward organizational development, straddling such matters as succession planning, talent acquisition, training and, recently, company culture, following the flurry of mergers and acquisitions worldwide.
Indeed, the HR function “has evolved. It is not just service-related, but is more a partner of the CEO,” Canilao adds.
For today’s HR firms, it is thus imperative to understand their clients’ businesses. “This is critical for us to find the right talents for them,” explains Canilao. “We ask: Are they strong in customer development, distribution? Do they have inventory, IT problems? We have to understand all that.”
In fact, firms engaging in executive searches have ceased to see themselves as HR practitioners, but rather, as human capital-resource consultancies. “We are nontraditional; we are businessmen, industry people who can offer a hands-on business perspective,” Chico Chuaquico, director of ZMG Signium Ward Howell Global Executive Solutions, says. “We are in constant touch with industry leaders so we know where the industry is going. We are more of analysts and strategists and we understand the business of our clients.”
The business and its people are, after all, inseparable. Companies are, of course, ever hungry for information and insight that will help them arrive at the correct business decisions that would inevitably influence who they should get for their companies.
Complex process
Research underpins much of the consulting process. Executive search, which Signium managing director Gigi Zulueta likes to call “the highest form of management consultancy,” is a human-capital solution that needs a good research framework as its foundation.
Needless to say, executive search is never a simple process. “It’s really consulting and not an order-taking type of business. You become a stakeholder somehow, especially when you get the C-level executives. It’s an activity that will give that firm competitive advantage, an answer to a specific problem of the business,” Chuaquico says.
In fact, a growing number of US private-equity, asset-management and direct-investment firms are having head-hunters sit on their boards. For a number of global companies, partnerships are sealed by the promise of being able to get the right leaders.
Jose Balderama, Asia Select managing director and Signium director, recalls how Signium India helped effect vulture fund 3I’s acquisition of a transformer-manufacturing firm. The buy-in proceeded when 3I was able to present the company’s skeptical chairman with the right candidate to head the company.
Access to information has become a critical component of the human-capital challenge. By providing important information to large companies in search of a home for their outsourced operations, Signium was able to bring Chevron, Watson Wyatt and GSM (Baker & Mackenzie) into the Philippines and helped build up their businesses from the ground.
For Balderama, this meant “telling them what to expect” in very specific terms. Time and again, he has found himself advising clients on their wish list of competencies to include what is most critical and dispense with what may be whimsical. “You can really just focus on a number of competencies since the search strategy is dependent on what the talent market can bear,” he explains.
A shared services firm, for instance, wanted candidates with at least five years of experience even when they were the first in the Philippine market. Another wanted SAP-literate professionals with 10 years of experience in the software even when SAP has not been around that long in the country. A third wanted statisticians with psychology backgrounds. “This is when the value of the firm comes in,” he says. “We tell them what to look for, help them temper their expectations to what’s available in the market and tell them when the people they want don’t exist. We don’t sugar-coat.”
Search the world
This is not to say that Signium does not exhaust its resources in scouring the world for the best possible talent.
Just as the world’s poachers get their talents from the Philippines, so does Signium consider the globe as its hunting ground. It scours the world to keep tabs on Filipino professionals and diligently conducts “road shows” in Singapore and the United States to know who these people are. Chuaquico recalls how the realization that telecommunications will evolve from a utility to a consumer product sparked the search for the next head of a large telecommunications company, a search that Signium ended in Singapore.
When a semiconductors company realized it was losing out to manufacturers in cheaper Asian locations, it knew it needed a new leader to bring it out of the woods. The company wanted a man who knew three languages, had managed a million-dollar organization, had a business development orientation, and was a Filipino. Signium found their man in the US Midwest, and though negotiations stretched for half a year, the leader has since taken the company public in Singapore and has dramatically increased shareholder value. “The easiest searches,” notes Balderama, “have a few qualified people.”
Beyond competencies, leadership counts for a lot. “We believe in identifying leaders,” says Canilao. “A company may have the products, the business processes and everything else, but most important are its people. The real competitive advantage will come from leadership—the capability to manage people, to rally people.”
The right attitude, a willingness to learn and the capacity to adjust are qualities of leaders who can bring successful companies to the next level.
