The Asian Manager, January 1992 Issue by Sherbet Manalili

I I

THE ASIAN MANAGER

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A Publication oftheAsian Institule ofManagement andtneFedefation of AIMAlumni Associations

Vol.V No.'l January / February / March1992

GEABS UP Asean's \t . : F:4. li: ,ri USA US$5.00 Hong&ng HKS28 00 ndonesa RF 90000 Korea K*2 90000 Maaysia Ws 50

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Even now, if you listen with your heart, you can hear the music. We need not wait for the future to find out whal is in store for us. We need only look aheadwith faith and conviction that we can snapeour own lomorTow. Just as you can hear the music of a guitar that is.yet unfinished, so can you see the vision of tomorrow. It is a vision we sharewith vou.

ter', M,GUâ&#x201A;ŹL coRpoRA.oN

K A I S A

S A P A N G A R A P N G B A Y A N

THE ASIAN MANAGER

Vol.VNo.1 January / February / Marci1992

AsiaGearsUp

anaging forGlobal ilarket Leaoersntp

Bv Isador6Sharo \-tutftnon.vtesaentand LLU. tour Seasons Hotelsand Resorts

@TheProcess ilanaoer

By Prof. ReneDomfngo SimeDarby Prolusor ol Manuf act ur ing Ma nogeln"flt

EJapanese Business: lrvthandBealitv

E Reoional Investment Flows anal theAsian Manaoer

Bi Noritake Kobavashi FbrmerDeanand Frofessor. GraduateSchoolof Business Administration, IGio Uni?tersitu

I ne 5(Jv GfouD

EKorea : Asean'sl,lewPartner

4 From the Editor 53 A Matter of Fax

By Kim Duk-Choong Eltzcut iue C.oun selor, Daerooo Comon t ion

@^sl{s lnlrFtment-Bg0ker.: Jardine Fleming Bv Prof.MichaelA. Hamlin tditor-in-Chief @The Casoof Indonesia Bv Dr. Siahrir ManagiigDirector, InstituteforEconomic and FinaniiafResearch . -lakarla Mohamad Iklsan Lec-turer , Faculty ol Economics,Unioersity of tn40nes8

Publisher Felipe B. Allonso Editor-in-Chief Michael A. Hamlin Man.cinc Editor Ibarrat. Cutierrez A$ociate Editors Pia JesusaT. AroyoAnita E. Pundol SalomeFlores-Aldaba Pinkv L Gallesos Kin Catbontoi Deoign Direc{or BeaulahP. Taguiwalo Matketinq Director Lrela L. Gunerrez Editori.l Bo.rd Gabino A. Mendoza Horacio M. Borromeo, F. Sonny B. Colorna Contributing Editors Milon Bikash Paul (Bangladesh.MM'88) Peter Kwok Yiu-Kee (Hong Kong, MDP'80) tuzar Khorakiwala (India, MBM'75)

By WashingtonSyGp Lnatnnan.

THEASIAN MANAGER

6 Feedback 54 Book Review

Robby Diohan (Indohes'ia, ABMP'79) Christina F. Ferreros (Indonesia, AMMP'82) BooHo Rho (Korea,MBM'74) Khoo Boo Boon (Malaysia,MDM'90) Ishtiaq Ahmad Qureshi (Pakisfan,BMP'7n Alqandro Z. Gaston (Philippine6, MBM'70) Gan CheonqEng (Singapore,VBft'82) Hsieh Lai Fa (Taiwa& TMP'82)

AsianWomen Manaqers

Somnuk ,etiiravat (Thailand,BMP'81)

EWomenintheWorkplace

By DeanVictoria S.-Lioanan Associate Deanfor Entetorise and ProiectResinrch

: @success Slrateoies lnsiohts fromWomen Manaoers Bv Annie E. hndol Sinior Resear ch Associate WomenManagersProgram,AIM

@A Portrait Asian ol theSoulheast Woman Managel

Co9trign 1Sr bf Tbld. e!{d. llirhbl€€.lld.F.F.dJdionh t |I!nr|€|inrioL d Penh Endbn!. D. Ar&$l|.n{r b Frt*n d qflOd t ta Airn I'Et'i.r€d rhrso€.r'€it. Eddlal&'drdr€itlrS Ofi.s.Ai,l. t23P!.o d. Borc. ilddt, . .,Ptlhtn€.. TC-i(A?) 6710l1/f8r : 163c) 817gel|o. ftEbg'adEsdrmsd tr i6 Ali{t.i'a'y. Ptinr€d bvTin€€PaihlsPr6.ld.pemirNo.MITA(P)245/9/91. tiing6poro.

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TheAsianManager intheYear2020

MichaelA.Hamlin

ANILA - Washington SyCip and Felipe B. Alfonso write: "Political scientists,economists,financiers,social historians,all agreethat the 21st century will belong to Asia. In this new Asia, the demand for the development of new markets,for more dynamic industries and advancedtechnologies,for creating new sources of energy and the need to seekfinancial resourcesto support theseexpansionswill exceedanything we have ever known. Then there is the socialproblem of how to Westernize or to go 'high tech' without destroying or evisceratingancientAsian values,a problem we are already experiencing.Thesedemands will posenew, formidable challengesto the Asian manager. "How doesthis Asian Manager of today prepare for such a challenge?How doeshe ready himself, what does he have to know, not only to survive but to master his environment, to ride the whirlwind? How should teachersin managementinstitutions prepare their young men and women for the 21stCentury?"As one step in defining and clarifying theseissues,the Asian Institute of Management and the Asia-PacificEconomicCooperation councilwill jointly conducta two-day international conferenceFebruarv 12-13.1992. The conferenceis entitled "In Searchof the Asian managerin the Year 2020." SyCip and Alfonso continue: "This conferencewill seekto define the key role which the Asian managerwill play in the evolution of the new Asia of the 21stCenturv. and the ' problems he will face.It is he whowill direct the destiny of Asia in the decadesto come. Thus as we stand on the threshold of another century we must seeto it that our Asian managersare equipped to identify the basic managementchallengeswhich will emergeas our century ends and a new one begins,and to plan how thesechallengesare to be met." The first day of the conferenceAIM's top two officials describedwill be concernedwith visioning Asia 2020.As part of the Instituteis plans for its 25th anniversary in 1993,we are ionducting a seriesof delphi interviews around the region with top executives,government officials and academiciansto conceptualize Asia in2020 - to learn how businesswill be onducted as well as the kinds of managers that will be neededto manage21stCentury enterprises. Prof. Victor A. Lim is heading this project, and Vic will presentthe results of the yearlong study in the initial sessionof the conference.His presentationwill be followed bv a workshop in which participants are expectei to addressbusinessmanagementand human

THEASIANMANAGEBJanuary / Februarv / March1992

resourcedevelopment concerns.The first day will concludewith a round table discussion by representativesof the workshop groups and membersof the Institute's board of governors. Day Two will focus on finding, hiring, training and retaining the best managersin Asia's excellentcorporationsand the role of Asian businessschoolsin helping prepare managers for the challengesof the next three decades. Presentorsand reactorsto the four sessionsinclude top executivesof organizationswhich receivedawards in the first Management Awards Program last year, officers of other major Asian enterprises,top government officials and AIM governors and faculty. We hope you - our readers- will plan to join us for this important conference.As a participant, you will benefit not only from the program/ but the opportunity to speakpersonally to the panel of internationally renowned speakers.You can obtain more information on the conferencefrom Sallv FloresAldaba and Hilda Tolentino of the Inshtute's corporatecommunicationsoffice. You'll find our address,phone and fax numbers in the editorial box on the contentspage of this issue. FacultyChaii When the Philippine Chamber of Commerceand Industry invited President Corazon C. Aquino to keynote its annual conference,it faced a common dilemma: how to show its appreciationthat the Presidenttook time from her scheduleto speakat the conference.An it seemsthat the Chamber officers also wanted to do something to show their appreciation for the President'sserviceto the nation as her term draws to a close.We think they cameup with an excellentsolution. At the conclusionof the President'smessage,Dr. Aurelio O. Periquetannouncedthat the Chamber was establishingthe Corazon C. Aquino Chair in DevelopmentManagement at the Asian Institute of Management.The Presidentwas quite visibly pleased- and so are we. We would like to expressour appreciation to the Chamberfo their important gift and to PresidentAquino for providing the inspiration which resultedln a further enhancement of the Institute's resources. TheAsianManager In this spacelast issue,I said that our readerswould find a nomination form for the ManagementAwards Program inserted in the magazine.I was wrong. Continuedon page5.

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R9S{I1Ay^HJc#t+N,Aq C/TMom,nsSt Cenrer,S.nC,lPuy.tAv.nu. M,ldn. Meno-Man'tr Tels:3r5.80188r5-80te3tt-3,i?0 8tr-3026 815,m28 THE SEC-IJRITIES AND EXCH,INCECOMMISSIONS APPROVALAND ISSUANCEOF THE CERTIFICAT€OF PERMITTO SEIL THE OmRED SHAR€SOATID AUOUST ?6, 1991.lS PERMISSIVE ONLY ANTJD)ES NOT CONSTITUTEA RfC)MMENOATTON OR ENMRSEMENT BYTHE COMMISSIONOF THE SECURITIESPERMITTED TO BESOLO.THIS AOVERTISEMENTVAS APPRO!€D SYTHE SECURITILSAND EXCHANCECOMMISSIONUNTJ€RAD RLSOLUTIONNO.I ' ' SERIESOf 19I

@t llissingLessons I have read with Dleasure the JuneAu8ust 1991i;ue of Trp Asian Manager,the first copy of the magazine I have seen.I would like to make somecommentsregarding the article of Prof. Etsu Inabi's "Managing Peope Lessonsfrom Matsushita Konosule." I would like to fhd out if the main text of Prof. Inaba's article was edited since her entire article concenhated on describing the practices of well-managed cornpanies in Asia and not on the lessonsfrom Matsushita managed fiims. If the article was edited and the iuicy lessonsfrom Matsushita were not included, I hope it will be republished with ihe main lessons intact, otherwise I suggest you retide the article as "Lessons From Well Managed Firms in Asia." Thank you for your delightful chance of having a glance at your magazrne. BetW F. Tenmatav PersbnnelManac(+ Mitsumi Philippines,lnc. According to Prof. Etsu lnabo, "the drticle wasoiginally rcadasa seminarof PeaceIlappinessand Prosperity, o ]aryneseinstitute and proponentof Matsushita's teachings, held.earlier this ymr. Shedid not want to repeatwhot thepimary speaker,a PHP officitl, wasgoing to say. ProfessorInafu, howeuer, promisesto

Continuedfton Wge4.

What I should have said was that all non-Philippineresidentswould find the form. And that Philippine residentswould receiveit separately. Once again,we bumped up against an obscure- and ridiculous - law which forcesus to mail eachcopy of this magazinefirst classif it includes an insert which requestsreadersto respond to an offer or even to a survey. The Philippines is the only Asian nationthat haskept sucha statuteon its books,and I am told that there are only three countriesin the entire world that have such a restrictionall underdeveloped. It is indeed unfortunate that the

writean articleon Matsushito's philosophywhich we wiII management in a feature future issue. - TheEditors

NewLook For some time, I have been a keen observer and adrnirer of AIM's manifold activities and new proiects. I have enjoyed following the conceptualization and implernenta-tionof the Management Awalds, but I would like to express my delight at seeing the new look issue of TTreAsidn Mm&pet that haslanded on my desk.It is a very professional publication and credit goes to you and your staff for taking the nagazine to such heishts at a time when the emphasis in publishing is on cutting down on quality. The articles were of great interest too and I am sure that the new look will continue to imDless vour readers as well as briig in many more into the AIM family network. Pleaseconvey my congratulations to Dean Alfonso, your managing and associateeditors. One should not forget your designteam too. May you continue to grow in terms of readershiD and I look forward to the next issue. Clarence da Gama Pinto Memberol theDirecting Stat'f Editor, ThePructicingMonaget Mt ElizaAustralianMsnasement LOUe9e

Philippine governmenthasover the yearsput up and perpetuated numerous hurdles hindering the developmentof the publishing industly. As I noted last issue,these include high tariff rateson paper and exorbitantinternationalshipping and mailing costs. It is regrettablebecausethe Philippinesis a natural intemational publishing center.The journalists,edito$, artistsand techniciansare here in greaternumbers than anywhereelsein Asia - and they are world class.Thereare no restrictionson the press;there is a highly literate,English speaking population.Thereare over 17,000 printing presses.It is regrettablebe-

THEASIAN MANAGERJanuary/ February/March 1992

Interesling Articles I have beenregularly reading TheAsian ManagersinceI enrolled here at AIM in July '90.Someof the articles that vou published were extremely interesting. I partiolarly liked the article, "Strategies for Bank Ima8e Building" by kof. Eduardo L. Roberto in the September-November '90 issue. The thing that impressedme most in the June-August'91 issue was the 1990ManasementAwards initiated by the Institute which honor and promote excellence among companiesin the Asian context. Theseawards will, in thâ&#x201A;Ź future, encourage companies in Asia to strive to do their best. Also, an extremely useful article was, "Managing People:Lessons fuomMatsushitaKonosuke" by Prof. Etsu Inaba.In my opionion one of the major reasons for Japan becomingan economicpowerhouse is that the companies there treat their employees as "investments" and not ascosts. Pleasetry and include at least one article on the art of Japanese Management. Milind M. Laad MBMII AsianInstituteof Management

causeinternational publishingis eractly the type of high value-added, prestiSiousindustry the nation needsto develop. On the bright side,Trade and Industry Sâ&#x201A;ŹcretaryPeterGarrucho wantsto lower the hurdlesand push the industry. Membersof the House of Representatives have also voiced support. But in the meantime,Tre AsioaManagetwlllbe printed in and distributed from Singapore. We look forward to binging this businessback to the Philippines. Someday.Soon.

U,,^,:-..e 0. lL"-{..s Michael A. Hamlin

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' ----Regional Investment Flows andtheAsian Manager I*

ByWashington SyCip TheSGVGrouo Chairman.

I N 1985,at a meeting in New York, I an agreement was reached for the I revaluation of the yen. The US I then exerted pressure for the Taiwan dollar and the Korean won also to be revalued. These monetary measures, together with labor shortages in Japan and Taiwan, caused the rapid transfer of many industries from the northern countries of East Asia to the southern countries. As this change was taking place, European and American companies were focusing their attention on Europe 1992. We in Asia began to see a marked decline in the role of Western invest-

WashingtonSyCip

ments in the development of Asian enterprise and manufacturing. It was no longer the Americans and the Europeans who built the majority of our foreign equity funded factories, transferred technology and delivered sophisticated equlpmenr. Instead, it was the Japaneseand businessmen from the newly industrialized Asian economies who did these things. Asian Development Bank statistics show fhat in 1989, as much as 697o percent of total foreign investment in Asia's developing economies came from other Asian nations. While European and American investment continue, aggregate investments are modest in relation to these Asian equity infusioris. In fact, one may quite confidently say that Western investment in Asia is now dwarfed by Japan's. And if we consider ethnic Chinese living outside the present jurisdiction of China as "Overseas Chinese," then the crossborder investments of this group may even be larger than that of the Japanese. Japaneseinvestments in Thailand are more than nine times greater than American. Japaneseinvestments are eight times those of the United States in Malaysia; and in Indonesia, the Japaneseinvest five times what the Americans do. And

THEASIAN MANAGEHJanuarv / Februarv / March1992

there is little indication that this will change in the near or midterm. In the last few vears. labor costs in Korea have shot up and every major group has established a presence in Southeast Asia. Certainly, greater intra-Asian investment is a good thing and we should all welcome it. Reducing our dependence on the West can strengthen the region's leverage against developed country trade blocks. As intra-Asian investment continues to grow, we can also expect increased integration of regional markets and production capacities. Already, Malaysia produces steel sheetsfor automobile bodies, Indonesia produces and exports engine blocks and transmissions are produced in the Philippines. Appliances and computer hardware production have been similarly integrated in the region. Dependence on the West - in terms of investment - will continue to diminish as the inter-dependence of Asian economies increase.We may also see increasing specialization of nations in oroduction much like the regional specialization we see in Malavsia. where the hi-tech electronics, appliance and textile manufacturers are clustered in their own regional industrial complexes. Continued on page 10.

Continued frompageL This will evolve from the trend we see now in which nations are increasingly preoccupied with the question of their competitiveness - both in attracting investment and in selling their products - and competitive advantage in terms of their capacity to develop as well as adapt technology and the specialized talents of their populations. In response to increased integration and specialization, we may expect to see Asian multinationals become increasingly decentralized in their operations and decisionmaking. And as Alvin Toffler sug-

gests, our large corporations will become more nonnational or transna"drawing tional than multinational, their capital and management elites from many different nations, creating jobs and distributing their streams of profit to stockholders in many Asian countries." Given these trends, our task then is to consider - speculate - on their impact on Asian managers and Asian management. I have chosen to address this issue by the somewhat arbitrary process of selecting nine areas of concern to Asian managers. It is not meant to be a complete or even a comorehensive list of concerns, but merely nine priority considerations.

Commitment HE FIRSTof theseareas- or issues- is commitment. More precisely,commitment to Asia. P.T.Astra International is an Indonesianconglomerate which is one of Asia's great success stories.Founded a little over 40 years ago by two Soeryadjaya brothers,it has grown over four decadesfrom nine employeestrading agricultural commodities to an organization of over 40,000 employeesproducing automobiles, heavy equipment, motorcycles, chemicalsand electronics.Itexported over US$300million of its products in 1989and reported sales of US$1.6billion. Astra's successis in large part due to strict adherenceto one basicprin-

"Gommitment means therefore commitment to ourrespective nationaland regional development goals. Our mlssion isto jobsin create Asia."

Foreign Direct Investment Approvals

ciple: To be an asset to the nation. Before Astra considers any new venture, key executives ask if the project will be good for the country. They call this doing the right thing. Commitment therefore means commitment to our respective national and regional development goals. Our mission is to create jobs in Asia. And commitment must mean one more thing. Malaysia's development has been so well planned and executed that it exports no more than 20Voof its total exports to any one trading partner. In fact, the actual percentage is even lower. No other Asian nation can make a similar boast. We in Asia must commit ourselves similarly to developing other markets, particularly in Europe. We must lessen our dependence on the US market and seek new opportunities.

Relationships andJointVentures NEXT AREA oi concern I "relationships term and joint I I ventures." loing business in Asia will usually be a relationship-based process/ particularly since the economic leader - Japan - is a master at cultivating and sustaining relationships. For Asian managers, this means that it will be critical to network and to be a part of kev networks of Asian managers. The Asian Institute of Management over the past 23 years has produced such a network - a Continued onpage12. IFHE

in Southeast Asia: 1986-1989

Indonesia

Japan

369

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663

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MANAGERJanuary i February / March 1992 THEASIAN

Source: Asian Development Outlook 1991.

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network that is now over 18,000 strong. When a company sends one of its managers to AIM for training, it is not only providing him the opportunity to acquire new skills, it is gaining the potentials inherent in a network of 18,000decision-making managers who forge business ties and joint ventures, finance enterprise development, buy and sell, and acquire and disseminate technologies and systems. Wherever the AIM manager goes, he has someone to call, someone to advise, assist and even participate in the building and nurturing of his business.

Opportunity HE THIRD ISSUEis opportunity. Asian managers are in short supply. As the region continues to grow, this shortage will become increasingly acute, and could be a bigger threat to continued expansion than the availability of financial resources. For the Asian manager, this is a two-edged sword. On the one edge, you will always have - if you are good - new employment opportunities. You are the seller in a seller's market. But you are also a buyer. You will always find it difficult to find - and even more difficult to keep - professional managers. Perumtel, Indonesia's domestic phone company, is trying to solve this problem by developing its own in-house MBA program. Throughout the region, personnel departments are taking recruitment on campuses as a malor corPorate obiective. Others contribute scholarships and send employees to Asia's best business schoois. When one multinational financial institution's Philippine branch failed to recruit a single graduate of AIM last year, it sparked a major upheaval at the top levels of the bank. Thev couldn't understand why, as a multinational, they were not seen as an attractive employer. A key executive moaned at one lunch, "Why can't you produce more and why can't we seem to hire any of your graduates?"

"Moreof our managers lookto should manufacturing asa career."

The answer has two parts. First, young Asian managers seem to be much more entrepreneurial than in previous years. They are looking for challenges, opportunities to make a name for themselves - for excitement. Working in a bank, even a major bank, just doesn't offer the challenges or the opportunities for recognition. Second, recent graduates are losing interest in finance and marketing. Here again, there are two reasons for this. One is practical: manufacturing jobs arebeginning to pay more than the finance and marketing jobs. The other reason has to do with values: manufacturing is seen as a business opportunity which contributes to nation building; marketing and finance too often exploit opportunities for growth rather than create them. CompetitiveAdvantage ICHAEL PORTER'Smodel of competitive advantage has captured both the enterprise I f I and public sector manager's imagination. For both, competitive advantage of regions, nations, in-

dustries and corporationsis a critical issue. Lastyear,about 100]apanesejoint venturesbeganoperationin Thailand, about one every three to four days. Total direct foreign investment was about US$8billion in 1989. Indonesia attractedalmost US$sbillion; Malaysia over US$3billion. When we translatethosenumbers to per capita values,Malaysia receivedover US$400of foreign funds per citizen. Malaysia has about 18 million people. Thailand, with about 56 million people, receivedalmost US$400per citizen. And Indonesia,with about 180million people, got about US$50per citizen. The Philippines, with 62m11lion people, got about US$35per citizen. Think of the iobs createdwith that kind of money; the impact on povertv and social develooment. Indonesiareduced the incidenceof poverty from407oto77Voin 10 years becausegroups like the Salim and Astra conglomerateskept creating jobs and the government createdan environment supportive of foreign investment. Both enterpriseand public sector managersintent on being an assetto their nations will have to work to continue to createopportunities for investmentand job creation. Enterprisemanagersmust operateefficiently, be willing to competeand find the right partners. Public sector managersmust never forget that their nations will only grow through participation in the free market world; not by protecting inefficienciesin internal economiesbecause they resentforeign influences. Consumer Sensitivity

"Asianmanagers mustremember thatwefirstmust wealth create to haveanyto manage."

