August 2021

SGV thought leadership on pressing issues faced by chief executives in today’s economic landscape. Articles are published every Monday in the Economy section of the BusinessWorld newspaper.
30 August 2021 Wilson P. Tan

The V in SGV

The S in SGV was a business icon in the person of Washington SyCip. Last June 30, SGV celebrated his centenary which coincides with the Firm’s 75th anniversary.On August 26th, SGV celebrated another centennial milestone — that of our Co-Founder, Alfredo M. Velayo. They were born just 57 days apart in 1921.  The two met when they were five years old on the first day of First Grade in P. Burgos Elementary School. They then remained friends for the rest of their lives — they were the original BFFs even before the term was coined.Mr. SyCip convinced Mr. Velayo to return to the Philippines after the Second World War.  Mr. Velayo had migrated to California with his young family at the time. Seizing the opportunities of post-war reconstruction, Mr. SyCip had started a one-man accounting firm in 1946 and not long after, wrote to Mr. Velayo to join him.  That historic correspondence is considered the firm’s first recruitment letter and is now proudly exhibited in the SGV Museum.Together, Mr. SyCip and Mr. Velayo worked hard to grow the company. They shared the same values of integrity and excellence; the same vision of helping in national development; and above all, they shared the same deep love for the Filipino people.  In just two decades under their joint leadership, SGV had grown from 5 people in a one-room office to more than 2,000 professionals in member firms throughout Southeast Asia called The SGV Group.The growth of SGV was phenomenal and it can be attributed to the balance that Mr. SyCip and Mr. Velayo brought to the practice.  Each of them had their roles cut out for them. While both were heavily involved in client work, it was Mr. SyCip who focused on much of the external requirements of the young firm. On the other hand, it was Mr. Velayo who was depended on to take care of the house. He was affable and his winsome ways encouraged a familial work environment.  He took very seriously his role as mentor and steward. His legacy in this respect is embodied in SGV’s Purpose to nurture people and leaders. In fact, when people think of Mr. Velayo, the first thing that they recall is the largeness of his heart.While Mr. Velayo retired from SGV when he was only 50, his presence was larger than life in SGV. He would faithfully attend all our events and he also chaired the SGV Foundation. He was also a client of the firm and that is how I personally got to know him. Two months ago, I had shared in this column some of the life lessons learned from Mr. SyCip. Here are some nuggets of wisdom that Mr. Velayo imparted to us. The first is to strive for perfection.Mr. Velayo was a man of precision — he always started and ended every activity on time. He was also a man of accuracy, which can be attributed to his being an accountant.  Many who had worked with him in numerous Boards recall how he would come prepared for every Board meeting with questions that demanded exact answers. Being an eloquent person, he was impatient with people who could not articulate themselves properly. Mr. Velayo was also always impeccably dressed and looked like a movie star. The second lesson is to care for your people.While Mr. Velayo believed deeply in the value of hard work, he believed even more strongly in the importance of taking care of his people in SGV. He focused on finding ways to bring out the best in people and letting their inner strength shine through. He famously said that SGV does not give people jobs, they are given brighter futures.Caring for others can also be shown in small acts of kindness.  He would tell us that little things matter — a lot. Take, for example, a thank you note to someone who had given you a gift or had done something nice. That short scribble can go a very long way. The third lesson is to give back or pay forward.When Mr. Velayo retired from corporate life, he didn’t stop working. Instead, he directed his formidable energies and intellect to finding ways to help and create opportunities for those in need. Not only was he the chair of the SGV Foundation, he also became president of the William J. Shaw Foundation. Both foundations support public educational institutions among many others.Looking back on his roots, Mr. Velayo was also inspired to support the schools that gave him and Mr. SyCip their educational foundations. At his instigation, they made numerous donations over the years to the P. Burgos Elementary School, the Victorino Mapa High School, and the University of Santo Tomas (UST).His passion for education shone through both as a student and teacher. During his early years in SGV, he would teach evening classes in UST. Little did he know that more than 60 years after he graduated from UST, the school would honor him with the creation of the University of Santo Tomas — Alfredo M. Velayo College of Accountancy — an institution that now carries on his life’s vision to educate and care for future generations. The fourth lesson is to have a sense of humor.This was his trademark — he loved to make people laugh. While he was very serious when it came to business, Mr. Velayo always managed to see the lighter side of things. He never ran out of jokes and anecdotes on any occasion. Of course, some of them were recycled over time but, because of his masterful storytelling, everyone would always end up in stitches. Mr. Velayo enjoyed the company of people. He would host luncheons or dinners for small groups where he would narrate his fascinating life stories peppered with jokes.The V in SGV is no other than Mr. Alfredo Velayo. The V in SGV stood for his vivaciousness and vitality. The V in SGV represents his values of integrity, excellence and compassion that have endured the test of time. The V in SGV is the vision that our co-founders so carefully crafted and worked for which is to nurture Filipino professionals who can contribute to national development.Thank you, Mr. Velayo, for your legacy that continues to inspire us in our SGV Purpose to help build a better Philippines. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Wilson P. Tan is the Chairman and Country Managing Partner of SGV & Co.

