The business of making a better world

Foremost economist and Nobel-Laureate Milton Friedman once said that business has only one responsibility—economic performance. If business does not make a profit, it cannot be a good employer, a good citizen, and a good neighbor.

Peter Drucker disagrees, “But economic performance is not the only responsibility of a business, any more than educational performance is the only responsibility of a school or health care the only responsibility of a hospital.”

Helping the poor

For the longest time since the East Indies Company opened shop as a corporation, Big Business never saw poverty eradication as a responsibility. Businesses make the products that people need. Perhaps, they believe that people need them more that the business needs the people. For some time, we heard that only the poor can help the poor. Only the Filipino can help the Filipino.

Then suddenly, some Unseen Hand, or what Scottish philosopher Adam Smith called “The Impartial Spectator,” arouses in businessmen the values of generosity and nobility. Smith wrote in The Theory of Moral Sentiments, “It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct.”

When Priscilla Chan, Marck Zuckerberg’s wife, gave birth to Maxima, Mark suddenly pledged to give away 99 per cent of his wealth to charity via the Chan Zuckerberg Initiative LLC, to “advance human potential and promote equality.” When we thought doors have slammed on the poor, Windows opened. Suddenly, Bill and Melinda Gates started a foundation a decade ago with a $20 billion initial donation, which Warren Buffet increases with an annual gift of $5 billion. Dado Banatao, once a barefoot pupil in Cagayan Valley and now the Filipino icon in Silicon Valley, continues to help indigent Fil-Ams complete schooling through his Foundation that wife Maria manages.

Social business

Today, there are hundreds, if not thousands, of social enterprises created for the primary purpose of helping solve the problems of society. At the turn of the millennium, a Bangladeshi academician Muhammad Yunus founded the Grameen Bank and pioneer in microcredit. He lent $200 to people who could not avail of mainstream financial credit because they’re poor and needy. Yunus harnessed profitmaking to create “self-supporting, viable commercial enterprises that generate economic growth even as they produce goods and services that make the world a better place.”

In the Philippines, Ruben de Lara and Rene Cristobal improved Yunus’ business model via Serving Humanity through Empowerment and Development (SHED)—a holistic and integrated campaign to end poverty. Before giving out microcredit, Ruben and Rene first ensure values formation and entrepreneurship development. (Visit www.shedmfi.org)

SHED has already transformed 10,000 families into values-driven, productive people, thereby lessening the burden to society. In order to transform more lives, SHED needs more funding. Every year, I give gifts to friends, government and business associates. This year, I will instead donate to SHED what I spend for gift giving. I challenge my friends and readers to do the same. With even P100 or P50, you will make a difference. Just check out SHED’s web site.

Rene and Ruben don’t receive a single centavo for helping the poor. They give their time, talent, and treasure to make this country a better place to live in. They do this out of the kindness of their heart, and not to amass awards and recognition.

PMAP Foundation

Over the years, the People Management Association of the Philippines (PMAP) was concerned with societal needs. In 1991, PMAP created the PMAP HRM Foundation, Inc. In 2012 up to the present, Atty. Pilar Almira was elected Foundation President. I was appointed its first Executive Director, until 2013 when I became PMAP’s Executive Director up to early 2014. With the help of Foundation Chairman Orly Peña, Atty. Almira practically revitalized the foundation until it was worthy to become the real CSR arm of PMAP.

Last November 27, 2015, the PMAP Foundation held its annual CSR Summit, with the theme “Transcendence: Transforming Lives Beyond the Ordinary.” The Summit opened with messages from PMAP President Obet Policarpio and Atty. Almira. CSR Committee Chair Marie-cor Militante introduced Fr. Anton Pascual of Caritas, who spoke on the theme. Ayala Group’s Vicky Garchitorena and Chairman Orly Pena delivered strong messages on CSR. In the afternoon, talks were delivered by SM Group’s Kristeen Koleen Palaganas, Marian Quebral of Oscar Lopez Center, GK Community’s Isabel Cuevas-Santos, and Tita Puangco of Ancilla. Michelle Garcia of SGS emceed the event. Foundation Executive Director Lina Aseneta and the CSR Award Committee did most of the work behind the scenes.

The event’s highlight was the First CSR Excellence Awards that recognize great organizations in the exercise of corporate social responsibility. CSR Awards Chair Chit Ventura announced the category winners: AES Philippines, Corporate Governance; Johnson & Johnson, Health and Wellness; L & T International Group, Livelihood; SM Supermalls, PWD; Sunpower, Community Service; San Roque Power, Education; Trans-Asia Oil and Energy Development, Environment.

The Board of Judges did a great job at choosing deserving awardees: Sr. Helen Malubay, SPC of St. Paul University of QC; Dr. Carolyn Sobritchea of UP Asian Center; Marissu Bugante of SSS; Grant Javier of CC-FFL; and PMAP Past President Edgardo Soriano, also Foundation VP.

In the future

In the past, “business ethics” and “corporate conscience” were a contradiction in terms. We’ve all seen unethical practices, such as accounting scandals, valuing a company’s net worth on the basis of its potential income, and the “derivatives” that led to the recent global financial crisis.

Recently, technological advances, globalization, economic integration, fierce competition, shifting demographics and the aggressiveness of media and the NGOs have led organizations to be more transparent and ethical.

Of large US companies recently surveyed, 79 percent had written ethics guidelines. In another survey of 124 companies in 22 countries, 78 percent of corporate boards are involved in setting corporate ethical standards.

In the next decades, it will be unthinkable for business organizations to be without programs on ethics, corporate governance, compliance, mission and values, culture-building, stakeholder engagement, nonfinancial-reporting, diversity, workplace environment, sexual harassment, product safety, supplier conduct, human rights, anticorruption, corporate citizenship, and even strategic philanthropy.

Business ethics consulting will be a multibillion-dollar global industry. Four decades ago, these consultants were unheard of. Corporate reputation has since become directly proportional to corporate profits. What better way to be relevant to the buying public than to be the supplier of choice that addresses societal needs beyond product quality and customer satisfaction?

The Human Resources heads will have to work more closely with their CEO to ensure that they transform the whole organization into ethical, value-adding mechanism to promote public good. They should walk the talk and cease from mulcting manpower contractors and other vendors in exchange for overpriced contracts. It’s absolutely appalling and sickening to see how some have the temerity to lead ethical organizations despite their malpractice. If they don’t stop, one day the shenanigans will out.

Transformations happen only when there is a real values shift. Unless the leaders themselves see the need to make real contributions to society beyond dole outs, CSR will only be good for press release.

I salute PMAP and the PMAP Foundation for their initiative to recognize organizations that help make a better world. I congratulate the first batch of winners in the recent PMAP Foundation CSR Awards. Like George Lucas said, may the Force be you!

(Ernie is the 2013 Executive Director and 1999 President of the People Management Association of the Philippines (PMAP); Chair of the AMCHAM Human Capital Committee; and Co-Chair of ECOP’s TWG on Labor and Social Policy Issues. He also chairs the Accreditation Council for the PMAP Society of Fellows in People Management. He is President and CEO of EC Business Solutions and Career Center. Contact him at [email protected])