For Global Executive, thus, it is especially important to not just have the best talent but the “fit” as well. “The chemistry and the culture is a big factor,” Canilao points out. Personality, too, counts for a lot. Moving talents from multinationals to local conglomerates, for instance, may present problems for both the company and the talent due to cultural differences. He notes, though, that local conglomerates are professionalizing their ranks and are adopting global processes such that large Filipino companies such as Unilab, Jollibee and Smart are hiring from multinationals with success.
“At the end of the day,” he says, “you will need to understand the culture of the client: their vision and mission, their business landscape, their leadership style, their management style.”
Tech helps
Understandably, the war for talent is an expensive one. “We don’t have a fixed mindset on costs,” says Signium’s Chuaquico, adding that the company doesn’t mind paying for calls made all over the world.
“We’re building our research. These calls will generate a lot more,” he reasons. “We’re the only one with the enterprise approach. We spend time, which is very expensive. We don’t think of the short term, it’s always the long term for us.”
Fortunately, information technology has brought about the “death of distance.” With information technology, “we’re on real time, so we move faster,” says Chuaquico.
Videoconferencing facilities, 3G broadband and Blackberries have speeded up the search process. “We realize that clients are always on a timeline. We’ve always believed project managers will rule the world, and we keep up with the pace of managers,” he says. This, adds Canilao, is particularly important when one is serving clients overseas.
As the war to attract and retain talent rages, companies are coming up with innovative ways to stand up to the human-capital challenge. Signium, for instance, is organizing trade missions to Vietnam, knowing that any partnerships forged or businesses consummated would trigger a need for human-capital solutions. It is also working in collaboration with the Commission on Higher Education, the Ateneo de Manila University and the University of Asia and the Pacific so that the academe may produce the competencies that the job market so urgently needs. On his own, Chuaquico finds time to help La Salle high-school juniors and seniors plot their future careers.
Beyond salaries
Across all levels, talent searches have become more creative. Many companies are working closely with third parties to help shore up their manpower needs. ICTSI, for instance, has partnered with equipment operator Monark to train high-school students for a year and eventually hires those who successfully complete the training program. There, too, are the usual school job fairs held all over the country in malls, plazas and government halls.
Call centers are known to hold concerts and host open houses everywhere, from parks to coffee shops, to hunt for the people they need. One call center, People Support, even put up recruitment kiosks in malls. Others pay referral fees ranging from P5,000 per applicant plus an additional P2,000 when the applicant hurdles the training program. Accenture talent acquisition specialist Christa Perez says such promotions are necessary to fill up shortfalls in demand. Sometimes, they would have to fill up as many as 1,000 slots in one day.
Of course, compensation packages are also being enhanced. “You have to be innovative,” said Stella Garcia, office practice leader of the Human Capital Group of Watson Wyatt. Cash and benefits, for instance, are not the only carrots to dangle to talents. Rather, there is a greater emphasis toward a more “holistic” employment deal that gives weight to work/life balance, career breaks and training opportunities. Being able to work from home or being mobile appeals to workers who want to be free from the encumbrances of work.
More important, people need to have a personal stake in the enterprises they work for. Willy Arcilla, regional director of ZMG Signium Ward Howell and president of Market Mentor, believes in the merits of power sharing. “The worker who is a part-owner is more productive. He will take the initiative to drive revenues and reduce costs—even without being told by his superior,” said Arcilla.
Need is indeed the mother of innovation. As the global war for talent intensifies, so will organizations find new ways to meet the human-capital challenge. “If people are a company’s greatest asset, then providing human-capital solutions is the best industry with the highest ROI—both financially and personally—especially if the supply of the best talent is in constant shortage globally,” Arcilla said.
Through all this, the challenge for HR, as enunciated by Dr. Ulrich, is not just to become a “partner in strategy execution, helping to move planning from the conference room to the marketplace,” but also “to become an agent of continuous transformation, shaping processes and a culture that together improve an organization’s capacity for change.”
Published in BusinessMirror, September 13, 2007
Today’s companies face five critical business challenges: globalization, technology, the quest for profitability through growth, intellectual capital constraints and the exigencies of continuous change. Regardless of their industry, size or location, these challenges require these organizations to continuously build new capabilities—a responsibility which, University of Michigan School of Business professor Dave Ulrich writes, human resources (HR) should embrace for these organizations to last.
