Making Business Sense: Providing the Best for the Least
by Human Heart Nature
The hard economic times and competitive business environment makes every Filipino entrepreneur nervous about their profitability. Operations and strategies must be carefully analyzed as increasing food and fuel costs trigger an increase in pretty much everything else and an endless debate on how to fix the economy. Such is a reality for most business owners, where the opportunity to grow and provide is confronted by issues concerning shrinking profits and sustainability.
Armed with foresight and an exceptional appetite for risks, a growing wave of social entrepreneurs are determined to take the challenge of proving that business is capable of rising beyond this fear with the intent of creating an opportunity for a better life for all.
Take the example of Human Nature, a social enterprise that was established to provide world class Filipino-made natural products. Its foundation for success is not solely due to its unique selling proposition but also in the way they mold their workforce. When most companies are faced by rising costs and austerity measures, the company whose one-third of its workforce is composed of residents from nearby Gawad Kalinga villages, has made a conscious decision to go beyond just legal compliance in treating their employees. Their warehouse staff undergo a probationary period of only 3 months and get Php 500 per day as a starting salary. Once regularized, they receive full benefits (SSS, Pag-Ibig, Philhealth and a generous HMO package!) and an average pay of Php 650 per day plus performance incentives. The benefits are not just monetary as they also receive financial mentorship from company managers and they are encouraged to be active in their GK communities and programs. All of these were deliberately designed as part of Gawad Kalinga’s value system of providing the best for the least until the least becomes the best.
But the company’s drive to provide quality of life to its employees also extends to their rural community partners. Since 2009, Human Nature has been paying 20-30% more than the going market price for organic raw materials such as Citronella essential oil which they source directly from a small farming cooperative in Bicol. Taking it even a step further in 2010, the company launched a campaign wherein 100% of the profits of their top-selling product, Citronella Bug Spray, was invested back into the community. The donation was able to fund the expansion of the Citronella operations from seven hectares to 47 hectares, renovate the deteriorating roof of the local public school and provide Philhealth to all the members of the cooperative. The company sees this high engagement with their community partners as more than just a charity project; it is a direct investment in the poor who are an integral part of a sustainable supply chain for its organic raw materials.
With this high “overhead”, how to do you think the company is faring? The company just doubled its revenues in 2010 from 2009, and sales are still projected to grow by 120% in 2011. This value proposition has enabled the company to attract talent from multinationals and top brands, some agreeing to take an initial pay cut to support this business philosophy. Managers are more than ever inspired to grow the company in order to provide more jobs and to eventually attain, if not surpass, their previous salaries. It’s no wonder the company has undergone expansion even during these tough financial times, as its employees increased from 17 in 2009 to 62 in 2011.
Raymund Madamo, a top performer in the warehouse for the past 14 months and a resident of GK Sitio Ruby, enrolled himself in the company’s voluntary save-up program. He believes that as the company provides for all of his basic needs, he can now afford to save for his aspirations. He aspires of providing good education to his children and to afford homeless people a decent home by donating a GK house from his savings. Since their employment in Human Nature, three of the warehouse employees who came from predominantly scavenging urban communities, have also been able to finance their own motorbikes from their increased earnings.
This success story has inspired other social enterprises who initially felt compromised just to get their businesses off the ground. Trese is a community based enterprise that provides silkscreen and sewing services by partnering with out-of-school youth and housewives in GK Blue Eagle Village in Payatas 13. It started as a livelihood program that was initially able to offer its beneficiaries Php 150 – 250 per day just to compete in the market. Due to its impact on the residents of GK Payatas 13, Human Nature proudly supported its products and services as part of its advocacy of empowering communities. The market exposure contributed to more clients for the community and this stable demand enabled Trese to increase its wages to Php 500 per day. Sales doubled as productivity improved and more residents became active with the constant projects coming in. This small livelihood program is now a full-fledged business which is VAT registered and a certified Barangay Microbusiness Enterprise. Over 20 residents are directly involved in operations while the whole community is benefitting from it as profit is shared to support their GK programs and infrastructure.
Visitors of GK Payatas 13 are astonished by the site business managers who speak confidently about their enterprise. Josephine Casimero had no knowledge of the internet nor the computer 2 years ago. Now, she has learned to do Excel accounting and payroll reports which she emails to GK investors who have mentored her. The youth engaged in silkscreen printing enjoy a weekly football camp in Ateneo that is funded by the enterprise. The confidence that they gain from being productive enables them to mentor the younger generation of their community to be active.
The on-going success stories of Human Nature and Trese illustrate the collaborative partnership that is needed to jumpstart the economy and reshape the future of our country. It may seem uncanny to many that investing more in the least of our brothers has helped these noble businesses to flourish, but business was always about providing what the market needs, and the Filipino has always been in need of an opportunity to rise above poverty.