January 2023 Articles - Suits the C-Suite | SGV & Co. | EY

30 January 2023

Marie Stephanie C. Tan-Hamed

Digital government: Creating real connections (Second Part)

Second of two partsTo better understand how lives are changing in the connected world, EY launched a new research study with over 12,000 respondents of working age called Connected Citizens. This global study looked at what these respondents value, their top concerns, and how they feel about the impact of technology. The study then aimed to examine their expectations of the function of the government, the provision of public services, and the nature of the interaction between those in power and those under it.In the first part of this article, we discussed the impact of technology in a more pervasive role, broader concerns from citizens regarding the impact of technology, and the seven Connected Citizens personas identified in the study.In this second part of the article, we discuss four key areas government can focus on to better engage with the public: agile and innovative policymaking, inclusive digitization, responsible data use, and public engagement and participation.AGILE AND INNOVATIVE POLICYMAKINGGovernments need to better anticipate the needs of the population and prevent crises before they arise. For example, governments can introduce new social safety net programs (like guaranteed minimum income or universal basic income) for low-income, disadvantaged populations.Case in point, in some countries, clearer rules regarding employment status and rights, as well as portable benefits plans that maintain coverage as employees move geographically, change employers, or experience periods of unemployment or self-employment, are some of the new policies being explored to combat income insecurity for those in precarious work, such as the self-employed and gig economy workers.Other initiatives include more flexible and lifelong education and retraining programs that help workers remain relevant and competitive, skills road maps that assist governments in understanding future-forward skills and jobs, personal learning accounts that provide workers with funds to learn new skills, and active labor market policies (ALMPs) to aid the unemployed and low-income workers in finding employment or retraining.INCLUSIVE DIGITALIZATIONDigitalization is necessary to quickly modernize public services and give citizens the same level of service as the private sector. However, governments must accomplish this while leveling society and making sure that no group is left behind.Broadband and 5G networks, among other investments in high-speed digital infrastructure, are required to ensure connection throughout a nation.Governments can also assist in supplying individuals with online-accessible devices and running programs to increase digital literacy, providing people the knowledge and assurance to connect with digital services. However, companies must also make sure that individuals who are not online have access to services in alternate ways. Citizens already comfortable with technology have higher expectations for the quality, expediency, convenience, and cost-effectiveness of service delivery.Governments can take a number of actions to address these citizens’ needs. The digital National ID system is a step in the right direction to help make it simpler for users to access a variety of services. They can also increase the use of smart websites and mobile applications that offer one-stop access to numerous government services and push notifications with timely information; develop integrated digital platforms that allow data sharing between various government systems so that people only have to enter personal information once; fulfill service demands end-to-end digitally; promote AI-powered chat bots to engage with users and conduct transactions; and create a true omnichannel experience enabling users to access services on various platforms and through various devices.Governments will be able to design their services with the aid of design thinking, customer experience laboratories, and data analytics as they progress toward more proactive and even predictive service delivery.RESPONSIBLE DATA USAGEMore data than ever before is being created, stored, and analyzed for the benefit of society, but there is also debate and controversy surrounding the expanding usage of data. New regulatory, legal, and governance structures are required for nations to take advantage of opportunities while also managing possible risks for citizens. Policymakers will need to carefully consider concerns like data privacy, surveillance technology, the equity built into algorithms, and the integrity of the information ecosystem. The recent controversial SIM Registration Law is one example where people are anxious about the access to their personal data.Governments are already tightening the laws governing how personal data is used. Furthermore, most governments already have laws