THEASIAN MANAGERJanuarv/ Februarv/ March 1992

APANESE appliances sell for the same reason Italian fashions, shoes and jewelry do: Thev are alwavs new. The Italians lead the market because they subcontract production to lean, mean small businesses employing skilled workers who barely miss a beat when they are told to modify a design or produce a new one. Benetton is the best example: it is a worldclass organization whose products Continued on page14

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Continued t'rompage'12. are oroduced and retailed all over the world - and it has less than a hundred employees. Everything Benetton manufactures is produced by small subcontractors. Japanese firms switch models without missing a beat because of technology. Both the Japaneseand Italian firms thrive because they stay close to the market. Close to the market means more than listening to your customers,it means giving them what they want when they want it. The problem is, that customers these days rarely want something very long. And what they want, generally is new - new design, new functions, new technoiogy. There is a new breed of young consumers in Asia. They are confident, they are professional and they are growing. And with more and more women working, changing work habits are leading to more leisure time. The effect on industry has been that large production runs of standardized products can quickly erode market share because consumers get bored easily.SuccessfulAsian managers will be those that make sure their organizations - whatever the means - can respond quickly and efficiently to rapidly changing consumer desires.

Technology ND THAT brings us to the next issue Asian managers must be concerned about: technology.

SonyCorporation'sAkio Morita said not long ago,in an addressto Yalebusinessstudents,that, "It may be an oversimplification, but the future of a nation will be shapedbv its ability to produceplanes,cars, electronicsand so forth. Not by how slick its financial markets can shuffle paper assetsaround." It is that mindset that has enabled Japanto increaseits worldwide market share of computers and office equipment, in the period 1984to 1989,from lessthan 15%to almost 35%.During that period, the US market sharedecreasedfrom slightly over 50%to roughly equal that of Japan.

WheretheMoneyGoes As the world fragments into trade blocs and - to use that outdated term - spheres of influence, capital flows have also become increasingly regional. American companies, for instance, are investing more money at home and in neighboring Canada and Mexico. Similarly, Western European money is going to the European Community and Eastern Eurone. From America to Asia, there is a perceptible trend towards more inwardlooking investmentpolicies. In Asia, home to some 60% of the world's population, intraregional commerce has grown at enormous soeed. Statistics from the Asian D^evelopment Bank show that in 1990,Asia was the source of over 607oof direct investment in Southeast Asia alone. The super-achievers (South Korea, and its fellow dragons Singapore, Taiwan, Hong Kong) are by no means ihe only countries in the region attracting substantial investments. Indonesia, Thailand, and Malavsia. which continue to grow at nlstoncally unprecedented rates, are attractive investment destinations because of the presence of a growing conSumeroriented middle class,low-cost labor and a wealth of natural resources. In the investment sweepstakes, the Philippines is being perilously left behind. For instance, the Far East Economic Rertiew reported that

The US sold almost 407oof. all telecommunications equipment in 7984; today, it sells less than 30%. Japan meanwhile has increased its market share from about 13% to 25%. And we can observe similar trends in other industries such as medical equipment and instrumentation and control devices. We know what they have done with cars and electrical appliances. The technology which enabled Japan to make these inroads in world markets is now coming to Asia. And

/ Februarv / March 1992 THEASIAN MANAGERJanuary

from 1985 to 1989,the Philippines received only US$288 million, or 2% of total Asian investments. This amount reoresented 7% of the US$4.1billion invested in Asean countries. To illustrate how far back the Philippines has fallen, in 1.977 , the country ranked fourth in terms of japanese investment in Asia, ahead of prosperous Taiwan and Singapore. Among its Asean neighbors, the Philippines was second to Indonesia. But by 1989,the Philipoines had become the least iavored destination for Japanese investments. Even war-torn Vietnam oroved more attractive. Indonesia and Malaysia's erperience provide ample proof that expansive trade and investment policies constitute the biggest singl-e reason why these countries have done so much better than others in the region. Although intra-Asian investment has traditionally been dominated by Japan, in recent years Taiwan has emerged as an imoortant source of direct investment. In 1986-88,Taiwan's investments comprised 45% of total investments from NICs. Hong Kong and Singapore have also made their presence felt. In 1989,Hong Kong invested an estimated US$] .2 billion in Southeast Asia. By contrast, Taiwan's investments amounted to US$4.7billion; Singaporean investments totaled US$0.9 i . r r .

Dllllt)n.

it is important that Asian managers take this technology and as the Japanesehave done, add value to it. To do so, we must changc the way our economic and our educational systems ar'estructured.

Economic Structure O DO THAT, more of our managers should look to manufacturing as a career. For it is the capacity to manufacContinued on Page16

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Continued frompage14. ture high-value added products which creates wealth, and not - as Morita notes - the ability to manage wealth. Asian managers must remember that we first must create wealth to have any to manage. Like Japan, it is critical that our educational systems begin to focus more on engineering and hard sciences to hasten the adaptation and refinement - enhancing value - of technologies transferred from Japan, and to develop indigenous technologies. However, I would place more emphasis on adapting and refining rather than creating new technology because it's faster and less expensive. And our technology development should be applied in nature; focused on small, incremental improvements so that we can respond to the rapid changes in consumer behavior described earlier. This strategy has allowed Indonesia to increase its manufactured exports fromTVo of total exports in '1984 to 25Voin 1989. Malavsia also. which has chosen to focui on electronics and high technology, has increased manufactured exports from33% of total exports in 1985 to 54% in7989.

Operations HE EFFECTS of thesechanges on the way we operateour organizationswill be primarily I in two areas. First, rn lrrst/ many manv ot of our firms which have evolved from entrepreneurial ventures are still under family control. Asian managers will benefit as these organizations grow and require professional management to prosper as large national and regional organizations. Second, organizations will continue to decentralize and emphasize autonomy of local operations in decision-making and planning. This in turn will increase the organization's capacity to develop a sense of teamwork and unity within and to benefit from the sense of loyalty evolving from these values. Sarawak Shell Berhad is an organization that has made teamwork an integral part of its business

"Asianmanagers overthenext willbe decade managers of - the change transformation of Asiaintotheworld's mostdynamic producer of goods aswellasits greatest market."

strategy. Teamwork, managing director Brian Andersen tells us, is critical to efficient and profitable operation of Malaysia's largest oil companv because of the tension inherent b-etween the business Drocesses and technical functions of the organization. Internal networks evolving from the firm's teamwork orientation allow informal resolution of conflicts between these processes and functions.

Communications HIS BRINGSUS to the irinth and final issue I would like to discuss with you today: communications. Toffler notes in Power Shift that, "The most important economic development of our lifetime has been the iise of a new system for creating wealth, based no longer on muscle but on mind." What this really means is that we are beginning to realize that knowledge - its acquisition, analysisand dissemination - is an even more powerful means of influencing, exercising power and developing opportunities than the traditional means of might and money. The Asian manager must learn to develop the capacity to manage knowledge and information - and use knowledge and information to exert control over his organization and influence his industry, government and regional opinion leaders.

THEASIAN MANAGERJanuary / February / March 1992

The Asian manager in charge of communications will be a senior manager reporting directly to the chief executive officer, and he will be responsible for managing the eyes and ears of the organization. The Japanesehave done this for years with their trading houses, and Asian firms are beginning to learn how important this is. I referred earlier to Astra, and I failed to mention that the conglomerate makes one modest - but critical - investment outside Indonesia. Astra maintains branch offices in major markets around the world, which serve as listening posts, collecting information which affects its businessesand identifying new opportunities - as well as threats. Robert L. Dilenschneider, former CEO of Hill and Knowlton, inPozrter "Frederick and Influence reminds us, the Great said he could excuse being defeated but never being surprised. I know plenty of executives who feel that way, too. Today, any executive's power triangle must be supported by first-tier intelligence." For the influential Asian manager, these are words to live bv.

Conclusion HERE you have it, nine areas affecting the way Asian managers manage Asian organizations. There are undoubtedly more, but these are priorities. As Asians continue to take firmer control of their futures and their development, the way we manage will continue to evolve, as will the reasons for that evolution. For that reason, Asian managers over the next decade will be managers of change - the transformation of Asia into the world's most dynamic producer of goods as well as its greatest market. T Washinglon SyCip Founder andchairman ofTheSGVGrouo. an nbtwork auditing andmanagement consultancy withoflices Asia,Washington is throughout SyCip alsothechairman ol AIM'S Board of Truslees and Board most ofGovernors. Oneof theregion's respected was business leaders, Mr.SyOip Degree Legion of Honor, conferred thePhilippine inJune1991. Heisa member of ofCommander, University anda theAdvisory Council, Columbia member of TheAsia of theboardof trustees Societv.

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A lessthreatening alternative...

Korea: NewPartner Asean's ByDr.KimDuk-Choong Daewoo Executive Counselor, Corporation

E ARELTVINGin a time of rapid, even explosive, change.Somesay the Cold War is over, but that proposition is still being tested.If 1989was the year of Europe, comparable only with 1789and1848, 1991certainly seemsto be the year of the Middle East.But no one can confidently predict the repercussions of another war in the Persian Gulf. The only thing certain is change. Drama in Europe and the Middle Easthas diverted world attention from the Asia-Pacificregion, at least

temporarily. Nevertheless,I remain convinced that the 21stcentury will usher in a PacificEra, in which our part of the world will assertits claim to global economicand political primacy and even leadership.Many foreseea great potential for prosperity and peacein Asia and the world. AseanRelations with Korea WOULDLIKEto focus on Asean relations with Korea. In order to place thesematters in a meaningful perspective,I will use an anal-

Table 1. Korean Trade with Asean Indonesia

Thailand

7984 1985 7986 7987 1988 7989 1990.9

Exports

Imports

Exports

235.7

732.7 752.7 276.7 191.0 264.4 41,6.4 355.5

254.0 195.5 ],78.9 240.7 402.7 666.8 757.3

t13.2

191.8 272.3 537.3 752.0 680.0

Philippines

Exports t984 t985 t986 t987 r988 r989 1 C90.9

(Unit Millions of US Dollare)

1,65.4 240.4 186.1 220.2 338.0 476.7

Imports

80.8 :04.8

496.8 490.7 531.5 927.5 1,355.3 1,300.0

253.2 449.5 218.8 299.7 470.6 542.8 481.3

652.8 668.6 428.4 825.3 905.3 1,,735.2 998.6

Singapore Exports Imports

13.8 50.6 21,.9

Mala rsra Exports Imports

390.2 267.7 275.1, 431..6 566.2 640.8 572.2

1,005.4 r,234.3 Eol.z 1,086.3 1,337.4 1,503.3 1,,1,38.7

Total Exports Imports 1,405.1 1,578.7 1,307.1, 1,960.4 3,043.3 3,970.1, 3,21,8.6

Source The Bank of Korea Monthly Bulletin

))q4q

2,473.3 1,,943.8 2,657.9 3,248.1, 3,900.5 3,065.0

ogy from the world of sports. Anyone who is familiar with American baseballis acouainted with the division of teamsinto two distinct groups. Thus, the "major leaguers" are the top- quality teams that are eligible to competein the World Series:the New York Yankees are an example. Lesserteamsthat are training ground for future starsare called "minor leaguers;" they represent smaller cities like Columbus, Ohio. The soccerteamsof Europe operate similarly. My point here is that, in dealing with the rest of the world, Asean encounterstwo types of powers. The major leaguersare of coursethe United States,Japanand the EuropeanCommunity. In these teams,my country is clearly a minor leaguer.And, in my view, dealing with a minor leaguerlike Korea can work to the advantageof Asean.The fact is that Korea'seconomicties with Asean are thriving and growing. As a sign of the times, Malaysian Prime Minister Datuk Seri Mahathir recently suggested that mv countrv be included in a new Eist Asian trading bloc that would include China, |apan, Hong Kong and Taiwan along with the Aseanmernbers. It is gratifying that South Korea should be nominated for member ship in such auspiciouscompany. More to the point, we deservesuch star billing. My mission is to explain why this is the case.By reviewing Korean economicrelationshipswith Continuedon page20.

1992 THEASIAN MANAGERJanuary i February / March

THERE'S A WHOLE COUNTRYSIDE OFPROMISE OUTTHERE...

AXOWE'RE BNxxING OXIr Out there - in the vast, open regionsbeyond Manila is a whole countrysidcof promise.

And alongsideour agrarian operations,offering full commercial banking serviccs.

A promise of grorvth.Of a chance to gain sclf-relianceand, hopefully, a better life.

I)eposits.Import-export servlccs. Loans to small and medium entrepreneurs.Trust scrvices.

LANDBANK promise.

Forcign cxchange.Ovcrscas workers' remittances.Wholesaling o f i p c c i a l f i n a n c i n gl r o g r a m s . And morc.

believesin thaL

That's rvhy rvc're thcrc. Banking on the promisc of grorvtl'rin thc countryside. lnvesting our resourcesin those l i t t l e c o m m u n i t i e sa n d t h e i r pcoplc.

W i t h o u t h e l p , a l l t h a t p r o m i s co f growth in the countrysiclccan just slip through our fingers. We're not about to let that happen. Bccausethis nation is to grolv.

We'rcbanking onthecountryside, LANDBANK TheCountryside Unibank 3 1 9S e n .C i l J . P u y a A t v e . E x t . ,M a k a r i ,M e r r oM a n i l a T e l .N o . 8 1 8 . 9 4 1 1

ilembtr: Philippine Depsit hsurance Co(poradon (Max mun ftpos I Insuran@ tor eech depslor?4O.mO

Asean, I hope to persuadeyou that Korea should be Asean'snew partner. withAsean KoreanTradeandInvestment O PUTfirst things first, let's startwith trade (SeeTable1). The most significant aspectof Korean-Aseantrade is its surge in recentyears- more than doubling since1985.It is alsoworth

Table 2. Korean Foreign Investment

(Unit: Thousandsof U.S.Dollars)

A*"""t I

Coun

326 98 92 81 39 37 35 30 29 28 27 25 26 21 79 74 1 i

72 11

U.S.A. Indonesia

/+ 5 6 7 8 9 10 11 72 IJ

74 15 76

Thailand EgyPt Ireland Sri Lanka North Mariana Costa Rica

18 79 20

Source: Bae, K.S. and Hong, S.l. Investment Environment and Technology, Oct. 1990

Asean (A) World (B)

163 426

A /B(%)

38.3

Amount

Proiect Asean(A) World (B)

A,/B(7")

9.8

as of 1989 (Unit: Thousands of U.S. Dollars)

Proiect i Amounl 8 422

858 377,528

11 63

25.0

1.9

0.3

17.5

Transportation & Storage

Amount

2,090 84,828 2.5

Project

0.0

Project

6,301

1 l6

0.0

6.3

Source: The Bank of Korea

Amount

Project

881 67,702

2 1.9

l..l

'1992 / March MANAGERJanuary / February THEASIAN

Amount

180,506 609,384 29.6

10.5 Others

Real Estate

Amount

Forestry

Mining

Construction

Project

228,676 976,379

Fishing

that major I T ISNOTEWORTHY like tend to target leaguers Japan I I their investmentin localmarkets, I i.e.,they want to sell productsto consumersin Asean.In contrast, Korea,a minor leaguer,aims at Continuedon page22

Foreign Trade

Manufacturing

Proiect

Korea'sAptitudefor Asean

of ASEAN, Korea Institute for Economics

in Asean bv Industrv

Table 3. Korean Investment

764,338 347,090 249,263 207,778 66,426 62,382 56,502 48,234 46,465 45,877 44,878 39,984 36,940 33,880 32,667 24,362 22,500 21,804 79,303 77,975

U.S.A. Indonesia Canada North Yemen Malaysia Australia Algeria Panama Hungary Japan Saudi Arabia Hong Kong Papua New Guinea United Kingdom

]apan Hong Kong Malaysia Thailand Panama Saudi Arabia West Germany Canada North Mariana United Kingdom Philippines Australia Guatemala Sri Lanka Singapore China Guam France

And our investmentsin Asean continue to grow (Table3). Table 3 tells us that Korean investment in Asean focusesvery markedly on manufacturing which I consider to be a good omen. The most interesting aspectof Table4 is the enormoussurgein Korean investment in Asean that has occurred in the recentpast. Indeed, such investment increasednearly 15 timesbetween1987and 1988,and the number of projectsmore than doubledbetween1988and 1989. Thesetrends continued in 1990. Table 5 tells us where Korea is putting its investmentsin Asean. By number of projectsand size of investment, the greatestconcentrationis in light industrial,labor-intensiveactivities, but other areasare by no meansneglected.Once again, I tind this pattern encouraging.Thus, our investmentsare, in general,not in competitionwith suchmajor leaguersas fapan and the United States,but insteadcomplementaryto them. Table 6 shows that Japanis focusing its Aseaninvestmentsin the heavy industrial sectorand in the developmentof resources.

nothing that this trade is roughly balanced in terms of imports and exports, certainly a good omen in a world in which chronic trade imbalances can lead to political troubles. And it seems certain that these Korean-Asean exchanges will continue to increase. Let's look next at Korean foreign investment (See Table 2). The striking thing about Korean foreign investment is that Asean ranks number two behind the United States, well ahead of fapan.

Continuedfrom page18.

Proiect

101 34,062

0.3

4.7

Amount 8,995 242,726

Proiect

I Amounl

6 11

41,645 88,851

54.5

46.9

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.,;:.,]':.'.;iir'tr..;l-J in.1@].*e nn*.$ninoi'Fiiinin; ll;iur n*an.lr..i; f-liit"provincialbarikbranch.

Member: PDIC (Mdrimum Insutance tor erch Oeposilor ?'10,000) lpagpatuloy ang kaunlaran. Me9-impok sa bangko.

Table 4. Korean Manufacfuring Investment in Asean bv Countrv as of 1989

(Unit: Thousandsof U.S.Dollars)

Continuedfrom page20.

{s7v19ls Amounl

Indonesia Malaysia

5 4

Philippines Singapore

2 2

2 3

1,877 71,993 26,488 2,009 3,908

1 1

Amount Thailand Indonesia Malaysia Philippines Singapore

74 53 15 14

4 \)q

34 83 25 21 3

73,353 76,383 33,858 8,758

500

L-Uql

46,098 23,744 3,301

74 22

32,5/ +

174,469 64,475 77,358 4,408

ZS,|ZZ

Table 5. Korean Manufacturing Investment in Asean bv Industrv as of 1989 (Unitr Thouends

1973-1985 Project Food, Beverages Textile, Clothing Shoes, Leather Wood, Furniture Paper, Printing Chemical Products Non-metallic mineralproducts Basic Metal Fabricated metal products and machinery Others Total

Food, Beverages Textile, Clothing Shoes, Leather Wood, Furniture Paper, Printing Chemical Products Non-metallic mineralproducts Basic Metal Fabricated metal products arid machinery Others Total

Amount

3,185

1 3

1,009 4,746

5,796 28,986

I 1,

7,278 388

1,483

Proiect

Amount

633

800

557

680

1989 Project

1 7 7 2

500 4,552 13,065 LUO

4 1

4,337 60

5,697

1 12

7,633

48,r72

Amount

4 29 10 5 1 11

Source: The Bank of Korea

46,277 1988 P.riect fA*.""t

Amount

Project

588

of U.S. Dollars)

t987

7985

THEASIAN MANAGERJanuary / February / March 1992

LZ,OZJ

Total Proiecl

6 39 79 11

23,772 74,459 3,200 7,520 13,533

56s 35,902

76,788 rJz,Joz

) fia'7

36 766

Amount

26,308 31,,935 29,333 70,874 7,520 23,615 29,046 1,888 52,661

25,904

233,084

producing goods for the global market. This is natural, becauseour economicgrowth has been strongly oriented toward selling Korean goods to the rest of the world. Furthermore, our strength lies in the light industrial, labor- intensive sector. By contrast,the major leaguers have virtually abandoned this sector; in general,they prefer to import thesegoods rather than manufacture them. Over the past 30 years/we Koreanshave learned that manufacturing for export stimulateseconomicgrowth, leads to increasedemployment, and promotesaccessto global markets. I feel that we can help Asean reach thesesamegoals. Our expertisein promoting exports is embodied in our general trading function. Large Korean companiesproduce and market a wide variety of products, for sale all over the world; for example, Daewoo,the company that I am most familiar with, has officesin no lessthan 77 countries. And Daewoo has directly invested in joint ventures in 15 countries. Theselarge Koreancompanies, which are similar to large Japanese enterprisesthat are familiar to all of us, have rich experiencesall over the globe,regardlessof ideology or military alliances.These companiescan help Asean establish itself in far-flung markets where Korea has enjoyed much success. Also, Korean generaltrading companiescan be useful to Asean in building and promoting capitalintensiveinfrastructure projectsin constructionand communications. We have a good record in this kind of activity, where we are highly competitive with major leaguers. When Asean enterprisesenter into economicarrangementswith major leaguersin manufacturing Japaneseand American companies - it is fairlv likelv that the smaller or weaker fartnei'will act as a vendor - producing parts, components,or other items for the foreign big brother. So-calledvertiContinuetl on page 24.