For Philippine companies, these challenges are no less important. The growth of the global economy, particularly of the Asia-Pacific region, has vastly changed the business landscape. As tariffs crumble and technology blurs geographic lines, the Filipino enterprise now finds itself as part of the global supply chain, competing with businesses from all over the world. Slightly disadvantaged in terms of capital and infrastructural support, Filipino firms at least have that precious resource few other countries have: human capital.
This resource, though, is slowly being depleted by the global war for talent, intensified by the growth of economies around the world and the growing recognition of the Filipino worker’s skill and attitude. As a result, human capital has become a perilously rare commodity in a growing number of sectors, such as in engineering, IT, education and the health sciences. And yet, in a sad irony, unemployment remains at a constant high.
In the global village, where knowledge has become the most important currency, the truism about people being a company’s source of competitive advantage rings truer than ever. In the new economy, Ulrich writes, “Winning will spring from organizational capabilities such as speed, responsiveness, agility, learning capacity and employee competence. Successful companies are those that are able to quickly turn strategy into action; to manage processes intelligently and efficiently; to maximize employee contribution and commitment; and to create the conditions for seamless change.”
All these, of course, can only be done by having the right people in place.
HR evolves
AT no other time has the war for talent been as fierce. The search for the right talent has become such an essential function that it has forced the evolution of the HR function.
“Whereas HR used to be very traditional, generating systems and procedures and focusing on administrative functions, today, it is more strategic in nature,” notes Rey Silvestre Canilao, vice chairman and managing director of Global Executive Solutions Group, a human consulting company servicing multinationals and global firms. It is now oriented toward organizational development, straddling such matters as succession planning, talent acquisition, training and, recently, company culture, following the flurry of mergers and acquisitions worldwide.
Indeed, the HR function “has evolved. It is not just service-related, but is more a partner of the CEO,” Canilao adds.
For today’s HR firms, it is thus imperative to understand their clients’ businesses. “This is critical for us to find the right talents for them,” explains Canilao. “We ask: Are they strong in customer development, distribution? Do they have inventory, IT problems? We have to understand all that.”
In fact, firms engaging in executive searches have ceased to see themselves as HR practitioners, but rather, as human capital-resource consultancies. “We are nontraditional; we are businessmen, industry people who can offer a hands-on business perspective,” Chico Chuaquico, director of ZMG Signium Ward Howell Global Executive Solutions, says. “We are in constant touch with industry leaders so we know where the industry is going. We are more of analysts and strategists and we understand the business of our clients.”
The business and its people are, after all, inseparable. Companies are, of course, ever hungry for information and insight that will help them arrive at the correct business decisions that would inevitably influence who they should get for their companies.
Complex process
Research underpins much of the consulting process. Executive search, which Signium managing director Gigi Zulueta likes to call “the highest form of management consultancy,” is a human-capital solution that needs a good research framework as its foundation.
Needless to say, executive search is never a simple process. “It’s really consulting and not an order-taking type of business. You become a stakeholder somehow, especially when you get the C-level executives. It’s an activity that will give that firm competitive advantage, an answer to a specific problem of the business,” Chuaquico says.
In fact, a growing number of US private-equity, asset-management and direct-investment firms are having head-hunters sit on their boards. For a number of global companies, partnerships are sealed by the promise of being able to get the right leaders.
Jose Balderama, Asia Select managing director and Signium director, recalls how Signium India helped effect vulture fund 3I’s acquisition of a transformer-manufacturing firm. The buy-in proceeded when 3I was able to present the company’s skeptical chairman with the right candidate to head the company.
Access to information has become a critical component of the human-capital challenge. By providing important information to large companies in search of a home for their outsourced operations, Signium was able to bring Chevron, Watson Wyatt and GSM (Baker & Mackenzie) into the Philippines and helped build up their businesses from the ground.
For Balderama, this meant “telling them what to expect” in very specific terms. Time and again, he has found himself advising clients on their wish list of competencies to include what is most critical and dispense with what may be whimsical. “You can really just focus on a number of competencies since the search strategy is dependent on what the talent market can bear,” he explains.
A shared services firm, for instance, wanted candidates with at least five years of experience even when they were the first in the Philippine market. Another wanted SAP-literate professionals with 10 years of experience in the software even when SAP has not been around that long in the country. A third wanted statisticians with psychology backgrounds. “This is when the value of the firm comes in,” he says. “We tell them what to look for, help them temper their expectations to what’s available in the market and tell them when the people they want don’t exist. We don’t sugar-coat.”