that grant citizens active control over their data as well as the right to know how it is being used, such as the Philippine Data Privacy Act of 2012.Regulators must take into account how businesses use data in their AI systems. The general public is becoming more aware of the issues with algorithmic decision-making, namely in how it can result in discrimination against particular groups or result in poor decision-making. The regulatory setting needs to increase public confidence in these developing new technologies.Governments, public service providers, enterprises, and other organizations will need open governance systems at the institutional level to show how the data rights of people are protected.Organizations could also pledge to be open about the automated decision-making tools they employ and the safeguards they have in place. Governments will also better manage risks, guard against negative consequences, and foster the necessary trust as more organizations adopt these ethical design and governance best practices.PUBLIC ENGAGEMENT AND PARTICIPATIONTop-down governance methods will no longer be regarded as efficient nor legitimate in the future as many citizens demand shared, transparent, and participatory decision-making. Governments can have the opportunity to interact with citizens on problems that matter to them by gathering citizen feedback on a massive scale, thanks to new digital e-participation tools like social media, smartphone apps, and online digital platforms. Vox populi may take on a new digital meaning in the future.However, governments can ensure that citizens are not just consulted but also able to influence important choices. Many people are experimenting with various engagement methods to find, discuss, and decide on a variety of topics. For instance, Australia, Ireland, and other nations have employed deliberative citizen juries to jointly develop answers to difficult social and economic problems.Initiatives for participatory budgeting which give residents a say in how public funds are spent are gaining popularity. More than 180 policy laboratories have been established globally to foster ideas and serve as a testing ground for policies in areas like education, health, and justice. Additionally, government-sponsored hackathons have proven to be a successful tool to get people involved in developing new responses to pandemic-related economic, social, and technological concerns.Most governments and public institutions around the world are starting open data programs and establishing platforms for data exchange, emphasizing making data broadly accessible to third parties, especially citizens, to support the creation of original solutions to challenging issues while enhancing accountability and transparency. These are all crucial projects that can help governments in a networked world better serve all their citizens.TRUE DIGITAL INCLUSION VIA CONNECTED CITIZENSThanks to advancements in data and technology, governments now have a unique chance to better serve their populations. However, as with any revolutionary possibility, there is an inherent risk: that the desire to digitize as much and as rapidly as possible leads to a one-size-fits-all strategy that actually fits only a few citizens, further separating people from government.The Philippine government in particular has acknowledged the global megatrend of disruptive technologies that pivot transformation in various sectors — augmenting economic development and improving citizen well-being.To address economic recovery, the recently published Philippine Development Plan for 2023 to 2028 takes on the underlying theme of transforming the economic and social sectors and institutions for a prosperous, inclusive, and resilient society, with the digitalization of government services in the forefront of its transformation agenda.Included in the priority bills of the 19th Congress is the passage of the Open Access in Data Transmission Act that will improve competition and promote regulatory efficiencies in the digital market, and the Critical Information Infrastructure Protection Act and Cybersecurity Act that will strengthen the security and resilience of the Philippine cyberspace. These legislative national government agendas will pave the way to more and better programs, resulting in better government services delivery.By understanding that different people have different levels of digital maturity and access, governments will be able to better plan digital service delivery mechanisms that meet all of the needs of their citizens. Governments can do this to increase their effectiveness and efficiency, address digital exclusion to reduce social inequality, and contribute to the creation of more equitable social services for all. 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.Marie Stephanie C. Tan-Hamed is a strategy and transactions partner, EY Parthenon partner and PH Government and Public Sector leader of SGV & Co.