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23 August 2021 Julie Christine O. Mateo

The certainty of Purpose

Every day, the volatility and uncertainty we see in the world continues to grow. People, organizations, and even countries are grappling with increasingly complex disruptions caused by the COVID-19 pandemic, and it often feels like we are constantly one step behind the changing times. However, while the global situation remains unpredictable there IS something that can provide us clarity and certainty — and that is Purpose.The global COVID-19 pandemic has revealed underlying weaknesses and vulnerabilities in many organizations. Many companies were caught off guard and needed to scramble to cope with new challenges, not just to growth, but even to survival. As we’ve discussed in previous C-Suites articles, companies are already rethinking how they work and the value they bring to their customers in the new normal and post-pandemic. For some, this has involved a reevaluation of their Purpose.To be clear, an organization’s Purpose is not just tested during times of crisis. It is an ongoing journey that companies need to undertake each and every day in the fulfilment of the organization’s collective “Why.” But we also need to see that a Purpose can resonate even more deeply when people struggle to find meaning in why they do what they do and the difference that it makes. It is a roadmap that reinforces the company’s values, gives weight to sacrifice, and encourages people to see the bigger picture. A Purpose acts like a North star — a beacon that can guide an organization’s people through dark times. Purpose is not a mission, vision or strategy — these can change over time. True Purpose endures and can provide clarity and conviction when we need it the most.DOES IT RESONATE WITH PEOPLE?A Purpose has to appeal to people on various levels — rational while being emotional, ethical yet strategic, important and enduring. It helps to state a core issue or challenge that the organization wants to address, and not simply make statements about their products or services. Sometimes, it also helps to go back to the organization’s roots and why it was founded. It also helps if the Purpose clearly illustrates the company’s identity in some way — does it reflect the interests and priorities of a company’s leadership? Does it include any metrics beyond financial value? Does it resonate with your people on a deeper level, and bring truth to what you wish to achieve?In SGV, for example, our Purpose to nurture leaders and enable businesses for a better Philippines is anchored on the bedrock of the vision, values and real-life examples of our founders and generations of alumni. The ideals of developing people, helping companies thrive and doing our part for our country and communities are already in our corporate DNA. By anchoring and articulating our Purpose on our roots, we provide our people with a familiar roadmap that feels achievable and something that they can actively contribute to.DOES IT ARTICULATE YOUR WHY, WHO AND HOW?WHYAuthor and motivational speaker Simon Sinek’s book Start With Why: How great leaders inspire everyone to take action illustrates the importance of clearly communicating and stating the WHY behind the company’s existence. The WHY (provide a better way of life, creating healthier communities, create a more inclusive society) is more effective than merely stating WHAT (produce high-quality, low-cost goods, provide seamless services) the company does. In addition, many organizations with a powerful and motivating Purpose put people, both within and outside the company, at the heart of all their efforts.WHOA Purpose should clearly state who the organization aims to benefit beyond its shareholders. It is important to state or demonstrate how the organization’s work can benefit those beneficiaries. The beneficiaries can be as specific (marginalized women, small and medium enterprises, primary school children) or as general (healthy communities, a better country, every home) as the organization wishes. However, it should also be authentic and believable to be acceptable to your people and the public.HOWTo round out a Purpose statement, it should also clearly state “How” it intends to achieve its “Why” for its “Who.” This is often where organizations stumble as they strive to find the balance between being too abstract (becoming a world-class company, promoting innovation) or too specific (manufacturing cars, creating devices). Organizations that can find that “sweet spot” where a concrete, measurable and definable “How” can be communicated are more likely to crafting a powerful Purpose statement that will inspire people to truly embrace, act on and advocate it.DOES YOUR COMPANY CULTURE DEMONSTRATE IT?A unique and powerful Purpose can not only unite the people in your organization behind a personally meaningful, inspiring and achievable vision for the future, it can also provide a competitive advantage as it translates into better employee engagement, stronger commitment and more focused efforts and initiatives for the organization.However, it has to be authentic and believable, and it must necessarily permeate the organization from the top down. As stated in an article by EY Global, Why business must harness the power of purpose, for purpose to truly matter, it must go beyond any single initiative that sits on the margins of an organization. It must be driven operationally by the leadership team, and supported with training, performance metrics and talent management. Purpose also has to continually and organically suffuse every aspect of the organization, and should be constantly part of the dialogue between the leadership and the people in a company.Purpose, by itself, will not take the place of strategy or planning, but it does intensify the will and intent behind them.  It is also a continuing journey, one that everyone in an organization needs to constantly work together to truly achieve. By leveraging and truly embodying the power of Purpose, business leaders can help their people find certainty and assurance in an uncertain world. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Julie Christine O. Mateo is the Talent Leader and Purpose Council co-chair of SGV & Co.

