Tuesday, 6 October 2009

‘Ondoy’: A positive game-changer

John Mangun
Outside the Box
Business Mirror

The problem with most of the analysis that you read regarding almost any event is that it is based on the Western system of logic formulated by Greek philosopher Aristotle. Simply put, if “A” occurs then “B” will happen next. This is linear or straight line thinking.

In Asia, influenced by both traditional Buddhism and Confucius, a much less linear style of thinking developed. Western logic looks more closely and more effectively at the details, while Eastern logic does a better job of seeing the big picture.

The reason I mention this is in response to those e-mails that always question and wonder why I can be optimistic in the face of events like the killer storms that we have just experienced.

It is not a matter of being optimistic; it is all about looking for other possibilities that might not fit in the normal A+B=C logical pattern.

For example. The day before Ondoy hit Manila, a close relative of mine died. Another relative in the US wanted to send over some money to help with expenses. Usually this kind of remittance takes 12 to 18 hours. This time it took more than four days, and according to the remittance company it was because they were flooded with money coming into the country. They did not have enough couriers to handle the enormous increase in their business. We will see a substantial increase in overseas remittances for the month of October which will offset some of the economic damage from the storm.

In effect, Ondoy caused an increase in remittances which several commentators are now noting. This might fall under the Law of Unintended Consequences (LUC).

The LUC usually relates to some government program designed to do one thing and winds up causing a completely unexpected effect or consequence. Government attempts to control the price of a commodity without controlling the price of all the components that go into producing that commodity. Shortages occur and the price control is ineffective in protecting the consumer.

In the 1980s, US penalties for drunk driving were increased. What resulted was a great increase in the number of hit-and-run accidents, since the penalty for drunk driving was much greater than the penalty for running away from an accident. The introduction of rabbits into Australia for food was followed by an explosive growth in the rabbit population; rabbits have become a major pest in Australia, destroying crops.

However, there are also positive unintended consequences, maybe the best example being the drug Sildenafil or Viagra. Created for use in high blood pressure and angina, it did not work effectively. But what it did do, well, we all know what Viagra does effectively. There will be positive consequences from Ondoy also.

Government is now forced to address the problem of squatter communities along the waterways, something that every administration has virtually ignored. The proper use and maintenance of Laguna de Bay has suddenly become important, another issue that was ignored.

And corporate response to situations like the flooding has had to be examined and a new model created.

One of the largest outsourcing/call- center companies in the Philippines is Teleperformance Philippines (TP), a part of the worldwide publicly listed French company Teleperformance Group. TP has been in the country since 1996 and employs about 10,000 Filipinos. This is a $2-billion multinational company with call centers in 47 countries.

Every large company has a disaster plan with all the “What do we do if...” scenarios spelled out. A labor-intensive firm like a call center must first and foremost have a strategy to ensure its employees are able to function during extraordinary times.

And during Ondoy, the call-center business continued even with a substantial amount of people not being able to get to work. But the mere implementation of a disaster plan is not what I mean by a positive unintended consequence.

At news of the great flooding, TP founder and CEO Daniel Julian e-mailed his global offices, mobilizing a relief effort coordinated through Philippine managing director Dave Rizzo. Within a couple of days, global TP employees had pledged over P2 million to help their fellow Filipino employees.

TP has a community outreach program called “Citizen of the World.” And again, TP employees donated cash and goods to help the community like very many other corporations. There is nothing unusual about that. Just good social responsibility. But here is where the model changes.

TP quickly surveyed its thousands of employees to identify those most affected by the flooding, locating those that may have suffered severe damage to their homes. The human-resources department coordinated with Pag-IBIG to facilitate disaster loans for its employees.

A portion of the goods and cash collected from employees here and abroad went to assist other employees impacted by the flooding, an example of charity beginning at home.

However, all of these efforts at helping those most affected are commendable but certainly do not qualify as particularly unique. But then, TP management changed its disaster-relief model.

Recognizing that all of its employees suffered during the flooding, TP did something that I have never heard of before. The company advanced the payment of its employees’ 13th-month pay, pro-rated and paid this week. Granted that this is not charity, the company is still advancing tens of millions of pesos at a substantial expense to the company to help out its employees.

The unintended consequence in this case is that this very large company reacted by creating a new and different response to an old and common problem of disaster relief.

I guarantee that Ondoy is a game- changer that will create many other positive unintended consequences.

PSE stock-market information and technical-analysis tools were provided by CitisecOnline.com Inc. E-mail comments to mangun@email.com.

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