Thursday, March 5, 2015

SEMCO's Model for Philippine Democracy: Applying Catholic Social Thought to Business Management and Nation Building

(This article was published as an accompanying abstract to a poster presented in the 9th International Symposium on Catholic Social Thought and Management Education on 26-28 Feb 2015 at Ateneo de Manila University, De La Salle University, and De La Salle-College of St. Benilde, Philippines.)

by Quirino Sugon Jr.*[1, 2] and Norman Cabrera [3]

[1] Department of Physics, School of Science and Engineering, Ateneo de Manila University, Loyola Heights, Quezon City Philippines**
[2] Manila Observatory, Ateneo de Manila University Campus, Loyola Heights, Quezon City, Philippines**
[3] Kapatiran Party (Alliance for the Common Good), Philippines. http://kapatiranparty.org

*Email: qsugon@ateneo.edu
**Opinions of the author are his alone and do not represent the official stands of the institutions he is affiliated with.

Maverick: The Success Story Behind the World's Most Unusual Workplace
Maverick: The Success Story Behind the World's Most Unusual Workplace
I. INTRODUCTION

Democracy as a form of government was proposed by Robert Cardinal Bellarmine:
“It depends upon the Consent of the multitude to ordain over themselves a King or other Magistrates, and if there be a lawful cause, the multitude may change the Kingdom into an Aristocracy or Democracy.”
That is, it is the people who decides who among themselves shall be their rulers. Theologically, democracy is based on the equal dignity of each man and woman as sons and daughters of God, which makes the man on the street equal in human dignity to that of a King or the President.

Democracy can take two forms: direct democracy or representative democracy. The Philippine Republic, for example, is a representative democracy because power is exercised through elected representatives, from Barangay Councilors all the way to the members of the Congress, Senate, and the President himself. When the Philippines was seized by the US from Spain in the 1898, the US planned to eventually grant the Philippines the ability to govern themselves, but could not immediately do so because education was not widespread. In 1935, the Philippine Commonwealth was created patterned after the US bicameral system, but still under the US government. In 1946, the US granted the Philippines was the full freedom to democratically govern itself.

But after 60 years of independence, why did Philippine democracy fail? Why is it that the Philippines is governed by a few ruling family dynasties? Why do voters sell their votes for a few hundred or thousands of pesos? Why do Filipinos entrust their future to politicians who loot the country's coffers through the establishment of dummy NGO's, PDAF pork barrel, and DAP budget realignments? Why do Filipinos mistrust the electoral process due to allegations of computerized fraud through the Commissions on Elections itself?

For the Philippine democracy to work, three more ingredients are needed: the principle of subsidiarity, access to information, and elimination of family dynasties. In this paper, we shall look at the company SEMCO, as described in the book, Maverick, by Ricardo Semler. We shall study how this company worked to implement these ingredients in the democratization of their workplace, in order to give us a model for how to make democracy work in the Philippines.

Three concentric circles in SEMCO: administration (Counselors), leaders of business units (Partners), and everyone else (Associates).
Three concentric circles in SEMCO: administration (Counselors), leaders of business units (Partners), and everyone else (Associates). Each business unit has several Coordinators represented by triangles, each one guiding 5 to 20 Associates. Coordinators are just that: they just lead, but don't receive higher salary than when they were just Associates.

A. SUBSIDIARITY PRINCIPLE

The Principle of Subsidiarity was enunciated by Pope Pius XI in his encyclical Quadragesinno Anno:
80. The supreme authority of the State ought, therefore, to let subordinate groups handle matters and concerns of lesser importance, which would otherwise dissipate its efforts greatly. Thereby the State will more freely, powerfully, and effectively do all those things that belong to it alone because it alone can do them: directing, watching, urging, restraining, as occasion requires and necessity demands. Therefore, those in power should be sure that the more perfectly a graduated order is kept among the various associations, in observance of the principle of "subsidiary function," the stronger social authority and effectiveness will be the happier and more prosperous the condition of the State.
At SEMCO, workers are organized according to the subsidiarity principle. Instead of an organizational pyramid, SEMCO has circles. There are three concentric circles: administration (Counselors), leaders of business units (Partners), and everyone else (Associates). Each business unit has several Coordinators represented by triangles, each one guiding 5 to 20 Associates. Coordinators are just that: they just lead, but don't receive higher salary than when they were just Associates. Here is one illustration of the organizational dynamics based on the subsidiarity principle:
On the shop floor, in fact, each Associate would make all the decisions he felt confident to make by himself. If he was uncertain about a problem, he would consult his Coordinator. Similarly, each Coordinator would make all the decisions he felt confident to make. He would bring other issues up at a weekly team meeting presided over by the Partner of his business unit. This session would be held Monday morning, after which the Coordinators would brief the Associates they worked owith on the results. Decisions that affected all our business units, such as a company-wide increase, or decisions that one business unit did not think it would make alone, such as a large investment in a new equipment, would be forwarded to another meeting on Tuesday attended by a representative from each unit (not necessarily the Partner), plus all the Counsellors. Just three circles, four job categories, and two meetings. That's it. (Maverick, p. 192)