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Continued 22. frompage cal relations of this kind involve somedegreeof dependenceupon the major leaguer.In this way, Asean could, to some extent,fall under the control of outsiders. In contrast,when Asean deals with minor leaguerslike Korea, such relationships are more horizontal, that is, between equals.Foreign domination thereforebecomesless of a concern. And, becauseKorea has few ethnic ties to SoutheastAsia, and is not a superpower, it can be neutral in terms of domesticor international politics. Sincemany Asean members are subiectto the strains of racial and ethnic tensions,this kind of neutrality is no small advantage. Still another favorable Korean characteristicfor Aseanis our growing emphasison researchand development.We are planning to devotesome3.5 % of GNP to R & D.

a proportion higher than the major leaguersare devoting to this vital area.This kind of emphasisis relevant to Asean relations with Korea. Thus, our interest in Asean is not limited to light industry. In due course/it is likely that Korea will want eventuallv to promote some hitech manufacturing activities in cooperationwith Asean. KoreanMotivation CONOMICactivity normally reflectsthe self-interestof those who engagein it. This is what economicsis all about. I don't think I will reveal any secrets if I touch upon some of the factors that inspire Koreansto trade with and invest in Asean. In recentyears,South Korea has beenengagedin the so-called processof democratization.A byproduct of this processhas beenan increasein wagespaid Korean

workers by Korean employers.Real wagesincreasedby '1,4.4 Vobetween 1985and 1989.One causefor this phenomenonwas strikes and other labor disturbances.Actuallv. as wageshave climbed, such disturbanceshave tapered off, from about 3,000in 1987,to some2,000in 1988, approxi mately 600in 1989,and only 200last year. Sincewe find our competitive position deteriorating, we are looking southward to Asean for business opportunities. Further more, Korean investment can rely upon financing by the Korean Export-Import Bank, the Korean Development Bank,and the Small/Medium Bank.These three government institutions will provide 90 % of the funds needed for Korean investment in Asean for the next 10 years,at low interest rates. Asean'sAttractions

HY ISKOREAespeciallyinterestedin the economies of Asean?The reasonsare Table 6. JapaneseInvestment in Asean by Industry & Country as of 19g9 not mysterious. (UnitrThousandsof U.S.Dollars) Asean nations have robust Thailand Indonesia Malaysia economies,and they are growing, Proiect i Amount Proiect Amounl some of them by as much as 10 % Project Amount per annum. In addition, the Asean Food 706,921 161. 68 66,575 48 37,820 countriesmaintain a favorable Textile 1se | 218,25s 1,75 554,253 743,1.24 53 climate for foreign investment, in Wood & Pulp 24,479 54 107 242,719 83 60,050 terms of such key factors as tax Chemical 104 83,221 150 785,1,32 274,228 65 policy and repatriation of profits. Metal, Non-metal t6z; tJ r _tr 144 1,4D8,7U 74 787,541, The areaof manufacturing that inMachinery 237,147 98 31,684 JJ 57,991 terestsKorea is embodied in the Electric 110 ) 350,495 44 72,566 158 382,084 economicplanning of Asean Transportation 7e,8e0 60 70 762,453 37 783,378 | countries.For example,Thailand's machinery "1986-199 1 economiidevelopment Others 773,278 168 r00 126 89,265 l

J I

Total (A)

1,02s i 1,455,93s Philippines

Project I Amounl Food Textile Wood & Pulp Chemical Metal, Non-metal Machinery Electric Transportation machinery Others

Total (A) Source: The Ministry

27 37 22 i 37 29 18 )

56,633 27,0't7 8,614 89,4t9 85,510 10,11e

)J,LZO

)s,

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288 I s09,s10

890

2,955,138

677

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Amount

51 35 79 248 106 145 267 28

40,528 77,704 76,082 681,,432 90,086 355,685 399,808 727,396

181

267,327

1,080

of Finance ofJapan, The Yearbook of Intemational

L9%,048

Continuedon page26.

Total

Proiect 355 460 285 604 464 325 612 zzJ

Amounl

308,477 960,353 351,,344 7,253,432 7,954,236 686,620 1,zffi,079 689,422

632

796,709

3,960

8,2@,672

Finance, issued by the Ministrv

THEASIAN MANAGERJanuary / February / March 1992

r,u9,981

of Finance, 1989

"WhenAsean deals withminorleaguers likeKorea, such relationships are morehorizontal, that is,bretween equals. Foreign domination therefore becomes lessof a concern."

THE MANILAPENINSULA

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Continued from page 24.

plan emphasizes the manufacturing sector for domestic and foreign markets. And Indonesia's 1985-1989 plan focuses on the petroleum industry and diversification, while Malaysia targets industrialization. We Koreans feel that these Asean aspirations suit our investment goals. Furthermore, we are favorably impressed with other Asean efforts that smooth the way for foreign investment. Thus, Thailand is building industrial parks near Bangkok and planning others elsewhere. Thirtytwo such parks are already operating in Indonesia. By 1989,Malaysia had built 107 of these facilities, and 45 more were planned; 10 of them

are free trade areas. As for the Philip' pines,24 such parks, called export zones/ are gomS sffong.

Prospects SUMMARIZE,domestic Korean factors, as well as I developments in Asean, I I amply explain increasing Korean trade with and investment in Asean. One final, somewhat visionary consideration: After the Korean peninsula is again unified, the Korean role in Asia is certain to expand. And I feel that our Asian partners, including Asean, will benefit from the emergence of a more influential and more indefFO

pendent Korea. In any case,Korean investment in Asean cannot be seen as a threat to Asean. To close on a practical note, I offer in Table 7 an indication of the industries and activities in Asean that are especiallv attractive to Korean investors aciording to the Korean Institute for Economics and Technology. r KimDuk-Choong of Daewoo Executive Counselor Currently oftheAIMBoard Corporatron andalsoa member A graduate of of Governors. of theUniversity Missouri where heobtained botha lvlasters in Economics, Dr.Kimisa degree anddoctorate Committee member andReform oftheEducation oltheMinistry Education Commission andHigher aswellasa member ol the of Education. Economic Advisory Group oftheKorean government.

Table 7. Investment-prospective Industries in Asean Countries

I.d!t!ry

Thailand

Stationery, Sewing & Toys, Sports & Leisure Goods, Ceramics Textiles, Footwear & Materials for Footwear, Electronic Machine & Parts, Petroleum & Chemical Products, Automobile Parts

Indonesia

Rubber & Material-Wood Processing Industry, Marine Products Processing, Roundabout-exporting Industry (Textile, Sewing, Electronics, Metal, Album), Domestic Market Cultivation (Electronics, Automobile, Footwear Components, Petrochemical Products, Iron & Steel)

I Malaysia

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Fibers

Textiles, Shoes, Toys, Bags, Sporting Goods, Cement Plant, Automobile Parts, Food Processing, Home Electric Machines, Class Articles

Source: Bae, K.S. and Hong,S. l. lnvestmentEnvironment

Book Review

Managers andLeaders: AnUpdate Continued t'rompage56. towards the logic of the employer, as many authors have said about the human relations movement? Only if that logic has ceased to be impersonal and instrumental, then, and onlv then, has there been a real shift in perspective. Otherwise, the logic remains bureaucratic; that is, within the framework of objectifying instrumental rationality, of which behaviorism (stimulus-response) is the logical, if extreme, position.

* I 1-'l l

Rubber-processing, Wood-processing, Electric & Electronic Assembling,

Yt* Philippines

* " "i:lli'

ofASEAN, Korea Institure for Econonics and Technology,Oct. l990.

On the other hand, if such a shift has taken place, then management need not be distinguished from leadership. Management becomes essentially managing people as people, not as commodities. To produce consistencv and order as well as to motivate people and produce useful change are all part of a manager's job. Management is leadership. But only if we are able to rise above the perspective of impersonal instrumentality that dominates traditional Western organization and management theory and, perhaps, even leadership theory. r

1992 THEASIAN MANAGERJanuary / Februarv / March

"AftertheKorean peninsula isagain unified, theKorean roleinAsiais to expand. certain Andlfeelthat our Asianpartners, Asean, including will benefitfromthe ofa emergence moreinfluential andmore independent Korea."

r Whv the chanse introduced by leaders musibe eood aid constructive-is not c1ear. Hitler was a leader, for good or ill, constructively or destructively. One may call him an irirmoral, evil leader, but a leader nonetheiess.Morality does not seem to be integral to the abstract concept of leadershi6 as such, even if, once concretized in human activitv, moral or immoral can aiways be prediiated of it. 2I have analyzed this dichotomy between reason and tradition in mv book Oikos:The Two Facesof Orqanization (Manlla'. Asian Institute of Ma;agement, 1991)and shown how Western management literature continuesto be dominated bv it even as authors like Kotter try to reciaim the traditional in the orsanization conceived instrumentally and impersonally.

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Financing development...

Asia's Banker: lnvestment Fleming Jardine Hamlin ByProf.MichaelA. Editor-in-Chief

HEREISonly one stock market in Asia which is completely I open to foreign investment: I Hong Kong. Two of the largest- South Korea and Taiwan - ire still closed.And Asian nations strictly regulateforeign firms' role as investmentmanagers. Why, then, is Hong Kong-based JardineFleming so bullish about Asia? And JF's future after 1997? First, becausemoney is flowing into Asia at unprecedentedlevels in the form of direct investments(see "Regional Investment Flows and the Asian Manager" in this issue). Foreign direct investment in Indonesialast year (about US$3billion) was equal to 63%of domestic stock market capitalization.In Thailand |twas27%aand evenin the Philippines - which seemsto have tried to keep investors at baYforeign direct investment equalled '1,'lVo of total market capitalization. That kind of investment is creating the world's greatestmanufacturing capacity in what is emerging as its largest market. This manufacturing capacity will not onlY Produce substantialearnings to be reinvested,but require huge infusions of equity to operateand exPandas ind'istry and the regional market develop. Second,becausethe banking and financial sectorremains relatively regulated and under-develoPedin SoirtheastAsia, it will be unible to efficiently managetheseearningsor

supply operating capital for the region's booming manufacturers. Consider private sectordemand for funds with that for public infrastructure in Asia - concurrent to a downturn internationally in banking - and it becomesclear that the region is facing a fierce fight for funds. This is a fight JardineFleming is looking forward to. Despite the beating markets and institutional investorstook in 1989 and 1990,JFannouncedrecord profits of HI$577 million (US$74 million) in 1990,representinga 57% return on shareholders'funds. In the past five years funds under its to managementhave increased33TVo HK$1.233billion (US$158million) and it boastsof a return on earnings more than 50%higher than that of its closestcompetitor. Founded 20 years ago with a mere HK$1 million, JFhas never required an additional infusion of capital. Originally concernedwith attracting funds from the West for investment in Asian enterprisesand public infrastructure, the firm now finds that intra-regional fund flows have become predominant. Managing director Alan H. Smith notes that this is most apparent with the japanese and the Taiwanese.Private investors in Japanhave focusedon Indonesia and lhe Taiwaneseinterest is in both "Becauseof Malaysia and Thailand. the high savingsrate in Asia, which exceeds20Voin virtually every na-

1992 / March / February MANAGERJanuary THEASIAN

tion exceptthe Philippines, much of the financing can be generatedwith the region," Smith points out. JF'srecord profits for the year, however, were marred by a decrease in total funds of approximatelY 11% due to the largest fall in the TokYo StockExchangesincethe end of World War II and the effectsof Iraq's invasion of Kuwait in August. Accbrding to chairman Nigel M. S. Rich, thesesetbacksdid not prevent the firm from expanding its scopeof businessin the region. Its Tokyo affiliate receiveda government go-sigpension nal to manageJapanese funds and captured two Sovernment-relatedclientsalmost immediately. Tokyo also awarded the firm a licenseto set uP an investment trust Continuedon Page33

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Japan Airlines

IN COOPfRATION WIT H

The Asian lnstituteof Management

3,414Nominees Vie for 1991 ManagementAwards T

' HREE T H o U S A N DF o U RH U N D R E D FOURTEEN nominationshavebeenreceivedfrom six participating countries in the 1991Management Awards Program.(A 2OO%increasecomparedto the 1,006nominationsreceivedfor the 1990Management Awards.) Now in its secondyear,the Management Awards Program,presentedby JapanAirlinesand organizedby World Executive's Digestin cooperation with the Asian Instituteof Management, is the only regionalawards programthat recognizes companiesfor management excellence. Awardswill be givenin sevencategories: . CeneralManagement o MarketingManagement o FinancialManagement . OperationsManagement o Information r PeopleDevelTechnologyManagement o opment& Management Development Management Thenominated companies comefromvariousindustries: agricultural services, financing, insurance, real estate, business services, manufacturing, trading,mining, construction, transportation, storageand communication,andevencommunity, social,and personal services. TheAsianInstituteof Management togetherwith the editorsof World Executive's Digestwill soonbeginthe process of dataevaluation andvalidation. Finaldeliberationswill be accomplished underthe aegisof the Chairman of the Board of Judgesin each country: Hong Kong DavidK.P.Li Indonesia Drs.Rachmat Saleh Malaysia TanSriCeh lk Cheong P h i l i p p i n e s Sen.VicenteT. Paterno Singapore Lim HongKeat Thailand Viroj Phutrakul

BetweenFebruary and March 1992,from rhe3,414 plus nominees, sevenwinnerswill be chosenin each participating country- Hong Kong,Indonesia, Malaysia,the Philippines, Singapore, andThailand. Thewinnerswill be announcedin a pressconferenceand fetedin a formaldinnerto be heldat the Management AwardsProgram's OfficialHotels:The Hong KongHilton, TheJakartaHilton International, The Shangri-La Hotel KualaLumpur,The Hotel Inter-Continental.Manila,The Shangri-La HotelSingapore, and The DusitThaniBangkok. Nomineesmay continueto forwardtheircompleted dataformsto the ManagementAwardsProgramSecretariat.All datasubmittedarecodedfor confidentialitv and enteredinto a speciallydesigneddatabase. Only the winnersin eachcategory will be announced.

1991 MANAGEMENT AWARDS NOMINATION UPDATE Countrv

HongKong lndonesia Mafaysia Philippines Singapore Thailand Total

Numberof Nominations

254 758 736 875 378 413 3AU

PIusUltra: Thereis More Beyond

TheStoryBehind TheManagement AwardsTrophy SrtttMer* g,'1512.Charles of Burgundy setssailfor Spainto claim his inheritance. For,while he hasneverleftthe Netherlands sincethe day of his birth, Charlesis now the rightfulkingof Spain,the legalheirto the throneleftvacantsincehis grandfather, Ferdinand the Catholic,passedawaythe previousyear. The Spanishpeopledreadthe comingof Charles. He is, afterall, a foreigner,and they regardforeigners with contempt.They continueto think in nationalrather than imperialterms. More thanfortyshipscomprisethe fleetthat bring. the youngmonarchto his new kingdom.Leadingthe way is the king'sship.On its mainsailis painteda pictureof the pillarsof Hercules.Writtenon a scrollthat twinesaroundthe pillarsis the king'smotto,PlusUltra... HfnCULeS wasthe mostwidelyvenerated Creek hero. His strengthand prowesswere incomparable,and his exploitswere legendary. One of thesewas his captureof the 3-bodiedmonsterGeryonon the exoticislandof Erythia.On thisjourneyhe erectedtwo pillarson eithersideof the straitsof Cibraltarin Europe, the otheron the rock of Ceutain Africa.These"Pillarsof Hercules"werethoughtto markthe edgeof the civilized world.Thus,inscribedon the pillarswerethe wordsNe PlusUltra-"Nothing LiesBeyond." CharlesI had removedthe word Ne in.Ne P/us Ultrato signifythat other lands lay beyond,and that he intendedto carry his pillarsplus ultra-to the farthest cornersof the world. And he would. KingCharlesI ruledthe Empirefor fortyyears,conqueringlandsboth in the Old World and the New, and extendedSpain'spoweraroundthe globe. Charlesl's emblemwould laterbe usedin the designof Spanishcoins.TheAmericanswould start usingSpanish coinsin the 18thcentury.TheAmerican dollarwould latercarrythe emblemof KingCharlesla scrollthattwinedaroundthe two pillarsof Hercules. This laterbecamethe modern"$" symbol- the two verticallinesrepresenting the pillarsand the "S" representingthe scroll. I", tnotnY for the Management Awards revivesthe originalemblemusedby KingCharlesI of Spain-the two pillarsand the mottoPlusUltra.

Therearethreesvmbolisms involved.Firstis the dollarasa symbolof profitability, signifiying achievement.Secondis the motto PlusUltra-there is moreto be achieved.Third is the globesymbolizingthe new breedof managers neededin the 1990sand beyond:

1990M ANACEMENT AW ARDSW INNE R S HoNGxoric CathayPacificAiryays Ltd. (cM) Fuii PhotoProductsCo. Ltd. (MM) The Hongkongand ShanghaiBankingCorp. (trM) ChinaLight& PowerCo. Ltd.(PDM) JardineFlemingHoldingsLtd.(FM) MaerskHonB Kong Ltd. (OM)

PHILIPPINES Ayala Corporation(CM) JollibeeFoodsCorporation(MM) SanMiguel Corporation(lTM) National SteelCoDoration (PDM) St.Luke'sMedicalCenter(FM) IntegratedMicroelrctronicsInc, (OM)

INDONESIA BankNiaga(GM) P.T.Astra International(MM) P.T.UsahaSistimInformasi ,aya(lTM) P.T.AstraInternational{PDM) P.T.Indosat(FM) P.T,AstraInternational(OM)

SINGAPORE Singapore AirlinesLtd.(CM) NTUC FairpriceCo-OperativeLtd.(MM) Singapore AirlinesLtd.(lTM) The Westin Stamford& The Westin Plaza(PDM) Singapore AirlinesLtd.(FM) NeptuneOrientAirlinesLtd.(OM)

MAI.AYSIA MalaysiaAirlines(CM) EdaranOtomobilNasionalBhd.(MM) SyarikatTelekomMalaysiaBhd.(tTM) SarawakShellBhd.(PDM) TractorsMalaysiaHoldingsBhd.(FM) Clobe SilkStare(OM)

THAITAND The ShellCompanyo{ ThailandLtd.(CM) DusitThaniCorp.Ltd.(MM) Thai FarmersBankLtd.(lTM) Padaeng IndustryCompanyLtd.(PDM) Thai lnvestment & SecurityCo. Ltd.(FM) ' Saha-Union Corp.Ltd.(OM)

(G[4),l\4arkeling (MM),Inl0rmalion LEGEND: General l\4anaoemenl Management Technology Management(lTM), (PDM)Financial People Developmenl (FlVl), & Management (0M) Managernent 0perations Management

O F F I C I A LH O T E L S Hong Kong: Hong KongHilton Indonesia : JakartaHilton International Malaysia : Shangri-La HotelKualaLumpur

philippines: Hotel Inter-Continental Manila Singapore : Shan8ri-La Hotel Singapore Thailand : The Dusit Thani Eangkok

O F F I C I A LA U D I T O R S : 5CV / Anhur Andersen(Searchand SelectionProcess)

orn of the vision of Asian businesspractirioners and educators in 1968, the ASIAN INSTITUTE OF MANAGEMENT seeksto develop competent, socially responsible managers of Asian economies and societies. The center of Asian management education, AIM offers degree and non-degree programs including 26 execurive development programs annually in Malaysia, Indonesia, Thailand, Singapore and T {tw an. 5 | Vo .rf AIM students come from counrries outside the Philipgines.

To date, over I 7,000 AIM graduates and program pamicipants have assumed management posirions in Asia's leading corporations, Asian governmenrs and have iniriated new entrepreneurial ventures to support the region s growth. Managers and porenrial m.anagerswho wish to develop additional skills and knowledge are encouragedro attain their optimum potential through AIM s program offerings.

DEGREEPROGRAMS Master in BusinessManagemenr(2 years) Designedto instill greater cross-cultural skills and internationalbusrness perspectivein developingionovativeentrepreneursand professional managers. Master in Management( I year) Enhancespersonalleadershipskills and s!rong careerpotentialsfor future g e n e r am l a n a g e m e nrre s p o n s i b i l i r i e s .

. c$\ c' ' \{o'{s$bct

Master in DevelopmentManagement( 1 year) Integraressocialvaluesand responsibilitieswith hard-nosedmanagement skills to createprofessionaldevelopmenrsrrategists.