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16 August 2021 Noel P. Rabaja

Repositioning for growth beyond COVID-19

More than a year into the COVID-19 pandemic, it is apparent that the impact of this global health crisis has far-reaching implications. Countries are still battling to contain the virus and businesses continue to adapt and find ways to address the resulting disruption. According to the EY Global Capital Confidence Barometer, 92% of global respondents reported a negative impact on their profitability due to COVID-19. For companies to thrive in this disruptive and rapidly changing landscape, looking beyond the immediate challenges is key — companies need to also seize the opportunity to transform and make long-term, strategic decisions on how to reframe their future.To accomplish this, it is important to be able to distinguish between temporary shifts in behavior and enduring changes. Companies have to focus on key trends that had been shaping up even before 2020 but were accelerated by the pandemic, and which will significantly impact how business is conducted. These trends were identified in the EY article, How companies can win in a dislocated economy. Companies need to consider these key trends in their strategy in order to reposition themselves for growth beyond the pandemic and achieve long-term success.DIGITALIZATIONEmerging technologies such as data analytics, artificial intelligence and robotics continue to have a transformative effect on companies regardless of their size, and across all aspects of business. As technological disruptions continue to arise today even under the shadow of the pandemic, companies will need to fully embrace digital instead of adopting it in silos. They need to incorporate it into their culture and corporate strategy, as well as allocate resources to accomplish their digital transformation goals.The 2020 study EY-Parthenon Digital Investment Index found that companies that achieved higher returns on their digital investments have better technical execution and clearer strategies. These digital leaders reported stronger revenue growth in the past two years and expect to sustain this growth in the future.ESG AGENDAThe pandemic has also heightened awareness of environmental, social, and governance (ESG)-related risks. As a result, there is increased pressure from stakeholders for companies to review their efforts to address global challenges such as sustainable growth and climate change. Businesses are driven to take action on these issues by rebuilding a stronger post-crisis business landscape underpinned by sound ESG principles.Companies that prioritize the ESG agenda benefit by driving improved financial returns and simultaneously making a better overall impact on the world as they do business. Research has proved that ESG initiatives positively correlate with the performance, financial value and reputational value of a company to investors. A University of Oxford study reveals that 88% of companies with robust ESG practices also demonstrate better operational performance.Given how wide the scope ESG can be, it may be a challenge for some companies to identify specific priorities and focus areas that can best deliver material sustainability, yet the data show that this is a necessary step for continuing growth.SECTOR CONVERGENCESome sectors did better than others in recovering from the uncertainty of COVID-19, resulting in uneven K-shaped recovery that is pushing sectors to converge as they push to survive. Lines