Search the world
This is not to say that Signium does not exhaust its resources in scouring the world for the best possible talent.
Just as the world’s poachers get their talents from the Philippines, so does Signium consider the globe as its hunting ground. It scours the world to keep tabs on Filipino professionals and diligently conducts “road shows” in Singapore and the United States to know who these people are. Chuaquico recalls how the realization that telecommunications will evolve from a utility to a consumer product sparked the search for the next head of a large telecommunications company, a search that Signium ended in Singapore.
When a semiconductors company realized it was losing out to manufacturers in cheaper Asian locations, it knew it needed a new leader to bring it out of the woods. The company wanted a man who knew three languages, had managed a million-dollar organization, had a business development orientation, and was a Filipino. Signium found their man in the US Midwest, and though negotiations stretched for half a year, the leader has since taken the company public in Singapore and has dramatically increased shareholder value. “The easiest searches,” notes Balderama, “have a few qualified people.”
Beyond competencies, leadership counts for a lot. “We believe in identifying leaders,” says Canilao. “A company may have the products, the business processes and everything else, but most important are its people. The real competitive advantage will come from leadership—the capability to manage people, to rally people.”
The right attitude, a willingness to learn and the capacity to adjust are qualities of leaders who can bring successful companies to the next level.
For Global Executive, thus, it is especially important to not just have the best talent but the “fit” as well. “The chemistry and the culture is a big factor,” Canilao points out. Personality, too, counts for a lot. Moving talents from multinationals to local conglomerates, for instance, may present problems for both the company and the talent due to cultural differences. He notes, though, that local conglomerates are professionalizing their ranks and are adopting global processes such that large Filipino companies such as Unilab, Jollibee and Smart are hiring from multinationals with success.
“At the end of the day,” he says, “you will need to understand the culture of the client: their vision and mission, their business landscape, their leadership style, their management style.”
Tech helps
Understandably, the war for talent is an expensive one. “We don’t have a fixed mindset on costs,” says Signium’s Chuaquico, adding that the company doesn’t mind paying for calls made all over the world.
“We’re building our research. These calls will generate a lot more,” he reasons. “We’re the only one with the enterprise approach. We spend time, which is very expensive. We don’t think of the short term, it’s always the long term for us.”
Fortunately, information technology has brought about the “death of distance.” With information technology, “we’re on real time, so we move faster,” says Chuaquico.
Videoconferencing facilities, 3G broadband and Blackberries have speeded up the search process. “We realize that clients are always on a timeline. We’ve always believed project managers will rule the world, and we keep up with the pace of managers,” he says. This, adds Canilao, is particularly important when one is serving clients overseas.
As the war to attract and retain talent rages, companies are coming up with innovative ways to stand up to the human-capital challenge. Signium, for instance, is organizing trade missions to Vietnam, knowing that any partnerships forged or businesses consummated would trigger a need for human-capital solutions. It is also working in collaboration with the Commission on Higher Education, the Ateneo de Manila University and the University of Asia and the Pacific so that the academe may produce the competencies that the job market so urgently needs. On his own, Chuaquico finds time to help La Salle high-school juniors and seniors plot their future careers.
Beyond salaries
Across all levels, talent searches have become more creative. Many companies are working closely with third parties to help shore up their manpower needs. ICTSI, for instance, has partnered with equipment operator Monark to train high-school students for a year and eventually hires those who successfully complete the training program. There, too, are the usual school job fairs held all over the country in malls, plazas and government halls.
Call centers are known to hold concerts and host open houses everywhere, from parks to coffee shops, to hunt for the people they need. One call center, People Support, even put up recruitment kiosks in malls. Others pay referral fees ranging from P5,000 per applicant plus an additional P2,000 when the applicant hurdles the training program. Accenture talent acquisition specialist Christa Perez says such promotions are necessary to fill up shortfalls in demand. Sometimes, they would have to fill up as many as 1,000 slots in one day.
Of course, compensation packages are also being enhanced. “You have to be innovative,” said Stella Garcia, office practice leader of the Human Capital Group of Watson Wyatt. Cash and benefits, for instance, are not the only carrots to dangle to talents. Rather, there is a greater emphasis toward a more “holistic” employment deal that gives weight to work/life balance, career breaks and training opportunities. Being able to work from home or being mobile appeals to workers who want to be free from the encumbrances of work.