*^"**.^.lrj*'^.'cot$rou\o' Dcar

DEVELOPMENTEXECUTIV-E PROGRAMS Program for DevelopmentManagers(4 weâ&#x201A;Źks) May 4 to 29 November 9 to December4

,'"::*:;$*'*l;,it*i'$::ii tj}tisr*::tg ;*""t',- 't$,'li

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CaseMethod PreparatoryCourse/EnglishLanguage(6 weeks) April 20 to May 29 June I ! to July 1+ DevelopsEnglish languageproficiency,sharpensanalyticalskills and introducesvariousresearchmethodologiesto non-English-speaking managers. EffectiveCommunicationfor Manasers( I week) February3 to 7 August 3 to 7 October 5 rc 9 Focuseson variousforms of managementcommunicationand commuoicationstrategiesnecessary in high-levelmanagement. Please send me details on the

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^db,

ffi{sAsrAN '\YINSTIruTE OF MANAGEMEM EucwroLonz FouNo,rroru 123Paseode Roxas,Makati Metrolvlanila, Philippines T e l .N o . 8 7 4 0 1- 11 9 FAXNo. (632)8179240

Continuedfrom page28.

managementfund and JF subsequentlyestablishedthe first trust in Japanto be managedby a foreign house.Other inroads were made in Taiwan, Thailand, Indonesia and the Philippines notable "firsts" for foreign firms. Being first in Asian markets,fund managementand development of investment opportunities has beena key factor in JF'ssuccessaccording to Smith. Examination of Hong Kong's first and most profitable investment houserevealsfour other key successfactors.JardineFleming is: . First; . Focused; . Networked; . Committed; and, . People-Centered. BeingFirst F HASBEENin the forefront of many industry developments in Asia. After establishingan office rn Ofirce in Tokv Tokvo IoKyoo rn in 1,971, 1971, lvl1, , tne the

!7 house was one of the first six foreign

firms permitted to sit on the Tokyo Stock Exchange;it was one of the first four given an investment trust license;it was one of three permitted to managedomesticpension funds. JardineFleming now managesmore domestic pensionsin Japanthan any other foreign house. Smith is particularly proud that the fastestgrowing segmentof the firm's Japanesebusinessis selling Japanesesecuritiesto Japaneseinvestors. With the difficulties and controversy surrounding the operations of Japan'sbig four securitieshouses, investors seemto place more trust in the foreign firms. Smith expectsthis to continue. He also notes that not even Nomura Securities- Japan's largest firm - is permitted to manage]apanesepension funds. In Korea,JF was one of four foreign firms initially permitted to set up operations. When it opened its Taipei office in 1985,JFwas the only foreign firm operating and it was the first outside houseto be granted a securities licenseand to sit on the Taipei exchange.The firm has similarly operatedin Thailand, Malaysia and

the Philippines sincethe'70s. In 1.989,1t establishedthe first ioint venture operatingunder Indonesia's liberalized securitiesregulations. The firm has no illusions, however, about the difficulty in developing profitable operationsin Asia's traditionally closedmarkets.Rich notes that, "We are under no illusions that it will require considerable tenacity, skill and stamina to establish ourselvesin this (Tokyo) sophisticatedand competitive market but, as the secondlargest market of this type after the United States,its potential is clear." Tokvo is not the onlv market that requires a long-term p'erspective.JF opened its Seouloffice in 1985,and is still struggling to make a profit. "It takes time to get known in Asia," Smith says."There are different ways to do things in different countries.But it is our view that our businessis one which can add value to countries." Besidesfunding the development of Asian enterprisesthrough its investment,broking and corporate finance activities,JFhelps regional governmentsfinance large public infrastructure projects.Financing of infrastructure also demonstratesthe value added to nations by the investment house,and why Asian governments have welcomed the firm. First, infrastructure stimqlatesthe local economy,creatingjobs and boosting grossdomesticproduct (GDP). Taiwan is an extremeexample: its "proposed US$300billion in outlays over a six-year span is expected to boost GDP'l0Vo."Second, infrastructure is a long-term booster becauselocal econor4iescannot expand without it. "The clearestexample at presentis Thailand, where returns on investment in private manufacturing are now declining becauseof a lack of infrastructure," according to JFdocuments. Focused F ISFOCUSED in two ways. First, it is focusedon finincial services,not participating in the managementof enterprises it helps finance.But within the financial servicesrealm, the house provides broking, pension fund management,mergersand acquisi-

tions consulting and corporate financeservices. Second,it is focusedon Asia. "We are a region-focusedorganization," Smith intones. 'Jardine Fleming is not going to go to Europe or America or South America or anywhere.Our competitors have to faceglobal decisionsand allocation of resourcesand commitment of capital." Becauseof this, "other firms have somegapsbetweenlocal people and the head office which restrict and inhibit the capacityof the local offices. We have a short chain of command - we do not report to a London or New York office. For JardineFleming, there is no one elseto convince or deal with," Smith savs. As a result, JF'smanaging director believeshis firm is able to respond more quickly, efficiently and effectively to opportunities in the region. Becausethe firm does not have a hierarchicalstructure,decisionmaking is swift. Networked O ONEhas a better network than we do." Smith states. "No one can match our range I fandexposure." TFhas a totai of 12 offices throughout the region, and many have beenaround almost as long as the firm has beenin existence.Becauseof the obvious importance of the Japanmarket, jF has three offices operating in Tokyo which separately handle the firm's securities,pension and investment fund business.But it also has two officesin Taipei, Jakarta and Manila. JFalso operates14 other officesin Australia, Europe and the

"Wearea region-focused organization... Jardine Fleming is notgoingtogoto Europe orAmerica America orSouth oranywhere."

THEASIAN 1992 MANAGERJanuary / February / March

United States,effectively form.ing "a dynamic financial network for sourcing and investing funds. This network Drovides the firm with an intelligeirce framework which provides the house with near instan i information on regulatory envronments, comorate movements such as acquisitionsand merqe$, and threatsas well as oppo.tioities to and for investments. Becausethe offices themselves operate with a high level of autonohy under a strearnlineddecision-makins frarnework, reaction to threits and moves to capitalize on opportunities are much rnore rapid than in the typical foreign invtstment house. Continuedon pase37.

Right: Motuging Diector AIan Smith: "No onecannatch lF's rangeond exwsure." Iafdine Flening: Hoflg f\ong's first and mostptofitoble inoestrnent house. Below: lardine Flaning's Hong Konghead.qusrters. Far right bottom: Iardine Flefling's Asia-Pacificnetwork.

THEASIAN MAMGER January / Fâ&#x201A;Źbruary / irarch1992

lqFrF

IHEASIAN Mllil 6ER January/ Fdruary/Marcfr tgga

February 12 and13,1992 Philippine International Convention Center,Metro Manila, Philippines

@ Regional scenario in the Year 2020 based on a l2-month sumey conducted by AIM in eight countrics. Presentor Victor Lim Far East Bank Professorof Business Management AIM WorkshopRound Table Discussants Tun Ismail bin Mohamed Ali

@ How SarawakShellFinds, Hires, Trains and Retains Only the BestManagersin Preparationfor the Demandsof the Year 2020.

Brian Anderson Managing Director SarawakShell Berhad

Bharat Parashar Managing Director ChemicalAsia, Lrd.

How BusinessSchoolsToday Can Help Industry Find, Hire, Train and Retain the BestManagers in Preparationfor the Year 2020.

*Dr. Noritake Kobayashi FormerDean Keio University

T. Soerodibroto President PT Indosat

Chaniril Donavanik Executive Director Du.sitThani Corp.,Ltd.

M.R. Sarisdiguna Kitiyakara Chairman The Shell Company of Thailand,Ltd.

Mohd NadzmiBin Mohd Salleh ExecutiveDirector EdaranOtomobil NasionalBerhad

Robby Djohan President Director PT Bank Niaga

How Dusit Thani Today DevelopsIts Managers to be EffectiveOfficers in Preparationfor the Year 2020.

Dr. Brian W. Scott Dr. Duk-Choong Kim Sen. Vicente Paterno

How Edaran Otomobil Nasionalis Building a CorporateCulture in Preparationfor the Year 2020.

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ReservationForm YES,I am interested!

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Name Signature Company Position Address Tel. No.

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Forinquiries or please reservati0ns, Ms.Belinda contact: Tel.(632) Singson, 8 7 3 3 4/ 1 874011,0rMs. Tel.(632) Arlene Aguilar, 873338 / 8160683. 0r writeto:TheProgram Director c/oHilda AIM1992 Tolentino, Management Asian Conference, Institute ol Management, MCCP.O.Box898, Makati, MetroManila. / FaxNo.(632)8179240 / Telex63778AIMPN AIMANILA. Cable

Continuedfrom page34.

Committed E'VEGOTthe place tobe," Smith sayswhen speaking of the firm's commitment to theregion. "We're very optimistic: for the future in the region becauseindustry is still in its infancy." That commitment is evident in |F's investmentphilosophy.Smith explains that the house "only invests in the region in terms of corporate funds." And JFhas established country funds around the region to facilitate equity investmentsin the region's growing enterprises. , As a result, |F is the leading foreign joint-venture merchantbank in Indonesia.Last year, it participated as foreign lead manageror co-managerin new issuestotaling over USgl billion. In Thailand it acted as lead or co-managerfor nine issuesand underwrote 22 new and secondaryissues.The housepulled its own coup in Thailand when it was appointed lead managerfor Tanayong Company Limited, a highprofile real estatedeveloper. The firm's commitment to funding of infrastructure is yet another indicator of JF'sfundimental interest and contribution to growth in the region. To serveAsian equity needs even more efficiently, the house directs profits back to investmentsin the hardware and software necessary to conduct its businesselectronically as Asian boursesmodernize.

Southeast Asian "offer markets exciting long.term potentialand will continue togrow andattract increasing attention frominternational investors."

Corporate financing is also directed toward manufacturing capacity,contributing to the region's capacity to createwealth. ]F has invested strongly in the garmentsindustry in Indonesia,Thailand and Malajrsiaand toys in China. In the Philippines, it has helped financethe plasticsindustry and commodities storage.]F also financesthe construction of oil tankers in China.

and we look forward to helping our clients benefit from this potential in the years ahead." But like so many others,confidence in Hong Kong as a good place to do businessis not as great. Of 1997Smith says,"Since our international officesare set up, we don't expectany major problems. The headquartersmay changehowever. fapan is a possibility, it is our second biggest office, but it is not the best People-Centered place to run the business.Communications, location, costsare also considerations. I ARDINEFLEMINGis a cos"We'll seehow things go and I I mopolitan organization,reflectwill remain optimistic that Hong Kong will remain a good place to conduct businessfrom. But if it ]apanese,Europeans,Koreans,Singaporeansand Malaysianswork in doesn't " Smith adds, "it doesn't." the corporateheadquarters |F staff seem to share Smith's op alongsideBritish, Americans,and timism. The house has not suffered Australians. Also unlike its comfrom the mass exodus of talent that petitors, |F has never suffered the many Hong Kong-based organizaloss of a team of people. "There is a tions have. In fact, Smith notes that remarkably high degreeof stability his biggestproblem has been the in an areaknown for its instability," emigration of secretaries,not Smith notes. management. "We do try to help Many domesticand international staff with their houses-inrecentyears have suffered needsregarding long-term arrangethe loss of wholeteams of investrnentsto assurethat thev have alterment bankers when a leader or natives.But there is a liririt to what group of leadersis lured away to we can do becauseof the number of another firm. This has beenthe price people. Ifs a real balancing act bemost every other firm has paid as a causewe don't want to causepanic result of the increasingcompetition orgloom." in the region as opportunitiis have Smith has beenable to replacethe increased. middlelevel and senior managers "able to who have chosento leave very quickJF,Smith says,has been provide an environment in which ly with their subordinates."Hong people are able to put their ideas Kong people respond to challenges," in(to)" action becauseof its short he says,"becausethey are versatile, chain of command and flat organiza- hard-working people.They are tional structure. The firm's costremendouslyproductive." mopolitan staffing patternsare also Which seemsto be whv Iardine reflectedin the composition of the Fleming is so productine. And as main board; both contribute to intheir record of assistancein financcreasingunderstanding in the firm ing the development of Asian busiof the subtle and not-so-subtleconnesses- and societies- shows, trasts in the region and in managethat productivity is critical to rapid ment styles. industrial growth, the creation of jobs and increasedequity and TheFuture prosperity in Asia. r

uilil1"*'ffi':?*':t"d:?:"

I N HISstatementto shareholders, I Rich recently said that the house SoutheastAsian markets I believes I "offer exciting long-term potential and will continue to grow and attract increasingattention from international investors.So our optimism for the region remains undimmed

illchaelA. Hamlin Prolessor Hamlin is currenlly vicepresidsnt of the AsianInstitute ol Manaoemdnt. Pribrto ioinino AlM,hewaschiefexec-utive otficerol M'aebaihi Language Academy inJapan. Professor Hamlin public teaches corporale c!mmunications, informalion technology andenvironmenhl analysis intheInstilute's MBMandEDPprograms. Healso publiccommunications headsthec0rporate olfice otlheInstitute.

THEASIAN MANAGEBJanuary / February / March 1992

V ffi

inAsia... industries Prospects oflabor-intensive

TheCase ofIndonesia ByDr.Siahrir Director Managing Research, Jakarta andFinancial Institute forEconomic lkhsan andMohamad Faculty ofEconomics Lecturer, ofIndonesia University

I N THENEXTdecade,capital, I skilled labor, knowhow and comI panies themselveswill becomeinI creasinglymore mobile, moving easily between nations, continents and iultures. The owners of financial, physical, human and technological capital are growing in number not only in the industrial countries but in developing countriesas well. In fact, many owners of thesefactors of production from developing countries have already invested or worked in industrialized countries,

"Fordeveloping countries, globalization ... thepattern changes of specialization froma vertical of laborto a division horizontal division of labor... technology more becomes important andlabor, unskilled especially less labor,becomes important."

'80s. especiallysincethe end of the By the end of the '90s,the international mobility of the factors of production will have reacheda level where many national markets will be consideredfairly open and closely interlinked. The term "globalization" is appropriate to indicate this steadyincreasein mobility. Globalization is the result of technical changesin commiinications and transportation as well as institutional and socialchangeswhich have triggered an information and communicationrevolution. These changeshave reduced the transaction cost of international trade and factor movements (Kaspar,L991). For developing countries, globalization has two important aspects.First, it changesthe pattern of specializationfrom a vertical division of labor to a horizontal division of labor. Second,it may alter the relative importance of the different factorsof production such that technologybecomesmore important and labor, especiallyunskilled labor, becomeslessimportant. These two aspectswill affect the prospectsof labor-intensiveindustries in developing countriesin the next decade.The first may give an advantageto developing countriesby giving them opportunities to "catch up" in the industrialization process.The second aspect,however, may reduce the comparativeadvantageof developing countries.It may also create added difficulties for countrieswith

/ February / March 1992 MANAGERJanuary THEASIAN

labor surpluses in the form of higher unemployment rates,lower growth rates.external imbalancesand social problems. Indonesia,as a labor-abundant country, may be threatenedby the globalization of the world economy. A reduction of the labor content of the manufacturing sector- aside from lowering the ability of the sector to absorbnew entrants into the labor market - will not only reduce the comparative advantageof Indonesiabut will also changesignAls in the factor market, possibly lead"low level ing to the creation of a "vicious circle" that equilibrium" or will bring about the lowering of the standard of living. AnalyticalFramework GLOBALIZATIONof the llHE I world economyhas changed I the production and trade patI terns of nations.According to traditional trade theory (HeckscherOhlin), the pattern of production and trade is determined by the factor endowment ratio of capital and labor in a two-commodiff and twocountry world. Basedonihis theory, the developing countries,with their primary resourcesand unskilled iabor, *ill dpecializein unskilled Iabor- and resource-basedindustries. On the other hand, the industrial countrieswhich have capital, technology and skilled labor will specializein high-tech,capital-intensive industries. Continuedon Page40

That's right. In fact, if our steelkeepsqoins into shrpping,this industry will be kept iflo--atb"ysteel. This meansmore ships can be repaired. More bargescan be built. And more containervans - and more business- can travel the high seas.

You see,,shippingcan do.so much for rhe country. prepanngto pur so much steel

,, T1, 1 Yh,L*.'re

li,l'll""ll;ilti.-ant So *.

sohelpit grow- andournation

."n all expect smooth sailing from here on.

\TE'RE BUILDING A COUNTRY. (E

ramra

Steet Gorporation

creasinglydifficult to find a product which ii manufactured totaliy in one country. in Technological imProvements Changesin the Production Pattern developing countries,however, have have reduced the usefulnessof the made lessrelevant production pattraditional theory as an analytical terns basedon the traditional trade framework. Thus, it is now more aPworld in theory. Improvements propriate to use the product life transportation and communication iycle theory and the wild-geeseadvantages have made geographical flying pattern in exPlaining lessimportant in determining comsieciilization trends in the-globalizaparativ-eadvantagesof countries' ihis has led to a Jhangein specializa- tibn era since thesetheoriesdo not explicitly show the factor proportion from a vertical division to a tiohs in froduction. The pattern of horizontal division of labor. With production will be determined bY a the labor, of the horizontal division set of factors;i.e.,availability of the production of final goods need not factorsof production, productivity giving country, in one be confined of the factorsof production, rise to multi-country Products. In facilities,sound macroeconomic inbecome it will the next decade,

Contitueilfrom page38.

Table 1. Indonesia: Industrial Output, Exports, ImPort$ By Factor Intensity: SelectedPeriod By Factor IntensitY

1977

1988

Import

Export

Output

79Tl

1988

79Tl

1988

ResourcesBased - Agriculture - Timber - Mineral

59.2 46.2 4.6 8.4

54.0 30.1 76 7.9

89.5 4.8 '17.4

63.1 27.2 1.4.2 6.4 15.6 20.5 3.7 2.2 32.5 4.1 4.5

Labor Intensive Unskilled Labor Skilled Labor

33.9 22.9 11.0

35.2 26.2 9

6.3 1.8 4.5

30.1 u.7 45.3 22.9 9.6 10.7 7.2 34.5 34.6

8.9

70.7

4.5

Tecturology/CaPitaI Intensive

o/.J

6.8

28.6 40.5

policies,etc.Thesetheorieshave sucieeded in explaining the various stagesof development and industrialization in many countries' The globalization of the world ecot-omymay changethe duration of eachitage. the p6riod of each stagebecomesshorter comParedto past decades. ^ We will use thesetheoriesto explain the performanceand prospects of labor-intensiveindustries in Indonesia. ol Indonesian Development Industries Labor-lntensive EFoREdiscussingthe development of labor-intensive industriesin Indonesia, let us describethe classification of manufacturing industries by factor intensity. Someeconomists divide the manufacturing sectorinto three groups; i.e.,resource-basedindustries,labor-intensiveindustries and technology/capital-intensiveindustries. Others try to further divide the labor-intensiveindustries into skilled and unskilled labor-intensive groups. However, criteria for deteririniie what industries fall within what iroup vary from economistto ""ottJ*itt. For fhe sakeof consistencv, we will follow the classification

oi Hil (rsas).

Table 1 shows that labor-intensive industries in IndonesiaonlY

Source: World Bank

(value added per employee, $ 000) Table 2. International Corporations of Manufacfuring Productivity, 1984 Indonesia

Industry

UNIDO

Author

Malaysia

Philippines

Korea

Mexico

India

United States

Light industry 311/2 Food products 321 Textile 322 Garments

2.8 2.3 '1.9

2.2 2.8 1,.6

'14.7

2.8 10.6

4.0 5.6

5.8 3.2

6.7 3.8 1.5

13.7 8.8 5.8

15.8 13.1 18.3

1.7 7.6 1.3

70.7 37.9 24.9

4.3 '10.2

7.7 n.a

9.8 16.0

14.1 34.7

23.2 32.0

1.8 5.8

66.6 r07.7

3.9 6.4

6.9 72.1,

5.1 4.2

10.0 16.3

13.1 77.8

2.5 2.9

45.2 67.2

Heavy processing 341 Paper products 351 Basic chemicals Engineering 381 Metal products 384 Transport equiPment Source: Hal Hill (190)

1992 / March / February MANAGERJanuary THEASIAN

developedby the end of the'80s. The table show that even though Indonesiais a labor-abundant countrv. the contributionof labor-intensiveindustries is small. By the end of 7977, labor-intensiveindustries contributed only 33.9%of the total output of the manufacturing sector.Of this small amount, 67Vowas contributed by unskilledlabor industries. The bulk of the output of the manufacturing sectorcamefrom resource-basedindustries. Table 1 also shows that the laborintensive industries, for the period of the'70s and the'80s,were oriented towards the domestic market. This was in line with the import substitution strategyadopted by Indonesiain that period. After the secondoil boom of 1.982,the growth rate of the economy declined

substantiallyfrom7 %-8%to 2Vo-4Vo. As a result, the demand for oil declined and the production of this industry slowed down. Another factor that contributed to the low output of labor-intensiveindustries wai the exchangerate, which until 1983was overvalued. This erodedthe competitiveness of Indonesia'snon-oil cbmmoditiesexports. The overvaluation of the exchangerate during that period was causedby the phenomenonknown as the "Dutch Disease." Distortion of the factor market also discouragedthe development of labor-intensiveindustries. This distortion was mostly causedby monetary policy. To combat inflation, the Indonesiangovernment adoptedinterestceililngs, both for depositsand credit.Foi the latter,

GoBULK.

the governmentgaveinterestsubsidies.The subsidycreatedthe distortion in the maricetsinceit made therelative price of labor to capital higher, a situation which prompted the movement of resourcestowards capital-intensiveindustries. Finally,the low productivity of lndonesianlabor comparedto their counterpartsin other Eastand SoutheastAsian countrieshas discouragedforeign businessmenfrom investing in labor-intensiveindustries in the country. Table 2 showsa significantdifferencein labor productivitv between Indonesiaand othei countries. Labor-intensiveindustrial output and exportshaveincreasedsignificantly sinceI 983.Table 1,however,doesnot give a good picture of the developme*nt of tibor-intensive

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THEASIAN MANAGERJanuary / February i March 1992

industries particularly in terms of industrial output. The table shows that the shareof labor-intensiveindustries went up fuom33.9Voto only 35.2Voover a period of 10 years.This was due to the huge growth of the timber indusky, whose production shareincreasedfrom 4.6Voto l6Vo.lf. we exclude the timber industry, we will find a significant growth in the shareof labor-intensiveindustries during this period, from 35.5%in 1,9Wto 4'l.9Von1988. Table 3 confirms the noteworthy growth of exports of labor-intensive industries. The shareof theseindustries to total manufactured exports rose fuom37Voin 1981to 46.0Vo in 1990. The growth in output and exports of labor-intensiveindustries during the'80s was spurred by both external and intemal factors.A changein

also correctedthe relative prices of labor to capital and encouiagedthe movement of resourcestowards labor-intensiveindustries. An improvement in Indonesianlabor quality was another factor that has contributed to the significant growth of the country's manufacturing sector (World Bank, 1989). Meanwhile, extemal factorsthat contributed to the huge growth of labor-intensivegoods were: r The increasein wagesand the appreciation of the currenciesof Japanand the NICs which prompted foreign investors to relocateportions of their production processesto other countries such as Thailand, Malavsia and Indonesia;and. o The political stability of ASEAN countrieswhich encouragedforeign businessesto invest in the region.