between sectors such as media, telecommunications and healthcare were blurring even before the pandemic, driven by changing consumer behaviors and technological advancements. Digital ecosystems now connect very different stakeholders, indistinguishably linking insurers, governments, healthcare providers and consumers.We are already seeing this trend in our own market where, for example, we see a telecoms provider bundling healthcare and COVID-19 insurance into its packages, in addition to traditional voice and data plans. Similarly, some insurance companies are found on online retail platforms to market their products.Moving forward, companies will have to determine the impact of sector convergence upon their operating environment and find ways to rise past the challenges that emerge while also creatively coming up with adjustments to existing business models so that they can better capitalize on resulting new opportunities.CHANGING GEOPOLITICSThe pandemic exacerbated an inward-looking approach for several countries, impacting how governments made policies in their efforts to protect their citizens, create more jobs and address falling economies. However, Southeast Asia saw an opposite trend where countries like Vietnam and Indonesia liberalized their laws to attract foreign investment. In the Philippines, there is also a move to liberalize foreign investment in certain industries through the proposed amendment of the Public Service Act, Retail Trade Liberalization Act, and Foreign Investment Act.Global leadership is also simultaneously becoming more multipolar as the US, EU and China emerge as competing powers. Smaller countries will have to align their activities to address changing global dynamics, while companies need to focus on applying and building resilience into their supply chains to anticipate the disruption from geopolitical shifts.REPOSITIONING FOR GROWTH BEYOND THE CRISISCompanies need to consider these key trends in developing their blueprints for recovery and growth. However, they will find that there is not one formula that can fit all, and that the right strategy will vary across industries.Businesses from any sector can nonetheless reposition for growth amid the current economic landscape. To do this, companies need to adopt proactive strategies based on a strong understanding of the key trends as well as the resulting sector dynamics and rapidly changing market landscape. These proactive strategies include taking bold decisions to transform existing businesses or transact through acquisition or divestment. Acquisition can help the company expand its capabilities or reach new markets and accelerate growth, while divestment can help build resilience. Past experience shows that companies who made the early bold choices — particularly acquisition or divestment — during crises had significantly higher total shareholder return over time, even if this meant taking an initial hit on their cash flows. These bold strategic decisions can create competitive advantage and long-term value to the business beyond the crisis.By integrating the key trends into their growth strategies and identifying the right path to follow, companies can reframe their future and emerge stronger in the period of post-pandemic recovery. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Noel P. Rabaja is the Strategy and Transactions Leader of SGV & Co.

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09 August 2021 Lisa Marie T. Escaler

Reimagining the future of work (Second part)

