The heart of La Farge

For many workers of Continental Operating Corp., the first thing they check upon entering the Bulacan plant is the color of the flag fluttering in the breeze. A green flag means the plant is on target to meet its production commitment for the month; a yellow flag, that the target is at risk; a red flag, that the target is compromised.

"We are a performance-driven company. Our vision is to be number one in the building materials industry. Right now, we are number one in the cement and roofing categories, number two in gypsum, and number three in concrete and aggregates," said Edgardo Soriano, senior vice-president for organizational development, human resources, and corporate communications of La Farge Cement Services Phils., Inc.

Organizationally, La Farge Cement will be the service provider of Republic Group of Companies, the holding company for five cement companies (including Continental), by 2007 when the local integration of La Farge Phils. and Blue Circle Phils. is completed.

Under the plan, total workforce will have been reduced from 2,000 to 1,200 in the plants and from 170 to 90 at head office.

Merger

At the time of La Farge’s global purchase of Blue Circle, the two Philippine companies each had five plants, each with a 17% market share of an industry estimated at 13 million bags a year.

"Our strategy was to emphasize the merger, not the acquisition. This was a merger of two giants and we were getting the best of both worlds. All employees received a letter signed by their company president, informing them of the merger and what will take place. We gave all presidents a standard Q&A to handle questions from employees. The hardest and most frequently asked question was, ‘What would happen to us?’ And our standard answer was, "We can’t afford to get everybody but, if you’re good, the process will get you in.’ We didn’t want to create unnecessary anxiety. At the same time, we didn’t fudge our answers. We told all employees that everybody must share the pain," said Soriano.

Hiring pool

The "pain" started with head office, where all employees from La Farge and Blue Circle were put in the hiring pool for the new company.

From March 2001 to December 2002, La Farge Cement Services held weekly fora with employees and maintained a regular newsletter called Horizon, which updated employees on every move made by management. Everybody was given an application form that revolved around two basic issues–the applicant’s career plans and his/her willingness to relocate.

"Those who indicated in their application forms that they didn’t mind being retrenched were immediately culled. That instantly reduced the workforce by 30%. Some applicants had problems with mobility. That carried weight in our hiring decision," said Soriano.

For those who were let go, La Farge came up with a generous package–two months’ pay for every year of service plus the equivalent of three months’ pay as seed money to start a business, both tax free. The company converted all sick/emergency leaves and maintained the medical and insurance coverage for employees and their dependents for one year from the time of retrenchment. For those who wanted to put up a livelihood project, the company paid for counseling.

A similar process was used for factory workers, which was completed in early 2003.

Culture

As part of the integration process, employee benefits had also to be reworked.

"Each of the cement companies were registered and incorporated separately with different minority partners. As a result, each company had its own terms of employment. What we decided on was to offer core benefits to all employees. On top of that, we decided to offer a flexible basket of benefits and put a value to each. It is now up to the employee to take the value to buy any benefit from the list of 20 that include maternity benefits and taking French lessons," said Soriano.

To a large extent, Farge’s successful integration in the Philippines could be traced to a global commitment to put people at the center of the organization and, ultimately, the customers that it serves. Every month, a general assembly is held where employees and clients can nominate other employees for a job well done, whether the act is as inconsequential as cheerfully showing the client where the washroom is or has financial consequences such as clinching a big contract. Five employees with the most nominations every month have a special lunch with the president.

"We see ourselves as a team. Our people go out of their way to help each other and in delighting our customers. Although we have been in the Philippines for only seven years, we have already invested 12 billion euros or about P90 billion in the country. When you get down to it, La Farge is all about heart. We care," said Soriano.