the government'strade strategy to one that is more outwardly oriented, accompaniedby liberalizahon policies,eliminated somedistortions and correctedprice signals in the factor and money markets.The correction of the exchangerate - through devaluation and adoption of a policy allowing it to be more flexible was another important boost to the growth of exports of labor-intensive industries. A study provided by the Institute for Economicand SocialResearch Faculty of Economics of the University of Indonesia (LPEM-FEUI, 1989),using the constantmarket shareapproach,shows that the devaluations of 1983and 1986 boostedexports of manufacfured goods,including thoseof labor-intensive industries: Freeinginterest ratesin June 1983

Table 3. Indonegia: Export of Manufactured Goods, 1980-1990 1980 1981 ResourceIntensive Total % of mfg export

1984

1985

1985 1987

1988

1989

770 56.1

832 45.2

992 48.5

1209 45.8

2036 52,3

2464 45.9

2838 3376 40.4 37.3

68 6

195 20 6

31,6 8 7

738 7 6

791, 13 7

947 22 8

1727 47 15

1,901, 2257 80 57 45 69

241,4 2791 133 100 67 66

287 57.3

249 37.0

323 39.9

486 35.4

826

/65

r054

u.9

38.4

39.9

1303 1794 33.5 33.4

2845 40.5

98 43

716 43 1 77 3 't1.7

157 1,07 74 79 9

296 183 77 29 10

339 227

r25

a1 A

522 287 20 27 13 29

3 1

15 2 74 9 2 3

97 19.4

1,66 24.7

94 n

35 5 8 n n 501

26 5 5

131 1,6.2

1,1,6 8.4

181 9.8

10 2 8

47 6 n 4 1

11 z

n 8 5 n 673

z n

809

Source:CBS,Export, various edition

1990

354 43.8

Fertilizer Paper products Steelproducts Inorganic chemical Rubber tires Total mfe

19&'

257 38.2

Clothing Woven fabrics Yarn Oils and perfumes Glass and glassware Electronics Musical instruments Furniture Footwear Capital Intensive Total 7oof mfg goods

7982

71,9 23.8

Plywood Cement Leather Labor Intensive Total 7oolmlggoods

(US $ Million)

THEASIAN MANAGERJanuary / March 1992 / February

8 ,7.7

39 'l

9 8

596 385

34 JI

15 28 27 22

797 57-t 109 ff

94 66 JJ

70 82

41,62 46.0

1770 7647 727 1,1,32 11,2 109 JL 60 46 80 1,23 208 J+ 41 167 286 220 570

266 377 556 1106 1335 1504 13.0 1,4.3 14.3 20.6 19.0 1.6.6

r93

98 32 45

764 138 277 35 65

r373 1839 2044 2639 3895 5364

7018

9047

20 7 33 2

80 21, 28 35 7

127 33 58 27 11

86 96 736 25 ZJ

r34 r28

t77 t72 27 66

Prospects ofLabor-lntensive Industries of the world LOBALIZATTON ,\ f : economvhasseveraleffects. L t The impact of technological changesis likely to be YI reflectedin the changein the composition of the exports of the NICs. The share of knowledge-based exports will increase at the expense of raw material or labor-intensive based exports. This change will give Indonesia and other countries the ooportunity to take over production o? labor-intensive industries earlier than the normal schedule in the wildgeese-flying pattern. Another effect of the technical revolution is the reduction of the labor content in the production of some goods. As an example, mechatronics has made possible the automation of many aisembly and quality-control processes.As a consequence, the production of electronic components and final goods has become less labor-intensive. Another aspect which has to be paid close attention to is the effect of technological change on the garment industry. This industrv has traditionally been labor-intensive. It is likely to be greatly affected by mechatronics. The production of garments comprises three major stages:pre-assembly, assembly and finishing. Mechatronics has already led to significant changes in pre-assembly activities; e.9., grading, marking and cutting. Computer-aided interactive graphics and numerically controlled cutters have replaced labor in the pre-assembly siage. The use of mechatronics has increased the economies of scale of a firm but has decreased the economies of scale of a product. This implies that even though labor contents are reduced, developing countries may benefit from the increaseof the economies of scale of firms. They may be involved in some parts of the production of final goods, especially in those parts which use labor as a primary input. The result will be an increase in the share of labor-intensive industries. The reallocation process between industrial countries and NICs and NICs and developing countries (especially ASEAN-4 and China) will take a shorter period. A study

by Watanabe and Koiima (1983) using the Revealed Comparative Advantage (RCA) index as an indicator of the pattern of trade, shows that the shifting process from labor-intensive to capital and technology-intensive goods will occur at a per capita income level of around US$1,500. However, a technological breakthrough may change this and shorten the life cycle of a product. As a country with a per capita income equal to $550, Indonesia is likely to remain in the labor-intensive stage for quite some time. This is confirmed in the increasing trend in the RCA index of labor-intinsive industries in Indonesia (seeTable 4). Most of the increase in the production of labor-intensive industries in Indonesia was the result of the change in the pattern of trade towards a horizontal division of Iabor. Table 3 shows that during 1988-1990,exports of labor-inteisive industries involved new products such as footwear, furnituie, electronics, etc. This indicates that even though technological changes may reduce labor content in the production process/ activities of labor-intensive industries in Indonesia may still rise in the future - at least,in fhe medium term - through the shift in world trade patterns. Consistent

"Eventhough laborcontents arereduced, developing countries may benefit from theingeaseof theeconomies of scaleof firms.They maybe involved in somepartsof theproduction offinalgoods."

macroeconomic policies and political stability are important factors that will ensure bright prospects for labor-intensive industries in Indonesia. A human development approach is also important in preparing Indonesia to enter the next stage of industrialization. Perhaps it is more important to pay attention to this second factor since the life cycles of products will become shorter over tirne. Research and development efforts, which are necessary to maintain the comparative advantage of a nation, need strong support from human development. I Sjahrir Currently manaoino director ofthelnstitute lor Economic andFinaicial Hesearch, Jakarta, Dr.Sjahrir waseducated at Universilas Indonesia andHarvard University. Heholdsa Masters Degree in Public Administration from theJohnF.Kennedy School of Public Administration anda Ph,D. in Political Economy andGovernment fromHarvard. Dr. Sjahrir isalsochairman ol Yayasan Padi& Kapas, a foundation concerned withissues related to education andpublic health administration. Mohamad lkhsan graduated Mr.lkhsan fromtheFaculty of Economics, University of lndonesra wnere ne iscurrently a lecturer. Heholdsa masteral degree in Economics fromtheVanderbilt University intheUS.

Table 4. Revealed comparative advantage (RCA) indices for Indonesian manufactured export: 1970-86

--"--r year

-T

Total ' LaborI intensive

1970 1s75 rq80 I q81

0.02 0.02 0.04 0.06

1982 rq83 1983

0.07 0.13 0.13

1984 0.18 le85 0.12

tgso o.zz | i

Resourceintensive

=_Capitalintensive

0.03 0.02 0.10 0.09 0.11 0.22 0.26 0.20

0.02 0.01 0.20 0.49 0.70 1.53 1.61 1.51

0.02 0.02 0.0t 0.02 0.02 0.02 0.07 0.02

0.38 _

3.13

o.1o

Catatan: RCA index, commonly assciated with Balass 0 965), is defined as: Xii / Xwi Xi /Xw where: Xii = country i's exports commodity Xi = country i's total exports Xwj = we.14 ""Oo",s of commodity Xw = world exports Source: Hall-Hill.

THEASIANMANAGER January/ February / March1992

E@ Adapting to survive...

for Managing Leadership Market Global Bylsadore Sharp President andCEO Chairman, FourSeasons Hotels andResorts

N APOLLO7 astronaut once remarked that what struck him most about looking at earth from outer spacewas the fact that he could not seeany national borders. That is how many corporateleaderslook at the world today. They seea global market shaping and have beenjockeying for position through buyouts, mergers and alliances.Asea of Sweden merged with Switzerland's Brown Boveri to becomethe world's largest electricalengineeringfirm; France's Accor acquired America's Motel 6, making it the world's largest hotelier. In every sectorof businessit is the same.There has been more consolidation theselast four years than in the past 50.This is not the empire building of the late conglomerate period; this is the corporateworld reenactingDarwin's theory. Businessis evolving at a speednever seenbefore, and the fittest to survive will be thosewho adapt quickest and best. Businessis becoming a never-ending Olympiad where the best firms of eachcountry compete everywhere every day for the gold of global market share.We are now into the most competitive decadein businesshistory, and a respected businessprofessor,Howard Perlmutter of Wharton, predicts that by the year 2000three to five huge multinationals will dominate almost every businesssector. Undoubtedly the racewill go to the strong, but strength is not what it used to be. Although size is still

important, it is not essential.What is critical is reputation, a global brand name that sellsCocaCola, Hermes ties and Gucci bagsall over the world. Our own brand recognition is still in its early stages,and already it has taken us into Tokyo, Singapore, Paris and Mexico Citv. as well as giving us future opportunities in Berlin, Prague,Bangkok and Jakarta. A global brand name is like a stock.A stock incorporatesits perceived worth in its price, and a top brand incorporatesits customers' perception of value, signifying, for investors,a company's understanding of the new businesscriteria for market strength.Thesenew criteria stem from the most rigorous examinationof North American competitivenessundertaken in severaldecades,the implications of which are not realized fullv even yet. A ClearPurposeandGoal HE FIRSTrequirement of any undertaking is its purpose and its goal. Many large American companiesspent the'50s,'50sand '70sbuilding up conglomeratesthat raised their Fortune500status,only to spend the '80sdivestingand downsizing. Others aimed primarily at profits, causingthe'80s to be labelled "the decadeof greed." The export successof the Japaneseproved that theseare the wrong priorities. Growth and profit do not give us direction, do not guide us in forming strategy and do not build market shareor tum on employees.

1992 THEASIAN MANAGERJanuary / February / March

At Four Seasonsour goal is market leadership;our purposeis satisfying our customers.Like other market leaders,we have found that this goal of being the best energizes our company, and focusing on the customeris the only sure guide for strategy.Profit and growth will follow as long as we give the customer value. Aimingat ZeroDefects ORTH American companies have been learning the hard way that value is not what we think it is; value is what

our customersthink it is. In 1984, Edwin Land, the founder of Polaroid,was reportedas saying that successdependedon coming up with innovative products, then persuading people to buy them. Three years of falling salespersuaded Polaroid to changeits strategy.It now finds out what customerswant and designsits products accordingly. Customershave told us very clearly what they want. Through the products they have beenbuying they have been redefining values as quality in relation to price. Worldclassquality in product and service is what it is all about. By the'70s, quality had become the Achilles heel of most North American companies.During the postwar seller'smarket they had taken it for granted that building in higher quality would raise costs; they made up quality sloganswhile fapanesefirms made quality products.

EIE By the'80s,leadingfirms beganto realize that aiming at zero defects doesnot raise cost - it lowers them - and quality in product became the new Holy Grail. But not until the late'80swas theremajority recognition that servicewas integral to quality. ServiceMakesthe Ditference ECHNOLOGYhas been bringing parity to products.Every airline is physically able to fly the same planes to the same

airports. Every bank, big or small, has accessto automated teller machines.Every hotel can hire comparable designersand software programmers. Around the world, some 30 firms make television sets of comparablequality. In many sectors servicehas becomethe essential difference.

Increasingly, value added means service added. When a customer of Noranda Mines specifies the weight and tolerance required in an alloy, that product is incorporating a large service content. Globalization has outmoded the term "non-service industrv." There are onlv industries with more or less service content. There is now almost total agreement on the need for quality service, but a lot of skepticism about the programs for aihieving it. Many managers who have tried it were looking for quick results. Others still look at quality as a trade-off with costs, so in good times companies push slogans such as "commitment to excellence," then in downturns revert to habits that have worked for them in the past, and the slogan be"comrnitment comes to profit." The truth is, quality service is not a program/ it is a process. At one of

our recent meetings we considered a proposal to manage a hotel already built. The owners had hired the designers we use and copied all our specifications, even down to our preopening brochure. Everything thi:y could see about our r:roduct had been copied, but stili it was not working for them. They had over looked the most important thing: the unseen process, a process that begins with a strategy focused on customer value. Selling service is not like selling a product; demand is managed more through subjective feelings, mainly perceptions and exr:ectations. We set the level of expectation through our advertising messages, our promotion programs and sales promises. If we promise more than we deliver, our service will be perceived as poor. Meet customeri' expectations and they will perceive it

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E@ as good; exceedexpectationsand we are excellent. In our new resorts,for example. we have built in a dozen or so new ideas that we think our resort clients might like. But we do not sell them on more than half a dozen; we let the others be a pleasantsurprise. By underselling and overdelivering we raise the perception of value. The key is customerfocus and our biggest challengeby far is getting that focus down throught the ranks, down through six or so levels of managementto the front line employeeswhose count lesscustomer contactswill decide the global winners. NoRoomfor Error LOBALcompetitionis raising servicestandardsat a faster rate than ever before. In the'60s.when Four Seasonscompeted only in Canada, we had ouite a lot of room for error. In the'7ds and'80s,competingin maior American and British maikets, we had lessroom for error. In the'90s the global market will give us no room for error. Serviceerrors are made in two ways: lack of knowledge or lack of attention. Lack of knowledge is a training problem, easily spotted and oncerecognized,easily rectified. Lack of attention is an employee attitude problem, much more difficult to correct. Employee attitude is a long-standing and long-neglectedchallengein every industry, but especiallyin hospitality, where turnover ranges up to200%o. Somecompaniestry to solve it by rules: "Answer the phone by the third ring," or "Smile, and say,'Have a nice day."'They adopt a standard-product manufacturing approach; they try to drive all the variablesout of the system.But individual needsare, by definition, variable, and any system designed to avoid errors of commissioninevitablybreedserrorsof omission. Standards ol Service E NEED standards, but standards are means, not ends. Employees cannot be customer-driven and ruie-

driven at the sametime, any more than creativeartists can draw by numbers.We cannotattain rising standardswith a static set of rules, and unlesswe keep standardsrising we will fall behind. We have generally claimed that successdepends on a few top problem-solvers.But now, if we want to keep standardsrising in pacewith the global leaders,we need the participation of every employee. Whether we run a servicecompanv or a so-callednon-servicecomiany, continuousincrementalimprovement - added value - dependson the workers closestto the product or the customer,on their information, knowledge, ideas,initiative and commitment.

recentpolls, is respect,appreciation and managerialintegrity. Without integrity we cannot really manage people - we cannot communicate. Edward R. Murrow summed it up when he said,"To be persuasive,we must be believable.To be believable. we must be credible.To be credible we must be truthful." To communicate,in other words, we have to create a climate of trust. A company's climate, or culture, grows out of ethical belief. Ours is basedon the Golden Rule: treat others - and that meanseveryone, including customers,employees, suppliers, partners,shareholdersas you would want to be treated. Our beliefs guide our actions as managersand thoseactions create our culture.

A Changein Management Style Management Integrity SAN ARCHITECTI have found that changing one basicspecificationusually calls for changesin the others.A processis no different. Giving our serversmore responsibility, more authority to make decisions- "empowering" in the jargon - will require a changein conventionalmanagementstyle. Command and control is out; people cannot be ordered to think. They cannot be coercedinto enthusiasm;voluntary commitment requires persuasion.The manageras disciplinarian will have to give way to the manageras mentor, communicator and coach- a leader rather than a commander - someone who createsunitv, not divisiveness,who generatesenergy rather than just directing it. Our employeeattitude problem is really a managementattitude problem. We will have to replaceour concept of labor as a cost to be controlled with the conceptof labor as energy to be liberated. We wil have to break with traditional practicesfor motivating people. How do we at Four Seasons motivateour emplovees?We do not. We hire for attitude - people who are already motivated. Then we treat them the wav we trv to treat our customers.We do our best to give them what they want. And what emploveeswant from management,aicoiair,g to several

MANAGEHJanuary/February/March THEASIAN 1992

RUSTis fundamental to a motivating environment, and trust is basedon management'sintegrity. Managersin an era where companiescompetethrough empowered employeesare going to find that titles will not automaticallv convev authoritv.Authoritv wiil be moie a matter oi earning trust and respect, not only through competence,but by keeping our word and living up to what we say we believe. This is by far the most crucial part of the quality serviceprocess.In his 1990book, Megatrends2000,Naisbitt saysthat two-thirds of corporate employeesin America no longer believe what managementtells them. Employeeshave been conned too often; now they only believe what they see.Four Seasonscould never have won its reputation for customerserviceif "Do as I say" had not been changedto "Do as I do." Every Four Seasonsmanager from the top down acts as a role model. They are expectedto show belief in action by everything they do - the decisionsthey make on quality, their responseto guests' complaints, the respectthey accord to all employees. Respectequateswith fair and equal treatment: fair pay and benefits,prompt action on complaints, full open two-way communications and treating employees

ffi@ with the sameconcernwe expect them to give our customers.We do not practiceclassdistinctionsuchas reseived parking, private dining rooms or excessivepay raisesfor top managementwhile laying off employees.We cannot get togethernessby setting.ourselves apart. HighPerformance Standards E ALSO show resoect for

.... high employees by setting standards for oerfomance: total customei satisfaction

- zeromistakes.We do not believe in "AcceptableQuality Levels."We do not expectperfection but if you want to come closeto a target, you have to aim for a bullseye. And we do not believe that high standardsfrustrate employeeshired for attitude. In our experiencethe opposite is true; performancerisesto meet expectations.By treating people as if they were membersof an elite team, we encouragea higher self-image,and living up to that image lifts performance. Participative managementis not permissivemanagement;relinquishing autocraticcontrol doesnot mean abdicating authority. We cannot field a winning team if everyoneis calling the play. Peopledo not want to be controlled but they want and need firm, clear direction. And if we give it to them, and trust them to carry it out, we get the best kind of control: self-control.The most ethical organizationsare the most disciplined. World competition will likely go on building pressureto lower costs while further expanding the concept of quality, so we will have to have managersbetter versed in the psychodlmamicsof human effort. The quality processthat begins by knowing and satisfying customers will end by putting people - not capital, not technology,but customers and emplovees- at the center of the corporateuniverse, making feelings as significant for managersas facts. All businessis a skein of relationships between people, and the quality processinvolves them in their totality. Quality standardsand principles have to permeatethe whole company: every areafrom R

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and D to marketingand finance.It is not somethingwe can.leaveto Quality Control or Customer Relations. Quality is not something we control;it is somethingwe cause.It is not part of the companyfabric;it is the company fabric,its way of thinking and acting, its incorporated ethic. That is why so many quality programs fail. Quality cannot be imposed on a company with different priorities;that is a misunderstanding of what quality is. The measureof qualityis customer satisfaction.Our scorein customer satisfactiondecideswhere we stand in the ratings for excellence, and that rating is implicit in our

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trademarks or brand names. That is why, in the global contest for market share, quality will count for more than size. Customer satisfaction is our sole guarantee of success, our only entree to the winner's circle in the corporate world Olympiad. As some"It 'to victor goes is not one has said, the spoils,' it is to'who spoils the customer goes the victory."' I of Business Reprintedby permission Oiarterlv,publishedby theWestern BusinesiSthool,TheUniversityof Western Summer Ontario,London,Ontario,Can'ada. '91issue.

/ February / March1992 THEASIAN MANAGERJanuarv

E@ Developing andstrengthening characters...

TheProcess Manager ByProf.Rene T.Domingo SimeDarbyProfessor ofManufacturing Management

I N THEproverbialracetetween I the turtle and the hare, it was not I a triumph of perseveranceover I arrogance.The turtle won be. causehe had a better management philosophy. The agile competitor was result-orientedwhile the sluggish victor was process-oriented. The hare was so sure of winning becauseof his natural swiftnessthat he dismissedwith glee and contempt the challenger'sthreat. He thought that he would reach the finish line first in any way he so desired, thus frittering away time and pandering to all sorts of distractions along the way. The turtle decided that to reach his destination, he had to go in the right direction without stopping while maintaining constant"full speed." It was the selectionand execution of the right processthat determined the final result, and not the possession of ability and confidence. Helpingthe HungryMan E HAVE BEENtold and convinced that to help a hungry man, it is better to teach him how to fish (process)than to give him fish (result). Better yet, why not teach him how to find and earn a living iust in casethe lake dries out or runs -out of fish? When one goesto the temple to learn the martial arts from the master,the novice does not start with sword-wielding lessonsor kicking techniques.For years,he is asked to sweep the floor, clean the

dishes,meditate and pray - activities or processeswhich to the impatient do not seemto have anything to do with the objectiveof subduing one's enemy or defending oneself. The master starts with the process of developing and strengthening one's characterand attitudes - perseverance,humility, concentration, consistency- that are crucial when he starts handling the sword and confronting the enemy.Thosewho are just good at techniquesand smashingbricks never becometrue mastersof the art. If process-orientationis clearly the better approach,why is it that businessin generalis so preoccupied with producing and chasingresults - salestargets,ROIs,bottom lines, quotas,budgets - to the extent of neglectingprocessdevelopment and processimprovement? The result managertells his subordinate:"I don't carehow you do it! I don't even want to hear how you'd do it!" The poor creatureis rewarded if he succeeds,or chastisedif he fails to meet the objective.More often than not, he fails and he and his boss do not know why, becausehe "doesn't want to hear excusesand explanations." Thus the subordinate never grows up/ never learns,and repeatsthe samemistakes.The ultimate victim of this vicious cycle is of coursethe company just like many other management techniques,PERTand StrategicPlanning to name two, the practiceof managing by results or objectives was borrowed by businessfrom the

THEASIAN MANAGERJanuary / February / March 1992

military. But the military situation is totally different from that of business.War is a project that has a beginning and an end; the ultimate goal is victory. There is no time to learn from mistakes;there is no secondchance.You are either the victor or the vanquished.The end justifies the means- any means. In business,however, there is no finish line; if you fail to meet your -end targets,it is not normally the of the world. There is time to reflect. recover,reassess/learn, adjust, improve your aim, catchup and make up for lost time. There are no permanent victors and vanquished in business.You are fighting battles; the name of the game is batting average- or those with fewer mistakeswin.

