The Asian Manager, September 1990 Issue

ER

A Publication of theAlumniBelations and Placement Offices andof the Federation of theAsianlnstitute of Management AlumniAssociations

Vol.lll No.3 . September1990

NEW DIMENSIONS IN FINANCIAL SERVICES

All AsiaCapital is more rhan jusr a financing company. And more than just an investment house. All Asia Capiral is borh anJ m,,rc A m u l t i ; d i m e n s i o n a l r o l e w i t h a s i n g l ec o m m i r m e n t t o i t s p u b l i c s : t o p r o v i d e u n e q u a l l e d s e r v i c e .

All AsiaCapital with the able support of its affiliates All AsiaProperties, All Asialnsurance and All AsiaSecurities addressesthe needs of both financing and investment concerns. Integrating into its service portfolio timely and relevant facilities into rhe fields of leasing, consumer financing, investment banking and stockbrokerage as well as into allied services pertinent to insurance and real estate/equity investments. The result is a new synergism in service. A combined capability which is more flexible in meeting various challenges; more single-minded in approach; and more effective in execution.

All AsiaCapital's distinct and sr.rategicposition entrblcs the company to scan the investment horizon more thoroughly. Pinpointing opporrunities with accuracy anc.lreading the business climate with the discipline of in-depth analysis. This orienrarion has ma.le the company one of the ftrstest-growing financial institutions.

All AsiaCapital's new dimension in financial scrvices. Opening opporrunities for you in the fields of,

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Inffoducing

The TELECHARGE

TheFirstTelephone CreditCard

lrts vouhaveyourcallsin theU.S. charjedto youi PLDT numbr When you'rein the U.S.A.- especiallyon businessyou haveto make a lot of calls and pay in dollars.

But here'sgood news from PLDT. Now you can pay for your overseas and domesticlong distancecalls in the U.S. in pesos.How? By chargingthosecallsto your TELECHARGE Card.

With your TELECHARGE Card, all calls you place on the AT&T network in the U.S. are chargedto your PLDT accountandare includedin your monthlyPLDT bill' So, insteadof spendingdollarsfor your callsin the U.S.' you pay in pesosin the Philippines.A big dollar saverfor frequenttravellersto the U.S. Act now! You can apply for the TELECHARGE Card at any Metro Manila PLDT businessoffice or call833-3777. will be glad to Our TELECHARGECardSpecialists answeryour questionsaboutthe TELECHARGECard.

f he felqom mu nicationt Company THE ASIANMANAGERo SEPTEMBER1990 3

EDITORIAL F'romthefulitq...

fhe legcqy of Geiston Z. Ofiigcs I seeyouwalkingtothedyingsun In twilight; Youhaveunclaspedmy hand, Gasty, Whowill guideus in thecomingnigltt?

-Prof. Romulo L. Neri which Gasty would have said, "Every dying sun fo I meansa newdayapproaching."

The death of Gastymustgive us all pause,to deliberate who and what this man really was. Too often, it has not occurredto us that his fife waslived with a singlepurpose, to serve his country, and make more worthwhile the lives of his countrlmen. Gasty is the first

man many of us haveever known personally who gave his life for that purpose.

Assoc. Dean Rafael (Bing) J. Azanzasharedwith us aninstance which demonstratosthe intensity with which Gastvfelt the burdens of hardship an'd heartbreakof thosehe served.

"When my son was ill with leukemia,we took him to the States in 1987.And at a certain point I knew I had to come back. So I calledGastyandhegoton theline and I told him that I'd be back to work on suchandsucha time.And that the treatmentfor my sonhad notworkedandthathe'dprobably die. And then I heardthis crying.

I thought I was crying. I checked myself and it wasn't me, it was Gasty."

Former AIM presidentSixtoK. Roxas- upon learningof Gasty's death early Friday morning August 31 - wrote, "A nation's heroes give their lives in different wa),sso their people might live better. Gastygave his life to his people asmuch asif he had stood onBagumbayanto be shot. He wasvery much the hero in this sense.

And in the wayhe lived anddied - he wasverymucha hero of our time.

"What was it precisely about this man that drew to him peasantleadersand corporatepresidentsalike? He inspiredunqualifiedconfidence.Youtrustedhim.You felt his competence.But in a way that wasdifferent from the trust you placedon anyexpertworth his salt.In the caseof Gasty you alsofelt he would place his competenceunstintinglyat your service.

"He was the supremeprofessionalin that older sense which the word no longer connotes in our commercial society.He was an e)pert whosee:rpertisewasnot a com4 THE ASIANMANAGERo SEPTEMBER1990

modity to be sold. It was a faculty to be used to servehis fellowman. Everyone felt comfortable calling on him to serve the people's cause - farmer, fisherman, peasant leaders,aswell as senator,congressman,cabinet secretary or president.If the work wasworthy he wouldjust do it nothingsaidabouthow he wasto be compensated.

"After his heart attack he wasordered to go easy.But for this man the demandsof the country particularly of its peasantry could not be refused.He would servethem if it killed him.

"In the end, it did. I hope the country will thank him for it.

I know the peoplehe servedwill long rememberhim for it." ightthank Gasty,perhapsit would As we think of howwe night be appropriateto ponder a messagehe first voiced in 1988:"The path to authenticdevelopmentis not yet a well-tral'elledone and 'the book on the developmentof theThird World is still beingwritten.'The nameof this book 'The Democratization of Development.'It is aboutthe strategiesof participation and empowerment.

But most of all, it is about the developmentof the whole human beingand of all humanbeings...

"Even aswe proceed along this difficult path, we are reminded thatwe arenot at peaceandmany of our brothers and sisters continue to pursuethe way of armed revolt.To thoseof themwhohave chosenthe way ofwar, convinced that the way of peacefor justice and freedomis no longer a viable way,we hopethat our responseto the call of.Sollicitudo ReiSocialis will be decisive in persuading them back to the waysof peace. havealreadybeensacrificedto wars.Wars Manythousands that havebeenwagedin the nameof justice, nationhoodand evenpeace.May the path of developmentthat we chart,be calledthe newnameofPeace,a peacebasedonjusticeand built on solidaritywith the poor.And may we,in thenatne of thissolidaity onceagainstend to oneanotherthehand of peace."

Thank you Gasty. I hope we can. And thank you for showingus what Sri Krishna meantwhen he wrote: He isforeverfreewho has broken Out of the egmage of I and mine To be united with theLord of Love.

This is thesupremestate.Attain thou this And passfrom deathto immortality.

_ MAH

Evenasother insurancefirms alsomadetheir returnt guesswhich companyneverevenleft.

Wcrld War II forced many insurance firms to pack up or close down. It wasn't until after the war that they were able to retum and continue their operations in the Philippines.

Today, Insular Life is on its 80th year.

It is the first and largest Filipino life insurance company, with the longest unbroken service record.

It was Insular Life, however, that did not even leave.

In 1987 alone, it paid out 42.5o/oof the total dividends issued by the entire Philippine life insurance industry.

You see,Insular Life stayedon all during the war. They remained open, honoring their commitments faithfully.

Ngayon, kung mismong guerra ay hindi nakapagpahinto sa Insular Life, ano pa kaya?

INSULAR LIFE THE ASSURANCECOM PANY,LTD.

ai*Esll{+,1i.alfi#ltl.F.,,l

lriiriilif*iiiiiiixil,r,irlr iiiill:liriii,i:#i+lliriiliw Somethingpelrnanentin a pasing world.

THE ASIANMANAGERr SEPTEMBER1990 5

Articles

24 Cl|lb tonogerncnt

In flrc lourbr hdwrry byAnitaE. Pundol PeterGarruFormerAIM professor cho enteredgovernmentforewarned of the challengesand potential pidalls he would face.No one, however,prepodictedtheeffectsofcoupattempts, wer shortagesand a devastatingearthquakeon the Philippinesonce-revived tourist industry.

30

CoverStorv

$rcfcglct iol lcnk lmoge EulHlng byProf.Edrardo L. Robefto Competitionin theAsianbankingindustry is heatingupdueto increasingderegulation as economiesdevelopand marketsprosper.As a resulgbanla are placingmoreimportanceonimagebuildingin orderto retainandincrcasenutrket share- andthe attentionof Asia's fickle,but moremonid consumer.Increasingdependence for largeprofitson retail banking hasmadethe race for dominant image in the banking consumer's mindevenhotter.Nedlends a helpinghandtobank imagemanagers byprovidingastrategiccomnunications mapto effectirre imagebuildingbasedon his re.search into the imagestrategiesof Asia'sleadingbanks.

r8

5crcn Dccdly 9rr of Publlrhlng byAshokK Natlt Neverfor the faint hearted,publishing successfully in Asia meansresisting seven- a least* dgndlysins.Thankfully, Ashok provideseifective"prayers" to keepthe demonsat bay.

Editorial

Itc legocy ol Gorton Z Oillgor

llry Ifto lotlon ol c Colllng tonlfcltr ltrcll In thcWorld cf Burlnsrr Orr lllcwpolnr

by ThomosS.fohnson Tom, oneofthe originalexternalfaculty in AIM's Top ManagementProgram and currently presidentof Manufacturer's HanoverCorporation,asserts that a manager'scallinggoesbeyond businessleadership:our moral and spiritual obligationsare also paramount in fulfilling life's mission.

45

Gompodng tenufccrnrlng Prscilccl In lurcpc cnd tourh Korca byBooHo-MoMBM74 Partnersin successfuljoint ventures mustunderstandcontrastsin operating and managingstyle,and Boo Ho providesexamplesof suchcontrastsin the te:rtileand machinetool industries inKorea and Europe.

52

lcdrnlqucl lor hrcrrlculng Top tonogcmcnt byMa. PerlitaG. Tiro Trade secretsto help selectthe right top managementcandidatefor your

THEASIANMANAGER A Publlcallon of th. Alumni F.l.lion3 lnd Pltc.mcnt Ottlc.r rnd lh. F.d.rlllon of lh. Arlrn lnrlllut. ot Manâ‚Źcm.nt Alumni A$ooidlons.

PuUisher Fâ‚ŹlipoB.Alfonso

Editonin-Chiet MichaelA. Hamlin

Editors PiaJesusaT. Arroyo AnitaE. Pundol,SalomeA Flores

DesignEditor

36

Scll Rclhncc, lnfcgrlry, lrcclloncc bySeaetaryOscarM. Orbos Consensus building maybe a messy process,but it is a key step in building the selfreliance,integrityand excellenceof organizations andnations.

Al Ballesca

MarketingDhector DeliaGutierrez

EditorialBurd GastonZ. Ortigas,GabinoA. Mendoza HoracioM. Borromeo,Jr. SonnvC,oloma

AssocrateEditors

40

lndurlrlcl Fclotlonr ln thc Phlllpplnclr Jlcv Dhncndom ln l||c 9Ot byProf.Meliton V. Salazar As threatsto traditional unionism loom larger on the horizon,Philippine unionsare seekingnew strategiesto reflect their evolvingenvironment.

6 THEASIANMANAGERr SEPTEMBER 1990

Copyrlght t99O by Tha Arlan Managcr. All rlEht. r.3.il.d. R.pDduc{bn In any mrnn.r In whola oi pdt In Englbh or olh.r lrngurg.. prohlbltcd. Th. Adrn M.. mg.f lr publlsh.d qud.dy by lh. Alumnl R.latlon .nd Plaomcnl Oftc of lha Arlrn Inailtulc oa Manrgcmant.

Edltorl.l.nd Adv.nl.hg Otlc AlM, IZO P$ro dr Rox|!, Matdl, M.M., Phlllppln..

T.[ (0S2] 87-1G11 fAX: (63-a 8t7-02-a0 PhotogGph! Furc.d by thc AIM Ubfary ftlnl.d by AIM PYlntlng

What thefuturewill brins: from shadowto reality C a s t a s h a r l o uo n t h c w ' a l l .T r v t o t o u c h i t . a n r l a l l y o u l c c l i s t h e u a l l . T h e s h a d o u 'i s a c l a r k .l ' l a tr e p r e s e l t t a t i oon1 ' ar e a l i t l ' . . r e a l i z e c tl .h e l ' a r c l i k e s h a d o w s .B u t t h e y S L r c ha r e o u r c l r c a r t . tUs n necclncttrenrainso. We can ntake our drcams a reality.

I t i s t h i s r c a l i t ) ' \ \ cs c e ka s w e u o r k t o l ' u l f i l lo u r v i s i o n- o f ' a bright tonrorrow f or our children.

So that ourclreamsdo not remain as shadowson the wall.

,.

coRPoRAtoN Se sANM,GUâ‚ŹL

$t$!ffitgp+rsil'i

K A I S A S A P A N G A R A P

N G B A Y A N

1990 7 THEASIANMANAGERo SEPTEMBER

Hittingthemn*..

Slrtlteclies for

BcrnklmcrgeBuilding

byEduardo L. Roberto,Ph.D. Coca-ColaFoundationProfessorof Intemational M arketing I

side from advertisingtheir

A;:il;f*H""tHT;?f,*; theywantto bein themindandheartof the public.Bankinage consistsessentiallyof whatthebankrsin thepublic's mind and heart. To illustrate how bankscommunicatea desiredimage, here is a selectedsamplingof e4pressionsbanksuseto describetheir target images: o The ubiquitousbambooand Perwira Habib Bank. Two of a kind. Strong,resilient,flexible, dependable.Perwira H abib Bank of Malaysia o Your goodbusinessfriend.

8 THE ASIANMANAGERr SEPTEMBER1990

Bank Bumi Daya of Indonesia o Strengthin depth acrossthe world. StandardChatteredin Malaysia o Inlinite beginning.Limitless horizon. Lippo Bank of Indonesia r Where the customeris always ftrst. PhilBartk of thePhiWpines o We care for you whereveryou are.BanglcokBank Ltd. o Courtesyis our business.

Oiental BankBerhadof Malaysia o Your person-to-person service bank. CityTrustof thePhilip. pines Bankimagebuildingistheprocess of gettingthesebank imagesinto the mind and heart of the public. What doesit take to effectivelyimplement thisprocessandcompleteit? If a bank wantsto initiate a bank imageenhan-

cement program, how does it start?

How can it find out what image the public currently has of it? What will the image building program look like?

These are the questions that confront a bank wishing to systematicallybuild or enhance its image.

lhe tlcny Dirnensions of Bernk fnoge

ly," they are imagingthe bank asa person, as an actor. On the other hand, when the complaint is phrasedin ano"this bank is ther way, such as, inaccessible," then the irnaging is as a place, as a location, as a serviceoutlet.

A third object of complaint maYbe "just did that, for example, the bank not care." This is an imagingof the bank as an experience,an occasionofservice staging.

I|tft:1"ljx:jli{rx';{# mind and heart. This definition immediately designatestwo aspectsof bank image. "What is in the mind" brings out a share-of-mind aspect while "what is in the heart" points to a shareof-heart aspect.The first is an impression and therefore an immediate dimension. The second is a reputation and therefore a long-term dimension.

If bank image is an immediate impression as well as an earned reputation, then banks cannot afford to treat bank image buildingas a low-level management concern and responsibility.

Its long-term reputation aspect makes it a strategic issue and demands top management attention. Its immediate impression aspect gives it a tactical angle requiring operational management inputs. This means bank image building must be both a top and bottom management commitment.

A bank characterizesthe impression and reputation it wants the public to have ofitselfin at least three alternative ways.This derives from the service character of the bank. According to servicemarketing literature, serviceas "performance" (e.g., a product offers see Shostack, 1984). In turn, performance may be thought of as having three defining elemenl.s.'Theseare its "actorsr" its "stager" and its "staging."

In bank service as a performance, these elements correspond to its service personnel (the "actors"), its ser"stage"), vice outlets or locations (the its deliveryand experience and service (the "staging").

Each of these elements can define the bank image. Thus, when one hears bank customers complaining and calling their bank a "snob" or "unfriend-

l

1 ExperierGGd. 3 bosed otfribute imcAing

yields longer lerm, mofe enduring imoge effecfiveness. ,,

Considernowthe positiveversionof theseimagings.When the Perwira HabibBankin Malaysiareferredto its targetpublicimpressionand reputa"strongand tion by sayingthat it is resilient,"it waspersonifyingitself.So wasBankBumi of Indonesiawhenit spokeof itself as"your goodbusiness friend." Both werereferringto the "actor" side of their serviceperforOn the otherhand, mancebusiness. whenStandardCharteredclaimedit has "strengthin depth acrossthe world" becauseit is "spanningthe globewith over 2,000branchesin 60 countries,"itwastalkingof thebankas a "stage"for serviceperformance, Lippo Bank Similarlyfor Indonesia's "Inwhenit talkedof its philosophy: finite beginning.Limitlesshorizon."It explainedthat this characterization

"as a aimed to underscorethe fact that Foreign Exchange Bank... we are able to offer even more extensiveservices to our 300,110clients spreadthroughout Indonesia in I32 locations." Both were imaging the bank as a place and a physicalor geographicalsourceofservice. Finally, Philbank of the Philippines in projecting the image that its "where the customer is albank was ways first," Bangkok Bank in promising that "we care for you wherever you are," Malaysia's Oriental Bank Ber"courtesy is our had in assertingthat CityTrust Philippines' and business" "your person-to-perin calling itself son servicebank," were all speakingof the experience side of bank image, the "staging" of their experiencingof the service performance. There was the experienceofbeing first (in Philbank), ofbeing cared for (in Bangkok Bank), of getting courteous service (in Oriental Bank) and ofpersonalized service (in CityTrust).

These three ways of portraying target public impression and reputation constitute three bank imaging strategies.There is a bank-as-a-person imaging strategy, a bank-as-a-place imaging strategy,and a bank-as-an-experience imaging strategy.How does each of these strategieswork and how are they made to work?

lhe Stro_tegy o! lmoging lhe Bonk os o Person 1|onsider the specificcaseof the I - P e r w i r aH a b i b B a n k . I n t h e !w1i1e-up of its imagecampaign in L987entitled,"The New Frontier: theBirth of aProudNewImage,"Per"The objective wira Habib explained, of thiscampaignis to makethecharacwith that of ter of bainboosynonymous PerwiraHabib Bank.This will give us identity.An identity a single-minded w h i c h s a y ss t r e n g t h ,r e s i l i e n c e , fl exibilityand dependability."

The analogywith the bamboostops at the point of taking on this fourcorneredidentity. When it claimedit wasa strong resilient,flexibleanddependablebank,PerwiraHabib Bank wasobviouslytaking on a personal character.Strength,resilience,fle-

The sociologrstGoffmandevelopedtheseconceptssome30 yearsagoand refinedthemin L981in relationto his thesis on "talk.-'The originalworkis in Goffman(1959).The later refinementsare in Goffman(1981).

THE ASIANMANAGERr SEPTEMBER1990 I

xibility and dependabilityare all attributesof a person.

As a sourceof imagebuilding, attributes are classifiedinto different typesaccordingto the kind of "prooP' or "evidence"that their targetaudiencesacceptascrediblefor thebankmakingthe claim.For instance,bankcustomersare convincedthat attributes like strength,resilienceand flexibility arepresentin their bankto the extent thatwhattheyassociate in their minds with theseattributestheyalsopetceive as '.'existing"in their bank.If customersthink of a strongbankasonethat haslargetotal assetsand theyseethis in their bank'spublic balancesheet, thentheimageof strengthis "proven."

Attributes that merelycall upon perceptionto gaincredibilityarewhatthe servicemarketingliteraturerefer to as "perception-basedattributes"(see, e.g.,Zeithaml,1981).

On the other hand,there are attributesthat banksclaim to havebut which people find difficult to believe basedonly on perception.Take,for example,the attributeof "dependability." Peoplewho havenot had dealingswith a particularbankwhenasked if theythink this bank is dependable will often answer,"I reallycan't say.I haven'ttried themyet." This kind of answermeansthat the proof to the individual of dependabilitywill come from and after experiencingthat bank and its service.This is what service marketingcallsan "experience-based attribute."