More important, people need to have a personal stake in the enterprises they work for. Willy Arcilla, regional director of ZMG Signium Ward Howell and president of Market Mentor, believes in the merits of power sharing. “The worker who is a part-owner is more productive. He will take the initiative to drive revenues and reduce costs—even without being told by his superior,” said Arcilla.
Need is indeed the mother of innovation. As the global war for talent intensifies, so will organizations find new ways to meet the human-capital challenge. “If people are a company’s greatest asset, then providing human-capital solutions is the best industry with the highest ROI—both financially and personally—especially if the supply of the best talent is in constant shortage globally,” Arcilla said.
Through all this, the challenge for HR, as enunciated by Dr. Ulrich, is not just to become a “partner in strategy execution, helping to move planning from the conference room to the marketplace,” but also “to become an agent of continuous transformation, shaping processes and a culture that together improve an organization’s capacity for change.”
Friday, June 8, 2007
Persons I Admire Series: Patricio Lim
(Published in the Philippine Business Magazine, January 2006. I interviewed these five men in between my stints at BusinessWorld and BusinessMirror)
Experience is a great teacher. There is no exchanging what one gains through the years with what one learns from books. As time passes, even as technology and new learnings bring about change, one discovers that some themes remain constant-the importance of succession planning, the value of education, the strength of partnerships, the rewards of entrepreneurship, the meaning of integrity.
Patricio L. Lim, 90, was constant in his perseverance and dedication to duty in all his endeavors Simply "P.L." to his friends, he belongs to a generation known as much for their hard work as their valor, a generation that built the country and refused to put up with inanities that would otherwise destroy it.
For Lim, who peddled clothes along San Vicente Street in turn-of-the-century Manila and lived above a goldsmith's shop, time is relative. His perception and view of time is very Chinese, extending beyond his grandchildren's lifetimes.
Not Just Doing Business
Indeed, when the 30-year-old Lim decided to quit being a medicine salesman for Zuellig to open a textile mill with equity from a friend, he was not looking at building a mere business. When he established a garments business to serve the retailers of the world, opened a carpet factory to serve the global markets, and built a world-class hotel (The Peninsula Manila, which forever changed the Makati cityscape), he did so with the knowledge that he was helping build the Philippines. He was fulfilling his generation's dream of building a nation, and carving his own legacy.
Universal Textile Mills began operating in 1953. It was the first and, at its prime, the largest integrated woven textile mill in the country, providing thousands of jobs to Filipino workers.
The Philippine Carpet Manufacturing Corporation was established in 1965 with 60 skilled employees trained by Chinese weavers in the traditional art of making fine handcrafted carpets. Today, the company has 444 craftsmen in its employ and is affiliated with the biggest and most prestigious suppliers of handmade carpets in Asia, Australia, Europe, and the U.S.
The Peninsula Manila opened in 1976 in time for the big annual meeting of the board of governors of the International Monetary Fund and the World Bank held in Manila that year.
Astute and Generous
Lim is a totally self-made man whose success can be attributed not only to incredible luck and hard work but also to an astute business sense and keen understanding of the business environment and the men and women who run it. He had his ears to the ground, such that he was able to adequately prepare his companies for the ravages of the Asian financial crisis in the late '90s. Because he preferred to finance most everything from manufacturing operations, the firms (with the one exception of The Peninsula) were free from debt when the peso plummeted. His strong adherence to that simple belief-one that financial managers would have earlier scoffed at-saved his companies from collapsing, as was the fate of debt-saddled business during that period.
P.L. Lim has always taken pride in helping countless families by doing the noble thing-providing employment. In fact, even as he complains of a failing memory, he is quick to come up with the current headcount of employees of the PLLIM Group of Companies: 3,000. His ability to create goodwill is tremendous, and yes, he loves the country dearly. "The Philippines gave me what China did not," he states.
Passing the Baton
Today, at 90, P.L. Lim is proud to have bequeathed the enterprises he built to his children. "I worked very hard before. I was involved until I was 80, so now, it is time for me to rest," he says. He always believed in hiring professional managers to oversee the business, but it is a big source of pride that the most accomplished of these managers include his own children. Although he remains chairman and president of the holding company PLLIM Investments Inc., his son, David, is now at the helm of their various business interests and sits as president of the enterprises in their group of companies. His daughter, Evelyn Lim-Forbes, is in charge of the companies' day-to-day operations as general manager. He is pleased that his children have built up what he started. "My children are running the companies very well. They understand what the business needs. I leave everything to them now, and they are doing better than me!" declares Lim, who now chooses to spend precious time in the company of his wife, Madeleine, and playing a round of golf twice a week ("with a cart," he qualifies).