"A process manager aimsforperfection, andhedoesthisby continuously improving all processes sothat, goes first,nothing wrongand,second, nothing cango wrong."

tfilmrft In war, iust one mistake can mean total and irreversible defeat. In business you can still come out a winner even with a lot of mistakes, so long as the competitor makes more of them. The Coachand the Judge ROCESSmanagement does not aim to make mistakes; it aims to learn from them fast so they are never repeated in the future. A process manager aims for perfection, and he does this by continuously improving all processes so that, first, nothing goes wrong and, second, nothing can go wrong. Mistakes are not anticipated but are forgiven when they do occur as long as one learns from them. The result manager is also after perfection; but he manages by remote control and refuses to check if the process can attain its goals. His main task is to evaluate the process and not to improve it; the only time he changes the process is when results are consistently bad - when it is too late to do anything. The result manager is a judge, a process manager is a coach. The former aims for fairness - reward the good and punish the bad. The latter aims for victory - encourage the good, and heln the bad. Companies managed by results tend to have short memories. What is important is present accomplishments versus targets; past performance, no matter how glorious and how recent, has no bearing-military, on one's present evaluation. In the you can receive honors and medals for gallantry one day, and get hanged for insubordination the following week. This principle is desirable in war, but disastrous in

business. Companies nagged by results find themselves alternating unpredictably between celebration and crisis, between parties and panic. Senior managers and executives who have built the company for decades are fired for non-performance or failure to meet the quarterly or annual targets. Demoralization is officially systematized. Organizational instability is traded off for short-term results, for pleasing and rewarding the few who bring in results.

Decisions andResults ET US LOOK at one very important process - the decisionmaking process - and see the dangers of result-orientedmanagement. The decision tree (Diagram A) below shows that a good decision can bring good and bad results, so does a badly made decision. Note that a decision is theoretically judged by its result; i.e., a good decision is good because it brings in good results. But in practice, we do not know the result of a decision immediately after it is made; it may take some time before we know the consequences. But at the time the decision is made, we can already evaluate how well or badly the decision was made, whetheir it was cautiously or hastily done, whether it was well-informed or ill-informed, whether it was scientifically done or pure guesswork using the flip of the coin or a crystal ball. There are many decision-making processes that aim to help us select the better decision or alternative s beforethe actual results are known. Note that a well-made decision

Diagram A

doesnot guaranteethat one will not commit a mistake,nor does a badly madeone guaranteedisastrous results.So what is the point of improving one's decision-making processwhen the consequences seemto be the same?The difference is that a good decision has a higher chanceof yielding good results than a bad decision;conversely,a bad decision has a higher probability of coming out with bad results than a well-made decision. In effect,by improving our decision-makingprocess,we are improving our chancesof success,but not completely preventing failure. We are just trying to be better decision-makersthan others,committing lessmistakes.Good decisionmakers are still human and imoerfect,but end up as the winnersin the long run. Let us now convert the tree into a grid (Diagram B) and examine the IOUrScenarros. "A" means you worked hard and you deservedthe successfuloutcomes."8" meansyou worked hard, but were not luckv; some external forcebeyondyour cbntrol,the weather perhaps,got in your way. "C" meansyou did not try but got lucky. "D" meansvou did not do anything and you ieserved all the dire consequencesof your actions. Judgingby Results company, I N A RESULT-ORIENTED I people managementand I employees,superiorsand suborI dinates- arejudged according to results,regardlessof the process that generatedthe results. Results are in the form of market share, profit targets,ROI, salesvolume, cost per unit, defectsper million,

Diagram B Good Result

-" Good Decision ==t BadResurt

,rt <\

uuoDecision--=- --------

GoodResult Bad Result

'1992 THEASIAN MANAGERJanuary / February / March

E@ production quota, meeting budgets, etc. Let us seehow result evaluation affectsthe behavior of the person being evaluated. If the situation is "A" or "D" , thereshould be no problem.lf " 4," you get awarded, praised or promoted for the fine results, so you just continue or repeat what you have done in the past- i.e.,good decisions- expecting the samefine resultsto happenagain.If "D," you get scolded,warned, or penalized for the disastrousoutcome, so you changeyour old ways and hopefully improve your decision-making process;do the opposite of what you have done and changeit from "bad decision" to "good decision." The problem occurswith "8" or "C." li"B," after being evaluated poorly for the results, you wrongly conclude that your decision-making processwas at fault, so you just do the opposite - make a bad decision - expectingthe result to be better next time. Of course,in reality, more bad results will occur becauseof this unnecessarychangein process,and you deterioratevery fast. Nobody know why becausenobody cares. lf "C," the company congratulates you for your shining achievements, not knowing nor caring that you

"Byimproving our decision-making process, weare improving our chances of success, butnotcompletely preventing failure. Wearejusttryingto bebetter decision-makers thanothers, less committing mistakes."

Bewere iust luckv and careless. causeofthis pat on the back,you wrongly conclude that what you did in the past, flipped the coin perhaps, was right and accurate- so you repeat the sameritual expectingthe samegood things to happenagain. Chancesare, the next time you flip that coin,the result will be a dis-

aster, and you will get hanged for it. So from hero, you become a villain, because of the result evaluation system. You. vour boss and the companv becohe the losers in the final inaiysis. The Japanesemanagement system is the epitome of process-oriented management, while the Western management system, result-oriented management. The difference in management philosophies is evident in top management decisionmaking, corporate strategy, human resource development and manufacturing systems. ihe difference may also explain excellenceand medioCritv, market dominance and low growih, innovation and stagnation among many fapanese and Western companies respectively. I

BeneT. Domingo Professor Domingo holds Anengineer bytraining, in lndustrial ofScience degree a Bachelor (magna fromthe Engineering cumlaude) anda Master of University ol thePhilippines from inManagement Engineering Science degree Institute Japan. theNagoya oi Technology, istheSimeDarbyProfessor of Professor Domingo lVanufacturing Management andteaches management. business statistics. operations management systems Japanese andinformation at AlM. technology

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have looked to America and other Westerncountriesfor the theories and models necessaryfor modernization ofJapanesebusinessand industry. Many valuable theoriesand modeis were imported into Japan and used here.

Japanese Business:

MythandReality

ByNoritake Kobayashi Former DeanandProfessor Graduate School of Business Administration KeioUniversity

MERICAN"revisionists" contend that the way of thinking and doing businessin Japan is very different from, and so incompatible with, Westernways, thus creating an impediment to the free trade relationship. Many overseasobserverssay that the Japanese way is not only difficult to understand,but is mysterious. Why is it so different and mysterious?It may be partly due to geographicaldistancebetween fapan and other Western countries and partly due to socio-culturalfactors which still exist in an isolated societylike |apan. Holvever, the emotional and psychologicalbarriers that obstruct an earnesteffort to facerealitv mav be even more important. In a-situation where the comparative advantagesand disadvantagesof two competing parties like American and Japanesebusinessare examined, it is easierto say that one is different from the other, and thereby obscurethe real causesof strength and weakness.This seemsto be the casewhen Americans talk about the relative competitivenessof japanese and American businesses,and worry about the generally perceived poor quality and productivity of their own production; or when fapanesequestion the practicality and effectivenessof their tendency to apply Japanese work ethicsand practicesto non-Japanesepeople and environments in their overseas operations.

EndorsingtheMyth Someof the myths of Japanese businessare often endorsedand further expounded by Japanese scholars.It is interesting to note that Japanesescholarsrecognizedthe so-calleddistinctive characteristics of Japanesemanagementonly after they had read about them in articles or books written by foreign writers. Examplesinclude life-time employment and the seniority systemof promotion. Many such writers have beenimpressedby the alleged major differencesthey thought they discoveredwhen they visited Japan.Becausesuch observersrely on first impressions,the differencesare often emphasizedin an exaggeratedway. In an isolated environment in which a homogeneousgroup of 120million people live, conformity is a virtue. It was a fresh experiencefor the to havecertainunique Japanese aspectsof their managementstyle pointed out to them by outside ob. servers. Differencescannot be ignored if outsiders wish to do businessin Japanand deal with the Japaneseeffectively. Yet, I think it is more important for outsiders to find some common factorsbetween their own national heritage and businessculture and those of the |apanese,and to exploit such common factorsto their advantagein their business dealings with the |apanese,either in Japanor elsewhere. The origin of some common factors that may be found between Japaneseand Westernbusinesssystems carrbe traced to the introduction and historical development of Western managementto Japan.Ever sincethe Meiji Restorationand the resulting opening up oflapan to Westerncivilization, the japanese

Adjustmenls But it is important to remember that in the processof importation and absorption,many delicate adjustmentswere made to the managementstyle born in the rational, Western world to adapt it to the Japanesebusiness environment, which was not necessarilybasedon logic and reasoningidentical to that of Westerncountries.Therefore,what has emergedfrom the adoption process/and during the courseof the implementation that followed, might be quite different from that which would be expectedin a Westernbusinesscommunity. These differences,however, can beperfectly justified in terms of the adaptation of a rational system to a lessstrictly rational environment. Last,but not least,is the fact that the so-calleddistinctive characteristicsof the Japanesebusinesssystem have changedin nature and impact as the Japaneseeconomy has developed.For eachone of several developmentalstagesof the ]apaneseeconomy,overseasobservershave emphasizedand attributed to Japanesemanagement different interpretations that derive from focusing on or emphasizing divergent characteristics.As a result, foreign observersbelonging to different generationshave had different perceptionsand interpretations of Japanesemanagement. Therefore,when one talks about the unique characteristicsof |apanesemanagement,he or she must also make referenceto the developmental stageof the Japanese economy to which theseare applicable, e.g.,the conceptand practice of 'Japan Incorporated." Otherwise, unnecessaryconfusion and misunderstanding may follow. T Reprinted by permission of TokyoBusiness Todav,Mav i$90.

THEASIAN MANAGERJanuary / February / March 1992

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The Asian Instituteof Management

3,414 Nominees Viefor 1991 ManagementAwards T and March 1992,ftom the 3,414plus ' H R E ET H O U S A N D F O U R H U N D R E D F O U R T E E N BetweenFebruary nominees, sevenwinnerswill be chosen in eachparticipating nominationshave been receivedfrom six participatingcounMalaysia, the Philippines, t w a r d s P r o g r a m (. A 2 O O % country- Hong Kong,Indonesia, t r i e si n t h e 1 9 9 1 M a n a g e m e n A and Thailand. increasecompared to the 1,006 nom-inationsreceivedfor the Singapore, and Thewinnerswill be announcedin a pressconference 1990 Manag,ementAwards.) feted in a formaldinnerto be held at the ManagementAwards Now in its second year, the ManagementAwards Program, presented by JapanAirlines and organized by World Program's OfficialHotels:The Hong KongHilton, TheJakarta TheShangri-La HotelKualaLumpur,The Hilton International, Executive'sDigest in cooperationwith the Asian Instituteof HotelSinManila, The Shangri-La HotelInter-Continental Management,is the only regional awards program that recoggapore,and The DusitThaniBangkok. nizes companiesfor managementexcellence. Awards will be given in seven categories: Nomineesmay continueto forwardtheircompleteddar . General Management o Marketing Management All AwardsProgramSecretariat. aformsto the Management . FinancialManagement . OperationsManagement . Inforand enteredinto a datasubmittedarecodedfor confidentiality special ly designeddatabase. mation Technology Management . People Development & Management . DevelopmentManagement Only the winnersin eachcategorywill be announced. The nominated companiescome from various industries: agriculturalservices,financing, insurance,real estate,business I services,manufacturing,trading, mining, construction,trans1991 MANAGEMENTAWARDS portation,storageand communication, and even community, social, and oersonalservices. NOMINATION UPDATE The Asian Instituteof Managementtogetherwith the Numberof editorsof World Executive'sDigest will soon begin the Nominations Country processof data evaluation and validation. Final deliberations Hong Kong 254 will be accomplishedunder the aegisof the Chairman of the 758 Indonesia Board of Judges in each country: 736 Malaysia D a v i d K . P .L i Hong Kong : Philippines 875 Indonesia : Drs. RachmatSaleh 378 Singapore : Tan SriCeh lk Cheong Malaysia 413 I nailano Philippines : Sen. Vicente T. Paterno Total 3,414 Lim Hong Keat : Singapore Viroj Phutrakul Thailand I

O F F I C I A L H O T E L S Hong Kong : Hong Kong Hilton Indonesia : J a k a r t aH i l t o n I n t e r n a t i o n a l

Malaysia : S h a n g r i - L aH o t e l K u a l a L u m p u r P h i l i p p i n e s : H o t e l I n t e r - C o n t i n e n t aM l anila

O f f i c i a l A u d i t o r s : S C V / A r t h u r A n d e r s e n ( S e a r c ha n d S e l e c t i o nP r o c e s s )

S i n g a p o r e : S h a n g r i - L aHotel Singapore Thailand : The DusitT ' hani Bangkok AMl29l

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A Matter of Fax ByAnnieE.Pundol

'Contact Point" starts in this issue as a regular column on the various aspects OI DUSINESS

communication. Annie E. Pundol is associateeditor of TheAsinn Manager and has severaf years of experience ls a journalist, a columnist for a women's weekly and a consultant on corporate communications and public reiations. Ms. Pundol is also a senior research associateof AIM involved in the women managers program. - Ed.

HE FACSIMILE machine first gained a toehold in the businessprairie over 15 years ago years agO- as as an rmmensepiece an immense oI Preceof equipment just slightly smaller than a jukebox. >x.Nothwithstanding Nothwithstandine its imposing imoosins and thereforeintimidating - appearance,the fax awed one with the magic of being able to send scribbles,drawings and all imaginable types of writing acrossthe world before one could spell f-a-c-s-i-m-il-e. After a few years- when it had obligingly shrunk in size and cost - the fax machine slowly securedits rightful place in the realm of office essentials.As an electronicmessenger/it made the telex appear unbearably slow, and mailed letters utterly unfashionable. One cannot but notice this gradual change in style of businesscommunication, propelled by a senseof technologicalpower that tears down not only the literal but also the figurative notionsof distance, Fax messagescrisscrossthe oceanseven at the oddest time of day or night. With the resulting speedin interaction, usageof the fax gives the impression of urgency, or at the very least,eagernessto communicate. Couple this speedwith the fax's ability to transmit personal scribbles,and we have executivestaking full liberty of the privilege. Businessmenhave becomecomfortablein sending handwritten notes via fax, a small misdemeanorif the letter were to be mailed. They also seldom hesitate(to the horror of their secretaries!)to scribblemarginal notes on crisp typewritten letters, thus revealing a spirit of candor. Casualness,if not intimacy, becomesthe key message:"There is no real distancebetweenus!" Surely the telex is not anywhere near this. While it allows fairly quick access,the telex hasspawneda lot oi awkwardnesssuchas annoying word amputations - e.g.,"thnks n bstrgds" that really says:"I'd like to thank and wish you best regards,but this messageis costingme a lot already!" As againstthe mailed letter, the fax easily triumphs. In the days of yore, an executivedictated [o his secretarv,who in turn translated her shorthand, typed a draft,maybe a second draft, then filed the carbon copy. Therewas also the small matter of obtaining and licking stamps and seeingto it that the correspondencereachedthe post office in time. But the fax has changed all that. Even with their secretaries'absence,most executivescan simply handwrite notesand operatethe userfriendly fax. The only gauchething perhaps is making senseout of sending the "photocopy" and filing the original.

Over communicating by phone, the fax has the edge of giving the receiver of the message a decent chance to ponder before answering, an opportunity seldom given to the other end of the telephone line. Even confidentiality has ceased to be an argument against the fax. Not a few executives have installed private faxes in the intimacy of their office for "hotJine" or confidential communications. The fax however, is not without defects. Imperfect telephone connections can garble messages, but this can be remedied by resending. Complaints have also been heard about the tendency of the fax paper to fade (Many deal with this smartly by filing a photocopy of the received message.). But this problem is expected to be solved by technical improvements in paper processing. Thanks to the fax, sales networks strewn all over the country, or even around the world, can send and receive information instantaneously in spite of the staff's varied schedules. In the West, some fax machines already have a "broadcast feature" whereby a message can be automatically transmitted to an established routing list. Even with the basic model, however, it is still possible to send out a round-robin communication. Thus, it is now easy for an international team - say, designers based in ]apan, producers in the Philippines and marketing people in the US - to brainstorm over a project without having to meet face to face. A basic document is sent to persons on the routing list. Each of them makes comments or suggestions - usually (sometimes, preferably) in scribbled notes - on the issues at hand, and sends the document to the next person on the routing list until everyone concerned has contributed to the brainstorming and the document reaches the original sender. In spite of time zone differences, this system allows the message to reach everyone concerned during his or her office hours. Many more exciting applications are expected to emerge as further innovations are developed. For instance, Sharp has already introduced a full-color model with photographic quality. The pricey (about USg 23,000) gadget might be a little too extravagant for ordinary businesses, but industries vulnerable to deadlines (such as advertising) are likely to meet the manufacturer's price.The fax indeed has come a long way, shrinking gaps in distance and time. And with continuous breakthroughs, there is no telling yet when it will stop changing how business communication can be accomplished across the world. I

THEASIAN MANAGERJanuary / February / March 1992

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Leaders AnUpdate andManagers: ByProf.Leonardo R.Silos A Force for Change: How Leadership Differs from Management By John P. Kotter NeutYork,TheFreePress,1990 180pages.

John P. Kotter A FORCE FOR

CHANGE How Leadership Dffirs From Management

Prol.Silosis PLDT Professor of Business Management atAlM.

Beginning with this issrrc,The Asian Manager willfeatrre a regrilar book review section. We welcome contributions to this section. Reviews should be on books dealing with managiment styles and philosophies as well as other topics of interest to Asian managers. Articles should not exceed 1,500words, should be typed doublespali and should be sinlto:The Asian Manager, Asian Institirte of Management,123 Paseo?e Roxas, Makati, Metro Manila. The editors reserve the right to edit articles to conformtoThe Asian Manager/s editornl stand-ards.

HE DISTINCTION made by John P. Kotter between management and leadership represents a development that is typical of current Western management

thinking, which may be characterizedas transitional, or perhaps more accurately,on the verge of a paradigm shift. "Tolead" used to be considereda function of management.Henry Mintzberg considered it to be an over-arching role of the manager. Kotter himself who thinks of managing and leading to be two "very distinct" and "complete action systems,"ascribesto the leader functions that managementauthors have generally ascribedto managers,such as motivating and managing change. Even terminologically, the idea that managing and leading are two distinct action systems carrieswith it someproblems of ascription. Who is accountablefor thesetwo action systems?Shall we call him manager?Or shall we call him leader?Or do we invent a third term that combinesthem? Kotter, as we shall see,encountersthis difficulty in his book. But it has becomepopular thesedays to radically differentiate leader and manager.It is effectively an admission that after a century of theorizing about management,there is something wrong with our conceptof management. "In many of our huge corporationswe treat people as commodities," H. RossPerot was quoted after he was ousted from the board of December15, GeneralMotors (Newsweek, 1986)."And peoplecannotbe managed.Inventories can be managed,but people must be led." That apparently was how Perot defined management:managingis managingcommodities. No wonder leadershipis distinguished from management,for who can lead commodities?Leading is leading people. But is that what managementis all about?

/ March 1992 THEASIAN MANAGERJanuary / February

Management Processes andLeadership fFO RETURNto Kotter'sdistinction, management processes include (a) planI I ning and budgeting;(b) organizingand I staffing;(c) controllingand problemsolving. Theseprocessesare intended to produce consistencyand order, "consistent results on key dimensions expectedby customers,stockholders,employees,and other organizational constituencies."They intend to keep a complex organization on time and on budget. "That has been,and still is, its primary function." Leadership,on the other hand, is very different. It produces,not consistencyand order, but movement. "Throughout the ages,individuals who have been seenas leadershave createdchange,sometimesfor the better and sometimesnot," although a page later it is said that the common perception is that changeintroduced by ieadeis is "constructive and adaptive."' Leadershipwithin a complex organization achievesthis function (of creating change) through sub-processes described: (a) Establishingdirection - developing a vision of the future, often the distant future, along with strategiesfor producing the changesneededto achievethat vision. (b) Aligning people - communicating the direction to those whose cooperationmay be neededso as to createcoalitions that understand the vision and that are committed to its achievement. (c) Motivating and inspiring - keeping people moving in the right direction despite major political, bureaucratic,and resourcebarriers to changeby appealing to very basic,but often untapped, human needs,values, and emotions.

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Similarities There are similarities, it is said, between the two functions. Both managersand leaders decide what needsto be done, determine relationshipsof people required for the task, and try to ensurethat the people actually get the job done. "They are both, in this sense, completeaction systems;neither is simply one aspectof the other." Peoplewho think of managementas being only the implementation part of leadershipignore the fact that leadership has its own implementation processes:aligning people to new directions and then inspiring them to make it happen. Similarly, people who think of leadershipas only part of the implementation aspectof management(the motivational part) ignore the direction-setting aspectof leadership." Ditferences They are, nevertheless,"very distinct" processesand functions. Table 1 comparesthe two functions. Table 1. MANAGEMENT FOCUS

LEADERSHIP FOCUS

Planning andBudgeting ' shorter timeframe, few months to fewyears . details . eliminates risks o instrumenlal rationality

Eslablishing Dhection . longer timeframes . bigpicture ' takescalculated risks . values

0rganizing andStaffing AligningPeople . specialization . integration . getting therightperson into ' getting group thewhole ortrained fortherightjob linedupintheright . c0mpliance direction . commitment Controlling and - Solving Problem o focusoncontainment . control . predictability

Motivating andInspiring ' empowerment . expansion . creating occasional surprise thatenergizes people

Table 2. MANAGEMENT is maintenance, rs0rder, istopdown, iscontrol.