To banksthinkingof howto effectively launchan imagebuildingprogramthat seeksto positionthe bankasa person, the practicalquestionis which of these attributesis moreeffective.

Perception-based attribute imaging is quick in creatingits targetimpression.This is especiallytrue whenthe " p r o o f " t h a t t h e i m a g ep r o g r a m presentsfor the bank'spossession of the imageattributematcheswhat peopleassociatewiththeattribute.To determineif thereis a match,thebank mustundertakeresearch.In anearlier reportedwork (Roberto, 1987,chapter 5), I gavean exampleof the appropriatekind of researchrequired.

This examplerelatesto a bank which wasseekinga methodto effectively evidenceits imagingas an "accommodating"bank.

To get at what bank customersassociatedwith an accommodating

bank, I resorted to a correlation study.

This was becauseasking customeis directly what they associatedwith an accommodating bank yielded no meaningful results. The"correlation analysis made use of two sets of data.

One set was the customers' rating of their banks on "accommodating." The other set was these customers'rating oftheir banks on such features as: 1) having a large parking area, 2) being in a large, beautiful building,3) having a

acting on this willingness will attain for it the targeted image.

In contrast, experience-basedattribute imaging takes time to attain its target impression with the public. The desired impression comes only after repeated positive experiencesconfirming the bank's possessionof the attribute. Such experiencesneed not be direct but can be ofthe vicarious type.

Recalling our accommodating bank example is instructive.

Thes(a(s(c{(R{tysiss(thc(r(r,s,stablisheda positiverelationship be-

aGonsumer 1 behavior lilerafure suggesls thol for cerlain producl cofegories and siluclions, lhe purchase decision ls not so much c funclion of the product bul more of itt 3ource oullel.

ll s p a c e o u sl o b b y , 4 ) h a v i n g a w e l l dbcorated interior, 5) having many branches, 6) being open in the late afternoons, early evenings,and on S a t u r d a y s o r S u n d a y s ,7 ) h a v i n g uniformed, courteous bank personnel, 8) having carpeted flooring, 9) having mechanized afte r-office and night deposit/withdrawal service facility; and, 10) delivering correct bank statementson time.

The analysiscorrelated the "accommodating" responsesagainsteach of the sets of ratings on the 10 features.

The results showed that "being open i n t h e l a t e a f t e r n o o n s ,e a r l y e v e n ings..." (Feature 6) was the only one that correlated highly with being perceived as an accommodatingbank. So, the perception base of the "accommodating" image is an open-for-businessfeature. If the bank desiring the accommodating image is willing to extend its businesshours or days, then

10 THE ASIANMANAGERe SEPTEMBER1990

tween"accommodating"and "being openinthelateafternoons..."

We concluded from this that the accommodatingattributeis a perceptionbasedattribute. However,a look at how much of the variancein the accommodatingattribute data is explainedby the "beingopen..."variable revealsthat this is no more than32Vo. This meansthat6SVoof the variation in the accommodating attributedatais u n e x p l a i n e d . T h er e s e a r c h r e s pondents'answersto the probe question on why manyof them rated the bank low or were undecidedin their ratingshint at the sourceoffurther explanation.A typicalanswerwas: o "I really can't tell. I haven't had transactionswith that bank." a "f'm not that surehow to rate this bank.I don't know anyone who hastried them."

This suggests that the accommodati n g a t t r i b u t e p a r t a k e so f a n e x p e r i e n c e - b a s e dc h a r a c t e r .I t i s probablymore of an experiencedbasedattribute than perceptionbased.

So which is the more effective strategy?The precedingdiscussion favorsthe experience-based attribute positioningas the more effective strategy.There are at leastthree reasonsfor this.One saysthat to the banks,the long-termenduringdimensionof image,namely,reputation,is the more importantdimension.Experience-based attributeimaging yieldslonger term, more enduring imageeffectiveness.

The Secondreasoncomesfrom the competitivecharacterof thetwo alternativeimagingbases.Competitionwill find it easierto matcha perceptionbasedattribute positioning.Experience-based is moredifficult to match andbecomes evenmoresoasthebank

A TNIuITION Or LENDERSHIP THrBnrurTHNISMNTTD

AHEAD. A CTNTURY Aco Is ImnEED A CExruRy

ffi

PHILIPPINEISTANDS BANKOFTHE A tradition of Ieadership

B a n k o f t h e P h i l l p p i n e I s l a n d s .W h e r e b a n k i n gl e a d e r s h i pm e a n sk n o w i n g t h e market and having the capabilityto deliver t h e f u l l e s t r a n g eo f f i n a n c i a ls e r v i c e s . ' Above all, it's staying at the cutting edge - as the country's first private commercialbank and as the largest private universal bank today. o P49 Billion in consolidatedresources a the widest domestic and international branch network: 263 branchesand offices a first in electronic banking technology: 121 BPI ExpressTellers nationwide, and a unique ExpressPayrnentSystem in maior establishments o a n d n o w . t h e i n n o v a t i v e E X P R E S S N E Tthe largest ATM shared network between BPI and BPI Family Bank o a leader in corporate lending and loan syndications,corporate finance and financial advisory services o leader in agricultural financing, leasingand consumer banking While all thesespeak well of its skills'and strengths, BPI's enduring quality remains hinged on its corporate values.Integrity.

Excellence.Professionalism.And a record of dedicatedserviceto the country unsurpassed by any bank.

I N S U R A N CC E O R P O R A T I O(NN , 4 amxu m D e p o s i Il n s u r a n c feo r E a c hD e p o s r t o r P 4 0 . 0 0 0 1 l \ , 4 E M B EORF T H Ep H l L t p p t N E DEPOStT

1990 11 THEASIANMANAGERr SEPTEMBER

consistentlydeliverson the promise underlyingthe experience-based mage.

A third and final reasonis found in the literature on consumersatisfaction. For example,Parasuraman ef a/.

(1985)showedthat in evaluatingservice quality and thereforein expressing satisfactionor dissatisfactioqconsumersdependmore on experiencebasedrather than perception-based attributes.

Strclegy of lmoging the Bnnk ii o Ploce

Becausemarketdrivenbanksare continuallyconsciousthat they are in the serviceindustryand that service satisfactionis a matterof qualitymore than quantity,thosebankswho position on quantityfind it important to alsospeakof what customerswillfind in the manyserviceoutletstheyoffer.

This is true of both our examples.For instance,Kuala Lumpur'sStandard Charteredwasquick to point out that while theyspanthe globe,theydo so "in depth,"

a(

s aphysicalstructure, thebank I a placeand an outlet for serllis nvice performance. It follows lhe line of that a bank can be positionedin the atfcck is clecrs public minds by talking either about fo induce in its what one can find in sucha placeor about the extentto which this place is audlence the set up in different locations.The fcntcsy or former is imaging the bank as a "quality place."The other positionsit proieclion asa "quantity place." exper:erGG. What do thesealternativestrategies ll ls rl ddry for bank imagingas a placelook and soundlike? Someconcreteexamples sfrclegy will help clarif this. becouseof Bankimagingasa qualityplacefinds its appeol lo one applicationin the CitibankAsian BankingCenter in Singapore.Its adon "ideaa." vertisingexecutionspeaksofwhat one can find in sucha place: ,, o Cometo CitibankAsian Banking Centerin Singapore.Here you'll find personalizedservice no other bank can rival. o Reachingout acrossthe Seven Like havingyour own PerSeas,our advancednetworkof sonalFinancial Officer who computers,satellitecommuniwil help take care of all your cationsand electronicfund financialrequirements. transfersystemslink our brano You caninvesttax-freedepochesworldwideand allowus sits in any major foreign curto talk to eachother. rency...All in the strictestcono Whereverwe operate,this infidence.Or benefitfrom loan stantaneous exchangeof inforand credit facilitiesor foreign mationmeanswe canoffer the exchangetransfersto anypart bestand mostcompleterange of the world. ofbankingand relatedserWith regardto bank imagingas a uces. quantityplace,in my introductionto o Althoughour superiorand this paper,I gavetwo examples.One soundbankingpracticesare was Kuala Lumpur's Standard highlyregardedin financial Chartered'spositioningof its "spanand governmentcircles,we at ning the globe with over 2,000 StandardCharteredhavenot branchesin 60 countries."The other forgottenoneveryimportant - the inwasIndonesia'sLippo Bank'simaging reasonfor our success asa servicesourceto "300,110clients dividualcustomer. spreadthroughoutIndonesiain I32 How effectiveis thisstrategyof bank locations." imagingas a place?Consumerbe12 THE ASIANMANAGERo SEPTEMBER1990

haviorliteraturesuggests that for certain productcategoriesandsituations, the purchasedecisionis not somucha functionof the productbut moreof its sourceoutlet.Two empiricalfindings areof particularrelevanceto thebank imagebuilder.

Onesaysthatthemoretheproductis boughtand consumedon the source outlet'spremises,the more important a determinantof purchasedecision the"place" variablebecomes(Markin et al., L976).Most bank productsand servicespartakeof this product character.They are both purchasedand consumedon the bank'spremises.

The secondfinding statesthat the moreintensecompetitiveconditions become,and the lessthe marketperceivesdifferencesin products and pricing amongthe competitors,the more critical a factor of purchase decisionthe "place"variablebecomes (Kotler, 1974). Facedwith increasing deregulation,intensifyingcompetition,andnon-patentprotectionofnew bank product developmentand introduction,banksare almostan exactfit for this secondproposition.

Strotecry of lmcrrina the Bank ii an Expdirie-nce anksperform services.CusIl experiencethis service lltomers t performance.When memorable and distinctive,that experience constitutesa potentiallypowerfulimagingbase.

For bankimagingpurposes,it is useful to differentiate amongseveral kinds of serviceperformanceexperiences.[n anotherwork (Roberto, 1987,chapter5), I referredto at least three kinds: 1) the multisensoryfunctional experience,2)an emotionalexperience;and,3) a fantasyor projective experience.Let us look at some examplesto explaineachone.

The SwissBank Corporation(SBC) providesa caseof multi-sensoryfunctional experientialimaging.Listen to the way it talks aboutwhat it stands for: o Why do so manytop investors 'choose SBCastheir private bank?They knowwe're active on everymajor stockexchange.A leadingbankin issuesand acquisitionsworldwide.That we're an Ard{rated bank,with the largestin-

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ternationalnetworkof any Swissbank.That we provide speed,the power,the global resourcesvital to big successful business.

So here,it is the total functionalexperiencefrom the senses- or several ofthem - that countsin the effective imagrngof the bank.

An exampleof emotionalexperiential imagingisfoundin thePhilippines' Land Bankwhenit sayshow it is "The unibankwith a senseof nationhood."

The presentationvariesby the case historiescitedbut remainsconstantin its theme.Take for instancethe case history of Henry Callao,presidentof the United Cotton Growersof Mindanao,Inc. (UCGMI). Land Bank saysof this case: o To Henry Callao,UCGMI is an organizationwhich helps farmershelp themselves.

Valueslike the wiseuseof credit,leadershipskillsand keenbusinesssenseare now beingfusedinto the livesof Mindanao'shardycotton farmers. o With moremembersexpected this year,UCGMI fortifiesits hold asthe vanguardof a people'sprimarylivelihood.Whateverthe odds. o The farmer'scooperative.

Peoplemakeit happen.Land Bank canmakeit work.

The appeal is toward the public's needfor an objector occasionof em'phathyor evencatharsis.When successful,thisstrategygainsfor thebank an enviable"emotionalfranchise."

Finally,bank imagingasa fantasy, projectiveexperienceis illustratedby AmericanExpressBank.It advertises its positioningby talking about its "principlesof how to run a bank for people who create wealth." It describestheseprinciplesasif it were speakingto its managers.For example,here is the wayit startedits enumerationof theseprinciples: o Our missionLsto servetodat's

peopleand mostsuccessful aroundthe their businesses, world, aroundthe clock. o Our clientsarecreatonof wealth.Theyhaveliule need of bankerswho are passive stewards.Instead,theywill seekout the bank that is most antbitiouson its clients'befor half, that is mostsuccess.ltrl its clients,and,aboveall, the Excelin all mostresponsive. thesequalities,andyour office will prosper.

The line of attackis clear:to induce in its audiencethe fantasyor projection experience.It is a risky strategy becauseof its appealto an "ideal." As we know,one counterexampleexperience,direct or indirect,is enough to shatterthe ideal.

Whichis themoreeffectivestrategy?

The accumulatingevidencesuggests that it is the emotionalexperience driven strategywith its promiseof an emotionalfranchise.A functional multi-sensoryexperienceimaging yieldsan attributefranchise.Between the two, the emotionalfranchiseis deeper,more involvingand longer lasting.

Implementinq the Bcnk Imige Buildiig Strotegy

serveyou in a verypersonal way.We call it Person-to-PersonService.

A subsequentsurveyevaluatingthe ad campaigrrsupportingthisbankimagingstrategyindicateda numberof "iisippoi.t"ting" public reactions.2 Table L summarizesthesedata.

The surveydatasaidthat after three years,the imagebuildingad campaign affectedthe publicto thefollowingextent: o 78Voof the publicwereaware that therewassuchan ad as service the person-to-person ad; o L6Voof them claimedthey knewthis wasa CityTrustad (:78VoxZlVo); o 33Voof them saidthat personto-personservicemeantpersonalizedservice(: 78Vox 42Vo); o 60Voof themwere awarethat CityTrusthad a bank imagead campaign;and, o I6Voof them could recall the person-to-person copypoint in thisad campaign(: 60%x 2jIVo).

To the criticsof theimagecampaign, that wasdisappointing.The problem with theseresultswas: 1) in the obtained imageownership/message and,2) iqsimage recalleffectiveness; effectiveness.' comprehension Thosewho wereableto identi$ that serviceclaim the person-to-person wasCityTrust'sandwho were ableto recall this claim as a copy point in wereonly CityTrust'sadvertisement L6Voof the public. However,those who correctlyunderstoodthat the claim meant personalizedservice weremuch more,33Vo.So ownership of the messagewasmuchlessthan its (48Voof comprehenComprehension sionto be exact).The33% message wasnothingto boast comprehension abouteither.It wasmuchlessthan of it; to be exact,itwas42Vo awareness ( : 33Vol78Vo). of awareness This mannerof readingthe survey

l,tfthT*rrllit##;*ld andreputation?Let usconsideranactual caseto answerthiscritical practical question.

Thisis a caseof a strategyfor imaging It a bank asa functionalexperience. involvesCityTrust BankingCorporation in the Philippines.City'frustis an affiliateof Citibank.In the first half of itselfas the1980sr thisbankpositioned ServiceBank." the "Person-to-?erson The imagecampaign'sad copy explainingthis imagingsaid: o Whenyour bankhasPersonto-PersonService,it mustbe CityTrust.At CityTrust,we

2

Thi, .u*"y wascarriedout by ER Associates, Inc. asits own project.I herebygratefullyacknowledgeits donationof the survey'sdatafor this paper.

3 In fact,the CityTrustbank Thi, i. appropriatelyqualifiedto refer to criticsratherthanto CityTrust'smanagement. official then in chargeof its bankmarketingwascarefulto point out duringa meetingwith the authorthat the and nothingmore." The bank,he pointed bank'sobjectiveforlhe campaignwas"primarily focusedat awareness 'out, wasthereforehappywith what the campaignwasableto accomplish.

14 THE ASIANMANAGERo S€PTEMBER1990

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datais a short-termviewofthe results.

It assumesthat imagebuildingcanbe fully accomplishedwithin threeyears or less.Its contrastingview can claim thatwhat remainsfor the campaignto w o r k o n a r e s i m p l yt o g e t : 1 ) t h e remaining22Vo of thepublic(= lggVo - 78%)to becomeawareof thepersonto-personservicemessage, 2) the remaining58Vo(: I00Vo- 42Vo)of thoseawareof the message to correctly understandwhat that message means;and,3) theremaining1TVo (: L00Vo- 48%) of.thosewith a correct understandingof the message to identify it with CityTrust. This is the longer-termviewof imagebuilding.It looksat imagebuildingasa processof accumulation.

This accumulationprocessis not linear.Increasesand gainswill not comeat a constantrate.This is becausethe public is not a homogenous, singlesegment.It hasmanysegments of varyingpredispositiontowardthe b a n k i m a g e s t i m u l u s .E v e n t h e simplified segmentationof the public into the bank customersegmentand noncustomersegmentwill help clari$ this.

Presumably, in the caseof CityTrust, thosewho will becomeimmediatelv awareof its imageads,understand what its message meansand identify that messageas CityTrust'swould be morethe CityTrustcustomersegment than the noncustomersegment.This latter segmentwill be harderto reach andpersuade.

Unfortunately, our survey data wasbasedon too smalla samplebaseto allowthe appropriate, meaningfulsubsampledatareanalysis and comparison.

But surveydatawill not contradictthe logic of differential segmentresponses to a bank image buildingcampaign.

Conclusion

promises. In fact, the bank must call upon all members of the organization he precedingdiscussionalso to actively participate in the imaging highlightsthe idea that bank campaign because everyone in the r imageshouldbe distinguished bank is in touch with someone in the from bankproductimage.Bankimage p u b l i c e v e r y d a y . T h i s i s a c r i t i c a l building is concerned about the total aspect of a bank image building propublic. Bank product image addresses gram. Image building cannot be the only a segment of that public, namely, responsibility of only the advertising the product's target customer segand public relations department. ment. Bank image is about the whole Those working in this department can corporate entity's enduring reputaonly design and launch the comtion. Bank product image is about the munication part of the campaign. competitive and market positioning of Delivery on the campaign promises, one of the bank's offers to its target the image's real and determining test, customers.Bank image takes longer to is not within their capabilities. build and therefore is not or should How can the whole bank organizanot be readily altered. tion be mobilized to carry out the Why does it take so much longer to bank's image building program? It can build bank image?Actually, the apstart with an "internal marketing" pro"longer" propriate term is not only gram. The target market of this probut also "continuing." It takeslonger and gram is every member of the bank orit calls for continuing efforts to build ganization.The product it is sellingis " c o n s c i o u s n e s sa b o u t t h e b a n k ' s an effective bank image. This is becausewhat the bank imaging strategy chosenimage and the commitment to promises must be delivered. The perbehave as promised in the bank image s o n - t o - p e r s o ns e r v i c ep r o m i s e i n statement."The program's marketing CityTrust's imaging strategymust be tools are communication, feedback, delivered. So with Perwira Habib's and follow through. I recall how such a promisesof strength,resilience, program was initiated in a public flexibility and dependability in its utility company which developedand launched a major corporate image strategyof imaging itself as a person; Citibank Asian Banking Center's building program. My research compromiseof a "quality place;" Standard pany did the supporting survey for the program. Those surveyed were both Chartered's promise of a "quantity place with depth;" Swiss Bank the public and company employees.In Corporation'spromise of a functional one of the interviews with company sum u l t i - s e n s o r y e x p e r i e n c e ;L a n d pervisors, this comment was made: Bank's promise of an emotional exo The last time they had a camp e r i e n c e ;a n d A m e r i c a n E x p r e s s paign like this, we didn't even Bank'spromiseof a fantasy,projective know when it started. I was so experlence. embarrassed then. I was comIfthe bank is to deliver on the undering out of our apartment when lying promises of its chosenbank immy neighbor greeted me and aging strategy,it must set up its service said: 'That was a terrific new delivery personnel to make true its TV ad you showed last night.

16 THE ASIANMANAGERr SEPTEMBER1990

But will somethinghappen this time?'I couldn'tanswer becauseI sirnplydidn't know what new TV ad he wastalking about."

When top management of the utility companywere providedthis feedback,it was decidedthat the new imagebuildingprogramwould not be launcheduntil afterthe supportingresearchandtheinitial campaignmaterialswere presentedto at leastall supervisorsand their reactionsobtained.

During the presentation,the audienceof supervisorsfirst responded with surpriceandthenlater expressed appreciationfor theopportunitytobe, "the first to seeall these."A seniorsupervisoraddressingmanagement spokefor his colleaguesat the end of to say, thepresentationanddiscussion "You havejust decidedto trustuswith somethingconfidential.For this we wishto let you knowthat from now on weareall on boardfor thiscampaign."