(Second of two parts)While many organizations have embarked on implementing more agile, people-centric and digitally-enabled workplaces, these same enterprises were not sufficiently equipped to deal with the rapid proliferation of COVID-19. After more than a year of adapting to the new normal and transforming how we work, it became evident that employees, workplaces, and the future of work have changed in significant ways that we could not have previously imagined. According to the EY 2021 Work Reimagined Employee survey, which comprises the results of interviews with more than 16,000 employee respondents across 16 countries, employees are fully embracing the flexibility that has made remote work possible, with 48% of respondents believing that their company culture improved during the pandemic.In the first part of this article, we discussed how companies need to understand the new normal worker, enabled by technology. In this second part, we continue by determining when and where work can be done in terms of remote and hybrid workspaces, and the necessity of making data-driven decisions fueled by workforce insights.WHEN AND WHERE CAN WORK BE DONETransitioning to video conference meetings and online chat presented a number of challenges. Employees reported varying levels of distress learning to manage remote work and work-life balance, such as a lack of boundaries, losing track of time over days and weeks, and feelings of isolation. These were the most common concerns raised in an EY Work Reimagined Leader’s Forum in the discussion on the challenges posed by remote work. In the survey, 78% employees and leaders responded that they felt the increased pressure to be constantly connected to their jobs.Up to 77% of survey participants also selected the loss of human connectivity as their top concern about increased technology adoption and agile working. This indicates that human connections still matter — and are perhaps even more important now as many employees globally face limitations on mobility, travel and returning to physical work spaces.In light of this, companies should consider incorporating “digital well-being” into their technology and tools to help employees manage remote work, such as leveraging fitness apps or digital fitness programs and emotional well-being apps to sync with enterprise technology. This technology aims to give employees insight into when they need to recharge and disconnect.Leaders designing remote and hybrid work strategies will want to position employee well-being at the forefront. They will need to understand what well-being features available in enterprise tech can benefit their employees and, concurrently, reinforce leadership communications that emphasize how they prioritize and support the well-being of their people. Despite the widespread adoption of remote work, survey data indicates that most employees are still not ready to embrace a completely virtualized work experience. The study shows that two-thirds of respondents wish to resume some form of business travel, and that a large majority of employees would prefer to work in the office two to three days a week once it is safe to do so.Many corporate leaders are already creating hybrid workplace strategies that bring together remote and in-office work. However, the hybrid work model risks falling flat unless the purpose of the office is made clear: as a place that helps people accomplish their best work and create meaningful connections. Employees enabled by technology have already realigned their working style to be more agile and flexible. New tools and technologies have already set the workforce on a new trajectory underpinned by flexibility. Based on the EY survey results, tomorrow’s employees will likely desire more freedom to design their workdays and meet virtually or in-person when needed to innovate and collaborate. In brief, employees want the flexibility to choose where and when to work while assisted by technology at all end points.To capitalize on this trend, the Chief Human Resources Officer (CHRO), Chief Technology Officer (CTO) and the Head of Corporate Real Estate should deliberate and consider how future work models can offer diversity and flexibility while encouraging a diverse and inclusive workforce, finding a good balance among location, technology and human interaction to bring out the best in their people.MAKING DATA-DRIVEN DECISIONSLeaders now have access to technology to drive their organizations forward, becoming increasingly accustomed to written communications and virtual appearances. The increased deployment of survey technology also allows leaders to align more quickly to their company purpose and employee needs.Leadership communication has improved in terms of expressing empathy, trust, and support, according to one comment at the EY Work Reimagined Leader’s Forum. The pandemic had a humbling effect on everyone, especially leaders, leading people to be kinder and more considerate under the collective challenges that we are all experiencing today. Technology rapidly broke down barriers between leadership, management, and employees, allowing leadership to sustain a more positive culture that saw gains in 2020.Technology leaders and the CHRO can support leadership by exploring technologies that can measure sentiment in real time during leadership video messages and livestreams. It will be important to constantly listen and collect workforce feedback to provide leadership with timely insights. Moreover, it’s no longer enough for leaders to delegate digital leadership — leaders must understand the interplay between technology and megatrends to enable their businesses to deliver long-term value and remain relevant post-pandemic.THE WORKPLACE OF THE FUTUREThe future of work, where we work and how we respond to work have all been transformed by technology, and organizations that navigate this seismic shift can successfully take advantage of its transformative opportunities. Leaders will need to continue assessing how the new ways of working can further enhance productivity among their employees to make more informed decisions about what can be kept or improved. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Lisa Marie T. Escaler is the People Advisory Services – Workforce Advisory (PAS WFA) Leader of SGV & Co.

