What is business ethics?
June 19, 2001 | 12:00am
The anterooms leading to Vicente Ayllon’s office at Insular Life prove a delight for a visitor, as the various paintings hanging on the walls are apparently not of the usual garden variety.
In fact there’s an initially not-so-obvious Amorsolo hanging in a far corner.
The canvas depicts a Christmas scene, and as Amorsolos go, seems uncharacteristically dark.
It turns out there’s a virtual gallery of Amorsolos in an inner sanctum. Ayllon recounts with regret how a fire that gutted the upper floors of the Insular Life building, a virtual landmark on the corner of Paseo de Roxas and Ayala Avenue, had destroyed a number of the priceless artworks by the Philippine master.
But the corporate walls still have a substantial number to be proud of, and it remains one of the most formidable collections of Fernando Amorsolo’s lifework.
Ayllon also expresses concern over the transfer of a Napoleon Abueva mural on the curving wall of the building that has borne witness to all the historic episodes of street protest conducted on and off the Ayala Triangle.
A new highrise will have to go up on this prime lot. It’s a matter of cost effectiveness; the building is old, and cannot take additional floors. Its location at the very center of Makati’s version of Wall Street, right across Ayala Tower One housing the Makati Stock Exchange, makes it imperative to maximize the use of the property.
Urban planning purists may raise a cry; after all, the Insular Life building has long been a landmark in the central business district, pioneering as it did in giving birth to a new, and still predominant, financial center for the Greater Manila area, indeed for the entire country.
But Ayllon gives the assurance that National Artist for Sculpture Billy Abueva has himself expressed confidence that his familiar bas-relief can be transferred safely.
Ayllon has been with the company for 38 years. He knows what it takes to initiate the first steps toward establishing tradition, as well as the need to hew to the precepts of loyalty and excellence.
Insular Life has been a byword for both, and its success has been built as much on savvy business conduct as on ethical practice that has remained unquestioned.
"Basically, it all boils down to fairness in dealing with your stockholders, giving them what is their due and never taking advantage of them," the twinkling-eyed, white-haired CEO says.
"We apply high standards in all our business dealings – with customers, employees, agents, and even our competitors. For me, what is important is we try to maintain what is fair to all concerned. That is business ethics, being fair to all concerned."
The genial, avuncular Ayllon harks back to a time when honesty was a given, an essential premise that, much as everyone took it for granted, still gained primary consideration in the patient formation of one’s consciousness and character.
"We all learn it at home, initially. Every parent tells a child to be honest, to be kind, to be helpful. And they engrave the golden rule in our early consciousness: Do unto others what you would want others do unto you. So I learned this from my parents. Then they told me one other thing: Do not take advantage of others. In school we learned the same things. They taught us the same values."
At the age of 23, Ayllon started working with Elizalde Rope Factory, as an assistant manager of shipping and warehousing. He was a working student, enrolled at Letran College, and eventually taking night classes at the University of the East for his last two years toward a college degree. He recalls having 40 laborers under him.
"I got to have an inside view of how the less fortunate live, what were their hardships and their problems. I learned how to get along with them, to look up to them, and I learned what loyalty was all about. I learned about fairness in work.
"If you treat people fairly and stand by them, then you become honored by them. You have to be loyal to your people first before they become loyal to you. And how do you do that? By protecting them, taking care of them, and being fair to them."
When he joined Insular Life, which was then one of the flagship companies of the Ayala Group, he was well aware that it was a highly ethical company. Thus was his adherence to corporate ethics further reinforced.
Asked if this initial view has changed at all, or has adapted to the socio-political scene, he answers firmly: "No, my views have not changed at all. But I guess you mellow as you grow older. When I was younger, I was very strict in having everyone adhere to company rules. In the late ’70s, I recall that we had a case where some employees faked their medical receipts. It only involved anywhere from a hundred to a thousand pesos. But we terminated all of them."
He admits, however, that times have changed and companies have adopted to a wide range of application when it came to once hard-and-fast rules.
"Now we have to play it differently in relation to our employees who commit violations. There is the approach, of course, of trying to help them change. It’s become a process – first infraction, counseling, second infraction, warning, reprimand, something like that. Mahirap ang buhay ngayon. It’s hard to earn a living. For poor people, maybe the temptation becomes too strong. But still we have to show that we respect values.
"If you look at our Code of Conduct, we lay the same rules, but now we deal differently with employees who commit violations. We give everyone a chance to reform, and we provide counseling and other similar interventions. But at the end of the day, we have to uphold our Code."
Ayllon acknowledges that it helps that the rules are very clear in the industry. "Insurance is one of the most highly regulated businesses because we have a fiduciary relationship with our customers."
He explains further: "When you sell an insurance policy today, you are actually guaranteeing that 20, 30, 40 years down the road, our company will be there to pay the policyholder’s benefits. In such a situation, you have to be very careful, very prudent with your company. And the best way to guarantee this is to adhere to the highest ethical standards."
He recalls that right after the Second World War, the company faced a crisis when 60 percent of its assets, which were in Japanese money, was declared null and void by the Balantine Scale Law. They could have declared bankruptcy, but were so concerned for all the Filipinos who had perished during the conflict.