Yet he remains strong and hardy, save for a bad back, and his appetite is still hearty. "I'm already 90, I was only good until I was 80," he laughs. He then motions one to look at his face and declares, "Look, no wrinkles!"
P.L. Lim still laughs a lot. He prays often and is still full of hope. He remembers friends, taking time to visit their homes or cheer them up in the hospital when they are sick, and cherishes mementos received from dear ones. He has lived a full life, and is proud to have made himself a part of others'.
Experience is a great teacher. There is no exchanging what one gains through the years with what one learns from books. As time passes, even as technology and new learnings bring about change, one discovers that some themes remain constant-the importance of succession planning, the value of education, the strength of partnerships, the rewards of entrepreneurship, the meaning of integrity.
Patricio L. Lim, 90, was constant in his perseverance and dedication to duty in all his endeavors Simply "P.L." to his friends, he belongs to a generation known as much for their hard work as their valor, a generation that built the country and refused to put up with inanities that would otherwise destroy it.
For Lim, who peddled clothes along San Vicente Street in turn-of-the-century Manila and lived above a goldsmith's shop, time is relative. His perception and view of time is very Chinese, extending beyond his grandchildren's lifetimes.
Not Just Doing Business
Indeed, when the 30-year-old Lim decided to quit being a medicine salesman for Zuellig to open a textile mill with equity from a friend, he was not looking at building a mere business. When he established a garments business to serve the retailers of the world, opened a carpet factory to serve the global markets, and built a world-class hotel (The Peninsula Manila, which forever changed the Makati cityscape), he did so with the knowledge that he was helping build the Philippines. He was fulfilling his generation's dream of building a nation, and carving his own legacy.
Universal Textile Mills began operating in 1953. It was the first and, at its prime, the largest integrated woven textile mill in the country, providing thousands of jobs to Filipino workers.
The Philippine Carpet Manufacturing Corporation was established in 1965 with 60 skilled employees trained by Chinese weavers in the traditional art of making fine handcrafted carpets. Today, the company has 444 craftsmen in its employ and is affiliated with the biggest and most prestigious suppliers of handmade carpets in Asia, Australia, Europe, and the U.S.
The Peninsula Manila opened in 1976 in time for the big annual meeting of the board of governors of the International Monetary Fund and the World Bank held in Manila that year.
Astute and Generous
Lim is a totally self-made man whose success can be attributed not only to incredible luck and hard work but also to an astute business sense and keen understanding of the business environment and the men and women who run it. He had his ears to the ground, such that he was able to adequately prepare his companies for the ravages of the Asian financial crisis in the late '90s. Because he preferred to finance most everything from manufacturing operations, the firms (with the one exception of The Peninsula) were free from debt when the peso plummeted. His strong adherence to that simple belief-one that financial managers would have earlier scoffed at-saved his companies from collapsing, as was the fate of debt-saddled business during that period.
P.L. Lim has always taken pride in helping countless families by doing the noble thing-providing employment. In fact, even as he complains of a failing memory, he is quick to come up with the current headcount of employees of the PLLIM Group of Companies: 3,000. His ability to create goodwill is tremendous, and yes, he loves the country dearly. "The Philippines gave me what China did not," he states.
Passing the Baton
Today, at 90, P.L. Lim is proud to have bequeathed the enterprises he built to his children. "I worked very hard before. I was involved until I was 80, so now, it is time for me to rest," he says. He always believed in hiring professional managers to oversee the business, but it is a big source of pride that the most accomplished of these managers include his own children. Although he remains chairman and president of the holding company PLLIM Investments Inc., his son, David, is now at the helm of their various business interests and sits as president of the enterprises in their group of companies. His daughter, Evelyn Lim-Forbes, is in charge of the companies' day-to-day operations as general manager. He is pleased that his children have built up what he started. "My children are running the companies very well. They understand what the business needs. I leave everything to them now, and they are doing better than me!" declares Lim, who now chooses to spend precious time in the company of his wife, Madeleine, and playing a round of golf twice a week ("with a cart," he qualifies).
