Filipino organizational hurdles amid shaky world economics

From Philippine Daily Inquirer By:  Saturday, 12 November 2011

The Kindergarten Education Act is about to be passed when sessions convene Nov 14. Angara believes that the measure, especially when coupled with the K12 curriculum which will add two more years of senior high school, will raise the quality of Filipino education. Photo by Ma. Esther Salcedo-Posadas

You’ve heard it straight from the International Monetary Fund (IMF): “The global economy is in a dangerous new phase. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing … The first is that the crisis in the euro area runs beyond the control of policymakers … The second is that activity in the United States, already softening, might suffer further blows…” [BizNews Asia, Oct. 2011]

If you’ve ever seen a stack of dominoes arranged in order to topple one after the other, you know that it only takes one or two of them to start the show.

The world audience is currently watching the first domino, Greece, to tip.  “Unemployment is at more than 16 percent—and about 40 percent for young people.  Crime, personal bankruptcy, homelessness and suicide are all increasing.”  [Time Magazine, Nov. 2011]

The second domino, possibly Italy, is said to be “too big to fail and too big to bail out” according to an MSNBC news report.

While the Philippine government claims a healthy balance sheet at the moment, the country is equally vulnerable to dramatic world changes, just like the rest of the world. This puts many traditional industries, at the very least, facing uncertain territory.

In the Philippines, there are three major groups that Filipinos normally give a lot of importance to: 1) religion, 2) education, and 3) housing.

If you ask many Filipino households, much of the expenditure (apart from food and other basics) would naturally go to the top three categories. As such, centuries-old beliefs and practices have also taken hold many enterprises, and they are now being challenged by changing times:

Religion-inspired businesses

Religion per se (of any kind) is not intended to be a material business.  However, many companies or non-profit organizations have been initiated in the name of charity or religion.

For more than a few centuries, much of this charitable exchange has been based on trust, as is the case with many other businesses such as banking.

Nonetheless, recent years have exposed countless financial scandals (not limited to religious groups) that there is currently a strong need for accountability especially in view of diminishing or more selective clients.  In his book “The Age of Turbulence,” Mr. Alan Greenspan succinctly described the boardroom scenario he experienced:  “It should not come as a surprise that, as with authoritarianism everywhere, the lack of adequate accountability in corporate management has spawned abuse. It was pretty clear during my quarter century on corporate boards that petty abuse was widespread, and on occasion, the abuse rose above the petty.”

The non-profit group that can account for each centavo spent is most admirable. If you think about it, a competent accounting system may hold the solution in attracting new funds.

Victoria Ferro, a strategy consultant who has worked with a number of non-profit organizations, believes that there is a need for transparency and more entrepreneurial thinking in managing donations. She suggests publishing programs and outcomes as well as third party audits.

“At the end of the day, did it create the positive impact that you wanted to achieve?” she asks rhetorically.  She thinks that charity organizations should find a way to quantify intangibles. For example, the King of Bhutan looks beyond Gross National Product and considers Gross National Happiness through a number of measurable criteria, according to Ferro.

Ultimately, it also boils down to the organizational mindset on whether donors are treated as customers.

Academic institutions

There was a time when the local school principal could easily police (if desired) the ranks, not to mention parents, into submission due mainly to the fact that exclusive education enjoyed a virtual monopoly.  Nowadays, economics are not that simple and certain parents have opted to try homeschooling or go for less expensive education, or for the more affluent ones, transfer to a competitor school.

The Education Encyclopedia summarizes the Philippine situation: “In the secondary level for 1965-1966, approximately 1.17 million students were enrolled with 62.3 percent in the private sector. In 1987-1988, there was a total of 3.49 million students enrolled, 40.8 percent of whom were in private schools. By 1999-2000 there was an overall total of 5.1 million students, with 24 percent in private schools.”

The numbers suggest that growth in private school enrollment has not been able to keep up with the rise in total enrollment.

In effect, private school education has become a privilege of the minority, compared to a few decades ago.  Private academic institutions need to re-evaluate bureaucratic practices in order to survive.  Parents can now demand to be heard and treated as clients instead of merely followers.

The current reality forces both school and parents to improve communication and management patterns.

On the other hand, another news report confirmed declining elementary school enrollment due to poverty.  The challenge in public education lies in how to keep children in school, not to mention upgrading the quality of education.

Recently, the Senate approved the “Kindergarten Education Act” endorsed by the House of Representatives that makes kindergarten mandatory and free in all public schools.

Housing projects

The private construction industry is highly cyclical. While it has enjoyed growth in recent years, any major turn of events can suddenly put many projects on hold.  With that uncertainty in mind, real estate companies are impelled to put developments in place at the soonest possible time.

They can also expect that as the world scenario becomes more uncertain, major investments will be in limbo.

That being said, alternative businesses or low-cost housing developments could be the growth area. To cite, Ayala Land recently announced plans to invest P3.5 billion in budget housing through its latest brand, Amaia Land. In the US, the trend towards building smaller homes has also sprouted.

In conclusion, turbulent times call for drastic improvements. The uncertainty faced by some Filipino institutions is an opportunity to become better rather than a scenario for failure.

Nevertheless, the choice to adapt to sweeping developments can only be made by its decision makers.

It is likewise good to remember that the evolving world order is a head wind faced by everyone—in case you haven’t noticed yet, we are all basking in the same yacht.

In her latest book, the author discusses how changing economics and systems in the world of work are transforming the life-work perspective of many. Likewise, the present moment gives an individual the opportunity to synergize life and work goals and to contemplate one’s life mission that forms an integral part of the career plan. “Rich Life: Creating Meaningful Wealth” [Anvil Publishing: Manila, 2011] is available at National Bookstore.

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