LEADERSHIP isentregreneurshiD, ischange andinnovation, is interdeoendence. is motrvation.

Ditference in PrimaryFunction More fundamentally they differ in their primary functions. Managementcan createorderly results that keep something working efficiently.

Leadershipcan produce useful change. Managementby itself never createssignificant useful change.Leadershipby itself never keepsan operation on time and on budget vear after vear. Table 2 iummarizes the differences: "...Tobe successful, organizationsItheir managers?their leaders?lmust not only consistently meet their current commitments to customers,stockholders,employees,and others,they must also identify and adapt to the changingneedsof thesekey constituencies over time. To do so, they [managers?leaders?] must not only plan, budget, organize,staff, control, and problem solve in a competent, systematic,and rational manner so as to achievethe results expectedon a daily basis, they [the managers?the leaders?]also must establish, and re-establish,when necessary,an appropriatedirectionfor the fufure, align people to it, and motivate employeesto create changeeven when painful sacrificesare required." WhoseConceptol Management? But whose conceptor definition of manage. ment is being used? Kotter's "management" has a suspicious resemblancewith Western classicalmanagement theory. There is no mistaking the referenceto the bureaucracyand to POSDCORB, hierarchy, rules, control and the like. This is what authors now refer to as "traditional management" not only becauseit has been handed down from the past but more specifically becauseit haslost iavor as the chahgeresisting,hierarchical,top-down, rules-determined and control-oriented type of management. Suchis the managementthat is distinguished from leadership. But if we look back to the time bureaucracy was itself considereda breakthroughin organizationalinnovation, it was innovation preciselyby going againstthe traditional. But the traditional againstwhich the bureaucracy was pitted was not a purely formal concept.It had a definite content:values in general,and more specifically,kinship values.That was what was being rejected:the personal organization. This dichotomy, it seemsto me, remains at the foundation of Western organization and managementtheories.Apparently, it is assumedin the very conceptof Western (and Kotter's)managementso that Kotter is obliged to separateleadership from it. But the samemay be said of innovation. It hasbecomea very flexible conceptbecause things that passfor innovation can be older than the bureaucracyitself, belonging to the tradition that the bureaucracvwas meant to

THEASIAN MANAGERJanuary / February / March 1992

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replace. What Kotter now presents as "leadership" to be distinguished from "management" has a remarkable resemblance with the kind of management that the Japanese are known for, which emphasizes values (culture), interdependence, motivation. Now, the foundation of the Japanese organization is the family system: kinship values, the kind that the bureaucracy rejected, the kind that was originally called traditional.

A Question ol Premises HE REAL ISSUEis not addressed by differentiating management and leadership. For the real issue is about premises. Kotter's definition of manage-

ment is the result of a persnectivethat views the organizationas a "tning" with a life and purpose all its own,"to be managed "without regard of persons."' It is a definition of managementsharedby Perot. It is in cornparison with such a conceptof management that Kotter is able to differentiate leadership as a distinct action system. But if managing is managing people, it is difficult to seehow it can possibly be without regard of persons.That fact is only slowly coming home and what authors like Kotter are now doing is merely reclaiming what managementreally is, using leadershipas the entry point. On the block is that particular brand of managementthat is the result of objectifying insfrumental rationality that is itself the result of modeling rationality after the perspectiveof the natural sciences. This kind of rationality is at the basisof Kotter's conceptof management.Instead of correcting it, instead of making whole a truncated version of management,Kotter merely complementsit with leadership. Peoplehave becomeimportant as people, interaction with whom is not through manipulative intervention but through communicative action. This shift is due not to any "moralism" but to the discovery of language and hermeneuticsas central to anv theorv of human socio-culturalrealities. However, Westem managementauthors ap parently cannot break away from their own traditional version of the "impersonal" organization,perhapsbecauseassumptions remain unexamined. We may thereforeask whether Kotter is not carrying over the old bureaucraticassumptions into the conceptof leadershipitself, making it as impersonal and instrumental as the managementit is being distinguished from.

/ February / March 1992 THEASIAN MANAGERJanuary

The impersonal management was at least consistent with its assumptions. Kotter's concept of leadership may have a more serious defect of being inconsistent with his assumptions. The human relations movement was accused of the same inconsistency by trying to remedy a structural problem simply by ap"human pending relations." The problem was dropped on the lap of the manager to try to have regard for people in an organization that was without regard for persons. That responsibility is now being transferred to the "leader." The Changeof Perspective I T WAS THISobfectifying instrumental I rationality that was polarized against tradiI tion, the kind of rationality that logically I led, among others, Herbert Simon to consider ethics and values to be outside the nale of science,or more recently, Allan Bloom (Tfie Ctosingot'the American Miid) to champion impersonal reason versus values in general and kinship values in particular. If we compare Max Weber's concept of rationality with that of Jurgen Habermai, a dominant iigure in social philosophy today, it is clear what kind of shift is required. The traditional that Max Weber calied irrational and refected, what the experimenters of the famous Hawthorne experiments called nonlogic or non-rational and defended, is now to Habermas "obviously" rational. Rationality is no longer limited to the instrumental but is now made to encompass different domains, including the traditional. The appropriate distinctions have been shifted to anoiher level. Human processes are now differentiated from natural processes, the world of things from the world of people, physical nature from human culture, goaldirected action from communicative action. "communicating" As a result, it distinguishes intervention in human affairs from the manipulative intervention in nature. It is the kind of rationality that has led to the distinction between the human sciences and the natural sciences. Unless, there has been a shift of this kind, the impersonal instrumental perspective continues to be a given in Kotter's concept of "leadership," leadership. Why and how is this this directing of change, this aligning and motivating of people not merely another manipulative intervention of a leadership that "without is regard of persons"? Why is it not just another technique to align the employee Continued on page26.

EvenBlondie hasgoneto work...

Women inthe Workplace ByDean Victoria S.Licuanan Associate DeanforEnterprise andProject Research OMEN in the workplace are here to stay. Even Blondie has gone to work. Blondie, Dagwood's wife - the quintessential wife, for decades a superb cook, inveterate shopper for bargains at Tudbury's, who kissed Dagwood off to work each morning at the door, and took loving care of Dagwood, the children and Daisy the dog - has joined the workforce. She follows in the footsteps of Barbie who went to work long ago (in 1985, after 25 years of parties and dates with Keit). The incident may be

trivial, but it illustrates tne changingroles of women not just in the comics,but all over the world. In SoutheastAsia there has been a steady rise in the rate of women's labor force participation. As of 1986, women comprised anywhere hom34%o to 4-5%of the labor force in Indonesia, Malaysia, the Philippines, Singapore and Thailand. The most dramatic rise in female labor force participation was in Malaysia where onlv 3Voof the labor force were femali in 1960. rising to 34% in 1987. ln both Indonesia and the Philippines, female labor force participation was roughly one-quarter in 1960,rising to close to40% at the end of the 1980s. In Singapore, females as a percentage.of the labor force went from 18% in 7957 to 38V" 30 years later. Only in Thailand was there a slight decline in the percentage of females in the labor force, but with 457oof the labor force

Weaskedseaeralartiststo createtheirown personal interpretations ot'theAsian TtJoman manager.Their artworksappearon these pagestogetherwith the articleson thesubiectot'the Asian womanmanagef.

being female,Thailand still has the highest ratio of working femalesto malesamong the Asean countries. But where have thesewomen gone to work? Women workers are highly concentratedin certain industries. Hardlv anv women work in mining, utiliiies, iransportation and construction. But women make up roughly 457oof the labor force in manufacturing in the five countries. And in services,including trade and restaurant,financial and business servicesas well as community, social and personalservices,women make up anywhere from one-third to over one-half of the workforce. Agriculture is still the largest employer (with the exceptionof Singapore) and women make up roughly 407oof the agricultural labor in Indonesia,Malaysia and Thailand, and 257oin the Philippines. In terms of occupations,the bulk of women workersin Asean countriesother than Singaporeare agricultural workers. Apart from agricultuie,most women are to be found employed as production, clerical and salesworkers. In the Philip pines, Singaporeand Malaysia, only 10%of women were classifiedas professionalor technicalworkers, while in Indonesiaand Thailand, only 4Voof all women were in this category in'1987.

THEASIAN MANAGERJanuary / February / March 1992

The occupation where women are least likely to be found is that of administrative and managerialwork, both as a percentageof total women workers and as a percentageof all workers in that occupation.Only 1% of all women were in this category in Thailand, Malaysia and the Philippines. In Singapore4% of women were so occupied,and less thanl7o in Indonesia.In termsof rnale,/femaleratios, however, there have been major gains for women as administrative workers or managers in the past 30 years.In1957 only 4Vo andS% respectivelyof all administrative and managerial workers in Singaporeand Thailand were women, but by 1987this ratio had risen to over 207o.lnMalaysia lessthan 1% of such workers were women/ rising to 10%in 1987.In the Philippines the percentageof female to all administrative and managerial workers rose from 75%in7957 to 257o30 yearslater. Thesemacro figures only paint the broad picture. Certain industries have becomeknown as "female" occupations,including electronics,garments, nursing, teaching and secretarial;where the labor force, primarily in the lowest skill categories,are made up almost entirely of women. The likelihood is high that these women in the workforce are also mothers.One in every two women in the prime childbearing agesof between 20 and 40 are working in the Philippines and Indonesia.In Thailand, the numbers are even higher, with eight out of every 10 women between 20-40years old in the workforce.In Singapore,S0% of women between 20-24yearsold are working. Although laborforce participation declinesafter that, 507oof all women are stil working at age 40. And therein lies one of the most troubling issuesof this sociodemographic shift. Shouldn't women be at home taking careof the children? Should women be doing certain types of work such as being managers,professionals?Indeed, should women have work careersat all? What is the imoact on men and on the family? Does this demographic changepush men out of jobs and/or out of their traditional place as primary breadwinner,

"Menandwomen arestillsorting out theimplications of thismajor demographic shitt... inthesecrecy of theirownminds."

master of the house,leader of the businessand community? While the demographic change has been visible, and achievedwith little publicity and not much fanfare, men and women are still sorting out the implicationsof this major demographic shift in the privacy of their homes and in the secrecyof their own minds. mavbe even in the unconsciousmind. This article dealswith issuesof concernto women managersand would-be managers,as well as to the people,men and women, who work with or for them, who mentor and ultimatelv. make the decision to promote ihem (This is not to say that issuesconcerninglower level women are not important. The vast number of women work, mostly in lower level positions, simply becausethey have no choiceand the family needsthe extra income.For thesewomen, issuesof childcare and other benefits,and adequate protection from exploitative labor practicesand sexualharassmentare important. And, sincemany of these women are stuck in lowerlevel positions for lack of advancementofportunities, training and professional development are also important. But this would be a separatearticle altogether.). GenderRolesandStereotypes NE VEXINGouestion that comesup (ofien in very subtle, carefully phrased ways, lest one be seenas unprogressiveand possibly a male

THEASIAN MANAGERJanuary 1992 / February / March

chauvinist) is that of whether or not women have a place at work, beyond temporary employment prior to marrying and settling down to raisea family. What is the appropriate role of women in society? Are women "naturally" suited to being chiefly housewives,and by extensionin the workforce to be in nurturing, serving and non-technicalindustries (i.e.serviceindustries like trade, restaurants,financial, personal services,)and occupations (clerical,sales,production workers)? Should female participation in the workplace ideally be only a temporary one, and only in "appropriate" areas?Are women naturally suited to be followers, and thereforenot be leadersand managersin the working world? Two terms are frequently used in discussionsof tooics such as these. One is sex and the other is gender. Differencesascribedto sex refer to those which are biological in nature, the most obvious being the ability to bear children. Gender roles, on the other hand, refer to notions of masculinitv and femininitv and how they affect roles of maiesand femalesin society,including workrelated behavior. The question of whether women should be in the workforce and if so whether they should aspire to be managersis tied to the question of gender roles. Beliefsregarding differencesin socialbehavior and interestsare very strong. Thus women are seenas warm, gentle,caring, more sensitive,more likely to be dependent and in need of protection. Men are seenas high in masculine traits like independence,decisivenessand dominance. And what about the impact of working women on society at large, especiallyon children? Without saying who should do it, there is no denying that the work heretofore done by women - childcare,providing food and emotional comfort, caring for the sick and elderly, caring for the home - is essential. But the question is, is it solely or even mostly the responsibility of women? Does the fact of bearing a child mean that bringing up the child is exclusively the woman's responsibility? There is a very complex relation-

ship between women's paid and unpaid work. By and large, the organization of work at home and in theworkplace has not kept pace with changes in demographics. So, for many women the work day never ends, and they work a double shift, one at work and the other at home.

WhatDoWomen Want Outofa Jobanda Career? HE USUAL definition of a successful career is rising to a top management position, with a commensurately high salary

to go with it. This is usually achievedby a combination of capability, steadylong-term and fulltime commitment and hard work, managerial competenceand a healthy dose of good luck. Being a part of the old-boy network doesn't hurt either. For men, this comesnaturally. After school,the manager-to-be finds employment, and with luck and hard work advancesup the managementladder. Somewhere along the line, he getsmarried and has a family, which is all to the good as it indicatesthat the budding managerin question has settled down. It is assumedthat men will have a careerand a family. Thingsaren't quite so simple for femaleslWhen a'budding woman manager getsmarried and has a baby,it is often assumedthat she will either quit outright, or move to a slower careertrack as she tries to juggle work with family life.

"When a budding woman manager getsmarried and hasa baby,it is oftenassumed that quit shewilleither outright, or moveto a slowercareer track."

Thus, a fairly common career pattern is for women to work intermittently, re-entering the workforce after childbirth or a break of a few years to rear children. Organizational expectations of employees, however, hinge heavily on commitment, on getting the job done at whatever cost. And this does not match women's multiple roles as worker and as homemaker, for, on the other hand, social expectations persist that women will marrv and assume maior responsl DrIlty tor ralslng the family. In terms of careers, intermittent labor force participation has many implications, including lack of job security, employment benefits and pensions, and getting stuck in the slower moving "mommy track." For some, the result is that women are the last hired and the first fired. Whereas for men thereis little question of careercum-family, for women this often means an either/or choice. Furthermore, these trade-offs between career and familv mav be reasonable within marriage, but butside marriage the economic consequences are severe (and more and more find themselves single parents). Whose obligation is it to accommodate these biological and societal expectations of women? Should organizations be more flexible, should promotion criteria be revised? Should women be given a break at work and at home? However, it would be quite unfair to blame this quandary only on society and management inflexibility. As an article inFortune put it, "Many women aren't rising to the top of large corporations because they quit or deliberately leap off the fasf trick. They miss th'eir children, they miss not having had children. A better opportunity comes along. Or they just get tired and want out of the rat race."' It comes down to multiple criteria for success - for some women career success may be defined as

having the flexibility to enable them to respond to family obligations. For other women, success is equated with personal fulfillment fromthe job. These indicators of success are in addition to promotions and salary increases. To confuse matters even more, female priorities change over time. The big question for many women (and also asked by not a few men) is "what ilo women want?" Many surveys indicate that for women, more than men, there is a constant tug-ofwar between promotion/income, personal satisfaction from the lob, and the desire to have and raise a family. Expectations, however, are changing. Many of today's successful women grew up not quite sure that they wanted a career or that they would work for most of their lives. Today, girls as well as boys know that they will have jobs and work for most of their productive years.

Getting Ahead VEN FOR THOSE women who unquestionablv want to be promoted andio rise up the managerial ladder, why don't

promotions come easier?Why are executivesuitesstill by and large a male preserve,despitealmost equal

THEASIAN MANAGERJanuary / February / March 1992

numbers of males and females entering the workforce? Education and technical skills are less and less the problem, and certainly not at the entry levels and early stages of promotion. More and more women are entering technical and business fields and come to the workplace just as academically prepared as the men. No, the answer seems to be that many women handicap themselves with self-defeating behavior at work, albeit unconsciously. Many women easily rise to first line supervisory levels, they are responsible, they work hard; then they get stuck. Why is this? o Women are seen as lacking in leadership and communication skills. They are not aggressive enough. At meetings they offer suggestions rather than make decisions. Women avoid conflict and lack initiative. This is often blamed on early childhood socialization, when girls are trained to be differential, to be nice and to be lady{ike in manner and deportment. o Women fall into the trap of being overly task oriented. Most women feel that hard work alone will get them promoted. Thus, they focus on the task at hand,

and attain mastery of a specificfunction or area,so much so, that they become indispensableand can't be promoted. There is a stereotypeof the female supervisor who feelsobliged to "dot the i's and crossthe t's", evenof their subordinates.Thus many subordinates,male and female,do not want to report to female bosseswho are too nitty-gritty, hands-on and controlling. However, the higher up the managementladder, the greaterthe need to look beyond the task at hand to other functions and areas.There is a need not just to solve problems, but to anticipate them, not just to carry out plans but to set goals and development plans to achievethem. There is a need not to solve problems themselves,but to increasingly delegateresponsibility. r Women have no idea of how power is used in an organization. Many women cling to the belief that hard work and simply doing their own iob well will be rewarded with promotions. They are blind to the organizational environment and the informal svstemsthat operatein the workplace, and the vitai importance of a network of peers and mentors. o Women don't set career goals, careers are seen as a result from circumstance or luck. Some of this can be traced to women's

ambiguity about a career so they trust in luck and fate. On the other hand, there is little doubt that it is hard to get somewhereif you don't know where you wanted to go in the first place.Hence,career planning is an important part of developing women managers. o Women have trouble trying to fit into a male milieu. Many things from perceptions, stereotypes and just plain vicious gossip, to family resoonsibilities - stand in the way of a woman trying to make it in the tvpical large organization.^ How should a womar manager behave? Women often come up against the

THEASIAN / Februarv / March1992 MANAGERJanuarv

"Many women handicap with themselves self-defeating behavior atwork, albeit unconsciously."

"men are aggressiveand decisive, but women are bitchy and pushy" syndrome, where similar behaviors are virtuesin males,but seenas inap propriate in females. Commitment to the iob is another thing that women findthemselves continually having to prove. There is an interesting poem, part of which goes/ "The t'amilypictureis on HIS desk. - Ah, a solid,respectable family man. Thet'amilypictureis on HER desk. - Umm,hert'amilywill comebefore hercareer."' Travel, relocation,long hours, and client entertainmentare all part of the typical top manager'slife. Many women are excluded from theseactivities (or can participate only to a limited extent) due to family commitments. Then there is also the gossip factor - the sight of a man and a woman lunching together still has non-business connotations. Women managers walk a thin line between camaraderie and impropriety. To quote from the same poem: "HE S haaing lunch with the boss. - He's on his way up. SHE'S haoing lunch with the boss. -Thty must behaving an affair." r Finallv. women are often not promotedbecause thev are not in ihe in-crowd. Promotions are judgement calls. When the time comes, will the boss (male) promote a man (with whom he is more comfortable sharing the executive suite anyway), or a woman (and maybe give rise to whispers of " other" considerations)?

Arewomenmanagerg diftsrentltommon - isthelea "leminlne" styleof management? ENDERstereotypessuch as the above,plus the existence,on the other hand, of some women who ate very successfulat their careers,lead to the question of whether there is a "feninine" style of management and whether women manaqers are different from men. There have been manv survevs, oI almost all imaginableviriation on the differences between men and women managers.Testsfor general intelligenceand aptitudeshave found little differencesbetweentoD men and women managers. Femali managers, it seems,have rnore in common with male managers than with housewives or nonw-orking women. Do successfulmale and femalemanagershave essentially the samechaiacteristicsbecausewomen who succeedcopv male stereot,?esto gain acceptance, or becausethereis onlv a narrow band of effectivemanase;ent and leadership characteri;ticswhich are neededwhether the manaqeris male or female? Others focus on perceived differencesin style and come to the conclusionthat oreanizationsare changingand tomorrow's business environment will call for new, flatter, lesshierarchical,more peoplecenteredorganizations,whirewomen and their style of management navean edse. Sally Helgesen,in TheFemoleAdzrdnfa8e, finds that one of the main gender differences is that women structure organizationsas a network or web, rather than as a hierarchy. "A hierarchy focuses on targetini a position, cli;bing the tadde"rand" knocking out competition...A web emphasizesinterrelationships,building up strâ&#x201A;Źngthand kritting loose ends into the fabdc."3Tom Peters agreeswholeheartedly with Helgesen;he finds that women tend to put more emphasison long-term relationships, thev tend to not make distinctionsbetw;tentheir iobsand their lives. Valuesof nurturing and caring lived in one context (lifL) are carried over to the other (business). And these- emphasison relation-

ship, teamwork, value-driven management - are imperative to successin today'sbusinessworld.4 According to yet anotherauthor, "Women have Judy Rosener, demonstrated that usins the command-and-control stylei'f management, a style generally associated with men in large,haditional organizations, is not the only way to succeed." lnsteadwomen emPhasizeencouragingparticipation, consensusbuilding, and enhancing the self-worth of others.Slt mieht be worth noting, however, that m"ostof the women she interviewed were in medium-sizedfi rms experiencing rapid changeand growih, ratherthan in traditional, large-scaleorganizations.

lmplicetions tor llanagels OMEN in the workplace are here to stay. The economic and social chan! ! ges that brought women into the workplaceare too stronq to tum back,even if we wanted to."lf the 40% of women now in the workpLace were to suddenlv call in sick one-day,or worse,quiien masse,the Consequencesare easy to irnagine. On a more serious vein, can management afford to ignore women managelsand their concems and needsif they want to make the best use of their workforce? Many women are obviouslv capableof making substantial cbntributions to management. What are the implica-

THEASIAN MANAGEFJanuary / February / March1992

tions for managers? All of us need to recognize that there is a multiDlicitv of roles and behaviors which ire muallv desirable. Wornen who build their intire lives around domesticity will continue to exist,but alongsidethem are women who build careerswhich they regard as at least eoual to domestic life in importance. A variety of Me pattems exist, rather than one "ideal" role for women. Civen women's multiple roles,corporations need to be moie supportive of farnily needsin order to maxirnize benefits from women in the workforce. The key here is flexibility, openness,a supportive environment and good professional growth opportunities. Manage$ also need to recognize that women want challenges. A common assumDtion is that women quit becausethey want to (or have to) attend to the children, but many highly trained women a.lsoquit becauseof limited career opportunities and discomfort with the culture. They leave becausethey iust don't feel they fit in. Women want more than iust davcare 'want and flexible hours - miny do a career, not iust a job. They want challengeand responsibilitv and will reward companies rnar arrorq rnem rrusoPpomrrury with commitment and topnotch outDut.