Yet he remains strong and hardy, save for a bad back, and his appetite is still hearty. "I'm already 90, I was only good until I was 80," he laughs. He then motions one to look at his face and declares, "Look, no wrinkles!"
P.L. Lim still laughs a lot. He prays often and is still full of hope. He remembers friends, taking time to visit their homes or cheer them up in the hospital when they are sick, and cherishes mementos received from dear ones. He has lived a full life, and is proud to have made himself a part of others'.
Monday, May 21, 2007
The Big Move to New Era
This week, we made the big move. When I say "we", I refer not just to my family but to my friends -- all special mommies as well -- who also made a major d
ecision that would profoundly impact the lives of our special children.
Leaving MI School, where Ragu has worked with the most wonderful teachers (Teacher Sharon and Teacher Jovi are precious not only to Ragu but also to me), was not an easy decision. Change is always hard to embrace. For someone like Ragu who can be quite rigid, this can be quite an earthshaking move, just as it is for me, too. MI was a comfort zone. But the fact that I cannot
ecision that would profoundly impact the lives of our special children.Leaving MI School, where Ragu has worked with the most wonderful teachers (Teacher Sharon and Teacher Jovi are precious not only to Ragu but also to me), was not an easy decision. Change is always hard to embrace. For someone like Ragu who can be quite rigid, this can be quite an earthshaking move, just as it is for me, too. MI was a comfort zone. But the fact that I cannot
change is that Ragu is quickly growing up (he is almost as tall as me now) and sometime, somehow, I would have to let him confront the real world. Real meaning the world that neurotypicals know, the world controlled by DepEd that the rest put up with. MI was a protective shell, which was good for his growing soul. But now his growing soul has to grow some more, and that will have to happen in a totally different place -- New Era. Moving to New Era is a great shift for me as well. I had to overcome all my religious biases, for one, and find peace in the knowledge that the Almighty, in His Wisdom, understands my every move.
This could have been a lonely decision, except that, to my great surprise, my friends from MI chose to make the same move for their children also at the same time. I am heartened to hear that Joaquin Angliongto, who Ragu was particularly protective of during their Primary B days, is joining him in New Era. Kiko Tan, Luther Ong, Jovi Joson, Hans, Lenlen Romantico and Benito Macapagal are moving too. (They will miss Miko Manzano and Joshua Aquino who are staying at MI. ) This gives me strength, for Ragu and I will make the big leap at the same time that kindred souls are making the same big leap, saying the same prayers to the same God and the same Blessed Mother who will, no doubt, send their angels to see our children through.
In the meantime, I am trying very hard to help Ragu through his adjustment period. He has been sad about leaving MI, and fusses that there is no aircon in New Era ( I tell him that he is supposed to enjoy the fresh air) and that no one speaks English (I tell him he has to learn Filipino because he is, after all, a Filipino). Jacob, who is going to Grade One at PAREF-Northfield, is similarly sad that there is no aircon in Northfield, and worries that he will won't learn Filipino as well as others. (Miguel, Jacob and Ragu all thought "saging" was an animal and argued that "kuneho" meant tiger) I let them fuss and worry together. What won't break them will only make them stronger.
This could have been a lonely decision, except that, to my great surprise, my friends from MI chose to make the same move for their children also at the same time. I am heartened to hear that Joaquin Angliongto, who Ragu was particularly protective of during their Primary B days, is joining him in New Era. Kiko Tan, Luther Ong, Jovi Joson, Hans, Lenlen Romantico and Benito Macapagal are moving too. (They will miss Miko Manzano and Joshua Aquino who are staying at MI. ) This gives me strength, for Ragu and I will make the big leap at the same time that kindred souls are making the same big leap, saying the same prayers to the same God and the same Blessed Mother who will, no doubt, send their angels to see our children through.
In the meantime, I am trying very hard to help Ragu through his adjustment period. He has been sad about leaving MI, and fusses that there is no aircon in New Era ( I tell him that he is supposed to enjoy the fresh air) and that no one speaks English (I tell him he has to learn Filipino because he is, after all, a Filipino). Jacob, who is going to Grade One at PAREF-Northfield, is similarly sad that there is no aircon in Northfield, and worries that he will won't learn Filipino as well as others. (Miguel, Jacob and Ragu all thought "saging" was an animal and argued that "kuneho" meant tiger) I let them fuss and worry together. What won't break them will only make them stronger.
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