Later,asthe membersof top management reflectedon the conference, someonesaidwhatprobablycaptured everyone'ssentiment,"Why didn't we think of doingthisbefore?"

T h e r e i s y e t a n o t h e ri m p o r t a n t aspectto noticein the CityTrustcase.

It is a caseaboutthe strategyof imaging a bank as a functionalexperience.

When it talked aboutthis experience, service"exthe "person-to-person perience,it wassomehownecessary to alsorefer to the bank asa person.In the caseof the PerwiraHabib Bank whichweusedto illustratethestrateg5i of imagingthe bank asa person,when its imagingcampaigntalkedaboutthe bank as a person with "strength, resilience,flexibility and dependability,"it alsofoundit necesarytoexplain thesequalitiesascustomerexperienceswhen they cometo buy the bank'sproductsand services.The Citibank Asian BankingCenter case illustratingthe strategyof imaginga bank asa placecould likewisenot do without personifyingthe bank aswell aspicturing it asan experience.Each of thesethreebankimagingstrategies find it usefulto supportits promiseby an appealto the other two. This is an importantrealityof bank imaging.

To saythen, for example,that one is imaginga bank asan experienceis to say that thepimary strategy is to imagethe bank as an experience.

However,this shouldnot preclude reinforcingthe intendedimagingwith A the help of the othertwo strategies. appliesto thestrasimilarrestatement tegyof imagingthe banhas a person, and to the strategyof imagingit asa place.

For a bank that wantsto get into a bank imagebuilding programfor the first time or morescientifically,where and how doesit start?It mustfirst know its currentsituation:how the public regardsit, what theythink and feel aboutit. In other words,it must startby measuringits currentimage.

This is basicallya marketresearch task.

S u c ha t a s k i s a m a j o r r e s e a r c h project. Evenwhen the bank hasa market researchdepartment,it will not makeeconomicsensefor thebank to undertakethe projectby itself.It is goingto be lessexpensiveto commission an outsideprofessionalmarket researchagencyfor the project.What the bank or its marketresearch departmentmustbe carefulaboutis to exercisecontrol over the project's questionnaire andanalysisdesign.For

this,it shouldbeguidedby thepreceding discussionon alternativebankimagingstrategies.

Eduardo L. Roberto Professor Robefto is the CocaCola Foundation Professor of Intemational Marketing at AIM and has witten three bool<s:a market' ingresearch textbook and two social marketingbooks, one of which was co-authored with Dr. Philip Kotler of Northwestem University.

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Prryre younelffor theultimntein deadlyins...

fhe Seven Deedly Sins of Publishing byAshokK Nath Publisher and President WorldExecutive'sD igest

each with more solid and more competent editorial. Yet you and I know that only a handful ofthese survive.

And from that handful fewer even will ever be really successful.The rest become also-rans.

(Thispaper wasrecentlydelivered beforetheAsian Pacific World PublishingCongressin Hong Kong.

- Eds) 4 } ' o o d M o r n i n g m o s tv a l u e d friendsfrom agencies Ilclients, and fellow publishers- perhapsevensomefellow sinners?

I feel very competentto talk about the sevendeadlysinsof publishing mainlybecause I havecommittedmost of themduringmy10yearsin thebusiness.Along the way I haveeveninventeda few newones.

When we started WorldExecutive Digest,lOyearsago - exactly10years ago,our first issuewasin July L980we did prettywell.At leastwe thought soat that time. Our mainfocuswasto build a solid and competenteditorial product - one that wouldreallybe "That'sgreat,"we usefulto managers. thought.What better,we saidto ourselves,than an exhaustivesearch processfor the best managementarticlesfrom worldwidesources?What better,weagreed,thanexpertcondensationsfor the time-strappedexecutive?So for quite a while,we focused our attentionon producingsolid,competenteditorial.

And that ladiesand gentlemen,is:

lhe lirst Deodly 3in Focuslng on produclng solld, compctenl cdllorlol producl day, we woke up - and /lne I lwhat do you think we found?

We found the world full of thousandsof publicationswith solid and competentand experteditorial.

Today,the new informationtechnologymakesit possiblefor thereto be evenmoreandmorenewpublications,

report only to God, let me offer you this Editor's prayer...just soyou can talk to your boss.It goes: o O Lord, let me not be an alsoran. Help me makemy editorialproduct a star - Exciting,Authoritative,Inspiring Commandingand Captivating!"P.S.Lord, maythe force makeme a Madonna.

May the forcebewith you!

If the force is with you and you have alreadycreateda star,then pleasedo not commit:

lhe Second Deodly Sln ilof kecplng close to youf nradcr3 ome yearsago,whenI wasin Boston,the executiveeditor of Inc, magazine had me at his homefor dinner.As it turnedout, my hostandI talkedinto theweehoursof the morning.I think we learneda lot from eachother that night - I perhapsmore than he.I learnedthatlnc. magazinedid not becomea star by chance.I learned thatlnc. magazine But we in publiihingare not alone.

Look around you.The world is filled with solid, competentactorsand actresses but onlya fewbecomestars.

There are so manysingerswith sery bodiesandgoodvoices,but ah...there is onlyoneMadonna.Thereare many s o l i d a n d c o m p e t e n ta n d e x p e r t professorsin anyuniversityofgreat learning, but only a few inspiretheir students.

Waita minute.Iwillbethehrstto say that competenceand expertiseare veryimportant.But if youwantto be a star,try makingyour editorialproduct excitingandauthoritative.Try making surethat it captivatesand commands attention.And muchin the waysad moviesmakeyou cry, try producing editorialthat inspiresand in addition movesyour readers.

To all editors:sinceyoubelieveyou

18 THE ASIANMANAGERr SEPTEMBER1990

TI//E'TriVAN PAffi,2413

continuesto be a star not by chance, but bykeepingin touchwith theirmarket.Inc'seditorspainstakinglytry to understandtheir readers.Theytry to reachout and touch their readers' hearts.I tell you,it wasa humblingexpenence.

Today, the editors of World Executive'sDigestare in constant touchwith their readers.Everymonth, t h e y w r i t e h u n d r e d so f l e t t e r st o readers.The editorshavestarteda letters page,which opensup another avenuefor communicationbetween editor and reader.This pageis alsoa t e s t - a n d w e n e e dt o t e s t t h e s e peoplewhotalk to God - to seeif the readeris responsiveto the editorial.

They have evenconductedfocus groups surveys.The editors call up subscriberswho do not renewtheir subscriptionsto get first-handfeedback.They havealsointroducedFaxPoll, a conceptwe borrowed from a sisterpublicationin the US - Business Month.ln theF axPol/,the editors choosea topic and askreadersto fax Then theywrite back their responses. up theresponses into a story.Our first FaxPollwas, "Do you want to migrate?"Currentlywe are running, "How do you rateyour Boss?"All of thiscreatesthedynamismandthetwoway communicationwhich I think is essentialto developinga star.

Mr. Reader,if your editorsare not keepingin touchwith you,you need this prayer: o Oh Lord, pleaseexplainto editorsthat You - and only You - are omniscient.Please grant editorsthe wisdomto createwaysto stayin touch with me.P.S.Lord, sinceYou do not pay the bills, please giveeditorsthe force to be in touchwith advertisers.

May the force bewith you!

Folks,10yearsago,afterwe planned andexecutedour solidandcompetent editorial,and after we got a decent groupof peopleto buy it, we went out intothewide,cruelworldof sellingadvertising.We were pointedin the direction of AdvertisingAgencies.I wasnaiveenoughto think I did not needanysalesstaff.What for, I said.

TheAgencygets L5Vof.rom me! Tlrc Agencyis knowledgeable.

Surelyfte Agencytvillsellmymagazine.And soI left my fate in the handsof advertising This bringsus to: agencies.

the third Deodly Sin of Publishing Leovlng your fctc In thc hcnds ol odvertlslng -cgencles id I learn fast! First it was,"You need more circulation, kid."

"Yes sir," I said...and went out and got more circulation. Then it was,

dule. But sorry,we just lost the account."

I'm really not trying to knock agencies;perhapsjust tryingto knocksome senseinto them,so theywill consider uspublishersaspartners.After all, the L5Vocomesoff the publisher'srate card. It is a commissionwe pay the agency.

Publishersare not squeeky-clean either.Not by a long shot.We givead thetitle of publisher,without salesmen eventraining them in the basicsof publishing.We "flog" our space, obliviousto clients' and agencies' goals.We havegot to go out andseeas manypeoplein the agencyaspossible, andpresentour caseto them.We have gotto go out andsellideas,andnotjust space.We havegot to involveour partners,both client and agency,in doingnew and better research.We havegot a lot to do. What we should not do is leaveour fate in the handsof advertisingagencies.

With that I offer this prayerfor our friendsin agencies: o Lord, are publishersreallyour partners?If theyare,please giveme the professionalism to fairly evaluatethe editorial product and the readerthey bring me, and the integrityto tell themwhenI cannotput their caseforth to my clients.

P.S.Partnersor not, I need the force to sendinto oblivion publisherswho think everyad shouldbe in their book.

May the forcebewith you! fateinthehandsofAd If leavingyour agenciesis bad, thereis something evenworse:

/\,toREBuNG.

"You need morebalancedcirculation." Then, "You'.vegot to be audited." Next, "Where'syour subscribersurvey?"Followedby"Are you in AsianProfiles(AP) (At that time,I had to ask,"What'sAP?")?' Having Iwent doneall thattheagencywanted, backfor the order.Do you think I got it? No sir! The agencysays,"You know, I really believe in your magazine.But this year,the client madethe major mediachoices,so pleasetry againnextyear."

That'sAgencyA. In AgencyB, the mediadirectorhad listenedto my salesstoryforovertwoyears.He never oncementionedthat the accountexecutivein that particularcasemade t h e m e d i ac h o i c e - n o t h e . A n d AgencyC?Thisonereallyflooredme.

A seniormediapersonlooksmein the eye,andsays,"Your magazinedoesn't fit myclient'sbrief - we'relookingfor the upwardlymobile executive group."

AgencyD doesnot know if AP is a mailed-insurvey,or a surveywritten on the back of a box of corn flakes.

AgencyF takesthe cake.They said, "You are finallyon my mediasche-

20 THE ASIANMANAGERo SEPTEMBER19e0

the ]ourth Deodly Sin teervlng your lolc In the honds ol medlo rcps I n the beginning,when we were I longon visionand shorton sawy,I r wasadvisedto appointgood,solid mediarepsfor adsalesandgood,solid agentsfor circulation.So off I went travellingaroundthe world - on the cheapesteconomyticketsavailableon credit ofcourse.I soughtout these reputedlygreatmediarepsandagents of internationalrenown.And thenmy problemsshouldhavebeensolved...

Yes, you haveguessedit: thingsdid not happenthat wayat all. A wiserbut

muchpoorer man,I found out that mediareps,in oneform or another,all reallysellyou the samesevendeadly lines: o I am reallyexcitedaboutyour publication; o All the importantmediadirectors and ad managersare my neighbors- wegrewup together; o Betweenme and my team,we havea thousandyearsof ad salesexperience; o We haveno real competingtitlesto yours; o We are reallykeenon getting a title from your region,er... whatregiondid you sayyou're from; o We will work hard for your publicationand we will assign someonespecialto mainly take careofyour publication; and, o We wantyou to visit us regularlyto help us sellyour publication.

A quick word in their defense:a mediarep needsto play a balancing act. If he sellswell, he is in some dangerthat you may setup your own officein histerritory.If hedoesnot sell well,he will loseyour title. Now that I know and understandthem better,I havecometo lovethem - the cheeky devils.

There is only one way to deal with mediareps.Assurethem that you

4

rrfrR4ExlRtr READM ABilTff, IT I WROTE

know, understandand appreciate lhe Filrh Deodly Sin their predicament.But do not ever ilor hcvlng thc wholc stop trying to hold them to market orgcnlzotlon bocklng thc share.Insiston callreports.And most pcoplc tc3ponslblc lor important:find awayto assurethemof brlnglng In thc buclnesr your commitmentand yourlonglerm business.

-, o not committhissin!Do not let For you mediarepsout there,isn't I Ieditors and art directorsand thisyour prayer?

7 production managersand aco Lord, sendme a publisher "I countantsand the can't do it," or whosetitle is easyto sell, "it's too late" folks run the company. whosepageratesare high, If your editorsthink their productis who will not askme for call so superior,let themgo out and sell a reportsandwho won't visit me subscriptionat full price, without a anytime hejolly well pleases. premium.Or betteryet,askthemto go P.S.Lord, mustpublishersall sellan ad.If theydo not makethe sale then be SOBs?If theyare, then they will be a lot more cooperapleasegiveme the force to tivewiththesalesstaff.If theydomake choosethe SOBwho'll stick the sale - Hallelujah! Make them with me for the long haul.

VPs for salesand you will both be you!

May the forcebewith richer and happier.

A fewweeksago,I wasbackin BosH o l d i t . I a m n o t s a y i n ga l l t h e Joel ton,havingdinnerwith mybosses, functionsare unimportant. publishing who Novak and Bernie Goldhirsh, But let nobody's important.

They are we things, Among other WED. owns self-importanceeverdetractfrom the talked about the industry-widead salesslumpand how US publishers importanceof bringing in the busi' ness.For all the peoplein organizaarefeelingthe pinch.Bernie,alwaysa tionswho do not reallygo out of their man of wisdom,is not sittingback their salesfolk, I wayto accommodate waitingfor thingsto improve.With prayer: no' offer this salesdown,he felt therewasreally o Oh Lord, makeme rich by point in all of usmanagersandexecu"managing." giving me the ability to makea tivessittingin our offices "Nothing happens,"said Bernie, sale.Until then,giveme the "until a saleis made.I think we should serenityto acceptthat I shouldfocuson helpingcreate all go out and sell (Of course,Bernie 'customers,and not on creathasa logicalplan to go with these ing problems.P.S.Lord. Give remarks,but thatwouldbe a little far a me the force,so that with one field from my topic today.)."I guess look I canforeversilencesales whatI'm tryingto sayis: Be it circulapeoplewho giveme a lot more tion, or specialprojectsor ad sales,its bull than sales. makes things generation that revenue May the forcebewith you! happen.Thisbringsusto:

rdll//Dot Ftrjt

UKLAIrtSER,

THE ASTANMANAGERr SEPTEMBER1990 21

Fellow publishers and sinners, there are two more sins to come - bad ones at that.

the Skrh Decdly Sin let your frrtcr hong on lhc resultt of syndlcoled reseerrch themad! reallydonot understand I nessbywhicha groupof intelligent r publishersorganizethemselves to allowtheir fatesto hangon the results of Asian Profiles or the Asian Businessman's ReadershipSurvey (ABRS). ol

1.5to

15'/'0 2 %

1.3

And what ever happened to the good old fashioned subscriber survey? A subscriber survey - provided it is professionallydone - is, without argument, the window to a title.

This time I offer a prayer for marketingdirectors.At the rateAP isbecoming a Bible, they should pray: o Lord, please give me the force to knock some senseinto these publishers. AP already gives me one set of dimensions to base my decisions on. Give me other dimensions, other data. P.S.Lord, Pleasegive me the force to ZAP the publisher who insults my intelligence by saying:In AP my magazine has the highest coverageof all the left-handed readerswho earn exactlya hundred thousandthree hundred sixty six-dollars and seventy-sixcents a year, with three dogs as pets.

May the force be with you!

Let me go quickly to:

lhe Seventh Deodly Sin Nof understcndlng rhe loglc behlnd setflng c rrrtc bose

L a t e l y ,I h e a r d t h a t t h e r e w e r e thoughtsof conductingAP everytwo yearsor eveneveryyear,insteadof everythreeyears.I havenot heard pardon the expression- that rruch bull in a long time.A more frequent AP only servesthe researchcompany.

Both AP and ABRS are incomplete, havelimitationsandcannottherefore, be used astftemarketingtool. They shouldonly be usedasa marketing tool.

What we shouldbe doingis thinking of undertakingother researchwhich will add to the body of marketing knowledgeavailableto advertisers.

For example,we shouldbe lookingat psychographicresearchto better profileour readers.We shouldbeconductingstudieson brand preferences, brand usageand brand recall.We shouldbe surveyingbuyingmotives and decision-making influences.

I g u e s sI h a v eb e e nt h r o u g ht h e ! route.It stillhurts.In thebeginr ning,I fixedmy ratebase- andI still clearlyrememberit - at 10,000 copies.I basedthison whatI thoughtI could averageduring the first year.A fewyearslater,I fixedmy ratebaseon what salesagentsaroundAsia said theycouldachieve.ThenI hired an ad director,and fixed my rate baseon whathe saidit shouldbe. ThenI went chasingghostsand startedto fix my

rate base on a comparative analysisof other publications. Now I realize that I was, year after year, feeling the proverbial elephant from different sides.

A publication's rate base, including its sub-components - like geographic breakdown, emphasis on subsvs. newsstand,paid vs. controlled, etc. must not be something that just happens. It cannot be ad-sales-driven.It should not be circulation-oriented.It must not be competitor-driv en.lt mu st be the result of astrategic and logical balance between editorial, circulation, ad sales,and subsidiary publishing activities on the one hand, and the realities of the reader, the advertising market,and competitor practices on the other. The rate base decision is a bttsinessdecision involving the whole management team, including the editors. The final decision must be made by the guy at the top.

I have learned that there are crucial underlfng questions concerning the rate base.Questionswhich cannot be resolved in isolation. What's the publication'seditorial niche?Whyand how is this different from that of the other publications, and therefore what's the prospective reader universe?Do advertisers value this segment? How much, and why? What is the logical number of such readers needed to make advertisersinterested, and can we deliver the circulation needed within reasonable cost? What editorial changesare needed to help circulation achieverate baseA vs. rate baseB?What is the optimum ratebase vis-a-vis page rates that can be charged? Throw in: what should the quality of paper and design be, and what should the book size be in rela-

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22 THE ASIANMANAGERo SEPTEMBER1990

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tion to the rate basequantity?What arethe competitors'practices?Where aretheycirculating,and why?Putting theseall together - that is the tough part.

While publishersstrugglewith their rate base,I offer a prayer - for the clients: o Lord, I havehad enoughof Circulationand CPM andAP computerruns.Sendme a publisherwho understands CCP - CostPer Prospectand who tries to understand my business.P.S.Lord, I need the force to measurea publication'strue worth.

May the forcebewith you!

Well, there you haveit. The seven deadlysinsof publishing.One wayof measuringa publication'strue worth is findingout whetheror not it is commining thesedeadlysins.

But thereis somethingmissing.And I cannotleaveyou todaywithout tellingyou all aboutit. Oh yes,ladiesand gentlemen,there is an eighthdeadly sin,the deadliestof the deadly!It is a sin that evenexperiencedpublishers do not realizetheyhavecommitted, not evenafter they havegoneout of It is a sin everybuddingnew business. publisherautomaticallycommits whenhe startsa publication.It is the deadliestsin,becauseyou do not have aninklingthatyouarecommittingit.It is an areaof publishingthat is so obvious,most of us do not evengiveit a secondthought...not even,like I said, after the ax hasfallen...

And what mightthis deadlysinbe?

Prepareyourselffor the ultimatein publishingsins.

AD5ALE5

revenueshavegoneup two-fold from just a fewyearsago.We haveworked on our circulationrevenuestreamand increasedboth subscriptionand news . ur subsidiary s t a n dr e v e n u e sO publishingoperationscontributesubstantiallyto our profits,and it is growsection is ing. Our Books-by-Mail producingsignificantrevenues.A hit with our readersis a uniqueprogram we havelaunched.It is called"Make your Own ManagementBook." We presentyou with a menuof over L00 articles.You selectonly the articles you like - you make your own management book.Latelywe haveinservice. trodu ced a Software-By-Mat7 In eachcase,we areof genuineservice to readersand we are profitable.

