By Ma. Salve Duplito
INQUIRER.net
FOR TODAY'S GENERATION, the fall of America’s economy and how this has turned others around the world hostile may seem like the most depressing news in decades. But watching the global financial crisis through the eyes of one of the Philippines’ ruling families with a conglomerate that has been around before World War II may change your perspective a bit.
In a rare peek into the Aboitiz family’s management style and his own personal finance strategies, newly installed president and chief executive officer of Aboitiz Power, Erramon Aboitiz, spoke about how Filipinos can keep their heads above water in these challenging times.
He is also the president and CEO of the family’s holding company, Aboitiz Equity Ventures.
Aboitiz, who admitted that the family has through the years made a deliberate effort to keep their personal lives private, also described what goes inside the family boardroom, how decisions are made and how leaders are chosen.
The Aboitiz family controls the country’s second biggest power distribution and generation group and it also has major investments in banking, food, transport, real estate and construction. In 2008, the family landed on Forbes magazine’s list of 25 wealthiest families in the Philippines with an estimated net worth of $125 million.
Question: How can Filipinos keep their head above water in these difficult times? How should they handle their finances and invest their money? What is the best way to preserve the wealth that they have?
Answer: I always say don’t put at risk what you cannot afford to lose. You can always take risks and people do take risks. That’s the only way that you are going to make money or succeed in a financial way. Otherwise, you are going to put your money under your mattress and even that means you are taking a risk.
But never risk something that you cannot afford to lose. Stay within your means. Make sure that what you invest--the exposure that you put in--if you lose it, you can afford to lose it. It’s not the whole thing.
I think business is that way, too. We won’t bet everything on one thing, no matter how much we believe in it and no matter how good it looks. Spread it around, that’s one.
The next one is, never overextend yourself. Be prudent in the risks that you take and the amounts of money that you borrow.
Of course, the Filipino way--unlike the Americans where they have no savings at all--is to always save for a rainy day because the rains will come.
Q: Is this also true for someone like you who has never known a single day of want in your life?
A: That’s not necessarily true. Like everyone, when my ancestors first came to the Philippines, they had nothing. There were ups and downs. In 1929, the company almost went bankrupt. In our history, there have been good times and bad times.
But from a personal point of view, our style has always been to start from the bottom. You work yourself up. Money wasn’t just given to us at the beginning. When we were kids, like everybody else, we had an allowance. And many times we had much less than our classmates. Even when we go to clubs, we had limitations on how much we could sign. It wasn’t like we had carte blanche authority to do whatever we wanted to do. We also had to budget and be frugal.
Q: So, how does it feel to take over the reins of the company in a difficult year like 2009? What are your priorities and what changes can your shareholders expect?
A: It looks and feels like nothing will change. Our plans are very long-term. It’s not like I came from somewhere else; I was part of the company all these years. Obviously, everybody has a different style but from a corporate direction, we will continue what we have been doing, which is to focus on core competencies. I don’t think you’ll expect us to get involved in radically different types of businesses. Of all our businesses, power has taken the limelight and absorbed most of the resources in the last few years, but we still want to grow our other businesses.
Q: So what is your style? How different are you from Jon Ramon Aboitiz (former president and CEO of Aboitiz Power who retired in December 2008)?
A: I am a very private person. (Laughs) Without going into details, everybody has his own style. But one of the reasons why I say that there won’t be any change is because our decisions are collective decisions. These are decisions that the family have made together knowing what our different stakeholders want and expect. The desires of our stakeholders have not changed, and that’s what we are bound to. That’s what we are expected to comply with and to satisfy.
We like to run things almost by consensus. We believe in what the majority wants. I may not necessarily agree with something in totality, but if that’s what everybody wants, then so be it. But once that is decided, then everybody is behind it. Our agreement is we can shout, we can argue, we can raise our voices at each other when we are discussing, bang our fists and kick the floor, but once that decision is made, that is our decision.
That’s how we do it. Whether it turns out good or bad, that’s our decision. We have to live with it, benefit from it or pay for it. There’s no, “Well you did that, that’s your problem, you fix it.” No, no, no.
If there’s one thing I hate the most, it is when somebody says “I told you so.” Or, “This is the way I felt,” or “I didn’t agree with that,” because the time to say that was before, not after.
Q: Who had the biggest influence in your management style?
A: I can’t pinpoint one particular person. We are beings that evolve depending on how things go. You learn from many things, from circumstances or other people that you see. I am a melting pot of different things.
Q: Did you always know you would head the company?
A: No. It’s really funny. I was in Japan last year with our partners. One of them asked me, “How old were you when they decided you would become the president?” How old was I? It just happened a few months ago! Our style--and this is the way the family operates--is that we believe in meritocracy. How could one decide 20 years ago you are “it”? You don’t know how you are going to perform.
To become a leader doesn’t mean you are the smartest guy in the group. It doesn’t mean you’re the brightest. Over time, different circumstances, different decisions, different events get you to be accepted as that person. It’s not one thing that you did, not that you’re the brightest, not that you were the one trained for it. Over time, things developed that way. Like I said, we believe in meritocracy so obviously doing well in your job and the decisions you make are a very important part of it, but so is being accepted by your peers.
There’s a Latin expression, “primus inter pares,” which means “first among equals.” You consider yourselves as equals but there has to be the first and the first has to be accepted. So when we sit around the table, everybody has the right to say things. Everybody has exactly the same opportunity. But when a decision has to be made, everybody’s behind it.
In family-run business, it doesn’t always work that way. Many businesses including family businesses are still very autocratic in their style. That may not necessarily work. In many families, the older brother or the eldest family takes over. Ours is not that way. It’s the one that everybody chose. It’s not that we vote on it, but over the years, you see that the leadership evolves over time.
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