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02 August 2021 Lisa Marie T. Escaler

Reimagining the future of work (First part)

(First of two parts)While many organizations had previously embarked on implementing more agile, people-centric and digitally-enabled workplaces, these same enterprises were not sufficiently equipped to deal with the rapid proliferation of COVID-19. After more than a year of adapting to the new normal and transforming how we work, it became evident that employees, workplaces, and the future of work have changed in significant ways that we could not have previously imagined.According to the EY 2021 Work Reimagined Employee survey, which compiles the input of more than 16,000 employee respondents across 16 countries, the workforce has positively adapted to the uncertain circumstances in real time. On a 1 to 10 scale, almost 75% of employees rated their job satisfaction at a 7 or above. Employees are fully embracing the flexibility that has made remote work possible, with 54% indicating that they would leave their company if the same flexibility in work location and scheduling is not extended post-pandemic. Despite the lack of physical connection between employees, 48% of respondents believe that their company culture improved during the pandemic.Because the data indicate that workforce needs are changing to adapt to the present circumstances, there is an opportunity for leadership to reimagine the future of work. Though employees value their new levels of flexibility and appear to be equally productive working from home, we’ve yet to determine the long-term effect of remote working. There is also less clarity surrounding how much is lost from the lack of in-person engagement and interactions, especially in terms of coaching and mentoring.To deliver long-term value for employers and their employees, organizations will need to consider three critical courses of action: gaining deeper insight into the transformed employee experience; enhancing the collaborative needs of employees through remote and hybrid working environments; and supporting leadership with workforce insights.UNDERSTANDING THE NEW NORMAL WORKERVirtual collaboration has become the norm in enterprises across multiple industries and internally across functions from operations to innovation, with organizations leveraging technology to shift manual processes and workflows to a virtual platform. With an increase in adoption rates, user data and resources, tech companies have capitalized on the opportunity to evolve and enhance their offerings. Tools enabled by cloud technology are now ubiquitous, with new collaboration software features such as reactions, cross-platform sharing, and image filters digitizing the human connection. Organizations are exploring how to better leverage cloud technologies to deliver enhanced employee experiences to retain high employee engagement rates.Employers who initially expressed skepticism about maintaining the productivity of tech-enabled remote work can now objectively view the data that indicates that productivity remained high after a full year of working from home, according to the 2020 Harvard business review study, “Research: Knowledge Workers are More Productive from Home.” While the long-term productivity implications of working remotely remain uncertain, EY survey participants responded positively: 65% agree that remote work enables better productivity, and 66% believe that their productivity can be accurately measured regardless of where they work. Now that employees are aware that their work does not have to be limited to specific locations, they want their employers to provide them with more technology, benefits, and support to further improve their remote working experience. They have expressed their desire for reimbursement for hardware and home office setups, followed by training for remote presentations. In certain countries like the Philippines where a stable internet connection is not always guaranteed, some employees are also looking to their leadership to provide solutions to their data needs so they can work more effectively.With a vast range of tools, technology and platforms available to the workplace, HR and technology leaders should assess which of these add the most value and identify which of these are the most pragmatic to deploy given their unique culture and business model, while mapping out their new enterprise tech stack. EY Global Technology Consulting Leader Dan Higgins believes that leaders will likely uncover surprising findings that show how new tech impacts employee experience and retention. He added that 40% of employees want their organizations to offer better communication and collaboration tools to boost their productivity.To achieve this, Chief Human Resources Officers (CHROs) and Chief Technology Officers (CTOs) need to collaborate to assess their workforce and garner insight into how tech enables and transforms the employee experience. They will need to understand how tech enhances inclusive contributions and ideation in areas of collaboration and team dynamics, while also remaining aware and prepared as new cybersecurity and technology-related risks arise.After assessing how the new ways of working and rapid adoption of technology impact employee productivity, leaders will also need to better understand and potentially expand employee expectations around flexibility. The transformational journey will have implications on how office spaces can be configured to encourage certain work practices and better support the physical and mental well-being of the workforce.In the second part of this article, we discuss how to optimize work in the use of remote and hybrid workspaces, and the necessity of making data-driven decisions fueled by workforce insights. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Lisa Marie T. Escaler is the People Advisory Services – Workforce Advisory (PAS WFA) Leader of SGV & Co.

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