And we havenot stoppedthere:Our the Eighrh Deodly 9in editorshaverecentlylaunchedthe WorldExecutive'sDigest"Manageyour rcvcnuc Umlrlng ment AwardsProgram"in cooperarhcomg fo ad rclcs only tion with the Asian Instituteof Management,andwith the sponsorgo you ahead shipof ACER Incorporated.T-h9nrof my competitor, are I I andmakemy day.Put all youreggs gramrecognizescompanieswith outI in vourad salesbasket. solicitsthe instandingmanagement, ofreaders,is ofgreatvalue tesit soundlike an ad-sales-shy volvement andis - youguessed publisher - look! WorldExecutive's to thesponsors, profttableto llorld Executive's it Digest'sad saleshaveneverbeenbetDigest. ter. Basedon the RomeReports,we And howbetterto end the daythan havebeenoneof thetop threegainers, We are with a prayerfor publishers? four yearsin a row. In fact,we are the in thetop the guyswho needit most. onlypublicationconsistently But beforetheprayer:Whatwerethe three.

DeadlySinsagain?

But we havenot neglectedour other o Focusingon producingsolid r e v e n u es t r e a m s .O u r l i s t r e n t a l

and competenteditorial; o Not keepingcloseto your readers; o Iraving your fate in the hands of Advertising Agencies; o Iraving your fate in the hands of the Media Reps; o Not havingyour whole organizationsupporting the people who bring in the business; o Irtting your fate hangon the resultsof syndicatedresearch; o Not understandingthe logic behind setting a rate base;and; o Limitingyour revenuestreams to Ad Salesonly, And so, our final prayer - for Publishers: o Oh Lord, I havesavedthe best prayer for myself.I only ask for the ability to do the impossible:To juggleand balance the conflicting needsof editors,circulationdirectorsand ad salesdirectorson one hand,and of advertisersand agencieson the other,while keepingaheadof competition and creatingmanyrevenue streams.P.S.It's a toughjob, Lord. I think I cando it, but I needtheforceto doitprofitably.

May the forcebewith you!

AshokIC Nath Mn Nath is thepresidentandpublisherof lVorldExccutive'sDigest whichhefounded 10yean ago with Mr.Iack Lim and Professor GabinoA. Mendoza.Bom and educatedinBurmq he leamed publishingthehardway:tial and enor and is now consideredan autltoity on thesubject.

Mr. Nath considerchimselfan and an autocrat, entrepreneur

THE ASIANMANAGERo SEPTEMBER19s0 23

Tlltee (fragedi*)in a row...

Grisis fhclnerqemenl in the Iourist lnduElry byAnnieE. Pundol

w$*lfdi#F.*$fHfi

secretaryof the Department of Tourism (DOT) by Philippine President CorazonC. Aquino in Junelastyear, he realized he wastaking a professional risk: Politics canbe - and often is - a messybusiness in the Philippines.

However it hasnot been the professionalrisk - at leastto this point - with which Garrucho hasbeen primarily occupied;rather, the risk hasbeenphysical,intenseand constant.

1989r Fiesto lslcnds Year ' I t wasthe Philippineround in the I ASEAN round-robintourismblitz I - climaxinginlgg2with Visit ASEAN Year. Bangkokwasstill reeling from its giddy successin L988's Visit ThailandYear - and naturally, hopeswere high in the Philippines.

DOT's "FiestaIslands"promotion connotedfun, food, and friendliness and the tourists - readyfor fun camein record-breakingnumbers.For the first time in years, five-starhotelsbraggedof thehUVo oc*upancyrate;reservationdepartmentswere floodedwith callsfrom individualtravellers,agentsandconventionorganizers.By the end of November,tourist receipts totalledalmostUS$1.5biltion.

But in December,the fiestawas called off.

The bloody coupd'etattrapped thousandsof touristsin thosesame hotels- asvirtualhostages to retreating rebelsoldiers- andseriouslvthreatened the PhilippineGovernment'before their eyesandthoseof theworld.Thecountry promoted worldwide as sweetand 24 THEASIAN MANAGERe SEPTEMBER1990

charming,threw one of its wildest tantrums:andthe tearsarestill falling.

With the count4fs premierbusiness district a surrealwar zoneand the airport closed,Garruchohad little time and little to salvageof DOT's fiesta promotion.Although16 oneseriously expectedthe rebels to harm their hostages,Garruchoknewthat the longer they remained trapped,the more severethe eventualfallout would be.

Metro Manila residentslisteningto DZRH radio the primarysourceof news during the hostilitieswere startled to hear t h a t G a r r u c h oa n d h i s staff were appealingto the rebelsfor permission to escort the tougists from their hotelsto evacuation c e n t e r s .U n d e r s e c retary RafaelAlunan and Garruchoplannedto ride freely into rebel-held M a k a t i o n b u s e sa n d take the touristsback out.

The radio later described the scene as Alunan walked out in the middle of Avala

Avenue,oppositethe Intercontinental Hotel, with a bull horn in his right hand.From the street,with hundredsof tourist buses as a backdropon the Makati stage, Alunan beganhis negotiations.

Second Qucrfer | 99Oc lhe Recoveryand Plunne inlo Dork-ness he successful"rescue"ofthe tourist-hostages from the largely "acoustic" war wasquickly forgotten - but the countrywasnot.The tourism industryrecoveredmore quickly than expected,and the hotels were soonboastinganewofhigh oc-

Painting from the 18th century Lacquer Pavilion at Bangkok's Suar Pakkad Palace.

BANCKOKTWELVE TIMESAWEEKONTHAI. d

30YEARSIN THEPHILIPPINES

TrFd..!J/ fuiAlWlnt{nthlh.

THAI INIERNATIONAI, Country Space I Bldg., Sen. Gil Puyat Avenue, Makati, M.M. Tel. 815-84-31 to 40 o Manib Office: J.P. Laurel Bldg., cor. M.H. del Pilar, Roxas Blvd., Ermita, Manila Tel. 57-56-7'l to 77 o For renations. call Tel. 815-84-21 to 27 . cSA Ccbt Tel. 92122197509 . GSA Cano Tel. 831-2686 to 87

THE ASIAN MANAGER o SEPTEMBER1990 25

cupancyrates.Their hour ofglory, however,wasto be short-lived.

The increasingfrequencyof the brownouts in Makati did not cause overrirling concern at first, but as hotels were askedto reduce the number ofhours they provided air conditioning aswell as the number of units in service- and guestsbegangrumbling - everyonebeganto heat up. When the National PowerCorporation announcedno reliefin sightuntil June, the nation reactedwith outrage.And the touristsand the conventionsbegan cancelingreservationsand continued to stayawaywhenrebel bomb sqres replacedenergyconcernsin June.

as a destinationfor leisureagainsta backdrop of world pressreports of violenceand armalite-totingsoldiers, of accountsof a nation literally wrappedin darknessbecausethereis not enoughenergyto meetnormal demand?Of a countrythat cannot respondto natural disasterand seems to refuseto allowothersto do so?

Few indeedwould - or do - envy Garrucho.Many of the problemsthat affect how the tourism sectorperforms are often far outsidethe control of DOT: ironically,they are the ones that producethe meanestinjury. The fuledcoup d'etatis a prime example, as is the murder of US servicemen early this year and the tragic thlrd Qucrler l99Or earthquakewhich devastatedBaguio fhc lGller Quoke and Northern Luzon. And there are otherfactorsof subtlermagnitude:the notherbeautifulday in the Phignarledtraffic situation,brownouts, I and impolite taxi driverswheezing alongin their rolling coffins. roseearlyasusualto tromp offto school G a r r u c h oa d m i t st h a t t h e 1 9 8 9 and classes,the casinoat the Baguio putschslammedthe brakeson and Hyatt Terracesbeganto fill up in the threw Philippine tourism off track. earlyafternoon,hotelgueststhroughout Yet he is optimisticthat recoverycan the sleepytown sat through seminars - will - be attainedby 191.

"It wasa givenby their employersandevenfundfast trackbeforethecoupating agenciesandworkersin the e:rport tempt. Touristarrivalswerehigh and processingzone sat working at thsir wereacceleratingfurther.

Wearenow placeson the assemblylines. penuadinginvestonthattheyshouldbe The Hyatt did not collapseimmedi- buildingto capacityanyway,becauseas ately - but assomeguestsreturnedto wefound out in 1989,it is so easytofill their roomsto retrievetheir possessions upthecapacityoncethenewsisgeneralafter the double quake - the atrium ly good." groanedand gaveway. Secondslater, Gamrcho'sconcernisto revivetheenthe apartelle cascadeddown in layers thusiasmof foreigninvestorswho plan like a horrific waterfall. Across town, to build or are currentlybuildingnew otherbuildings - hotels,schoolsand hotelsin the metropolisand other tou- had alreadyclaimedhunbusinesses in other partsof rist accommodations dredsof liras andtrappedthousandsof thecountry.Amongthosewhoseinvestvictimsastheycollapcedwrappingtheir mentfeverhascooledareJapanese busteeland concreteappendagesaround sinessmeqdisheartened by theDecemthe fragilehumanbodies. ber L989canpattemptand reportsof Neun of the disastErtravelled quic,k- kidnappingof Japaneseexecutives. oThefapanesetendto movein conly outside the Philippines,but the full extent of the disasterwasnot known cert.In thetouism areg theywerestaftwithin the countryfor three days.With ing to come in a big wave. Then of Baguio destroyed - and cut off from course.,.December.Thereis still one project, a major hotel to be built on therest of the nationby land andair andits tourist industryshattered,GarRoxasboulevardwhichwehavealready rucho once againfaced a crisis of endorsvdto the Board of Investments, major proportions.It washis third it and therearesomeresortsbeingbuilt little more than a year on the job. with lapanesepottners."

The Board of Investments(BOI) is llcnoglng lourlsn onlyoneof manygovernmentagencies that Garruchomustcoordinatewith and dependon for results.The BOI ow does one managesuch formulatesa yearlyInvestmentPriosituations?Howdoesone - or rities Plan (IPP) which pinpoints shouldone - market a country

4x'rnru::-#::n?':*ff ::il

26 THE ASIAN MANAGER o SEPTEMBER1990

which investmentefforts should receivegovernmentincentives.The hotel industry is a primary beneficiary under the IPP. It providessubstantial incentivesto investorsbuilding the increasedcapacityrequired to meet projectedincreasesin tourist demand.

At someyet to be determinedpoint, when the number of hotel roomsis deemedsufficient, the incentiveswill be dropped by the BOI. In August the BOI announceda P131.7million modernization program for the Century Park Sheratonin Manila, and despite the derastatioq Park PlaceHotel Corporationwill build a majorhotel - with Japaneseparticipation - in Baguio.

Garmcho seeswisdomin significantly expandingthe number of hotel rooms and believesthat DOT must wait for their availabilitybeforebeginling an extensivemarketingprogam.

"Onceyouhavethe capacity,thenyou can get into seriouspromotion massmarketinginsteadof this boutique typeof marketing."

But the questionof room capacity for goingslow doesnotjusti$ excuses on marketing.If thereis onethingthat the tourist industry praysfor it is the dovetailingcompletionof newhotel rooms with the dying out of negative newsreports."With all the bad news comingout of here,we figured that maybewe shouldpostponethe effort first," Garruchoresponds.

At present,DOT relies heavilyon direct sellingthroughtour operators and travel agenciesworldwide,and throughparticipationin world fairs and exhibitionssuchasthe two-week Philippine Fiestain-storepromotion at Keio DepartmentStorein Tokyo lastmonth.Oncethe countryhas"gotten its act together"a more diligent marketingstrategy- which includes massmedia promotions - mustbe devised.The idca is to projectan image of the country that most marketswill understandandbe attractedto, saysGarrucho. uWe'restill stickingto the Fiesta Islands campaign,which we think is a good handlefor captuing the details aboutthecountry.We'rein effectsaying that the Philippineshas manyislands, it's afun place,il's got a lot of histoty,a senseof reli$on, ucitingfood andother attractions.Havi4gdonethat we'realso sayingthatthenearemanydcstinations in the country,not iust Manila. There anemany tourism attractionsto be en-

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joyed: scubadiving plf, sportsfishtng and othen."

In manaeingthe tourism sector,it is criticalfor Gamrchoto work closelynot just with the executivearm of the governmentand with the privatesector, but alsowith the legislature,local governments,tourism councilsand many other communitiesand organizations.

Askedhowhe copeswiththe infamous paceofthe bureaucracy,Garruchoadmits thag "One wishesall the time that thingswould go faster.I suppose(the pace)variesfromagencytoagency.But at the top, amongthe department secretaries,the coordinationis very good.We inevitably run into some policydisagreements, but in general

the governmenttakes the lead, until suchtime when private investorsbecomemore interestedor sufficient incentivesto investorsare provided.

The investmentpotential in the tourism industry is not somethingto take lightly. In 1989alone,approximately P20billion in investmentswere committed, mostly by foreign organizations. "This must be translatedinto bricks,mortar andequipmentoverthe nexttwo years.And the pacemustgo on, preferably with a Filipino presence,"saysGarrucho.

Garruchoinsiststhat presentlyroom capacitiesare dreadfullylow and this fact restrainsDOT and the tourism sectorfrom "going to town" in terms of marketingand promotions. nTheroonr capacitiesare much too limited. If you look at Manila, you're talkingof only 8,500rooms.Cebu,even with the newly built rooms' has only about2,500.Davaohaslessthan 1,N)0.

Thenumbersareso small.In fact it is the lack of accommodationsthat dis' couragespeoplefrom takinglong trips, evenforbusinessout of town.Pattaya (Thailand) alone has 12,000rooms.

And Cebuhas a lot to offer in termsof and history." sights,beaches A fourth considerationaccordingto Gamrchois to '\alk that efira mile" for the domestictravellerand the lourcrincometraveller.The effort entailsmore coordinationby the departmentwith pale in whose limited budgets forts severalother communities,who are compaison with ourAsian andPocific otherwise less involved with big neighbors.Our moneymust not iust spenders."The tourism experience work hard, it has to work smart. We haveto gobeyonddefensivestatements mustbe enjoyedby many,be it through apublicparkor apublicbeachor awellof the country'sstabilityond'me-too' lit boulevardby the sea. of our aboutthebeauty blsndishments nVl/e alsohavetofind waysn makedobeachresorts.Wehave to breakaway mestic tavel easierandcluqrer. Thercis destinaa naughty the irnage of from more disufting than the inacnothing it is the tioq for in thefrnal analysir curate,butpenistent charyethat a twocelebrationof the Filipino spiit - unday tour to Hong Kong can be cheaPer Iesshedin his song hisfoo4 his dan' in C*bu." than an eEivalent weelcend ces,his religiosityand his creativeflair The fifth direction, accordingto that will ise abovetherest.u Garrucho, is toward the fast-paced The third direction is to woo and inspire the membersof the privatesec- developmentof infrastructure.The Philippine Tourism Authority, one of tor to remain steadfastin their investthe largestagenciesattachedto DOT, ment plans.Indeed the tourism inis in chargeof infrastructure - builddustry is not exempt from the ing and developingtourism facilities government'sthrust to privatize busiprivate suchas hotels,golf coursesand even secnessoperationswherethe roads.For infrastructurealone,the tor canprovide adequateand effrcient service.There are, however,areas PIA earmarkedP520million for 1990, easilydwarfing the P180million spent where private sector initiative is lackover the previousthree years. ing, such asferry servicgto connect oButthe infrastntctureprcjects," says tourism islandsor a conventioncenter in a major destination.In suchcases, Garrucho, oshouldnot simply be We have to draw in someEuropean markets,particularly the manYand adventurousGermansand French.We ourFilipinobrohaveto welcomeback andwhile then and sisteneveryvthere, they'rehereweshould coaxthemto go beyondtheb hometownsand taketour packagesto our newdcstinations."

Second,Garruchobelievesthat resultsmustbe seensoonand for that there is a needfor developmentand promotionalprojectsthat are of short gestation.DOT is rushingthe completion of programsthat areintendedto improvethemarketabilityof Coregidor, Intramuros,BataanandBoracaY. 9Vealsohaveto rouseup our creative

'---s -

we havesomegood cooperation."

Cooperationseemsto be the single mostimportant keyto Garrucho'ssuccess.His taskis to inspire and rally the private and public sectorsto rise repeatedly- fromthe ashesofbad newsand to take up the challengeof developingthe industry in earnest.

What strategicdirections doesGarrucho look at now?

The first item on his list is to recover the Philippine shareof the fast-growing Asia-Pacific market. Total tourist arrivalsof 1.2millisa hsl ysar palesin comparisonwith the performanceof other ASEAN countries.Thailand, fhe region's leader, has six million yearly visitors; Singapore and Malaysia,four million, and evenIndonesia- which startedan ambitious tourism campaignrelativelylate hasover one million visitors annually.

"Wehave to promote aggressively in theshort-haulma*ets, especiallyHong I(ongwhercwehavewealccned considerably,and lapan wherethe numbers aregood, but thepotential evenricher.

THE ASIAN MANAGER r SEPTEMBER1990 27

Tlrcseatlnrthatoccupiesus...

How the Notion of ei-Ceillinq Mcrnifests ltself in the Worlil of BusinesssOne Vieuryoint

by ThomasS.fohnson Presidentof ManufacturenHanover Corporation,New YorlgN.Y. ll of ushaveheardparishpriests 1 and otherreligiousleaderstalk lf nabout different vocationsthat are followedby membersof our community. Frequentlywe hear priests talk aboutthe vocationof the lay person, the vocation of marriageand parenthoodand others.I sometimes havewonderedwhethermost of us who are not formally following a religiousvocationreallybelievethat we are anythingother than secondbest.We givea lot of lip serviceto our responsibilities,to our professional lives and to our families.but do we

secretlyharbora senseofguilt or inferioritybecauseour vocationsare somehowlessseriouslycommittedto servingGod? We can contrastour daily existence in manywayswith thoseof priestsand other religiousfigures.As we mature in life, however,and particularlyif we h a v et h e o p p o r t u n i t yt o b e c o m e familiarwith priestsandreligious,is it not true that we seepeoplewho share muchwith us in how they spendtheir lives?The parishpriestscelebrates Massand other sacramentaldutiesin

waysthat we do not share,but he also administersan organizationthat requiresresourceallocations,supervision of labor and manyof the other elementsof what thoseof us in businessdo. In fact, I suspectthat ifyou measurethe numberof hoursthat the religiouspeopledevoteto uniquelyreligiousactivities,asopposedto administration or teachingorhealtb,you might in fact find that there are relativelyfew differencesin our 24-hourday.

This givesrise to the thoughtthat for all of us there is a good deal of the secularthat occupiesus,whetherone personwhois religious,or is abusiness whetherone is a priestwhosefield is economicsor physics,or a sisterwho administersa schoolor a hospital.We all needto answerquestionsaboutthe meaningand goodnessof whatwe do and abouthow the variedactivities

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30 THE ASIAN MANAGER r SEPTEMBER1990

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TYPEWRITERSPERSONAL COMPUTERSWORDPROCESSORSFAXMAGHINESCOPIERS

THE ASIANMANAGERo SEPTEMBER1es0 31

that fill a day can be made to fit togetherinto a patternthat is consistent withGod's planfor us.Howcanoursecularlivesbemadea part of ourjoumey throughlife accordingto God'splan?

I startmy reflectionon businessand professionallife for opportunitiesfor a morallygoodexistence by statingbasicpremises.First, I think mostwould agreethat the systemof democratic capitalismby which we pursueour professionsare demonstrablygood.It has created,for a large part of the world's population,greatprosperity comparedwith earlier days.This has given the people the opportunity, aboveall, for the dignityof self-sufficiency.It haschangedsocietiesin profoundways,perhapsmoredramaticallyin producinga degreeof socialmobility in westernsocietynot knownbefore in the historyof theworld andnot known today in manyother societies.

Thissystemis theenginethat hascreated prosperity,but morethanthat,the freedomthat is soughtby untold millions of refugeesfrom Asia , Latin countriesand most recently,Eastern Europe.