23 January 2023

Marie Stephanie C. Tan-Hamed

Digital government: Creating real connections (First Part)

First of two partsAs people increasingly look to the government to defend their lives and means of subsistence during times of crises, most recently under the pandemic, public policy and the provision of services are now under unprecedented pressure. There is widespread demand among citizens for more digitally enabled public services, and many of them want more control over how these services are provided. However, a sizable portion of the populace lacks the ability or resources to use digital services.To better understand how people’s lives are changing in the connected world, EY launched a new research study with over 12,000 working-age respondents called Connected Citizens. This global study looked at what these respondents value, their top concerns, and how they feel about the impact of technology. The study then aimed to examine their expectations of the function of the government, the provision of public services, and the nature of the interaction between those in power and those under it.TECHNOLOGY IN A MORE PERVASIVE ROLEThe increased use of technology in daily life has been one of the most noticeable changes catalyzed by the pandemic. It changed how people work, play, shop, study, and socialize in mere months. According to the study, a majority anticipate using technology even more in the future than they would have otherwise. As much as 64% of the respondents anticipate that the pandemic will result in an increase in the use of technology.Although governments worldwide have sped up the process of digitalizing many public services, many still fall behind private sector offerings like online banking and shopping in terms of anticipated gains in service delivery (although healthcare services are viewed more positively). Over half of the people globally (53%) believe that governments and public services have used digital technology to successfully combat the pandemic. This shows that governments still need to make progress in their digital transformation before they can live up to the expectations of the citizens they serve.We are seeing similar trends in the Philippines, where the government is increasingly focused on implementing and sustaining digital transformation strategies to bring about a true e-government that would strengthen connections with citizens by using digital and technology to achieve economic transformation and more efficient delivery of services to citizens. However, both government and stakeholders alike need to understand the deeper issues around technology in order to truly make the most of it.BROADER CONCERNS REGARDING TECHNOLOGY IMPACTDespite the prevalence of technology, the study found complex attitudes towards it. Most respondents (72%) believe it improves life and will be necessary in the future to help address ever-more complicated challenges. However, there are concerns about its broader effects. Growing socioeconomic inequality.The most disadvantaged people frequently lack the resources to access new technology and the digital literacy skills necessary to use it. Another issue is the use of algorithms for decision-making, which some believe may be biased. Nearly a third of people worldwide (32%) believe that not all segments of society will equally benefit from technology. And 34% believe that people who are already wealthy and powerful gain more influence as a result of technology.Diminished human interaction.Concerns have been raised about how using communication technology can affect social cohesion, with 32% believing that technology will cause people to feel less connected to their community. Some of the most vulnerable groups may experience increased isolation in a more virtualized society where there is less physical interaction.Digital security and personal privacy.The quantity and variety of data produced and the rate at which it is gathered will grow as more people and devices are linked. This creates public anxiety over personal privacy and a lack of choice over how data is used. More than 4 out of 10 people oppose the sharing of data with both the government and the business sector, while 72% oppose government selling their personal information to the private sector.Additionally, governments can do more to explain the advantages of data sharing and reassure the public that it will be used responsibly. The study reveals some support for data use when people are aware of the use case, and if it presents advantages for them personally or for society as a whole. This is especially true when it comes to matters of public health. For instance, 52% of people worldwide favor utilizing personal data to track and prevent disease, while 47% support using it to set priorities for healthcare.Building trust in government institutions will be crucial in increasing the effectiveness and efficiency of government operations as well as utilizing public efforts to help design and provide better services. The study shows that citizens are willing to participate more in the delivery of public services in the future, with more than a third identifying more performance transparency as one of their top priorities to improve public service quality. Additionally, 42% said they would like to have a greater say in how public services are delivered in their community.THE SEVEN CITIZEN PERSONASWith the study showing how complicated global citizen beliefs, values, needs, and behaviors are, understanding these identities can assist governments in forging more reliable ties with their constituents. It identified seven different citizen personas through survey data analysis: Diligent Strivers, Capable Achievers, Privacy Defenders, Aspirational Technophiles, Tech Skeptics, Struggling Providers, and Passive Outsiders.Diligent Strivers are young proactive self-improvers keen to advance in life. They expect seamless digital government services to help them achieve their aims, are comfortable sharing their data with governments, and strongly believe in equal opportunities.Capable Achievers have an older age profile and are independent, successful and satisfied with their life. Pragmatic technophiles who embrace digital innovation, they trust governments to use their data appropriately but worry about it getting into the wrong hands.Privacy Defenders tend to be older, independent and comfortably off. They value technology and the benefits it provides them, but are extremely cautious when it comes to sharing their personal data with governments or private companies.Aspirational Technophiles are younger, well-educated city-dwellers. Motivated by success and new opportunities, they incorporate technology and data into every facet of their lives. They are excited by the potential for new digital innovations to empower people and improve society.Tech Skeptics are older, on lower incomes and relatively dissatisfied with their lives. Distrustful of governments and skeptical about the benefits of technology, they tend to be opposed to data sharing, even with a clear purpose.Struggling Providers are younger and tend to be in low paying, less secure work. They are above-average users of welfare services and are ambivalent toward technology, lacking the access and skills for it to significantly impact their lives.Passive Outsiders have lower levels of income and education. Detached from the connected world around them and generally reluctant to embrace change, they are relatively ambivalent on data sharing but tend to feel the risks outweigh the benefits. The attitudes each persona has toward technology and their level of access and comfort with digital services are significant. Despite being representative of the online population, the survey participants vary in their comfort level while utilizing new technologies on their own. This indicates that governments should shift away from a one-size-fits-all approach towards service delivery and increase the level of personalization to improve public policy design, deliver more efficient and effective public services, and deepen the relationship between government and citizens.For instance, Struggling Providers, who would require the most assistance, would likely be unable to utilize services and miss opportunities if some services can only be accessed through digital channels. This leads to a worsening of the structural inequality they already experience.We have seen this ourselves during the pandemic particularly in the education sector where students were given the option to participate in online classes, yet a significant percentage did not have access to devices or the internet and had to resort to analog options such as printed learning modules. In the second part of this article, we discuss four key areas government can focus on to better engage with the public: inclusive digitization, responsible data use, innovative and agile policymaking, and public participation and engagement. 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.Marie Stephanie C. Tan-Hamed is a strategy and transactions partner, EY Parthenon partner and PH Government and Public Sector leader of SGV & Co.

16 January 2023

Kristopher S. Catalan

How can private boards be future-fit?

