Blog Entry Management failure Jul 31, ’08 10:34 AM
for everyone
This column appears every Thursday in BusinessWorld. The one below appeared on  July 31, 2008.
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STRATEGIC PERSPECTIVE
René B. Azurin

Management failure

Management performance must be evaluated on results, not efforts. Any Juan, Rick, or Harry of a management student can tell the executive secretary and Malacañang spokesmen this. Maybe these presidential minions will then stop brainlessly parroting the line that Mrs. Arroyo is a hard-working president. It is such a tiresome and meaningless phrase. Running around handing out doles or conducting meetings until 1 a.m. does not constitute managerial achievement.

Management students are taught (at least since Peter Drucker’s 1954 book The Practice of Management) that assessing managerial performance requires setting goals that are specific, measurable, and time-bound, and then measuring what is achieved against these concrete targets. This approach allows the elimination of much of the subjectivity that otherwise attends the appreciation of managerial performance and introduces hard measures that allow more objective evaluations. Management students are also taught that managers should be held accountable for their use of resources placed in their control.

Given the character and extent of resources placed under Mrs. Arroyo’s control, the specific, measurable, and time-bound goal I would choose to measure her (or any other president) by would be the comparative magnitude of foreign and domestic investment made in the country during her years in office. I particularly like this statistic as an overall measure of presidential performance because the amount of investment made in the country is intertwined with a large set of related factors that have to be addressed to produce an economic climate favorable to increased investment. Furthermore, boosting investment levels means increasing the number of jobs available in the country and consequently raising income levels in the general population.

Boosting investment requires meeting subsidiary objectives in a number of areas. These include finding and adopting the right mix of economic policies and incentives, reducing corruption in government transactions, eliminating red tape and other barriers to entry and competition, eliminating cronyism in business and establishing what businessmen like to refer to as a level playing field, establishing a rule of law and reforming the justice system to allow contractual and other disputes to be settled quickly and fairly, maintaining peace and order, constructing necessary infrastructure, building up economic and social institutions conducive to business activity, improving the educational system to produce a skilled and competitive work force, developing entrepreneurial attitudes in more Filipinos, and, generally, maintaining a stable and competitive and business-friendly environment. In effect, realizing the goal of increasing the level of foreign and domestic investment in the country essentially implies that improvements are also being realized on various important fronts.

On that score then, how does Mrs. Arroyo measure up? Using figures assembled by University of the Philippines economics professor Benjamin Diokno, not so well. Dismally, actually.

According to Prof. Diokno, foreign direct investments which “were already at the $2 billion level before she (Mrs. Arroyo) grabbed power in 2001…. fell to a record low of $195 million during her first year and averaged just a modest $1.2 billion from 2001 to 2006.” Set side by side with similar figures for our closest neighbors, the figures look positively appalling: in 2006 when our own foreign investment figure spiked to $2.3 billion, Vietnam (a communist dictatorship) drew in $4.1 billion, Indonesia drew in $7.5 billion, and Thailand took in $8.8 billion. Worse, foreign investment in this country this year will be much lower than that 2006 high. What this implies is that foreign investors – whatever they may diplomatically say in public – are not at all convinced by presidential press releases about how hard Mrs. Arroyo works and how well she is performing in managing the country.

On the domestic investment front, local investors are clearly not convinced about Mrs. Arroyo’s management prowess either. According to figures drawn by Prof. Diokno from Asian Development Bank reports, “the domestic investment rate of the Philippines has dropped from 19% in 2001 (when Mrs. Arroyo took over) to a record low of 14.8% in 2006. By contrast, investment rates of our neighbors have continued to range from 20% to 40%.” Often heard muttering privately among themselves that Mrs. Arroyo is a non-performing chief executive with only a selfish political agenda, our own businessmen – again, no matter what they diplomatically say in public – reveal their true sentiments when they take their money elsewhere.

As a natural consequence of these dismal investment figures, the numbers of Filipinos unemployed and underemployed have been increasing year after year during Mrs. Arroyo’s overly long tenure. In no year during Mrs. Arroyo’s seven years as chief executive has she even come close to reaching her own much-ballyhooed target of creating one million jobs every year.

In sum, Mrs. Arroyo’s “hard working” efforts have not produced any meaningful results. As a manager evaluated on a job-defining specific, measurable, and time-bound objective, she can only be deemed an abject failure.

The (poorly) scripted applause of her latest state-of-the- nation address cannot mask the fact that the Filipino people, across all income classes, consider Mrs. Arroyo the most unsatisfactory and most distrusted president of the post-Marcos era. This is not, contrary to the mantra of her spokesmen, because she has been valiantly opting to make the right decisions for the country even if these make her unpopular. She is unpopular and distrusted because it has become obvious to the Filipino public that accomplishments that actually matter to them are simply beyond her capabilities. As an obvious indication of just how tiny her conception of her job is and how inadequate her performance as president has been, she had to trot out as a major accomplishment of her presidency this year her getting telephone companies to reduce the price of text messages by 50 centavos for the next three months. How earthshaking.

Mrs. Arroyo’s state-of-the- nation address was a badly written mixture of insipid excuses, vacuous boasts, and pusillanimous promises. One didn’t have to be a student of Drucker to feel somewhat repelled by the sight of an executive trying vainly to justify management failure. That exercise is always pathetic.

A text message now going around says that Mrs. Arroyo collects from taxpayers billions and, in return, she offers change, meaning not reform but barya (small change). The text “joke” then goes on to say that this could be funny, except that it is too painfully close to reality. Well, maybe this achievement calls up management ability of a different sort.

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