The company decided to borrow money from the rehabilitation and Finance Corporation or RFC, the forerunner of what is now the Development Bank of the Philippines or DBP.
"Alam mo, mga caballero ang mga nagpapatakbo ng kumpanya, eh. Instead of declaring bankruptcy, they borrowed money just so they could pay off all the death claims. They were fair, they were just, di ba? Nanghiram ng pera at binayaran lahat ng mga claimant. Integrity was the name of the game even then."
Ayllon is proud of the fact that Insular Life, which was incorporated in 1910, remains the most successful Filipino insurance company, fending off increasingly stiff competition from 18 other local companies as well as 22 foreign companies.
"We are extremely solid," Ayllon declares. "When I took over in 1977, our assets were worth P600 million. Now it’s P28 billion, while our net worth is P9 billion, and those are conservative estimates. An example of this conservative reckoning is that this property alone, where our building stands, is only placed at P400 million in our books, whereas realistically, at P700,000 per square meter, it would be priced at about P2.8 billion. That’s how conservatively we look at our assets."
Insular Life has been so successful, in fact, that it has achieved autonomy from the Ayala Group of Companies.
"Mutual na," as Ayllon says. "Which makes it a little bit more difficult now, because I have to answer for the entire enterprise. And I have to make sure that everything the investors have put in, they can take out whenever they need to. It’s a greater responsiblity for me. I have to be very prudent in our investments."
Should the observance of corporate ethics be considered part and parcel of a company’s responsibility?
Ayllon answers in the affirmative. "In my observation, corporate ethics actually strengthens a company and ensures its survival."
How would he define integrity?
"I believe integrity means aligning yourself, in actual practice, to your beliefs and values. Your actions should reflect what you believe in. And this is what I believe in: One should not harm, lie to, steal from, deceive, or take advantage of one’s neighbor. This has been the guiding principle in my life, and I do think that this is the foundation of all ethical conduct, whether personal or corporate. Integrity on the corporate level would be similar to personal integrity, only practiced on a different plane."
For Insular Life, safeguards against corruption are embodied in a Code of Conduct that, according to Ayllon, "spells out what is right and wrong with regard our people’s conduct, behavior and business dealings. It also outlines disciplinary action for non-conformance to the Code.
Ayllon adds that this is regularly updated to cover any new developments in the business environment. "For instance, our latest revision incorporated a section on compliance with computer software and copyright law. But more than the written code, I guess what’s important is for the company’s leaders to set the example and for the company to develop an atmosphere and a culture where the practice of ethical conduct is encouraged."
He does not believe that corporate ethics changes through the years. However, he allows that it may become subject to variations in observance.
"An act is right or wrong, good or bad, ethical or unethical, regardless of time or place. However, in the application, it may vary depending on specific situations. For instance, in medieval times, or in the centuries preceding us, they probably had different measures for judging people’s actions, and different ways of dealing with offenders."
Ayllon considers corporate philantrophy as part of ethical conduct. "For a corporation that belongs to a community, it is only fair that the corporation give the community its due. It’s part of dealing fairly and justly with your stakeholders."
Indeed, the company is well-known for numerous projects manifesting its social commitment. The Insular Life Educational Foundation has long provided scholarships and various forms of educational assistance to students from all over the country, who are chosen through rigorous examinations, and advised to select careers that can help the country, such as being an engineer, an agriculturist or a scientist.
A Golden Eagle Award is given to all high school valedictorians nationwide. The Ateneo de Manila University has been given support to conduct classes that would improve the quality of teachers. In Makati where the company is located, several students from less fortunate families are also given education support every year.
Insular Life has also become synonymous with the TOFIL awards, which, in corporate collaboration with the Jaycees, honor outstanding Filipinos of a generation older than those selected for the TOYM or Ten Outstanding Young Men awards. Recent TOFIL awardees have included world billiards champion Efren "Bata" Reyes and Chief Justice Hilario M. Davide Jr. Among past awardees whom Ayllon recalls is Teodoro Locsin Sr. for journalism.
"We give it to Filipinos who have already made their mark in society and who have done so much for our country," Ayllon says. "We don’t award presidents anymore. The last we did give it to was Cong Dadong Macapagal, the ‘poor boy from Lubao’ who really rose from poverty to top his class and eventually become president of the country. For us, that was truly meritorious."
For Vicente Ayllon, the virtues respected in the past and in the present will remain fundamental, even as he acknowledges the possibility that corporate ethics can take a different shape in the future.
He sees a bright promise for corporate governance in the country, as bright perhaps as the vibrant colors of the distinctive Amorsolo landscapes the company treasures. As in the National Artist’s lifework, it is the promise of continuity and tradition – the pellucid morning heralding honest labor and fair commerce – that will bind the future generation to the observance of integrity for its own merit.
"You have to take this in the context of how far into the new millennium these changes will happen. By that time I would have been retired. What I am certain of is that the executives who will carry on after me in Insular Life will continue to adhere to the highest ethical standards. But farther ahead, we will have to lay the foundation today among the young people who will be taking over the leadership of our top companies.
"Children are now growing up with a different set of values than what their parents and grandparents held. But some fundamentals will never change – fairness, just to uphold these virtues."
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