All these, of course, gives rise to the question of whether there is a need for a new management paradigm (a much abused and misused word). Is there only one way that organizations function and are managed? Is there only one way in which promotions and rising to the top can be achieved? Must women copy male stereotypes to be promoted? Are women expected to change to adapt to a pre.existing male' oriented milieu without significantly affecting the systern as a whole? Do men also need to change and make accommodations at work and at home to complementwomen's development? We seea continuing challenge to traditional notions about women in the workplace. There is much awarenessof and sympathy for women's concerns, both from an economic (efficiency) point of view, and from the point of view of equity and fairness; but many lingering doubts and misgivings also exist. There are no clear answers, but just thinking about the issues is important. Also, it will help if they are not considered "women's issues"which setthem up as a problem of women, and of nen versus women. What we have discussed are people issues,they are work issues, they are societal and organizational issues.For relationships in the workplace and in the home to work, there must be mutual understanding on all sides,from manager/subordinateto male/female relationships. All parties need to understand eachother'sattitudes, perceptions, needs, feelings and arnbitions. And what about Blondie? Will she succeedin her business?Will sheand Dagwood be happy as her

1992 THEASIAN MAMGER January/F€bruary/Mard

business grows and she eams enough money so shecan buy, say,a new car all by herself? Fortunately Cookieand Alexanderare almost grown. But how will Dagwood reactif shehas to attend a conference out of town? Open discussion of issuesand concerns will help. There are no comfortable answers;but then,whoever said change and progress wou-ld be easy? Go for it, Blondie! ! VlctorlaS. Llcuangn Prolessor Licuanan isAlMs Associate oeanlor Rgsgarch. Enlsn s€andProjscl Sh€is concurently lheprogram diectorol lheWomen projecl, Manaqers inOrganizations a fesearch Asianwomen andtniningprcgEmlorSoulheast execllives conducl€d byAIM!ndorthe sponsoBhip ol lheCanadian Inlefnalional Dev€lopmenl Ag6ncy. 1 "Why WomenStill Don't Hit The Top," JaclynFieman,Iolfne, July30,1990. 2 "lmpressionsFromAn Of6ce",Natasha losefo-witz,1983. 3 Sally Hellesen, Ir? FeflaleAdwnlaRe: WotnA's Wavsol lladerclip, Doublediy. 4 'List€n, Mohvate, Support: lsn't ThatJust Lila A Woman?" Tom PeteE, t{o/&ittg Wornen,September 1990. 'livays 5 Women Lead," Judy Ros€n€r. Hannftl BusinessReuieu, NovemberDecember 1990,

Personal values andaspirations...

Success Strategies: Insights from Women Managers 8y AnnieE.Pundol Senior Research Associate, AIM This alticle is basedon interuieus of womenmanagersfrom Indonesia, Malaysia,thePhiliryines, Singapore , and Thailardunderthe Women ManagersOrganizotionProjectol the AsianIn,titute ol Management, WMO is a multi-Vearresearch and training programsponsoredby the Conodian Intematiotal DevelopmentAgenc! and directedby AssociateDean Victoria S. Licuanan. HEN the Asian woman began to give up cookery for a career, there was no question that she was up against very real odds. While industrialization and economic Dressures readily welcomed the A;ian woman in the world of work, tradition and role expectations kept her other foot out oi the door fori lonq while. Over the years, however, the Asian woman has slowlv proved her mettle, merged into the riainstream of the workforce and entered highpaying positions.Gradually, shehas made her mark in the field of managementof corporations, government agenciesand enterprises. As a woman parliamen-

tarian of Indonesia renarks: "In thesedays,a woman is no longer a koncowingking (companion who staysbehind) of the husband." The enhancement of women's rolr however,does not mean their role ai wife and mother has been oblitelated by their role as income earners.[n effectit hasled to a multiplication of roles,now encompassing both home and career. This multiple role of women carries a modified - though basicallysimilar - concept of feminine attributes like gentleness,modesty and nurturance Theseattributes could well be the premise for the initial acceDtanceof ihe Asian woman in the iob force,albeit basicallyconfinedto the typically nurturing occupationssuch as teaching and nursing. The problem of role expectations - of identifying the feminine role with the nurturing functions in the home - was admittedly more pronouncedseveralyearsago.These expectations often alienated women from high positions of authority, especiallv in areaswhere the sense of poweiwas more centralized. A prominent educator in Thailand recaiis how she was once turned

down for the position of Dtector Generalof Educationsolely on the basisof her gender.Shestill remembers the Prime Ministe/s words: "I know her very well. Sheis an able woman. Shehasa perfectrecord in education.Sheis qiralified...Too bad sheis a woman!" Another high-ranking woman manager in the government of Thailand notes that sometimes women themselves also perpetrate female stereotyping - their self-concepts and consequent behavior being often inlluenced by the beliefs and expectations of people around them.Shesays:"Some women are smart but they do not dare show they are good for fear that their husbandswon't be able to acceDtit and so they keep their abilities sup pressed." The belief that women often reinforce stereotypes in the work environment seemsto have a strong basis. A casein Doint is the shortf but intelesthg exercise commonly used in AIM's women's programs to determinethe participants'concept of the ideal manager.The program participants - all women managers from the Asâ&#x201A;Źan count es - choose

THEASIAN MANAGERJanuary / February / March1992

For some,a deliberateeffort to proiect femininity is important. A woman holding a high position in a ministry in Singapore tries to be lessaggressivewhen her male colleagues are "Realizingwhat around. they think about us, I want to prove to them that we canbe lust as efficientand effâ&#x201A;Źctiveas they are...we neednot behavelike themi we need not talk like them; we need not wear coats like them. We ought to behave like we should be asladies." Given the odds then, how do Asian women managerscope with the challengesof career?The first step, it appea6, is having a self-conceptthat is not confined to the customary attibutes of 10 out of 42 randomly arranged adiectives to describe, first the ideal manaAer,then the attributesofa man. ihen thoseof a woman. lnvariably, in all the programs, ParticiDantsselectedidenticaladiectives ' forihe attributesof the ideal managerand the attributesof a man. A high-ranking woman in the National University of SingaPorenotes that "the Droblems and dilemmas faced by women today are very real. Men h managementpositionscan eet away witi a lot of thinqs and iobodv'will bat an evelash.Men can be aggiessive; but iI i woman is 'too assertive, she will be labeled masculine.' If she is more humane, 'soff or 'ineffecshe may be labeled tive."' Most of the women managers interviewed in the WMO study are onlv too aware of the stereotypes, buiremain undaunted.Insteaathev transLatethese stereotypes into chailenqes.Saysthe executivedirector of one-of Siniapore's largest NGOS, '"Ihe presiuie to be piofessional is stronier. You have to work at it so that rj6opletake vou seriouslyand not iimdtv say,'bh, she'sa nice girl.' Everytirire I attended meetings with men. I was never consciousot sexual diiferences. I considered myself their equal - until I got pregnantl"

To a very large extent, the women managersinterviewed indicated that self-understanding- that is, recognizing one's valuesand acknowledging one'sneedsand aspirations - has contributed much to the realization of their success.For instance a deputy director in a Sovernment agencyin Singaporeentertained a childhood dream oJmaking a significantcontribution to society. "Vvhen I was youn8, I always looked up to great men and women. I did not have any definite careerin mind. But I dreamedof doing great things...that would have a positive impact on people'sIives." fhi. -ai in ionsonancewith the finding of the WMO survey that roughly 607oof successful women managersknew, asearly as their teens.that thev wanted to be some' bodv imDorta;t somedav,clearly im'

ly, it was not usual for them to maP out their own climb up the organizational ladder. For manv of the women interviewed, opportr.rnities Presented themselves, and thâ&#x201A;ŹY saw in these opportunitiesthe fuifillment of their cireer desires.Beingpreparedand able to assumeresponsiblepositions, thev acceptA and tri;d hard to live up to the challenge. But a conscious,deliberatecareerPlan was not a usual element. For instance, the head of the one of the state universities in Indonesia is very nonchalantabout her success:"l don't quite want to be called a careâ&#x201A;Źr woman. To me what I do is a hobby." A high ranking academicianin Singaporealso hints of a note of fatalis-mwith regardsto her career development: "I guess I iust give my best...and think it is God's grace. Somepeople may think that I reached wihere I im todav becauseI singlemhdedly pursuedit. I was dven the position, so I just Put my heart and soul in it." While it could be said that most of th9 women did not deliberately formulate any career plans, it was aPDarentthat thev had stackeduP on qualificationsind experienceprior to the onsetof careeropportunihes. The women are usually highlY educated,many of them having taken advanced studies or professional training outside theii countries.

;fift1fr"#i#J;yHi'ii;ffii tional Dortraitof a housewife.

Planning coreer URIOUSLYhowevel, CAIEEI planning doesnot seemto be always a strong consroeration for women's success. While many of the women consciouslysought ways to lead and manaBetheir organizationseffective-

Fsbruary / Mard1992 MAMGER Januaty/ THEASIAN

tlotfloddng ETWORKINCis an imPortant tool for career successthat Asian women managersuse. I ! This is especially true of women involved in noi-for-profit organizationswhich always rely on funding agencies,donors,members and other supporters to carry out their objectives and Programs. For this reason it becomesimperative for women manaAersto establish linkages that ficilitate the smooth flow of support to their organizations. The same holds true for entrepreneursand corporate womin. who must constantlvbe on the know where opportunities lie for their company, and for themselves Dersonauv. ' But networkins should not be

limited to associationswith other women in the samefield, but should include both men and women who canbe of help or influencelater. The usual sourcesof networking are friends made in school, relaiives, businesscontactsand fellow members in professionalclubsand civic associations. Mentor HE ROLEof the mentor cannot be discountedin many cases. Several women had verv supportive male bossesor s'enior colleagueswho not only provided them issistanceso theycbuld assume more resDonsiblapositions within the orgdnization,but sometimes tried to open new opportunities that would demonstrate the woman's competence.In manv instances,mentorship comes noi from just a single person but from several figures such as the woman's father, husband,brother, or friend . Timemanagoment IME management is everybody's concem, not iust of women managersbut of theil male counterpartsas well. It is quite typical for women managers to be encumbered by the problem of how to managetheir time to be able to attend to so many functions, An example is a prominent Indonesian enhepreneur who serves on the board of directors ofseveral companiesand as officer in a host of large national organizations.Through careful planning she iugglesher time, being e\tra cautiousabout tiving enough for her children, "No matter how successfula woman is in her career, people will always ask, 'How is it with her familv?' And unfortunately, wheneverthere is something wrong with her family, the woman is almost alwavs blamed." Another lndonesianmanaser sticks to the appointments scribbled in her diary wliich she found to be a big help in balancing her time among her many activities."l always try to be on time and keep meâ&#x201A;Źtings to the point. Time is something that we must be able to contlol. Meetings do not need to go on

and on. After the meeting, I either go straight home or attend to other business." Beingable to compartmentalizeone'sconcems is anothertechnique for managingtime. Accbrdint to anotherJakartabasedmanager:"Luckily, I can divide my time into 'compartments' suchthat while making a drink or preparing breakfastfor my husband,I can solvea work-related problem in my mind." Balanclng HomesndCatâ&#x201A;Źer/ GettlngtheHusband's Support AN CAREER and marriagemix? Basedon the WMO

survey,successful

women managers managers in

SoutheastAsia believethat pursuing a careerand having a family at the same time can be difficult but certainly workable. Eighty-onepercentof thosesurveyed were married at one time or anotherand 867oof thosemarried had children. Ninety-one percent of the married women surveyedsaid their husbands were either suDDorhveor very supportive of their career.This jibed well with the interview findings where all women managers who were married said their husbands were highly supportive of their careergrowth. Therewere a few, howevir, whose husbands were unsupportive,aftd someof the women who encounteredmadtal conflictseventuallydivorced.A prominent entrepreneur and civic leaderin Thailand,for example,ac, commodatedher husband'swish for her to leaveher job to raise their children.The coupleeventuallv divorced and shenow recalls,"I stayedhomebut it was againstmy feelings.I was only respeiting his' wish. In the meantime,I kept on looking for opportunities and thinling about what I would like to do." For others,marriageis completely regardedas a baneto careersuccess. A few have chosennot to set married at all, iust like the exeiutive

director of a foundation based in the Philippines: "I feel I could not be free and married at the same time. I want to be in control rnost of the time, if not all of the time. I want to be free to do what I want; if there's going to be any boss,it's going to be me. It would be difficult to find a man who could take me as I am." Someof the womery however, clearly put the interest of their husbands above their own career. One woman parliamentarian from Indonesia believes, "The time for careerwill come...I alwavs put mv husband'scareerbeforejnyihing' else." Many of the wornen decidedtv accedetotheir husbands the tradiiional role of beins the head of the family. An Indoneiian executive, for instance,observesstricdy the Javanese tradition of keeping the household's power basâ&#x201A;Ź in the hands of the male: "Although I work, my husband always wants to be respected as the person who eams the living. He always says You may work and have activitiesoutside the home as long as you like. But give me the Drid;f eaming the livirig."'

jgg2 THEASIAN MAMGER January / Feboary / March

FamilySyslem Extendod NE ASIAN tradition that seemsto work very well for career women in Southeast Asia is the extended family system. Deeply looted in this Practice is the cultural value of filial piety - Asian couplest)?ically shelter their Darentsand even grandpaients. Even in urban areas, where Westem Dracticesare easily assimilated, it is generally taboo not to take care of elders in their old age. Thus, it is usual to share the family abode, not iust with the husband's or wife's parents but also with other relatives 3uch as sisters, brothers, cousins and aunts. The idea is not limited to fiving under the same roof. It is for instance, not uncommon for relatives to cluster in one residential compound or live within the same neighborhood, or at the verv least, in the same district, A orominent Thai woman maniger attributes much of her successto the extended family system which allows her to dedicite herself to Drofessional work without woryinj unduly about her family. Accoiding to her, Thai societyencourages the husband to live in the comDound of the wife's parents. Shenotei, "Living in an extended family sys-

tem, one natulally expects ftiction among family members. We have less freedom, but comPared to living in a nuclear family and leaving our children with the maids, I think our system is much better." The most obvious suPPort, of course, that relatives could give is assistancein taking care of resPonsibilities that would otherwise have to be shouldered by the working woman. There too is the psychologi cal benefit derived from knowing that the household is in capable hands and the children are looked after by people one can trust. Probably of equal importance is that the acceDtabilitv of relatives as surrogate m6thers subdues the pressures of social norms about the woman's farnilv role. Sociew is less likely to frown upon a working woman if shehasadequatesubstitutes at home who are themselves emotionally attached to the fami.ly. DomestlctlelD HE AVAILABILITY of household help is likewise a crucial advantage to Asian working women, which is something their Westem counterparts obviouslv miss.Of thosesuri'eved, four oui of five women have ' household help. Many of the women manmers make deliberate efforts to train their househelp such that most functions are delegated and rninimal supervision is necessaryfor day-today chores.Most women run their households by plannhg what should be done by the servants, by training and trusting them, prettY much the same delegation techniques they use in the office. Pliority Setting NE'Spersonal valuesand aspirations will always

corneinto play !7 when facedwith choices. This is especially true in the way a career woman will set her priorities. Al-

/ Madr1992 / February MAMGER January THEASIAN

though all of the.successfulwomen managers rnterueweo aPPea!comfortable with the priorities they have set for themselves, this does not mean that they do not have trouble pertaining to career-family conflicts. On the whole, it is how the woman manager handles her priorities which seemsto account for success in dealins with home-careerconflicts - ;ith decisiveness,but always temperedwith nexibility. Most of the women manaqers interviewed either singled out one role or identified the most important roles which they are not willing to sacrifice, if push comes to shove. Usually th; is the wife-and-mother role. They have made it a personal policy to put thet family's interest , over career concems grven a cnucar situation when one hasto make a choice. For others,like the executivedirector of a large Singaporean organization, the increasingly demanding workload at the office has made her family clearly secondPriority. She admits: "PersonallvI do not believe in a balancedlife. You are either very strong in your careâ&#x201A;Źr and Put the farnily in second place, or have very strong fami.ly commitments and are less successfulthan you could be in your career. I could never exDectto lead a balanced life and be h;ppy with both." Manv women however do not believein having the priorities stiffly structured. What has proved operable for them is prioritizing accordins to the demands of circumstiirces. That is to say, the woman hasto weigh the urtency of situationsaffectinshome and work and oDt for the alt;rnative that is more important at a particular decisionDoint. Both fa-mily and career develog ment require intense personal commitment. It is inevitable that at one Doint or another, these two life coniems will divide the attentioD time and enerqyof the woman executive. Timely r&ognition of the Problem can help her designcoping mechariismsthatlrotect the growth of he! careet without Preiudicing her family relationshiPs and other personal concerns. I

Young, married, urbanandconfident.,.

A Portrait of theSoutheast Asian Woman Manager TheAsianInstituteof Management , undertheauspices of theCanadianInter rutt ional In ternat ional D eoelopment Agency,fhst embarkedon o research and trainingprogramt'orwomen managers in 1985.Theinitial project in aorpora locusedon womenexccutiaes tions. In 1988,the WomenManagetsin O.ganizations projectues extended to coaeruomenenlr(preneurs and women managers in gouernment and not-t'orprofitorganizations. Thelatterpart of theprojectuas donein collaboration with partnetinstitutesin theregion rutmelV: Institut Pendid.ikan d.anPembinaenMrnajemenin Indonesfui; Unioersity of Malaya in Malaysia; Uniaersityol thePhilippinesandDe Ia Sall( Uniuer5ityin thePhilippines; and. Chulanglongl,,orn Sasin- Gruduateln stituteof Business Administrationand NationalInstituteof D@elopment Ad ministrationin Thailand. This article is basedon prot'ilesand rcporlson lurueysconducted W NM on.l theseparlnerinstitutes. I STHEREa typical woman Asia? ! managerin Southeast I Basedon threesurveys involving I over I,000corporatewomen execuhves, women entrepreneurs and women managersin govemment and not-for-prbfit orglnizations, the answeris a qualified "yes." There appearsto be significant homogeneity amongthe womensurveyed in terms of their characteristics,attitudes,managementpracticesand opinions.The risults however,alsopoint to somedifferences

which seem to be rooted in variancesin culfural valuesand economic environmentsin the five countries. Personality Prolile HE ryPICAL woman manager in SoutheastAsia is young, between 31 to 40 yearsold, a little older if sheis an entrepreneur.Her Singaporean counterpartis likely to be vounger while h6r Indonesiin.o,rttt"-i*. older. Shebelievesin a deity ' ind practicesthe religion most predominant in her countrv. In sevenout of 10"ases,ilre i. married and haschildren. She would have fewer children ifshe is Singaporeanand more ifshe is a Filipino.Shecomesfrom a middleincome family and was rearedin a maior citv. Of the ihree groups (corporate, entrepleneursand noq-profit sector), the women managersin govemment and not-for-profit organizations seemto have higher educations. Ninety-oneperient of these women have at leasta univâ&#x201A;Źrsitv de. gree. The comparable figure for'corporate women is 81%.Women entrepreneurswere not ncessadlv highly educated - for et'"ry otte who finished college, there is anotherwho did not. Experiencesduring her first 18 years centered around the home and the pursuit of education.Her parentswere most influential in instilling the value of hard worl responsibilitvand educationand the

school she attended reinforced these values.Shewas qiven her fair share of domesticchoreswhich, bv the time she was 18,included piaruring, budgetting.anddecision-niaking resDonslDtllues. Her parentswere very supportive ofher itudies and o.,.".rit oi' academic excellence.While she recaUsboth her parentsto be tough disciplinarians,shegrew up confident of their love and affection. Chanceswere sevenout of 10that by age 18,shealready knew what shewanted out of life. In six out of ten cases,she even had the hrre of career or profession clear in her mind. Whatever field shehad her heart in at that time, there existed a very strong desirefor achievement which went beyond being a eood wife and mother. Shetr.rt-tr.Ed thi. vision and it in tum sustainedher dive to completeher studies and further her education. However, for every woman manaqerwho says that sheis now doini what shd wanted to do when shewas 18, thereis another who sayssheis now involved in somethingtotally difrerent.

Thetypical Asian woman manager believes women can perform aswellasmen evenintraditionally male-dominated businesses.

THEASIAN MANAGERJanuary / February / March 1992

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