Monday, March 16, 2009

People are capital, not cost

This is my column today.

We all know we’re right smack in the middle of a global crisis because everyone has been making references to it nonstop—it’s practically coming out of people’s ears. Of course we’ve also become aware of the crisis because contrary to what some so-called experts so brazenly claim, we’re not deaf and blind. And we’re definitely not stupid.

The effects of the crisis are quite obvious.

I still have to watch a newscast, read a newspaper or magazine, listen to a radio talk show, or even sit through a briefing or lecture without someone making a reference to the global crisis and use it as some kind of a justification for all kinds of arguments and decisions—many of them horrendously unwarranted. Obviously, many of the messages being put out there are not even empowering or inspiring.

And horror of all horrors, there is now a cottage industry of business organizations and individuals cashing in on the crisis, under the guise of providing expert advice on how to survive it. I am talking about countless fora, symposia, seminars, workshops, conferences, lectures, and all other modern-day variations of the Delphi oracle being organized for the sole purpose of providing us information—most of which we already know, and advice— most of which we’ve already been practicing.

I’ve sat through many of these—as invited reactor, as facilitator, and as participant. I tell you, many of these sessions are pure unadulterated balderdash. I am not generalizing of course—some do offer valuable insights and practical tips. But most are just plain money making ventures. They invite so-called experts who, more often than not, turn out to be American management consultants. They trundle out statistics culled from the Internet, bring out the equivalent of fortune-telling crystal balls, and then begin spewing what they think are expert analysis and counsel.

In a number of occasions, I actually wished we Filipinos weren’t so polite and courteous so that we could give these experts the tongue-lashing that they so deserve. For example,

I sat at a forum recently where an American management consultant went on and on about his theories about what caused the global crisis and what countries could have done differently. I wanted to stand up and point out to him certain facts that he was glossing over. One, the global crisis was sparked by unabated greed, yes; but which country championed it? And if he and his contemporaries were really such great experts, why didn’t they predict and head off the debacle to begin with?

A colleague of mine recently told me a horrendous story that wasn’t really unusual—like I said, it seems to be the norm today—but which floored me because it happened at a forum organized by the Bankers Association of the Philippines and attended by the shakers and movers of the local banking industry.

In that particular forum, one foreign consultant offered what he thought was a brilliant deduction: The reason why the Philippine banking industry has been spared so far from a meltdown is because—hold your breath—Philippine banks are still behind in terms of global banking trends and technologies and Philippine bankers are not quite there yet in terms of technical expertise to understand the complexities of the hybrid financial schemes and products. What utter nonsense, what arrogance! I was surprised he was able to get out of that forum alive.

The foreign experts we can ignore and snicker at. But what do we do with people in the country—Filipinos—who have gotten into the act and started preaching messages of doom? I was at another forum Wednesday last week supposedly organized to discuss how to manage human capital in a downturn environment. I went to the forum expecting to hear about creative approaches in human capital management in these difficult times.

The very concept of human capital is built on a sacred assumption—that people are capital, not cost. Therefore, I expected to hear about what could be done or what others are doing to save people, or to use a cliché, how to cut costs to save people rather than cut people to save costs.

As expected, the initial prognosis was not good as statistics that outlined the breadth and scope of the global crisis was presented. But eventually, the global consultant (British, I think) showed statistics that indicated everything is not lost and that in fact, for countries like the Philippines, there are valid indicators to be optimistic and hopeful. He then went on to talk about what other countries have been doing to manage human capital issues.

Most of the thesis centered on creative approaches to managing executive compensation (yeah, it seems this is the major challenge since people on top of the hierarchy corner a huge percentage of the overhead).

What unsettled me though was the general drift of the discussion after the talk. One after another, Filipino managers began asking about and discussing better ways to say no to labor unions asking for increases, laying off people, declaring redundancies, etc. In short, they were on full crisis mode and seemingly raring to cut heads. I am aware that certain companies are really left with no other choice but to reduce headcount. But let’s get this straight: Not everyone is in that same dire situation.

I looked at the profile of the participants and noted that most of them belonged to companies that are generally insulated from the crisis so far such as outsourcing, banking, academe, consumer products, pharmaceuticals, etc. These industries are not badly hit and don’t really have to resort to drastic measures, and yet it seems they have already been converted into the ranks of the prophets of doom. It can be argued that many among us are just being proactive and are practicing strategic thinking. But there is a huge difference between being prepared and having a defeatist attitude. I am afraid that many among us are needlessly overreacting and making drastic decisions such as reducing people without considering the long-term cost to the business of these wrong decisions.

It is really sad that it is very easy for foreign companies to come into the country, set up business here, enjoy a windfall, and then when the going gets tough, pack up and leave—with the promise that just like Douglas MacArthur, they will return. When conditions are better, of course. On the other hand, local companies because of our complex value system, which prescribe malasakit, pananagutan, pakikiramay, pakikipag-kapwa, etc, are supposed to have a difficult time at it.

But it seems not anymore. It is tempting to heap the blame on foreign influences to explain the seeming shift in the way we are dealing with people issues as a result of the crisis. But that’s not really the case. It’s really the absence of a strong anchor—or core—that makes us prone to perpetuating the very same things that cause the global crisis to begin with: Unabated greed, lack of concern for others, not valuing people and relationships. In the end, it is people who will enable companies to weather the crisis - it is people that will bring in the revenues, fix the problems, plug the gaps, etc. Making people the first casualty of a crisis just does not make for good business sense.

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