Tao Corporation

Final PaperPresented to the

Decision Sciences and Innovation Department

In partial fulfillmentOf the course requirementsIn SYSTHEO Section M71

SUBMITTED TO:Dr. Cristina Lim

SUBMITTED BY: GROUP 3Hernandez, TrishaLee, Gwan Woo

Pangan, EmmanuelPanopio, Arman

Park, Hayeon

July 14, 2015

I. INTRODUCTION

a. Company ProfileBack in 1995, Julio O. Sy, Jr. decided to deviate from his family’s

commodity trading business and “make something on his own.” This desire took

form in Tao Commodity Trader, Inc., which specialized in trading molasses.

According to Mr. Sy, the business was very inconsistent in terms of profitability

for quite some time, in that he says “some years they would do well, some years

they would do poorly.” In fact, the company underwent (quoted from Mr. Sy) “2

crises that almost forced them to close the company.” Mr. Sy then decided to

invite a friend who happened to be the president of one of San Miguel

Corporation’s largest subsidiaries to diagnosis his company’s organizational

behavior. After 3 months of observing and interviewing his employees, this friend

invited him out for some drinks. As they were enjoying their beverages, he told

Mr. Sy that the primary problem his company faced was that he was (quoted

from Mr. Sy) a “lousy manager.”

He was told that he never trusted nor empower his employees, in that he

did not involve them in important decision-making processes, nor did he offer

them any sort of training. However, Mr. Sy’s employees did point out that he has

very good (quoted from Mr. Sy) “entrepreneurial tendencies” because they often

heard him speak of great ideas in this regard. What frustrated and upset him on

the onset simply led to the realization that his “gift” was not in managing

businesses, but in entrepreneurial ventures. This led to the decision to establish

Tao Corporation and bring in Tao Commodity Trader, Inc. as one of its

subsidiaries. Today, Tao Corporation has evolved to a holding company for a

“community” of entrepreneurial subsidiaries and affiliates. These subsidiaries

comprise of over 40 companies that delve into several industries, namely Healthy

and Wellness, Distribution and Marketing, Resources, and Financial Services. In

its short history, Tao Corporation has quickly risen to become one of the Top 100

Corporations in the Philippines (as mentioned earlier) that currently employs

approximately 3,000 individuals. It is amazing how much one can achieve with

some constructive criticism and humility, which is embedded in one of Tao

Corporation’s core values.

For the operations within the Tao Corporation holding company, the daily

regimen for every department is carrying out different tasks and deliverables in

light of meetings that occur on different schedules. On a weekly basis, there are

Working Management Committee Meetings, wherein the heads of the different

departments or functional directors meet and discuss updates regarding the

progress of deliverables, as well as issues and concerns that different

departments face. On a monthly basis, there are Full Working Management

Committee Meetings, wherein the department heads together with their

subordinates meet and discuss similar matters. Also on a monthly basis are

Consolidated Business Review Meetings, wherein the functional directors (and

at times with next-level managers) meet with the Chairman of the Board and

President of the company to discuss bring them up to date on such matters.

Regarding operations that involve subsidiaries and affiliates, the Finance

Department of Tao Corporation meets with a representative of each subsidiary

for one hour, once every month to discuss how they are doing financially, as

well as factors that hinder certain partner companies from their goals. Basically,

the primary purpose of the holding company is to monitor and evaluate the

performance of its subsidiaries and affiliates and more importantly, assist them

to achieve profitability. These meetings aim to give Tao Corporation the

necessary information to perform its aforementioned purpose.

As a whole, these company functions aim to shape the construction of

deliverables that will be set for the different departments of Tao Corporations

to accomplish.

b. Organizational Structure

The organizational chart of Tao Corporation is what the Corporate HROD

Director Anna Asuncion termed as “flat,” perhaps due to the low height or

number of hierarchical levels in an organization. There are 4 levels in the

holdings company and given that there are only 50 employees, the span of

control or the number of individuals a manager oversees is not very large. In

terms of departmentalization or the process of grouping of human and other

resources into units, there are 7 departments, namely Corporate Planning,

Finance, Internal Auditing, Manufacturing and Operations, Legal Counsel,

Human Resources and Organizational Development, and Strategic Business

Development.