Second,the institutionsof this system can thereforebe regardedasinherently(or at leastpotentially)good.

Their efficientfunctioningis good.By observingindividualcompaniesand industriesand indeedcountries,it seemsto me that it can be demonstratedthat strivingto makethe institutionsof democraticcapitalism work well is a worthwhile pursuit.

Theseinstitutionsincludenot onlythe companiesand firms that pursue profit and competewith othersfor success, but alsothe rulesgoverning t h e m a s w e l l a s t h e e c o n o m i ci n frastructurethat canbe providedonly by government.Thus,the overallsystem hasto be regardedasincluding the pursuitof education,transportation facilities,police protectionand the like. It is the interplay,afterall, amongall of theseelementsthat makesthissystemasawholework.We are barragedalmostconstantlyby the word "interdependence."But when one thinksaboutthe reliancewe in businesshaveon educationto provide a soundfoundationfor our employees, when one reminds oneselfthat a countrythat is at peaceinternallyand has a semblanceof tranquility providedby reasonableconsensus, aswell as adequatepoliceprotection,one

realizesthat the functioning ofthis system is at the same time a marvel and something that cannot be taken for granted.

Third, therefore, it seernsto be demonstrably good that the individual human being apply his or her talents to the successand improvement of the institutions of this great system.Striving to get the firm one works for to succeed or win over the competition and striving to get ahead in competing for that next promotion, if done the right way, will lead to greater personal

ee

It is obvious that stewordship should be defined in wcys to include the preservalion of our plcnel, lhe adrrococy of conditions fhaf will make life more bearoble for lesg forfunate people and lhe proper conducl of our business. ,,

development,and a better use,therefore. of the talentsthat we havebeen given.All this can be regardedas good,eventhoughit can haveheavy costsat times.

But thesepremises,or whatI might call the macrovieware really not enoughto satisfyus with the moral quality of our lives.If theywere,we wouldnot needto reflectfurther if we reallyheldtheviewthatsingle-minded pursuit of efficiencyis a sufficient criterion for moral goodness;we would not needto complicateour journeyby questioningwhetherthere is moreto the morallife thanjust that.

Thereare those,of course,who come closeto arguingthat the single-minded pursuitofprofit is enough.They

32 THE ASIAN MANAGER o SEPTEMBER1990

argue,mistakenlyin my view,that the invisiblehandtalkedaboutby Adam Smith makeseverythingcomeout for the good and that we do not need, therefore,to worry very muchabout the complicatingfactorsof competing claimson resources,the impactof theseinstitutionson humanlivesor whethertheseinstitutionshaveanv responsibilities other thanto makea profit. I think a proper and complete readingof Adam Smithwouldleadus t o s a yt h a t h e n e v e ri n t e n d e dh i s thoughtsasoffering a comprehensive prescriptionfor how all our socialinstitutionsshouldwork, but only as demonstratinghow the pursuitof gain and efficiencyworksto creategreater wealththan other systemsthat had beenconceivedbeforethat time.The macro-viewin itself is not, in myjudgment,sufficientfor a numberof clear reasons.

First,not all the consequences ofthis great systemof creatingeconomic valueare good.While muchgood is obviouslycreated,we cannotlook a b o u tu s i n t h e l a t e 2 0 t hc e n t u r y without questioningthe costsof this systemon our environment,without observingthe inhumanityof someof the excesses of the system,withoutrecognizingthatcheatingand lying occur within and sometimesin the name of the system.We need,therefore,to questionnot only how the systemoperates,but howour personalworkwithin the institutionsof our capitalistsystem canbe consideredmoral.

Second,the intensityof the racefor frequentlyseemsto blind usto success the other aspectsof a truly civilized society.If we achievestrikingsuccess by overallmaterialmeasures, andcreatewealthbeyondthe dreamsof earlier generations,as indeedwe have overthe lasttwo centuries,mostof the h u m a nb e i n g sw i t h i n o u r s o c i e t y benefit.But if we cannotsomehow e l e v a t et h o s e w h o a r e t h e m o s t d e p r i v e d ,i f t h e w a y w e t u n e t h e economicenginefails to be cognizant of the legitimateclaimson its product by the leastamongus,one hasat the minimumto questionwhetherthe system is asmorallygood asit canbe.

Third, the heavypersonalcommitmentsof time and energydemanded byour involvementin professions or in businessleadsto conflicts.Theseconflicts canbe quite intenseandextensive.We speakfrequentlyof the time-

demandsof businesscominginto conflictwith our responsibilities to our families,andwith our own personaldevelopmentin otherways- our needs for leisureand for reflection.Moreover,thereis oftensucha totalimmersionin work,andthework is of suchintensity,that we find it difficult to seea directconnectionbetweenwhatwe do andthe goodGod wantsusto do, and oftenwe aredistractedbythe intensity of the work from its negativeconsequenceson humanbeings.As exciting asour work canfrequentlybe,all of us havereflectedfrom time to timethat it canbe suchan all-consuming experienceand so lackingin diversity,that over time it becomesa confiningand narrowexistencewhenit reallvshould be a broadeningandenrichingone.

Fourth, and perhapsthis is the most difficult questionofall, dowenot need to reflect on the perverseeffectsof competition,aswell ason the positive andenrichingresults,asthefittestsurvive and rise?What about the individualswho do not get the next promotion,the companiesthat fail and the employeeswho losetheir jobs?Is it sufficientfor usmerelyto be comfortablewith the demonstrated effect of wealththat occurscumulativelyfrom the benefitof competition, w i t h o u t a t t h e s a m et i m e a t l e a s t wonderingaboutthecoststhat areimposedby this very samewonderful machineon the individual?

Thereare other questionsthat can beraisedaboutourwork andbusiness, but thesearesufficientto persuademe that thereis a moral dimensionto our workbeyondjust a demonstration that the overall systemworks to create wealthandopportunityfora greatmany people.What are the ways,therefore, in which our livesand business canbemademoral,or moremoral,or shouldI sayasmorallygood aspossible?If contributingto the overall operationof a systemcanbe regarded asgood,thenhow muchmoregood canit be if we payspecificattentionto the moral challengesand opportunitiesit presents?

Let mesuggestthree overallperspectives from which our livesand businesscanbe regardedas havingsignificantmoral dimensions.

First, if makingthe enterprisesuccessfulis inherentlygood,how much moregood can it be to achievethat successwhile accomplishingasmany desirableobjectivesbeyondefficiency

and profitabilityas possible,while minimizingthenegativeconsequences that our businessactivitiesmight have?Examplesof obviousresponsibilities,but onesthlt canbe enhancedthatweputourmindsandconsciencesto work, are employeewelfare,true serviceto the costumersof the businessandcontributionsto the communityin whichthe businessexists.Thosecontributionsare positive whentheyservethe long-termself-interestof the business, but theyare evenmore positivefrom a moral

c1

lf fhe good lhings we occomplish in

businessond professionol life etfe good, nol only

in ond of ourselves, bul because of lhe way we conducl ourselYes in Godts plcn, we cern consider work, not as sepafole frorn our spirituol life, buf os o moior pod of how we contorm lo God's will. ,, perspectivewhen they use the influence and resourcesofthe business beyond self-interestto enhancethe general good. Obviously, the converse of thesepoints is that efforts can be made by morally conscious executives to avoid policies and operations that are harmful or dangerous to employees,to avoid misleadingproduct information and to be conscious always of the business'impact on the social and physical environment.

Today much is said about environmental concerns,and the role ofbusinessin protecting our environment for f u t u r e g e n e r a t i o n si s a n o b v i o u s responsibility.The real challengeis representingthe interestsof the busi-

n e s so t h e r t h a n i n a s i n g l e - m i n d e d way. Can we challenge ourselvesto think notjust ofhow to defend ourselves from unreasonabledemandson the business?Since we know more about our technologiesand plans for future growth and development than anyone else, can we go beyond this defensiveness?Can we affirm that it is highly desirable, from a moral perspective,to consider environmental concerns a special moral responsibility that we have as business leaders, not just on behalf of the businessbutonbehalf of our fellowhuman "stewardship," beings?I like the word and I like an expanded definition of stewardship beyond the strict traditional stewardshipof shareholder resources. It is obvious that stewardship should be defined inways to include the preservationof our planet, the advocacyof conditions that will make life more bearable for less fortunate people and the proper conduct of our business.

Second, our involvement in business and professional life brings with it opportunities for leadership and influence that can be a genuine calling or vocation. Using personal influence canbe a force for positive moralgood.

Sometimes I am shocked at the amount of attention what I say gets, and in fact I have had to learn over the years to be careful about a somewhat acerbic and cynical manner that is part of my nature. The influence we can h a v e a s i n d i v i d u a l s b e c a u s eo f t h e respect others have for our leadership cannot be overstated. The extra attention that we give to usingthis influence in positive moral ways can, we think, be regarded as part of our spiritual and moral development,especiallyin settingthe right kind of exampleand in striving to let others know of the unity we see between our businessresponsibilities and our personal moral life.

This can be a powerful force for good.

Choosing a style of leadership that brings out and recognizesthe best in others is another way in which our r o l e s i n b u s i n e s sc a n b e a p o s i t i v e moral force. We are taught that we are not put on earth to be alone, that we are meant to live in communities and that we are meant, each of us, to use the talents God has given to us to the fullest extent. We need help to do this.

Every one of us can remember those who have helped us to develop,

THE ASIAN MANAGER o SEPTEMBER19s0 33

whetherteachersin school,professors,businessmentorsor colleagues.

Particularlywhenwe get to positions of leadershipand influencein business,I think that wehaveimmenseopportunitiesto help othersin their own d e v e l o p m e n t .I f c a n h e l p t h e m likewiseto recognizethe wholeness of their lives,includingthe moralaspects of their jobs and business, we can regardthis asa real callingand a real callingand a real answeringof God's demandson us.

Perhapsmost important,our positions ofleadershipprovideus opportunitiesto ministerto thosearoundus.

I usethe term "minister" becauseit g e t s a s c l o s e a s p o s s i b l et o t h e religiousvocation.The amountof time wespendatworkis,formostof us,way overhalfour wakinghoursthroughout our working life. The personal relationshipsthat developare such thatwe havemanyopportunitiesto ign o r e o r t o s h o w c o n c e r nf o r t h e problemsof others.What a marvelous opportunitythisis,truly God-given,to sharein the work of His priestsand ministers.

If we canviewour management roles notjust ascontrollingandadministering, but also as caring and providing moralleadership,arewenot thenconductingour livesin the mannerof the Good Shepherd?I havemanytimes heard good marriagesdescribedin termsthat comedown to ministering to eachother.Many peoplecomment that a good husbandor wife helpsthe partnerto comedownfrom the intensityof theday'swork, to regaina sense of self-esteem afterthe sometimesunpleasantaspectsof work and to expandvaluehorizonsbeyondwork to mattersof family,leisure,cultureand self-development.

If this is true, can therebe not be an analogousvalueon our workingday?After all, eachof us hasproblemsand eachof us suffers from confusionand pressure.Is it too muchto askthat we ministerto each o t h e r d u r i n g t h e h o u r sw e s p e n d togetherat work by showingunderstandingand compassion, by offering adviceandsupportandbyestablishing an atmosphere at work that explicitly honorsthe wholeperson?Do we have to go hometo becomehumanand to enjoysupportin our personalstruggles,or is therenot a highercallingfor thoseof uswho haveleadershippositions in businessto seeto it that the

work day is not an interruptionof to life. We all know this and haveexmoral responsibilitybut an opporpressedit in differentways,but wealso tunityto helpour fellowhumanbeings cannotsaythat businessis not a part of in theirjourney? our moral life. Nothingthat we spend Third, we must considerour own so much time and energyon can be journeyson earth.If the goodthings separatefrom ourjourney ashuman we accomplishin businessandprofes- beingsseekingto serveour Creator.If sionallife aregood,not only in and of that were the case,we would haveto ourselves,but becauseof the waywe changeourjourney.

The taskof businessleadershiprealconductourselvesin God'splan,we can considerwork, not as separate ly is not separatefrom our moral and from our spirituallife, but asa major s p i r i t u a l l i v e s a n d c a n e v e nb e part of howwe conformto God'swill. regardedas not so inferior a calling!

If wecanelevate Each of us is called on to struggle thegoodthingswe do abovethe merelymundaneand pragthroughto themorallife andsalvation. matic,by keepingan eyeon how best We continueto questionour layvocato usethe opportunitiesto help our tions,and whethertheymeasureup, fellow humanbeings,would not work but at leastfor me,that uneasyfeeling t h e n t a k e o n t h e a s p e c to f w h a t helps me focus on acceptingmoral responsibilityin what I do andto seek theologianscall "charity," that is, a lovefor othersseenboth in their need opportunitiesto makemoral convicand in their imagingof God himself? tionscount.

For example,our interestin comm u n i t y o r e d u c a t i o nc a n g o w e l l Reprintedwith the permissionof beyondthe pragmaticneedto secure T h o m a s S . J o h n s o n , f r o m t h e February1990issueof Ameica. andprotectresourceswe needfor the Theseinterests, if theyarise business. out of a true senseof responsibility toward the lessfortunateand those who will live in the future,takeon the aspectof a spiritualvocation.

Thewayweusethematerialrewards that comefrom businesssuccessis also important.The decisionswe make about conservingwealth or usingit to alleviatethesufferingof fellowhumanbeingsor to preparea better world in the futureare otherways in which our leadershippositionsin businessare opportunitiesfor personaldevelopment alongthe lines ThomasJohnson God hasin mindfor us.

Upon groduatingfrom H arvard's If we cando all thesethingswhile (High Distinction), Mr. MBA trying to avoidmanyof the personal fohnson cameto thePhilippines pitfallsthat aresoever-present, ifwe and acceptedtheposition of canavoidthe selfishattitude,if wecan Directorof thefrst full time win thebattleoverpride by reminding Mastercin BusinessAdministraourselves that the talents constantly tion Programat thefesuit Ateneo that enableus to do whatwe do come Univercity. from God, if we canfight temptation towardimperiousness and patronizHe recentlyjoined Manufacturert ing style,if we canfight intolerance HanoverTrustCo. aspresident if we avoidisolaand defensiveness, afterwo*ing at ClrcmicalBanlq tion andexclusiveness-in short,if we NewYorlc, also aspresident. can do what we do positivelyfor the loveof our fellow humanbeingsmore Mr. fohnson wasinstrumentalin thanfor theloveofourselves,ifwe can thefoundingoftlrcAsionInsitntc do this,we will be doingit for the love of Management,and has on of God, and thentruly our jobs are severaloccasionsvisitedManila part of our own salvation. to teacltin tlrc Institutes'sTop What all thisboilsdownto is that we Progrant.

Management is all thereis cannotsaythatbusiness

34 THE ASIAN MANAGER r SEPTEIIBER 1990

1990 3s THE ASIANMANAGERo SEPTEMBER

ARTICLE Tlrc objeaiveof renewaland dnelapment..

Self- Relicrnce,lnteg fiA, Excellence

by SecretaryOscarM. Orbos D epartrnent of Transp ortation and Communication (This article is basedon the address deliveredat theAsian Instituteof M anagementCommencement, Mqt 13,1990.- Eds) AlfredoNavarro I nAugustof L987,"When stuck in I Salangawrote, r time and memory,the reallysad realization that emergesfrom suchan experienceis that we are unable to renew ourselves."

Since1986,our countryhassoughtto freeitselffrom the timesand memoriesof 400years of domination by foreignpowers,a bitterly fought war during which much of our countryand our capacity for generating wealthwasdestroyed, a corrupt and immoral era characterizedbv t h e f a d i n go f A s i a ' s once brightest industrial star and viri' tuallyperpetualpoverty. It hasbeendifficult to put the pastbehind u s ,t o w i p e t h e s l a t e clean, to get a fresh start - becausepainful remindersof the pastmustbe dealtwith daily,and theytend to compromiseour enthusiasm and confidence for renewal and development.

Yet looking at your faces today, I am encouraged... and I am excited. Not only because the Filipinos among you have successfullyrenewed yourselves in a demanding and rigorous academicprogram, butbecause close to half

of you are from outsidethe Philippines,andyoucameto theseislandsto learn the scienceand the art of Asian management.

Although the Asian Institute of Managementis an internationalorganization,it wasgivenbirth in the Philippinesand its Filipino deansand administratorshavemadeit a world classorganization,successfullycompetingwith the bestschoolsin Asia, North America and Europe.AIM and its alumni - are powerful indicatorsof our capacityfor selfreliancein dvnamicAsian environ-

vn,...$-

management in 43differentcountries.

Thosewho havecomebefore you over the ZI-year history of the Institute, haveset a high standardby whichto measureyour achievements- AIM alumni are found throughoutAsia's most dynamic organizations,in the privatesectorandin government.

And for you a powertheyhaveestablished ful network - radiatingoutwardfrom the Philippines- ofAsian managers which will prove to be a key resource as you return to your professional careers.

As you begin that journeythis afternoon, allow me to leave you with a few thoughts which may be useful.

I referred a moment ago to the importance of self-reliance, integrity, and excellence in your just-completedstudies and in your continuing careers.This also comes from Alfredo Salangathe motto of his newspaper, The Independent, was "Independence, Integrity, Excellence.".I prefer to speak ofself-reliance rather than independence - Ibelieveindependenceis impossib l e u n l e s s w e a r e s el f reliant.

Self-Relicnce

+'i!

i'oz;r,,!

ment, integrity in a time when compromisescomeeasilyand often,and excellence in a highlycompetitiveage.

I understandthat thoseof vou for whom theserites of passage'areintended,will from todayjoin a network of over L6,000Asian managerswho p r a c t i c e t h e a r t a n d s c i e n c eo f

36 THE ASIAN MANAGER . SEPTEMBER1990

me, the capacityto Jo b e self-reliant is a I r consequenceofsocial responsibility among people, organizations and governments.Social responsibility demands

the distributionof equitythroughout the soclalstrata.This distributionof equity providesthe momentumto inc r e a s et h e p e o p l e ' sc a p a c i t yf o r generatingwealthand contributingto theprocessof nationalbuilding.When equity doesnot exist,our people are too busyjust stayingaliveto renew

t h e m s e l v e so r t o c o n t r i b u t e t o development.They are perpetually dependenton the stateand the state - becausethe peopleconsumemore wealth than they produce - is dependent on handoutsfrom foreign powers.

Equity - and capacityfor selfreliance - impliesaccessto opportunity,not handouts.

Acting on our senseof socialresponsibilitythereforemeansincreasingthe capacityof our people to avail of life's m y r i a d o p p o r t u n i t i e s .A s A s i a n managers,I believethat you will find that strengtheningyour organization meansdevelopingyour people and your communitiesto providethat access.The benefitsof socialresponsibility will be stronger{omestic marketsand the capacityto generate and availof future opportunities.

My experiencein the Departmentof Transportation and Communication (DOTC) hasbeenso.DOTC is onlyas goodasits peopleandits constituents, for they are the foundationupon which everythingwe do is built. Our people provide the synergyrequired to respondto the opportunitiessomesaycrises- which we have,and continue,to face. Our accomplishmentsto date are not mine,they are thoseof the DOTC people - who havebeen in the deoartmentfar longerthanme - andthe assistance of the publics we serve.My role, as an Asian Manager, has been to strengthentheir capacityto dealwith the opportunitiespresentedus.

I believemyrole shouldbea liberating one - liberating the men and womenof the department.

Liberating the potentialsof our p e o p l e a n d s t r e n g t h e n i n gt h e i r capacityto becomeand remainselfreliantwasa proposalpresentedto me andagroupofcongressmen in 1988by AIM professorVictor S. Limlingan.

Dr. Limlingan suggested that a possible first step in catalyzingselfreliancewould be lessgovernment and more business- specificallycountrysidebusinessand entrepreneurship.

That idea evolvedinto what we calledKalakalanng 20.Kalakalan has just beenimplementedandwe are experiencinga phenomenalmanifestation of long-suppressed initiativeby countrysideentrepreneursand small businessmen.