Right to Know, Right Now! Coalition is a broad network of organizations and individuals from various sectors and public interest groups that have long been campaigning for the passage of the Freedom of Information Act.
B. ACCESS TO INFORMATION

Access to information is based on the principle that truth is like a lighted lamp: you don't hide it under a bushel basket, but set it on a lampstand to give light to the whole house (c.f. Mt 5:15). The Catholic Church is a Kingdom established by Christ who is Truth:
You say I am a king. For this I was born and for this I came into the world, to testify to the truth. Everyone who belongs to the truth listens to my voice. (Jn 18:37)
That is why, there is an openness in the Church about access to truth, to information. The Church publishes her Catechism, her Canon laws, and her history. She hides nothing. She is not a secret society. Like a city set on a mountain, she is visible to all (c.f. Mt 5:14).

At SEMCO, truth is vital to the workings of its corporate democracy:
We always try to speak the truth and nothing but the truth. And on those rare occasions when the truth, for some special reasons cannot be told, we say nothing. We believe it is essential that all company communications, especially those intended for the workers or the public, be absolutely honest. We even apply this policy to journalists. Reporters from all the television networks and major newspapers and magazines in Brazil can talk to whomever they want at Semco, no matter what they have reported in the past, and do. And our people are free to speak their minds, without fear. Two or three times a year we distribute a questionnaire called “What does the Company Think?” It gives workers another chance to tell us whether they are satisfied with their salaries, have any confidence in management, and so on. The results are published for all to see (of course), and enable us to monitor our credibility as well as their concerns. (Maverick, p. 165-166)

And this also holds true when it comes to money matters. Workers have access to financial statements and SEMCO actually teaches workers how to read these statements. Workers know how much salary each one gets, how these salaries compare with those in the industry, and how the salaries are computed based on the basket of skills approach.

Anti-Political Dynasty Act.
Anti-Political Dynasty Act. Who are prohibited: Spouse and relatives of the public official and/or candidate within the 2nd degree of consaguinity and affinityand those relatives' spouses.
C. FAMILY DYNASTIES

There is no specific statement in Catholic social thought forbidding family dynasties. But SEMCO believes that family ownership of businesses is detrimental to the growth of business, because few family businesses survive after four to five generations:
I've already seen to it that none of my offspring can be promoted without the approval of three quarters of the SEMCO board. Not even my death will change the circumstances, since outstanding shares in SEMCO will revert to the foundation.... managed by another twenty-one member board that will include employees and outsiders but not family members. It is through such mechanisms that SEMCO will finally have its own personality, completely independent of any Semlers. (Maverick, p. 270)

The needed components of Philippine democracy: Subsidiarity Principle, Freedom of Information, and Constitutional Prohibition of Political Dynasties.
The needed components of Philippine democracy: Subsidiarity Principle, Freedom of Information, and Constitutional Prohibition of Political Dynasties.

V. CONCLUSIONS

Based on the SEMCO experience, we recommend that the Philippines adopt three things. The first is subsidiarity principle in governance, with citizens forming organizations to solve their problems, before elevating these problems to higher government.  This is particularly true when citizens are allowed to air their grievances and propose solutions and laws, e.g. people's initiative.  The second is ratification of the Freedom of Information bill which would allow each citizen to scrutinize public spending and point out possible leaks and signs of corruption. And the third is Constitutional pro-hibition of family political dynasties. As monopolies in business, monopolies in politics limit the entry that can bring in new ideas and offer better services.

Acknowledgments

This research was supported by Kapatiran Party (Alliance for the Common Good), Philippines. http://kapatiranparty.org.
Kapatiran Party: New politics, new Philippines, new life.



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