Last week, President Benigno (Noynoy) S. Aquino III admitted—in a speech during the 113th anniversary of the Department of Public Works & Highways—that meetings with two to three of his cabinet secretaries are like “acts of penitence” for him. Speaking in Filipino, he said he wonders what bad news he’ll receive each time he meets these government officials charged with managing government operations and carrying out the administration’s priority projects.
All executives—at one time or another—share the president’s frustration with one or more of their senior lieutenants. While revolutionary product and service concepts provide the inspiration for startup organizations, it is the organization’s capacity for attracting smart people who have the capability of transforming an idea into a marketable product or service and executing a strategic plan that determines whether they are successful and stay successful.
Venture capitalists won’t invest in companies that don’t have a strong executive team with a track record of successful executions, or one that has learned the lessons of failed attempts. Clients examine the backgrounds of executives in partner, supplier, and consulting organizations before entering agreements with them. Analysts evaluate a corporation’s strategic plans against the experience and leadership capabilities of top executives before recommending them to investors.
The willingness to cut underperforming executives is also an important gauge of executive leadership, and an attribute that impacts brand reputation. There’s a fine line between giving an executive time to professionally execute and allowing the executive too much time to try to make a bad plan work. For the sake of the chief executive’s career as well as the organization itself and its stakeholders, disengaging quickly and cleanly from an underperforming executive is critical.
But what to do about underperforming executives can be a tricky issue for a number of reasons. If a top private-sector executive in the Philippines insinuates internally—let alone externally—that he or she is unhappy with an executive, the result can be a complaint for constructive dismissal by the wayward executive. This is true even if the executive isn’t named, but says he or she was alluded to by a superior.
Under the Philippines’ antiquated labor laws, dismissing an executive is a long and tortuous process. It involves a series of evaluations and written reprimands that can span months. During that time, the organization continues to suffer from mismanagement or even dysfunctional behavior by the executive. By the time the disengagement process is complete and the executive is gone, significant damage that could have been avoided must be repaired. Missed opportunities may be gone forever.
The laws—meant originally to safeguard low-level workers from indiscriminate firings and withdrawal of benefits from unscrupulous executives and business owners—have actually hurt employees as well as complicated hiring and firing for businesses. Because the hurdles to dismissing full-time, “regularized” employees are so numerous and so high, many organizations keep employees on either direct, short-term contracts or contract them from a human resource supplier.
That practice—although supposedly illegal—is widespread especially at the lower levels of an organization where employees are most vulnerable. While it makes sense to outsource many of the chores these employees perform, the sad fact is that outsourced employees also have no real security. Even when employed by a human resource supplier, the likelihood that an individual will ever attain full-time employment and the attendant benefits is slim to none.
Clearly, legislation to protect employees should be rethought. However, that’s difficult because labor reform is a political black hole. Labor laws may inhibit the creation of full-time, regular jobs, but that doesn’t matter to labor activists and politicians who rely on the illusion of workers’ rights to perpetuate their legitimacy—or illegitimacy as it may be. Yet reforms delayed are rights and improved welfare delayed as well.
Meanwhile, once a “regularized” employee or executive hauls an employer into court, the burden of proof is on the corporation to show that it did not illegally dismiss the individual. The individual is assumed to have a legitimate grievance. Given the slow pace of the National Labor Relations Board—a quasi-judicial agency that first hears the complaints—and the even slower pace of repeated appeals, cases frequently go a decade or more without final resolution.
To avoid this extended, tortuous process, many organizations resort to effectively buying dysfunctional executives off in the form of an early retirement plan or an undisguised lump-sum payment to avert legal blackmail. The President doesn’t have to go through this process—he just has to convince the poorly performing secretaries’ benefactors that it’s time for them to go—at least for cabinet secretaries. But imagine if he did.
(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand. Write him at email@example.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2011 Michael Alan Hamlin. All Rights Reserved.)