Theyare undertaking

newventures- andlegalizingexisting endeavors- providingadditional capital and wealth generating capacity.The productof this capacity to generatewealthwillprovide addit i o n a l r e v e n u e sf o r e n t e r p r i s e developmentand the undertakingof additional wealth producing initiativesto supportcountrysidedevelopment. are Our countrysideentrepreneurs takingchargeof their lives.The broad supportfor and excitementoverthe potentialsmadepossibleby Kalakalan and its supportinglegislationsuggestedthat similarprogramsshould be an integralpart of our programsat DOTC. As a result, we havedeveloped programsintendedto release in the energiesof our entrepreneurs the transportationsector.Individuals maynow legallyoperatetaxi services, urbanjeepneydriversmayform as-

aa

Consensus building csn be r cunbef'ome process.

Howeve4 excepl ln ccses of dire crlsis requiring

immediote decisions, depcrfment policies ore best forged on the bosis of a broad consensus among lhe seclors We tefYe. ,,

sociationsto purchaseand operate buses,and in the countrysidewe are providingcredit mechanisms to allow individualsto purchaseand operate their ownjeepneys.

We are alsoundertakinga program of practicablederegulationof boththe land and seatransportsector.Like theseother programs,practicable deregulationis intendedto reduce

reliance on governmentfor subsistenceand to foster the creationand developmentof profitablebusinesses providing critical services at reasonablecoststo consumers.

DOTC is a pro-business,pro-countryside developmentgovernment agencyadvocatinglessgovernmentinterventionto build the capacityof our peopleto be self-reliant.

lntegrlty ! ntegrity seemsto me to be closely I tied to respectfor the ideas,standr ards,and initiativesof others.Integrity in a leaderis exemplifiedby his capacityto surroundhimselfwith very capablepeople who may not always agreewith him.

To be true to one'sideals,a capable leadermusthavethe confidenceto be true to thoseof others.

Much of what we do at DOTC is basedon the principle of givingthe publicwhat it wants,rather thanwhat we want the public to have.The mechanismby which we determine what the public wantsis somethingwe building. callmulti-sectoralconsensus amongthemany Buildinga consensus publics we serverequiresthat the groupswith which we dialogue - as well as the DOTC - be willing to compromise.The objectiveis the greatestgoodfor thegreatestnumber.

Interestingly,there are thosewho look upon compromiseasa capitulation ofvalues.I disagree.Stubborninsistenceon a set of valueswhich may seemveryarbitraryto othersis selfish, not righteous.And it hasbeenour exp e r i e n c et h a t w h e n t h e D O T C ' s p u b l i c s a r e b r o u g h t t o g e t h e rt o that achievea responsibleconsensus they do in fact act responsibly.

Consensusbuilding can be a cumbersomeprocess.However,exceptin casesof dire crisisrequiringimmediatedecisions,departmentpoliciesare best forged on the basisof a broad consensus amongthe sectorsweserve.

This consensusbecomesthe foundation for the strategicframeworkwhich will guide the departmentover the long-term The foundationactsasa catalystfor to innovationandcreativeapproaches newopportunities- and it provides thecapacityto withstandthreatsto the efficient,effectiveprovisionofthe serviceswhich the departmentprovides.

THE ASIANMANAGERo SEPTEMBER1990 37

Integrityin aleaderto me,therefore, is more than mere tolerance for the ideas of others - it is the willingness to accepta better idea asa better idea - an idea that shouldbe actedupon.

kcellence otwithstandingthe cumbersomeprooessinvolvedin consensusbuildirg, there comesa time for action - a time when the planningmust end and the provision of substancebegin. It is within this contextthat I wish to considerexcellence.

It isproper - indee4 itis imperative - that excellence evolve from strengtheningthe self-relianceof our people, and the establishmentof a frameworkfor firm consensus-based action.

We believe,therefore,that organizational excellenceimplies an actionorientation - a willingnessto make hard decisions,to undertakedifficult task, and to standaccountablefor our actions.It also implies hands-on managementand the setting of exanples by top management.

An action orientationdoesnot mean that everyprogramwe undertakeis the mostappropriateresponseto a particularopportunity,or thatit isevensuccessful.We arehappyif threeout of ten of our planscometo fruition or are implementedsuccessfully.But we also believethat to havethree successful programswe mustbe willing to act on ten - and to acceptthe fact that we learn more aboutwhat maywork next time from the sevenprogramswhich failed thanthe threewhichsucceeded.

In a highly politicized environment suchaswe havein the Philippines,it is not easyto admit that a programdid not work out or work preciselyasintended.But asothershavesaid,no one has ever said life is supposedto be easy,andno onehaseversaidit is supposedto be fair. It is within the context oftheserealitiesthat the excellentorganizationmustlearnto recogrizeopportunities - and to createmore andto be willing to act whenthe time is right; to makenecessarychangeswhen theyare required.

At present,we at DOTC are attemptingto dealwith the very real and very vast traffic problem in Metro Manila. One part of our actionprogram hasbeen a truck ban, and I am

surethat you havenoticed that we are fins luningtherestrictionsuponwhich this programis based.And Youwill continueto seechangesin the Progrem aswe try to achievean oPtimal balancebetweendeliveriesduring businesshoursand thosethroughout the eveningand early morning.

1And 1 rhls |g how It rhould be' for we hervelhe c3sulqnce lhol no maller wlral we achleve ln llfe or ln our orgcnltallons and no meillef how excltlng thot may be, lhere ls alwap somethlng !]1DOlCL.. ,, What thisprogramtellsusaboutthe DOTC is that not all programswhich essentiallywork, work aswell aswe wouldlike.Whentheydo not,wekeeP working on them until they work as well astheycan at a giventime.Then we continueto evaluate,and to adjust andreviseasconditionsandobjectives changeand evolve.

To us, then, an excellentorganization is not only one which is willing to act, which identifieswhat doesand doesnotworkandactson that,but one which alsomakesprogramsthat work, work better. And this meansthat we are never completelysatisfied proud perhapswhen progresshas beenmade - but willing to live with thefactthatno programwilleverbeas good asit potentiallYcan be.

The job neverends - and neither doesthe time for action.

Concluslon

discussedour efforts at DOTC to renewand developour organizationin the context of three ideals for which we strive: self-reliance,integrity, and excellence.

As I close,nayl suggestthat it maY be easierto sustainour enthusiasmto renew and developnations, organizations, and individuals,whenwe resognize the reality that renewalhasa startingplace,but that thereisnofinal endingplace?Or perhapsthat the objective of renewaland developmentis - sustainingrenewaland develoPment?

And this is how it shouldbe, for we havethe assurancethat no matter what we achievein life or in our organizations and no matter how exciting that maybe, there is alwayssomething greater - an objectiveevenmore worthwhile and exciting - that awaits our attention.

Classof 19.90- you are indeedfortunate.You havesuccessfullycompleted demandingpreparation ferr continualrenewaland development.

And to supportyouin this process,you enjoythebenefitofthe supportofover 16,000other AIM alumni to work with yor\ support yorl and celebrateyour successes.

Congratulations,and sincerebest wishesfor a prosperousand rewarding career.

OscarM. Orbos Mr. Orbosis cunentlythe Secretaryof TheDePattnentof Transpoftationand Communication (DOTC). The insightsgained from hisbief tenureat the dePartmentprovidedthe backdroPfor hisspeechto the institute'sdegree programgraduateslastMaY Ij.

ufifl,'xTlffi*}'',{fi$ thusiasmto renewanddevelop.I have

1990 38 THEASIANMANAGER. SEPTEMBER

THE ASIANMANAGERr SEPTEMBER1e90 39

Solutionsto Inbor-mnna.gement issues....

lndusnrfulRelcilionsin fhe Philippines: rI New Dimensions in ffie '9Os

by Prof. Melilon V. Salazar Don Ramon CaroProfessorof BusinessManqgetnent

lffi{rv

lntroduction paper is the result of two Ihis I roundtable conferenceswith r participants from government, the labor sector, managementrepresentativesand professionals.Additional inputs were provided from individual papers.

The object of the roundtable conferences as well as the papers contributed was to forecast developments in industrial relations in the Philippines in the decade of the '90s. As such, persons invited either to contribute written views or to attend the roundtable conferenceswere selected for their experience and acknowledged expertisein the field of industrial and labor relations.

We have divided the contents of this paper into 1) the near term, L9901992;and,Z) the long term, L990to the end of the decade.The near-term period is an arbitrary choice: it reflects not so much a collective feeling as a collective hope that the presidential,congressionaland local elections of 1992may finallyunravel the tangled political strands that have created so much public turbulence since L986 and establishpatterns that will persist and provide Philippine societywith both political and economic stability in the long term.

Our longrun assumptionshavein the samemannerbeen cautiouslyoptimistic: that the Philippines will not again succumb to an authoritarian form of government whether of the Left or Right and that the strugglebetween these two extremes and the center will die down after L992.Bythen,we hope, the Filipinos will have spoken with finality. Should these assumptionsbe proven false,however,then all predic-

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40 THE ASIANMANAGERo SEPTEMBER 1990

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tions that follow will be wrong: we shall be in a different ball game whose rules we would be foolish to forecast.

Outlook for the lleor lerm ecauseof the December 1989 coup attempt and other causative factors, there may be an in-

creasein the instabilityof labormanagement relationsin the near term.Anotheroil pricehike,doubledigit inflation and continuingerosion in the valueof the pesowill put press u r e o n w a g e sa s u n i o n s s e e kt o preservethe purchasingpowerof their members.

If the governmentrespondsto these conditionswith high interestratesin orderto curb moneysupply,business operationsmayslackenand put pressureon jobs.In addition,investment flows from both local and foreign sourcesmayweakendue to perceived political instabilities.This mayhave repercussions on currentand potenjob securityissues tial employment: maybecomea focal point of conflict.

The Decembercoupattemptandits resultingand potentialafter-effects haverevivedthespecterofthe 1984-86 economicrecessionin the minds of manymanagement andunionleaders.

Before the attempted kudeta,labor, management and governmentwere preoccupiedwith the shift from compulsorytovoluntaryarbitrationandto devisingnewmechanisms to conciliate disputes,suchas preventivemediation. After December1, however, manynew possibilitieshavesurfaced, all of themcontingenton politicaland economicconditions.

Will effortsto destabilizethepresent administrationandthecurrentform of governmentcontinue?Will the early 1990sresemblethe period 1983-86?

Will labor and management, in the faceof uncertaintyand turbulence,be forcedto preserveindustrialstability witha moratoriumonstrikesandlockouts?Will the Philippineshaveto drasticallyalterpresentdirectionsin order to designa new packageof reformsthat an ailingeconomycan support?It maytake anothertwo or threeyearsof relativepeaceand the absenceof politicalalarmsto reassure everyonethat life will be normalafter all and the future predictable.

Union strategyin the nearterm may

hinge on larger participation in Congressand at all levelsof decisionmaking to safeguardand advancethe interests of workers. Such interests may include the need to augment incomes and keep prices at present levels to compensatefor a freeze in demandsfor higher wages.Attention and emphasismay shift to non-inflationary employee services and benefits, tax exemptions,the so-called "salary extenders" livelihood projects, cooperatives and the like.

1 (One of the mosl dronotic developrnenls in lhe lcbor rnovement in lhe nert len yecrs will be rhe etppeorance of unionism in the governmenl seclo4

erprediction that wcs strongly supporled

by borh pemels. ,,

Outlook for the Long lerrn DevelopmentsIn Europe ond lhe Unhed Slatec he mostdramaticchangesthat will takeplacein the first half of this decadewill probablybe in Eastern Europe, the Soviet Union and the European Community. How will these changes affect industrial relations in the Philippines?

The emergence of new democracies and market-oriented economies in what used to be "the Eastern bloc" may affect the Philippine economyin t w o w a y s :b y d i s l o d g i n g i t f r o m i t s traditional shareof the European markets and by reducing the amount of economic aid it has been receiving from European countries. On the other hand, the integration of the European market inL992 may open larger opportunities for Philippine exports and improve employment and

incomesin the country.

More immediateeffectsare foreseen in the trade union sector.Transfersof federations from the World Federation of Trade Unions (WFTU) to the International Confederation of Free Trade Unions (ICFIU) maybegin to take place in Europe. Such movements are bound to have repercussions in Asia.

Becauseof the economic problems faced by the United States,there are apprehensions over Philippine exports in that direction. Protectionist tendencies in the 1-990smay be reinforced by an enormous trade imbalance and an international debt of staggeringproportions. A weakening US market for Philippine products and serviceswill have very serious implicationsfor the Filipino economy.In fact, there are already early indications that the Philippines may not expect in the future the same volumes of economic and military aid that it has received in the past.

Unlonlsm ln the governmcnl secloi ^1, ne of the most dramatic ldevelopments in the labor I V 6sve111entin the next tenyears will be the appearanceof unionism in the government sector, a prediction that was strongly supported by both panels.It is certain to raise many interestingquestions.

For example, how will the influx of hundreds of thousands of white-collar workers affect the labor movement's present composition and its present directions and goals? Will unions and their federations in the private and public sectors join forces? Will they run on separate, though hopefully parallel, tracks? Will government unions form federations of their own or will they affiliate themselveswith existing federationsin the private sector?

There was little doubt in the two panels that the governmentwill eventually accept unionism but all agreed that the problems that lie ahead are formidable. There will be a need to forinulate new definitions for concepts already well understood in the private sector.There will be a need to d e f i n e - a n d a c c e p t - t h e s c o p ea n d limitations of collective bargaining a n d t h e C B A b e c a u s eg o v e r n m e n t structures and processesare in many

THE ASIANMANAGERo SEPTEMBER1990 41

respectsvastlydifferent from thoseexistingin privateenterprise. {ni.le admittingthat the rise of unionismin governmentis inevitable, thepanelsalsoagreedthat thegovernment is almosttotally unpreparedto dealwith it. Thelaws,rules,structures, processes andstaffthatgoverncollective bargainingin the private sector havebeen in place for generations: how and at what paceand costare theseto be replicated in government?

How are the knowledge,experience and skills in labor relationsto be developed?Will an entity separate from the Department of Labor and Employmentbut mimicking its functionshaveto be createdfor theunique a n d n o v e l s i t u a t i o n sc r e a t e db v governmentunionism? lhc rolc ol governmcnt Induelrlcl rclotlonc

In

was general agreement Ihere roundtableparticipants among I r that the presentgovernmentis not addressingissuesraisedby labor and managementbut the proposed solutionsand predictedoutcomes were dramaticallydifferent.

One approachsawthe labor movement as intensi$ing its organizingactivities and forming broad alliances with other sectorsof society.

Large umbrella organizationswill be created.labor centerswill join forces and embrace even the growing governmentunions.The private sector willbe facedwithverystronglabor organizationsable to call crippling nationwide strikes (welgangbayan) and even opposekudetas.

Becauseof thesebroad alliancesworkerswill enjoy political clout and will force Congressto increasethe numberof sectorallabor representatives and passlegislationthat will further strengthenlabor power.

A secondapproachsawlabor and managementsolvingtheir differences at the bargainingtablewith lessinterferencefrom government.

Therewill be a strongeremphasison bipartisan,asopposedto tripartisan, approaches.Governmentwill be left out. This will be visibleon the company,industryand nationallevels.

There will be more "summits" bet w e e n t o p l e a d e r so f l a b o r a n d management.

Governmentwill iri time limit its interventionto definingthe

region,both managements andunions havedeclaredthat they will actively participatein the council.Much was madeof the no-strike/no-lockout concordatsignedin Negrosasan example of labor-management cooperation that shouldbe a modelfor replication in other regions.

Potentialrepercussions of RA No. 6727 and the government's regionalizationthrust are not limited to wageissues.Someparticipants predicted that labor-intensiveind u s t r i e sw o u l d g r a v i t a t et o w a r d regionswith lower averagewage levels,forcing regional officials to resistefforts by labor to increase wagesand salariesin the region.

Other participantsexpressedapprehensions that emphasison regional governmentalstructureswould force nationalunionsto follow suit,altering their structuresto providemoreautonomousdecision-makingpowersto theirregionalorganizations.

Competition betweennationalunionswill be pusheddownto the regionalleveland fhe Wceie regionalunionleaderswill gainpower Rctionofizcrllon Act at the expenseof national officials.

Many participantsfelt that the "one ne of the mostspiriteddiscus- industry-oneunion" strategyin the -, pastis "dead,"future competitionwill I Isions in the roundtableconV ferencesrevolvedaroundthe be on a regionalratherthanindustrial implications of Republic Act No. basis.Other participantsfelt that natio 6777,knownastheWageRationaliza- nal unionswill continueto insiston nation Act, whichshuntsresponsibility tional wage-fixing"in spiteof the law." for thesettingofminimumwages from Unions will haveto adapt in other Congressand the nationalgovern- ways.Theywill becomemoreregional ment to regionalcouncils.The reperthan nationalin character.This is hlreadyhappening:nationalunionsare cussionsof this law were seento extend far beyondwageissues. beginningto createtheir ownregional A good deal of pessimismwasexorganizations,especiallywith the dispressedoverthe abilityof government persalof multinationaloperations. to effectivelyimplementRA No.6727. This will weakenthe nationalunions This lawwill meetwith the samefate somewhat.It will certainlyrequire as previouswageboardsbecause closercoordinationbetweennational thesecouncilswill still begovernment. and regional offices.The spokesman As long astheseremaingovernment i n t h e r e g i o n w i l l h a v et o b e t h e structures,the impacton the genera- regionaloffice;whatusedtobe aweak regionalorganizationwill become t i o n o f s e l f - m o t i v a t i o nw i l l b e thwarted; we will only experience strong.Membershipin regionalwage frustration.As a matter of fact, what and productivitycouncilswill haveto are thesecouncilsdoingnow? comefrom the local organizationand Therewere dissentingopinions, the seatof power may shift to the however.Someparticipantsstrongly regions.But therewill alwaysbe nafelt that the councilswould in time tional organizations.For example, succeednot only in settingacceptable Singaporeand Malaysiastill havenawagelevelsbut alsoin promoting tionalorganizations but theseareconcernedwith nationalissues.Regional c o o p e r a t i o nb e t w e e nl a b o r a n d problemsare handledby regional managementand in this mannercontributingto industrialpeace.It was councils.It will be similarto a federal pointedout that in the Cordillera systemof government:decisionswill relationships,the mannerof settling disputes,and soforth, but it will leave iscollectivebargainingon substantive suesto the two sidesinvolved.

Too muchgovernmentinterference in industrialrelationsmatterstakes awaythe relevanceof trade unions.

For example,the recentP25increasein theminimumdailywagemadewagenegotiationsat the companylevel academic. In at leastthe areaof wage-setting the unionshavetemporarilybecomeirrelevant.In manyCBAs signedafter that increasethereareclausesdeclaring a moratoriumon wagebargaining Workshopparticipantswere howeverin generalagreementthat the clamorfor lessgovernmentintervention and more autonomyin industrial relations(IR) "is no longerreversible, it will continueinto the 1990s."They pointedto ongoingtrendssuchasthe Herrera-VelosoLabor RelationsAct of 1989and the thrustof the Department of Labor toward voluntarvarbitration.

42 THE A9IAN MANAGERo SEPTEMBER1990

firms, functioning as subcontractors Roundtableparticipantspredicted that this decadewill seea sharpinandsuppliers,couldverywell provide and Chlnglng_rtrotcglcl of creasein the numberof multinational a signifiiant shareof employnent in unlon lnd tncnogcmcnt ln companiesoperatingin the PhiliptheiqgOs.Becauseof th'eiriize and rgponsc lo rlructural drongc uniquestructure,howeveratheywillbe pinesunlessseriouspolitical convuldifficult to organize;someroundtable sionscontinueto take place.There participants predictedthat this seg- will correspondinglybe a larger was widespread feeling in a lhere I that the I mentofthelaborforcewillberelative-premium placed on productivity and I the two roundtables r decadeof the '90swill require lower productioncostsbecausemany I ly immuneto unionization. of thesecompanieswill be competing changesin strategyfor both unions I Oo the other hand, it was also in its on a global basis.The implicationfor and managements in responseto I pointedout that management, production will collectivebargainingis the possibility costs, for lower structuralandenvironmental changes. I drive that employeeproductivity maybeImplications of the regionalization I probablyfind waysto usethesefirms thrust of the government and I to absorbportionsof their normal come a significant factor in wage negotiations.Other issuesthat will predictedresponses by unionshaveal- | operations, effectively reducing its grow in importanceare thosedealing regular workwith forms of compensationand force. Union offic i a l s p r e d i c t e d employment:part-timeand seasonal work, piecework, and the like.