In today’s rapidly-evolving and disrupted business environment, private enterprises need to be resilient and responsive to fast-changing business needs. Boards and management alike should widen their agenda, and continually embrace transformation to keep their organizations aligned with the times.The most recent geopolitical, societal and environmental events force companies to rethink their priorities and revisit their current business agenda. Suffice to say, strategies which worked pre-2020 may no longer be effective. That is why private boards must reframe how the future looks like for their organizations.EY has identified six key actions to test the future fitness of boards and their ability to lead the business.1. Gather new perspectives by asking the right questions from stakeholdersThis helps create a robust dialogue around risk, opportunities, and any impacts on long-term purpose, which enables more informed decision-making. Initiating these discussions with management invites the exploration of alternatives that may not have been previously considered. Inputs from external resources such as business advisors or consultants can be beneficial as it provides new perspectives or provides alternatives to the current problems companies face.Conversations with stakeholders can give boards a better view of current or potential problems to provide organizations with much-needed wisdom. The better the questions are, the better the answers to be found.2. Revitalize board dynamicsDiversity and ongoing self-reflection, along with openness to varied inputs, reinvention and adaptation, builds a stronger, more effective board. A reasonable exchange of ideas can provide different frames of reference that are essential to problem-solving. An active board also provokes difficult but necessary questions.As an example, the Securities and Exchange Commission advocated increasing female representation in the boardroom and that boards should be as diverse as possible, gender-wise. In a study by Harvard Business Review, companies with more than two women on the board outperform others with less in their sector. Clearly, increased diversity in the boardroom has direct benefits for organizations.3. Increase focus on the long termWhile current circumstances have many boards centered on short-term survival, flexible and longer-term strategies based on emerging technologies, trends, new intelligence and industry developments, as well as a clear commitment to putting people first, should also be clearly articulated. Companies are no longer just measured on how well they performed for a year – they are assessed on how well they prepare for the future.Information about sustainable practices, including environmental, social, and governance (ESG) programs, are a staple in investor briefings for large companies. In the not-so-distant future, corporate communications will include sustainability practices and measures alongside financial metrics.With the growing significance of sustainability reporting, assurance of non-financial measures is equally important. Private companies may initially look up to their publicly listed counterparts, which are required to report about their sustainability programs (currently under a “comply or explain” basis). Private boards can include ESG matters as a staple boardroom discussion as well.Future-fit boards are focused on identifying megatrends and guiding management to face new challenges and innovate to seize the upside of disruption. Future-fitness is also about creating an environment for management which provides flexibility to develop better, more innovative business models, new collaborations, and new ways of working, drawing on talent, and incubating new ideas.4. Adapt communication, protect reputationTo maintain stakeholder trust, private boards need to align purpose with action. Communication must be timely and the division of roles for external communication clearly understood. Private boards can set the tone for the whole organization to follow. The policies and guidelines they adapt and approve for the organization should trickle down through formal and informal communication channels to the staff so that frontliners are equipped with the right information to make the right call.In the EY Global Integrity Report 2020, only 58% of junior employees, compared to 70% of board members, agree that employees in their organization can report wrongdoing at work without fear of negative consequences for themselves. Management must build the trust of their workforce through the clear communication of values and transparent compliance with the rules, as well as provide secure ways in which employees can voice their concerns.5. Align and monitor cultureIn his book Start with Why, Simon Sinek said that “Cultures are groups of people who come together around a common set of values and beliefs. When we share values and beliefs with others, we form trust.” It is important that boards have a clear vision of the corporate culture, align it with long-term strategies, and monitor said culture using new metrics to view issues from every angle.Purpose is like a journey, the board and management are pilots and stewards, and the passengers are the employees and other stakeholders. The pilot, the crew and the passengers need to have a common understanding of where their destination is and more importantly, trust that everyone will play their roles in order to arrive safely.6. Enhance risk and compliance oversightTaking a pragmatic approach enables boards to gather external insights, deploy monitoring mechanisms, and think more broadly about emerging risks and how to address them.One of the shifts required is to develop new competencies for finance, risk, technology and compliance. Private boards can organize committees similar to what public companies do to enhance oversight functions of their boards. Private boards may wish to rethink their usual agenda to tackle enterprise-wide risks.FUTURE-PROOFING PRIVATE COMPANIESPrivate companies can become future-proof by reimagining the way things are done and private boards are instrumental to setting that tone. A clear purpose acts as a compass in the journey of an organization to reshape and reinvent itself, setting a clear and inspiring direction that future-fit boards can navigate.Furthermore, with the right information and the proper tools, private boards can lead the transformations of their companies to the next level and beyond. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.Kristopher S. Catalan is an Assurance Partner and the EY Private Leader of SGV & Co.