Effectsof TechnologicalChange.

The growingpresenceof multinationtions and subcon- al companieswill hastenthe introduc-. \.. tion of technologicalchange.Introtract more" to ./ductionof newtechnologlmayleadto takeadvantageol \ \ a g r o w i n g i n f r a - the radical transformationof work \' stiuctu.Jofsup- c o n t en t . A s n e w m a c h i n e s ,n e w ilmX processes,and new organizational structuresare installedmanynovelissuesare certainto arise.Skill requirementswill change,with corresponding on wageand salaryranrepercussions and authority ges,job classifications and statusranks.New technical, of professionalandmanagerialclasses will emergethat mayserve employees '. to further erodeunion membership. wing trend in cur\ O;4 )' rent union stra- There will be need for extensive ./ '/ retraining and reorientationof existtegy is to form /'/ separateorganr- ing humanresourcesand to addrdss other problemsarisingfrom obsoleszations for wor./' cent employeeskills,experience,and k e r s e x c l u d e d --/ a t t i t u d e s .S o m er o u n d t a b l ep a r from the CBA, s u c h a s s u p e r - ticipantspredictedtemporarygapsin employmentpatternsbecauseof techvisors,technicaland profossionalemreadybeendescribedabove.But other ployees,casualsand contractuals, nologicalchange. trends and factorsare at work. ParAside from complicatingwageand givingrise to awkwardsituationswhen ticipants cited,Kalakalan24 the need salaryissues,technologicalchange multiplebargainingunitsbelongto the to develop agriculture rapidly, the will alsoput pressureon employment. growingpresenceof multinationals, samefederation.

Labor-savingdevicesand labor-miniI n d u s t r i a l R e l a t i o n sI s s u e si n the adoptionof newtechnology,overmizingtechnologiesare certainto be Agriculture.Unionismin the agriculseasemploymentof Filipinos and the introducedin the constantsearchfor ongoingsearchfor more"consensual" tural sectoris expecte{to grow more -as opposedto confrontationalrapidlyin the 1990s.As with govern- lower production costs.Although more sophisticatedskills,and thereapproachesto industrialrelationsas ment unions,new approachesmay fore higher compensationlevels,will haveto be formulatedand national someof the factorsthat will require probablybe required,the net effect from both sides. federationscurrentlyconcernedonly newresponses maywell be fewerjobs.

Kalakalan20.Becauseof theneedto with industrial workerswill haveto Someunion participantsto the conalleviatepovertyin the countryside decidewhetheror not to entera large If ferenceexpressedapprehensionover potentialmarketfor their services. anddecongestthe cities,Kalakalan20 the effectsof new waysof managing passedinto law lastyear.It guarantees theydoinabigway,thereareboundto be further changesin the present and different IR approacheson ora minimum of governmentinterganizedlabor. They pointed to ferencefor enterpriseswith no more structureof the labor movement. employmentpracticesthat Japanese Companies.

Multinational Thesesmallfamily than20employees. be madeat lower levels.

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THE ASIANMANAGERo SEPTEMBER1990 43

in manyplaceshavemadeunionsirrelevant.They predicted that the gowth of thesepracticesin local industriescould well becomeanother problem area for the trade union movement.

Labor ManagementCouncils.The searchfor more consensualand less confrontationalsystemsof industrial relations will continueand the practice of organizinglabor-management councils (LMCs) in individual companieswill becomemore widespread in the 190s. Recentstudieshaveindicatedthat LMCs arenot onlygrowing in numberbut are seenasimproving firm competitiveness,providing greaterjob security,reducinggrievancesand supportingunionismin the longrun.

Participantsalso pointed out, however, that area labor management councilshaveso far producedmixed results.The experiencein Lagunaand Bataanhasnot beenencouragingbut the conceptof an areaLMC seemsto be working in Negros. Someparticipantsfeltthat thewiderangeof disparateand often competinginterests that characterizsareaLMCs makesit moredifficult to arriveat agreements.

fhe Bolforn Liner Will CBA Content Chcnge? to the roundtable larticipants pconferences projecteda numr ber ofsignificantchangesthat will take placein the scope,coverage and contentsof collectivebargaining in the decadeof the '90s. agreements Coverage.The CBA of thefuturewill probablyincludein the bargainingunit manyemployeeclasses nowlistedunder "exclusions"and "exemptions."Casual and temporary personnelmay fall in thesecategories.Supervisorytechnical and professionalemployeeswill continue to be excludedfrom rank and file unitsbut will form their own unions.

Many "non-bargainable" Scope. items at presentwill be addedto the bargaining agenda. Livelihood projects,are one example.Othersinclude monetary"salaryextenders" and "alternative income schemes," profit-sharing and employeeparticipation in decision-making,aswell ashousingprograms.

Contents.Some of the more dramaticchangesin CBA contentwill

be in the compensationarea.Participantsforesawgreaterconcernwith productivityand productivity-sharing clauses.Proht-sharingwill take many forms,suchasincentiveschemesand performancebonuses.

There will be more emphasison job evaluationprograms.In the past,both tendedto unionsand managements cutjob differencestoo finely,resulting in toomanypositiontitlesandjob classifications.The trend in this decade will be to emphasizeworker flexibility and arrive at wider job contentand fewer pay classes.Payrangeswill be closer,with feweroverlaps,and there will be greater stress on merit programs.

Although regionalizationis not expectedto dramaticallydifferentiate betweenCBA contentsfrom one region to another,there will be different levelsof emphasis.Autonomy will also and local decision-making resultin greaterinnovationat the bargainingtable asthe two sidesexperiment with solutionsfor their unique problems.

TheNeedfor NewDelinitions.Most of the participantssawthe ongoing decadeasa periodof suchfundament a l c h a n g et h a t t h e n e e d f o r n e w definitionswasbroughtup over and o v e r a g a i n .H o w w i l l w e c l a s s i f y workerswhowill do mostof theirwork a t h o m e ?H o w w i l l w e d e f i n e a "professionalemployee"or a "technicalemployee?"Whendoesa casualor contractual employeebecome "regular?"Wheredowe drawthe line betweensupervisoryand managerial work? What is an "agricultural worker?" How are we to define "employeeperformance?"Mention hasalreadybeenmadeof the clear need for new definitionsin government and agriculturalsectors,but the problemextendsto the industrialand commercialsectorsaswell.

Gonclusion: the ]lew Dimengions he major developmentsthat will influence industrial relationsin the Philippinesare: the emergence of unionism in the government sector and the strengthening of unionism in agriculture; the effects of regionalization on the structure ofthe labor movement; the transfer of wagesetting functions from the national

44 THE ASIAN MANAGER r SEPTEMBER1990

governmentto regional councils;the unionizationof supervisorsand other employeeclasses;the increasing presenceof multinationalcorporations;Kalakalon20;and the consequencesof more rapid technological changeand the ongoingsearchfor more harmoniousand cooperative systemsof industrialrelations.

Thesedevelopmentswill affect the scopeand processof collectivebargainingand the contentsof the CBA in the 190s. The generaleffect will be a larger role for the labor movementin theeconomyanda largersharefor the worker in the fruits of industryand agriculture.There will be other major developments,suchas the effectsof Agrarian Reform the Comprehensive Laq whichwerenot seenasinfluencing industrial relationsand were therefore not discussed.Another potentially significantareanot sufficientlyexplored,becausefew membersof the panelsknewenoughabout it, wasoverseasemployment,with its implicationsfor foreign exchange earnings,employmentopportunities, the availabilityof skills in the Philippinesand potentialdislocationsin the eventof largebackflows.

Meliton V. Salazar ProfessorSalazaris theDon Ramon CaroProfessorOf BusinessManagement.He joined the AIM faculty in 1969afterreceivinghis MBAfront theHaruard GraduateSchool Of Business and teachesbusinesspolicy, strategtfonruilation and impl ementation, and occasionaI coursesin organizational develop' ment,behaviorand modification, of change. and themanoge,nent

ARTICLE Simikritiesand contrasts...

Comparing Mclnufclduring Prtlctices in Euirope'-crndSoulh Korecr businessschoolin Lausanne,Switzerland). This datawasmuchmoredifbyBoo-HoMo MBM'74 ficult to gather,and representsa considerablysmallerpercentageof the Professorof BusinessAdministration, companiesinvolvedin theseindusSogangUniversity tries.The surveyinvolveda mail questionnaire (in the appropriate lanlntroduction guage),againwith a disappointing response,and telephonesolicitation his paperpresentsan analysisof and follow-up through trade associatwo setsof datafrom a largedata tions. Substantiallyon the basisof baseof manufacturingplanning thesefollow-upphonerequests,thefipracticesgatheredfrom companies nal samplewassecured.The textile aroundthe world. Two industries firmsincludedsomeintegratedmanuweresurveyed,the non-fashiontextile facturers,aswell assomefairly small industryandthesmallmachinetool infinishingfirms. The smallmachine dustry.Both of theseindustriesare tool manufacturersrangefrom very found throughoutthe world in both small,specializedproductdesigners advancedand developingnations. and producersto fairly large, comDatahasbeencollectedfrom Western plete line manufacturers.

Again,the andEasternEurope,SouthKoreaand sampleis representative,with 34 the People'sRepublicof China,and machinetool firmsand24textilefirms. plansfor gatheringadditionaldatain Dotc Gcthering The questionnaireincludedsections SouthAmerica,North America,and for generaldata on the firm itself, Japanhavebeenmade.This paper, Ihe SouthKoreandatagathering forecastingprocedures,production however,only incorporatesdatafrom supportedbySogang planningand schedulingprocedures, I activitywas r Universitv and the Korea WesternEurope and SouthKorea. shop-floorproceduresand purchasThis paper is the first of a seriesof ProductivityCenter.The effort ining and materialsmanagement.

The cross-geographical The comparisons. volvedboth a mailsurveyandpersonal findingsin eachbfthesecategoriesare importanceof gatheringempirical interviews.The responsesto the mail presentedin the followingsections. data from the field is verv clearwhen surveyweredisappointingly small,and the objectiveis to compire practices the decisionwasmadeto sendteams Generol Conporisons betweendifferentpartsof theworld.It of interviewersinto thefield to directly is evenmore importantwhenpart of gather data from the target comhe companiesin both industries the interestconcernsdoingbusiness panies.The data,therefore,is from a in Korea haveslightly fewer with firms in theseareas.Although substantialportionof the population employeesthanthosein Europe, theoreticalmodelswere usedfor of firms producingsmallmachine but thereis wide variationin numbers developingthe questionsto be asked toolsand non-fashiontextiles.In the Both overallsalesand of employees. of managers, it is their actualpractices textileindustry someintegratedfirms investmentin productionequipment that are of interestin this paper.In (from spinningandweavingto sewing) were significantlylessin the Korean o r d e r t o b e t t e r u n d e r s t a n dt h e are includedaswell assomesmaller, firms: the Koreanfirms havesubstansimilaritiesand differencesin the lessintegratedcompanies.Smalltool in equiptially smallerinvestments regions'manufacturingplanningand manufacturersincludefirms that ment per employeeand lowersales c o n t r o l p r a c t i c e s , a r e l a t i v e l y producesmalldrill presses,mills, output per employee. straightforwardanalysisof the ques- other formingequipmentandsome Somefirms in both industries tionsfor whichtherewerelargeor inThe producestrictly to order and others computer-controlled equipment. terestingdifferenceswasperformed. sampleis representative of Korean strictly to stock,with manyproducing The choiceof WesternEuropeand f i r m s d o i n gb u s i n e s si n t h e s ei n a mixtureof both. The majorityof the SouthKorea for this comparisonwas dustries,with 89machinetool and33 productionis to order,with Korea basedon two factors.The first factor havingslightlymoreproductionof this textilecompaniesincluded. wasthe emergenceof Korea asan inThe Europeansamplingwassup- type than Europe in both industries. dustrialpowerandthe secondwasthe ported by IMEDE (an international Capacityutilization averagedabout i n c r e a s i n gi n t e r e s t o f W e s t e r n Europeanfirms in engagingin joint ventures,sourcingand otherbusiness in SouthKorea.The arrangements K o r e a ni n t e r e s ti n t h e s t u d yw a s f o u n d e do n i n t e r e s ti n d o m e s t i c productivityconsiderations.

The WesternEuropeansalsowereinterestedin doinginternalcomparisons, but were more concernedwith what different approachesto manufacturing planningand control they might f a c e w i t h K o r e a nj o i n t v e n t u r e partners.The studydoeshighlight someareasfor whichunderstanding thesedifferenceswill be important and which may require substantial patience.Thereare alsoareaswith potentialfor makingtechnological imp r o v e m e n t si n c e r t a i n K o r e a n manufacturingpractices.

THE ASIANMANAGERo SEPTEMBER1ss0 45

the same(77Voto 86Vo)for all cases.

The averagetextile firm exportsabout 25Voof its total sales.The Korean machinetool firms e)port an average L4Voof.sales,much lessthan their Europeancounterpartswho average 32Voof sales.This is one of the few instancesin the surveywhere the differencesbetweenindustries(although only in machinetools) were more pronouncedthan betweencountries.

Figure1 GenaralFirmData TEXTILE # of Empls.

TotalSales Equip.Value % to Order Export Sale %

Forecosting he preparationof forecastsis a b o u t t h e s a m ei n b o t h i n dustries,but doesvarysomewhat betweenEuropeandKorea.Although the sales-marketingfunction producesthe forecastsaboutT\Voof the time in both Korea and Europe, there is a differencein the level at whichtheforecastismade.In Europe, more executiveattention is paid to forecastingthanin Korea. About40Vo of the Koreanfirmsproduceforecasts at the lowestmanageriallevel (group in or section)asopposedto about?-0Vo Europe. At the other extreme,only about 3Voof Korean forecastsare madeat the presidentor CEO level, comparedto about3OVoinEurope.

Another differenceoccursin the use of forecastdata betweenEuropean and Korean firms. The European firmsuseforecaststo preparebudgets much more frequentlythan Korean firms usethem for that purpose(about 30voascomparedto l3vo). The maior useof forecastsin Koreanfirms is for production planning.That is the secondmost frequent use, after budgetpreparation,for European firms.

Perhapsas interestingasthesedifferencesare the similarities.For example, the forecasting horizon averagesabout one year, and the incrementrangesfrom 1.5to 2.9months in both Korea and Europe. Forecast revisionsare performed quarterly.

About half of the firms in all casesprovide a rangefor their forecasts,asopposedto a singlepoint.

Severalaspectsof forecastingthat differ betweenKorea and Europe (the industrydifferencesare small) surfaced.For example,Koreanfrms considerpastsalesdataa muchmoreimportant objectivedata input to their forecastingthan European firms.

Europeanfirms usea combinationof

M A C H I N ET O O L

# of EmPls. Total Sales Equip.Value % to Order Export Sale % 80

60

40

20

100

RelativePercentages l---l Korea

Europe

I

Figure2 ForecastingData TEXTILE Past Sales lmp.

Use FormalTech.

Use the Gomputer Use Error Measureg lnd. Prod.Fcst.

M A C H I N ET O O L

Pagt Sales lmp.

Use FormalTech.

Use the Computer Use Error Meagureg lnd. Prod.Fcst.

20

40

60

80

100

Percentof Regponseg I

pastsales,orderbacklog,andindustry statistics.There is a muchhigher use

1990 46 THEASIANMANAGERo SEPTEMBER

Europe

l---l Korea

of computersandformal techniquesin Europe than in Korea, aswould be ex-

while lessthan half the European firms do so. The European firms forecastproduct groupsor linesinstead.A higher portion of Korean thanEuropeanfirms forecastin physical unitsinsteadof monetaryterms.

Figure3 ProductionPlanningData Textile

I n d .P r o d .P l a n Usethe Computer

Producllon Plcnning cnd Scheduling

PlanPreparer P l a nU s e r

input factorsfor production fhe I p l a n n i n ga r e p r i m a r i l yo r d e r r backlog and forecast with productioncapacityalsoan important factor in Europe.The forecastis a moreimportantfactorin Koreanfirms thanit is in Europe (asexpectedfrom theforecastingresults).The planitself is developedfor individualproducts more frequentlyin Korea than in Europe, aswasalso the casewith the forecasts.Thereis a greateruseofthe computerfor production planningin Europethan in Korea.

In both industries,productionpersonnelare the primary preparersand usersof productionplans.TheKorean firms in general,however,tend to involve lower level people more frequentlyin the preparationand useof the plan. With the exceptionof the preparationof the textile plan,nearly twice as many plan pre parersand usersaresectionmanagersor belowin the Korean firms as in European firms.

Korean production plans cover about L2 monthswhile, in Europe, they averageonly about nine months.

The incrementaveragesaboutone month,but is slightlyhigherin Korea thanEurope.Therearesomesimilaritiesin planning however,that are important.The plansare revisedmonthly, apparentlyaccommodatingdemandfluctuations,since overffiVo of responsesindicatedthat plansare revisedwhenthereis a demandfluctuation. The productionplansare used primarilyfor operationalactivitieslike schedulingor materialplanningrather t h a n f o r p l a n n i n g a c t i v i t i e sl i k e budgeting,facilitiesinvestment,or staffingin both Korea and in Europe.

MachineTool Ind. Prod. Plan Use the Computer Plan Preparer Plan User

20

40

60

80

100

Percentof Responses I

Europe

[---l Korea

Figure4 Involvementin Shop-floorActivities TEXTILE Adrninistration Marketing Prbduction

M A C H I N ET O O L

Administration Marketing Production 40

20

60

80

100

Percentof Responses [---l Kor. Prd. Inlt.

I

Eur. Prd. lnlt.

ffi

Eur. Prd. Seq. Nl

pected. Many more European than Korean firms measureforecast errors.

Shop-floor ActMlies

Kor. Prd. Seq.

More than 707oof.the Koreanfirms forecaston anindividualproductbasis

are importantdifferences Ihere Europe and Koreain between ! r managingshop-flooractivities.

In initiatingproduction-oriented and job sequences, functional establishing

THE ASIANMANAGERr SEPTEMBER1990 47

involvementis predominantlyproduction-orientedin Korea while in Europe, marketingand administration playa substantialrole.However,there are other shop-floor activitiesfor whichproductionhaslessinfluencein Koreanfirms thanin Europeanfirms.

In Korea,marketingand customerinand fluencedominatethe establishing changingof in establishingpriorities and determiningdeliverydates.In Europe, factors like processingtime requiredandmaterialavailabilityhave a more important influenceon these items.Thus the initiationof production activitiesin Korea is dominated by production,but market-oriented factors dominatein determiningdue datesand priority considerations while theseforcesare more functionally balancedin Europe.

Thetransmittalof datato suppliersis mostly in written form acrossindustriesand countries.The European firms, however,havemore oral and computertransmissionof datathan Koreanfirms.Similarly,thereis more written communicationto the shop floor in Korea than in Europe.The Koreansseemto think more highlyof their time standardsbut, in both Koreaand Europe,manycompanies expresseddifficulty in using time purposes. standardsfor management Although the patternof engineering or designchangeson ordersin the shopappearto be somewhatdifferent (there are fewer changesin Europe than Korea for textiles, while the reverseis true in machinetools,it is not significant.In terms of lateness, however,the European companies tendto havefewerlateordersbut their late orders are substantiallylater (in t e r m s o f t i m e ) t h a n t h o s eo f t h e Koreanfirms.