09 January 2023

Wilson P. Tan

Revving for growth

As the transition into the new normal continues and the economy looks to rev up, it’s important for leaders to leave the pandemic mindset behind — that of caution and risk aversion — and adopt a bold mindset of optimism and growth. While 2022 was a good year of recovery, companies must place a greater focus on sustaining growth while continuing to prioritize the health and wellness of their people. In the current business landscape, those who will find success will likely be those who act first and do so the fastest. INCLUSIVE GROWTH WITH HUMANS AT THE CENTERIn the face of ongoing change, business leaders need to transform their processes as well as their organizations in order to grow. In a setting where there is tremendous competition for talent and high levels of burnout, successful transitions of any kind must start with people. In line with this, business leaders must take purposeful action to manage people through the transformation journey. Workers across industries are now increasingly evaluating possibilities based on higher income, greater flexibility in when and where they work, and better company culture. According to the 2022 EY Work Reimagined Survey, as much as 43% of employees say that they are likely to leave their workplace in the upcoming year, citing these reasons. Organizations need to reconsider their workforce planning now more than ever if they want to recruit and keep a diversified pool of top talent.For companies to succeed as the talent war heats up, it is crucial that they place more emphasis on purpose, rewards, wellbeing, and belonging. To remain competitive, companies have to thoughtfully respond to evolving employee expectations and incorporate them into future talent programs and strategies. This includes programs relating to mobility and immigration, the challenges of which were intensified by the pandemic. Companies must also reassess their immigration policies and build a strategy that can align with their business goals while managing workforce expectations.With human capital at a premium, the current experience-driven economy necessitates that businesses focus on their people as the key to delivering long-term value for any business. Organizations and their chief human resource officers (CHROs) will also need to rethink their workforce development programs to retain, train and nurture people with the right technical and behavioral skills required to meet the needs of the future. By identifying skills gaps, developing learning programs for reskilling, curating learning experiences and nurturing a culture of curiosity, organizations will be better positioned to make the training investments necessary for continuous learning.However, it should be noted that placing humans at center does not just refer to employees — both employees and customers or clients should be at the core of any business tactics and long-term goals. In strategizing for growth, every choice, use of technology, and creation of a good or service must be seen through the eyes of the customer. Companies have significant opportunities to change the emphasis from an employee value proposition to human value proposition by developing new programs and solutions that prioritize the needs of the people first while still meeting stakeholder expectations. This ultimately paves the way for wholesome profits and a better working world. OPPORTUNITIES IN ESGSustainability and environmental, social and governance (ESG) cannot be excluded from the discussion of transformation and growth. Sustainability is focused on future generations, while ESG concerns are a matter of transparency for all stakeholders. Investors, employers and even the community increasingly hold companies responsible for a balanced ESG strategy capable of supporting strategic vision and corporate purpose. Though it was previously mentioned that 43% of employees surveyed in the above cited Work Reimagined Survey are open to leaving their companies for new roles, that figure drops to 12% if employees believe their company is positively impacting the world. As an example, the EY organization set a target to significantly reduce its carbon emissions and become net zero by 2025. It was one of the first professional service organizations to achieve carbon negativity as of October 2021, which means it is now reducing total emissions and either removing or offsetting more carbon than it is emitting. By achieving the status of carbon negative, EY demonstrates its commitment towards accelerated climate action and sustainability.As businesses start reopening and expanding, they also have to be prepared for additional regulatory compliance in the form of the Philippine Securities and Exchange Commission (SEC) requiring publicly listed companies (PLCs) to submit their annual sustainability report. Focusing on these ESG practices and factors is beneficial to both individual companies and investors, as it promotes the harmonization of management practices and calculates returns and risks to ensure the sustainable financial performance of organizations.For leaders to embed sustainability at the heart of decision-making, they have to prioritize strategic goals while also taking business and sociopolitical contexts into account. They have to set clear targets aligned with a purpose-led strategy, and build a more robust approach in analyzing opportunities and risks from environmental and social changes. Last, they will need to instill discipline in reporting and non-financial performance management as a basis for continued adaptation.FROM RECOVERY TO SUSTAINED GROWTHThe new era of work requires enterprises to embrace greater flexibility and develop their workforces as well as prioritize ESG as the new norm. While economic conditions may seem somewhat despondent currently, we still believe that the global economy is ready to rev for growth, with companies taking the hard-earned lessons of the past few years and transforming them into performance drivers and new business opportunities.While the journey ahead will still be challenging, it is imperative that we keep our eyes on the vision of building and restoring long-term value to our businesses as we continue to move towards a world of sustainable growth beyond the pandemic. Let us look to the rest of 2023 with renewed strength, optimism, and clarity of insight. 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.

January 2023

Digital government: Creating real connections (Second Part)

Digital government: Creating real connections (First Part)

How can private boards be future-fit?

Revving for growth

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