When askedto specifythe causeof lateness,the answerscovereda wide spectrum,with capacity,material availability and quality problemsfor companiesin both countriesand in both industries.Labor capacityin Europe and machinecapacityand quality in Korea were especiallyimp o r t a n t . T h e m e a n sf o r m a k i n g capacitychangescovereda wide responseset. Overtime is usedfrequently for capacityincreases,while inventory is built during times of reduceddemand.Apart from overtime, the Korean firms tend to hire people,while in Europe the backor-

Figure5 Marketlnfluenceson the Shopfloor Textile

Mar/cusoet. irior.

Mktng. Con. Gh.Pr. Cust. Det. Del. Date

M a c h i n eT o o l s

Mar/CusDet. Prior.

Mktng.Gon.Ch.Pr. Gust.Det. Del.Date 20

80

60

40

100

Percentof Responses europe

I

^r,=o

J

Figure 5 Shopfloor Data TEXTILE WrittenPur.Order WrittenPrior Ch. AccurateStandards of Or. Des. Ch. <1O% rlO%of Ord. Late Late Ord. Over lWeek M A C H I N ET O O L

Written Pur. Order WrittenPrior.Ch. AccurateStandarde of Or. Des. Ch. <1O% >10%ol Ord. Late Late Ord. Over lWeek 20

40

60

80

100

Percentof Responsea I

ders are allowed to increase.When subcontractingis done in the textile in-

48 THE ASIAN MANAGER o SEPTEMBER1990

Europe

l---l Korea

dustry the tendencyis for it to be used for capacityexpansionin Koreabut to

Figure7 Purchasingand MaterialsData Textile Invt. % Raw Mat. SingleVendor EOQ Use MRP U8e JIT Use

MachineTools lnvt. % Raw Mat. SingleVendor EOQUse M R PU 8 e JIT Uee 10

20

30

40

50

00

Percentof Responges I

be usedfor strategicconsiderations suchascostand qualityin Europe.In the machinetool industry,both the Korean and Europeanfirms seemto subcontractfor capacityand costpurposes.

Europe

l---l Korea

ingly,inboth industries,about40Voof the Europeanfirms are benefitting from MRP while about 30Voof the Koreanfirms arehavingtroubleintroducingit.

In planningjoint ventures,Western Europeanfirms must take into accountdifferencesat the organizational level and sophisticationKorean firms usein their activities.In the dayof theseactivities to-daymanagement to the differencesin responsiveness customerrequestsmay causereal problemsunlessaddressed.These fundamentaldistinctionsmustalsobe addressedin order to minimizethe difficulty in integratingpracticesin WesternEuropewith thosein South Korea.AdditionallS there is room in the Koreanfirms for increasing knowledgeanduseofcomputers,and of someof the newertechniquesthat are availablefor forecasting,planning and scheduling.

The primary conclusionfrom this studyis, not surprisingly,that caution mustbe exercisedin anyEuropeanSouthKoreanjoint venture.SecondlS it is important to understandin detail someof the practicesof thejoint venture partner in order to integratesystemsand approaches.Finally,thereis an opportunity for training and technologytransferin order to increase of joint venture the sophistication partners.

Surnmary and Conclusi6ns inventorypositionof Korean Ihe I firms is slantedto the raw r materials/purchased partsendof the continunn. AborilSDVo of total inventoryfor eachindustry falls in this categorycomparedto lessthan4AVoin Europe.The purchasingofthese raw materialsis basedon customerorders or the productionplan in a majorityof caseswith Koreaplacingslightlymore emphasison customerorders.Single sourcinghasnotbeenwidelyaccepted as a supplyguaranteemechanism, eventhough more than 50Voof the Koreanfirms indicatedonly a single vendorper part.

In general,thereismoreuseof EOQ, MRP, andJIT amongEuropeanfirms thanKorean.In fact,veryfew firms in KoreauseeitherMRP or JIT. Up to 50Voof the European machinetool firmsuseEOQ and/orMRP. Interest-

here are some important differences in manufacturing practice disclosed in this studv.

Surprisinglythe differencesare greater,in general,betweenSouth Korea andEuropethanbetweenthe textile and machinetool industries.

Therewere issueswheretherewere industry differences,but not many. products, The greatdisparitybetrveen processesand marketsbetweenthese industriescanexplainthesedifferences.

The most important differences between Korea and Europe occur in the involvement of marketing the detail, a n d l e v e l o f m a n a g e m e n tu s e d f o r forecasting and planning; the influence of marketing and customers on shop-floor activities;and the level of computer usageand technology application by the firms. The implications of these findings are quite clear.

Boo-HoRho MBM'74 andpresidentof theKoreanAfM Afumni Association, Boo-Ho Rho is a ProfessorOf BusinessAdministration at SogangUniversityin Seoulwherehe is graduateprograntcoordinator of the college.His areasof interest include manufactuingpolicy, productivitymanagementandgeneral management.He hasrecently developeda researchproject title4'World-wide Sumeyof Marufactuing Practices"with Cloy Wryba* of Indiana Univercity.

THE ASIAN MANAGER r SEPTEMBER1990 49

Appendix (Values in Percent Unless Olhenvise Indicated)

Item GENERALDATA Sales

Korea Textile

$1s.3M

Europe Machine

Textile

Significance*

Machine

$19.2M $142.9K

$33.8K 72 32

Employment

84

Prod. Equiot.

$8.1M

$10.0M

Sales/Person

$37,6K

$29.6K

$14.9M $890.1K

EquipVPerson

$12.1K

$11.1K

$234.4K

s1

Level

Tesl

$53.0M

$402.1M

$14.4M 468

595

Prod.to Ord.

73

82

59

ExportRatio#

28

14

24

Mrktg.Invol.

75

80

61

69

by Lower Mgt.

40 13

56

9

27

25 30 10

<0.03 <0.02

t

No, <0.O005

t

<0.01

t

t

FORECASTING

Use:Budoet Manpower

4

13 23 3

Facilities

7

7

New Prods.

7

3

Material

Sales Plan Prod. Plan ForecastPeriod Forecastlncrmt# Revision/yr

15

22 33 12mo 2.2mo 3.7

18

3 3 3

<0.001

NO

K.S K-S

<0.05

K-S

14 1

3

18

17

17

33 1 2m o

27

21

12.7mo

17.2mo

2.0 mo

1 . 5m o

2.9mo 4.2

<0.0005 <0.02,<0.05 No

t t t

3.4

3.3

56

55

41

45

No

PastSales ComputerUse

100

83 15

3i' 42

Formal Techs.

17

14

62

<0.001

ErrorMeasure

15

30

42 38 52 62

<0.001

11

<0.001

Indiv. Prods.

74

71

27

73 43

Phys.Units

58

58

37

47

<0.001

K-S K.S K-S K-S K-S K-S K-S

40

47

27

27

51

42 2 79 12

18

19

<0.001

K-S

25 40

26

86

93

<0.001 <0.001

K-S K-S

33 30 26 27

29

Range

<0.m1

<0.001

PRODUCTIONPIAN Planinout order backlog

forecast prdctn cpacty (?)

2

lndiv Prods

84

ComputerUse Preo,: administr

t0 36

production

48

61

16

21 70 10

24

59

11

3 93

3il

16

81

48

54

7

4

11

16

51

64

23

28

PlanPeriod

12 mo

12mo

9.5 mo

8.4 mo

<0.001

PlenIncrmt.

1 . 7m o

1 . 1m o

0.8mo

<0.001

t

Flevisions/yr.

1 . 3m o 9x

10x

1lx

11x

No

t

Plan use Operational

58

64

76

69

No

marketing Low Mot. oreo #

Use: administ. production marketing Low Mgt. Use

s0 THE ASIANMANAGERr SEPTEMBER1990

49

No

K-S

17

a

No, <0.025

K-S

<0.10

K.S

<0.001

K-S t

K-S

SHOP FLOOR 42

<0.05

95

31

50

<0.01

75

48

47

<0.001

68

59 18

No <0.001

69

<0.05

65

38 62 52

35

<0.m5

t

91

81

65

42

<0.001

K.S

79

76

91

K-S

61

n

53 35

No, No

30 21

<0.10

K-S

51

75

85

<0.001

K-S

<0.005

K.S

<0.1

K-S

<0.001

K.S

No, No

K-S

MkVCustdet pri

82

Marketchanoeori CustDetDueDate WritePurch.

80 60 90

63 70

Write Shop

58

Good Stnds. < 10%Engr# > 10% late Ord > 1Wk. late Due to Machine cap.

28

24

4

6

Laborcap.

11

15

23

18

Material

13 32

15

21

19

a

19

15

8

5

Quality

DueDateChanges Cap. lncr.

Hire

OT Subcon

K-S K.S K-S K-S K-S K-S

46

al 92

73

Prod.

Sequen.

Initia.Prod.

6

85

8

24

n

7

17

49

50

53

43

24

n

n

28

13

n 21 21 26 24

Backorder/Lease

2

Cap. Decr.

Layoff

2

8

4

9

17

30

Beduce Time

15 0

0

17

lnv.

69

75

71

58

n

42

35 40 60

Raw Mat'l

48

51

39

36

<0.01

Purchto Ord

43 25 50 35 0

51

n

42

No

K-S

31

35

33

57

18

22

<0.001

50 21 50

No,<0.10

K-S K-S K-S K.S

Undertime

Subcont.Capac.# Strategic

47

53

MATLS.MANAGEMENT

to Plan SinqleVendor

EOQUse# JITuse MRPuse

9

26 1 9

22 13 42

No <0.001

t

*The levelofsignificanceis for the testbetweenKoreaand Europe (industrydata aggregated)exceptwherenoted.

The t test (t) and Kolmogorov-Smirnov (K-S) testswereusedfor numericand nominalcomparisonsrespectively.

The indication"No" wasusedwhenthe K-S valueexceededa significancelevelof 0.10. *Level of significanceis for the testbetweenindustries:first valuefor textile,secondfor machinetool.

References Chen Jian-Guo, Operations Management in Chinese Textile Enteryises, Master Thesis, Department of Systems Engineering Shanghai Institute of Mechanical Engineering, August 1987.

Rho Boo-Ho and D. Clay Whybark,"ProductionPlanning and Control in Korea," Pan-PacificConferenceIV, Taipei,Taiwan,May 1987.

Whybark,D. Clayand Boo-Ho Rho, "A WorldwideSurveyof Manufacturing Practices," DiscussionPaper#2, Indiana Centerfor GlobalBusiness.

GraduateSchoolof Business, IndianaUniversity,L988.

Yan Xiao-Jiang,Opemlions Managemattilt CltilrcseMachilte ToolMuufactuing Fl'nru, Master'sThesis,Departmentof SystemsEngineering ShanghaiInstituteof Mechanical EngineeringAugust 1987.

THE ASIANMANAGERo SEPTEMBER1990 sl

ARTI Selectingwinnen..

lnterviewing lechnhues for

lop Mclndgemenl

by Ma. Perlita G. Tiro Managing Director, Tiro Consulting Senices Pte. Ltd. abound on how canlublications should conduct themFdidates r selvesduring interviews.Cours e s ,d e g r e e a n d n o n - d e g r e e , a r e taught in schools and universities on how personnel practitioners should interview candidates. Few in top management positions, however, ever attend courses in interviewing.

I have therefore decided to share my personal observations from top management clients (directly or through candidates' feedback) through the years. I have personally learned a lot from them in the processand continue to fine-tune my interviewing style each day.I have picked up the most crucial

pointsfor this article.

L. Delinewhat you want right at the start.Someof my clientstell me two aboutthepositiontheywant sentences to fill and expectme to go out in the market and get the right personfor them.Of course,I am elatedat the trust they are givingme aboutbeing able to guesswhat they want.However,this just meansthat I needto write down my understandingof the job and what I think their requirementsare, for their review,before Otherwise,we startingtheassignment. may end up gettingthe wrongtype of candidatesfor thejob.

The mostcrucialelementin preparing for an interviewis to defineexactly (well,almost)the type of experience the client is lookingfor, the personal qualitiesthe positionrequiresand how muchclient is preparedto pay.

Thereshouldbe a "desired"setof "bare parametersand anothersetof

52 THE ASIANMANAGERo SEPTEMBER1990

minimum" requirementsfor the position. Often, of course,we simplyhave to be realistic and expectthat the "ideal candidate"is not availableunlessclient is willing to pay dearly for him or her.

I h a v eb e e n m o s t i m p r e s s e db Y clients who haveready for my first meetingwith them,the organization chart, job description,person specificationand remunerationpackagethey havebudgetedfor the job.

The real outstandingonesevenhave performancetargetspreparedahead of time. Placingan executivein such firms is normallya L00Vosuccessfrom the first shortlist ofcandidatesI prepare.They are the oneswho also havea high successrate for recruits that theyhire throughtheir own personneldepartments.

2. Readthe candidate'sCV before the interview.The candidateis supposedto havedone his homework

(aboutthecompany,its products,etc.) beforethe interview.You shouldtoo, in order to be ableto askmore discerningquestionsand dwell on points thatyou arenot sureof aboutthe candidate.Seehow the candidate'sexperiencerelatesto your requirements.

Alwaysrememberthat the candidate youin muchthe same will be assessing him.I am waythatyouwillbe assessing impressedby my clientswho remember the candidate'sbackgroundwell withouthavingto consulttheir papers all the time.

3. Prepareand structureyour questions aheadof time. You probably havea setof questionson your mind and canbe quick at formulatingthe questionsasthe interviewprogresses.

However,you could fall into a common interviewer'strap wherebyyou selecta candidatewho is smoothand assertive but lacksdepthor is not really the type of personhe presentshimself to be. To makeyour interview moreobjective,it wouldthereforebe usefulfor you to structureyour questionsaheadof time: o onesetofquestionsandsituational cases(for on-the-spot solution)commonto all the candidates;and, o anothersetofquestions relevantto the backgroundof eachcandidate.

It takesdisciplineto put thesequestions in writing, but the benefitsfar outweighthe extraeffort you put in.

You do not haveto follow thesamesequenceof questionsfor eachcandidate - you needto play this by ear.

You may evenskip somequestions which may havebeenansweredindirectlyalongthe way.

4.Start theinterviewon time.Unless youaretestingthepatienceofthe candidate,start the interviewat the appointed time. You must remember that you probablyneedthe person evenmore than he or sheneedsyou (especiallyduringboomtimes).You thereforewantto makeagoodimpressionaboutyourselfandyourcompany and makehim or her feel important.

Do not forget that the candidates scheduledto be seenby you are the best of the lot of candidatesconsideredfor the post and are likely to havebeenalready"grilled" by an outsideconsultantlike myselfor by your personnelmanager.

5.Blockoffthe timesolelyfor thein-

terview.There is nothing more exasperatingfortheintervieweethanthe meetingbeinginterruptedby phone calls or the secretarycomingin and out of the room severalttmes.We tell the candidatestheseinterruptions couldmeana little bit of time for them to consolidatetheir thoughtsand reformulatetheir answersto previous

veniently arrangedand, preferably with the telephonecut off. The rule is to placethe candidatein asittingpositionwhich is equalto that of the interviewer(".g., " conferencetableor sitting loungewouldbe superior to using a standardoffice desk),but this is difficult or expensiveto implement for Someclients,or even mostcompanies.

questionsbetter,but whygivethem that advantage.Unlessit is an extremelyurgentoverseascall (which youwouldwantto acceptasthe caller is payingfor thebill), youcouldshowa little more goodwillby givingyour intervieweeyour full attentionduring thehour that youhaveallottedfor him or her.

6. Make the intervieweefeelat ease.

Unlessyou are putting the candidate througha "stressinterview,"(which,if you chooseto do, shouldbe donewith greatcareduringthe secondhalf of theinterview),it is imperativeto make him feelat easesothat you canget the bestoutof him.It is usefulto startwith " l i g h t " q u e s t i o n s( s a ya b o u t t h e person'shobbiesor sports)beforeyou moveon to the heavyones,to break the ice. be Thelocationof theinterviewmust free from noise,the furniture con-

chooseto interviewover headhunters, lunch at public places.This givesthe intervieweran extraedgein assessing the table mannersof the interviewee, but it is not advisableunlessit is a secondor final interview.It is rather difficult to concentrate and meticulouslyfollow througha discussion when food and drinks are being served.Besides,the confidentialityof the whole exerciseis at stakeunless the place chosenis desertedand placeof remotefrom theinterviewee's work.

7. Avoid panelinterviews.Panelinterviewscan be rather intimidating andmaynot bring out the bestin candidates.They alsowastevaluable management ime. It would be preferableto askthe candidateto see one or two personsafter another, ratherthan threepersonsat onetime, unlessthe candidateis goingfor the

THE ASIANMANAGERo SEPTEMBER1990 s3

final round. For a very seniorposition, sayfor a generalmanagerwho would be expectedto makeboard presentations, then panel interviewingwould be appropriate.

8. Avoid the "halo" elfect.I have found someof my clients trying to recruit exactreplicas of themselves.

This doesmake sense,assumingyou are recruiting for a positionidentical toyours,with the samelevelandscope of responsibility,and that your style has proved to be successful.The reality of the situation is that no two personsare alike. Even if you have decidedthat the key qualitiesneeded for thejob are similarto yours,do not expectthe degreeofpresenceofthose qualitiesin other peopleto be identical to yours.After alt you havetaken t i m e t o d e v e l o pt h o s e d e s i r a b l e qualities.

9. Be honestin describingthe companyandthe position.I shouldnot be emphasizingthe obvious,but I have metclientswho promisea rosegarden to the candidatesin order to attract them to the company.Within a few months,however,the appointeesdo not find thelevelofchallengethat was .describedto them during the interview.At times,they are givenneither

the supportnor the autonomYto be ableto performwell on the job. It is nextto impossibleto put downinwriting a full job descriptionof an appointee,but a defrnitionof the'keyresults areasandtheparameterswithinwhich he canoperatewould be usefulto clari$ambiguities.

10.Closethe intervieruon a positive note.Whetheryou wishto pursuethe matterfurtheror not,youshouldclose the interview on a positive note, makingthepersonfeelgoodaboutthe wholeexercise.If the personis a completewash-outfor theposition,in your opinion,you canstill tactfullyrelayto him that his backgrounddoesnot seemto fit thejob or someof his personaltraits and aspirationsmay not matchthe position.Do not forgetthat a candidatewho feelshe was not treated well in an interviewmay bad mouthyouor your companyamonghis friends,andbad news(right or wrong) alwaystravelsfasterthan good news.

This becomesevenmore crucial whengood peopleare hard to come by.Besides,whoknows,the candidate you havejust interviewedmayend up beingyour customer.Or, after interviewingall the candidatesand reasyour needs,you maydecideto sessing

ReachYourMostlmportantPublic

reconsider a personwho may have been under your "maybe" list rather than"possibleappointee."

Finally, do not forget to notify the candidatesabout the final resultsof your interview.

Perlita firo Mrc. Tiro is cunentlytheManaging Directorof Tiro Consulting Services,Ltd Pte.in Singapore, cateing mostlyto transnational and local companies.Shehasac' cumulated18yean of expeience in the areaof uecutive search and recruitmentand has witten on these and talkedextensively topics.

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Wc coll i rho Skybed. Complole with cri3p linens, fluf{y pillows, ond o worm woolly blonkct. Upltoi.i in our SkybadLoungc.

And becouse it's certified for use during toke-offr ond londingr,you con slccp wilhorri i. arruplion cvcn lhrough stopovers.

Our l4 Skybedsore ovoilqble on o first-come,tiEl-sâ&#x201A;Źrvedbosison mod fiights belwoen Monilo ond the U.S.A..ond on ,elect d flight! lo Europe. lt comes wilh your regulor Firsl Clossseol.

At no exlro cosl.

Sleepti9h.

Fid Clo$ po!..g.o rr6&rE Clo$ Fs.ge..dM.5ufior club nlnb.6 @n .olr 81 8-7615 r. ,{onlo 't..mrid.nd frigln i'*dnqri.n.

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