The corporate hierarchy starts with the Chairman with his Board Members and

the President in one level. Below them are the functional directors or the heads

of the aforementioned 7 departments, which subsequently oversee middle

managers and their associates. Tao Corporation is democratic. The company

empowers their employees by involving them in decision-making processes. In

constructing deliverables to be accomplished by the different departments, the

company involves its functional directors by accepting their inputs. Although

there are set deadlines, Tao Corporation also gives its employees the freedom

as to how they plan to accomplish the said deliverables.

Brief Description/Functions of each department:

CORPLAN – Corporate Planning

Implementation of a work-plan development, setting of appropriate performance

and service standards and develop appropriate KPIs at the corporate and departmental

levels to track key performance areas. Develop and implement relevant performance

management and reporting systems and business analytics processes to track

corporate performance and strategy implementation. Evaluate performance and

highlight areas of attention to top management in a timely manner. Recommend and

monitor appropriate remedial actions to ensure organizational performance standards

and service quality are maintained.

CHIEF FINANCE OFFICER – Finance

The Chief Finance Officer as well as the financial department for Tao Corporation is

responsible for all the managing of the cash inflows and outflows as well as the

bookkeeping and accounting of their data. Being a holding company, the finance

department is crucial to the company in terms of its income and expenses.

INTERNAL AUDIT DIRECTOR – Internal Audit

The role of internal audit is to provide independent assurance that an

organization's risk management, governance and internal control processes are

operating effectively.

MANUFACTURING AND OPERATIONS DIRECTOR – Manufacturing and

Operations

The roles of this department are separated into two. The initial manufacturing

and operations, and security. The initial manufacturing and operations sector is

responsible for the current business functions in Tao Corporation. Security is

responsible for their keeping of data and information about the company and its

processes. The managers in these departments report to the department head/director.

LEGAL COUNSEL – Legal

The legal counsel is responsible for the company’s legal processes and activities,

as well as compliances with their policies, including government.

CORP HROD TEAM – Corporate Human Resources and Organizational

Development

The CORP HROD department is responsible for their human resources which

includes recruitment, hiring, counselling, and so on. For the Organizational

Development area, they are responsible for maintaining and improving the

organizational relations and behaviors of the corporation.

STRAT. BUS. DEV’T. HEAD – Strategic Business Development

This department is responsible for the companies focuses on improving their

operations and their processes. The main goal for this department is to assist the

company in innovating for their growth.

c. Products and Services

The formula Mr. Sy has followed throughout the years is simple: to find

entrepreneurial ventures with potential, equip these ventures with good leaders, and

train these leaders to be further develop and hone their skills.

As a result, the company has already accomplished a wide array of

successful business ventures in its short history (evident from illustration above). In

the Health and Wellness industry, Tao Corporation is the exclusive and authorized

distributor of healthcare brands such as 3M, GE Vital Signs, Siemens, Philips, and

many others through its HealthSolutions subsidiary. Total Nutrition Corporation is

another notable venture, being the exclusive franchisee of General Nutrition Center

(GNC Live Well) in the Philippines. It can be argued that the company’s strong suit is

in its Distribution and Marketing group of subsidiaries. Through JR&R Distributors

Inc., Macro Distributors, Inc., and Oro Grande Distributors Inc., the company

contributes 31% to total Proctor & Gamble business in Philippines, providing their

goods in numerous provinces nationwide. This led to P&G recognizing them as

“Best in Class Distributors” back in 2006. In addition, TriDharma Marketing

Corporation is the exclusive national distributor food and drink brands such as

Kopiko, Beng-beng, Energen, and many others. Tao Corporation also delves into

electronics and communication technology products. Among these are Altus

Communications and Open Communications, Inc., which are subsidiaries

responsible for exclusively distributing Nokia and Lenovo mobile phones respectively

in the Philippines.

Also, ThinkDharma Inc., is one of the company’s newest and most promising

subsidiaries, currently being the exclusive distributor of Nikon cameras and other major

brands. In the Resources industry, Tao Commodity Trader, Inc. has become the largest

trader of molasses in the country, constituting 35% of the market share, in addition to

other commodities such as fuels, lubricants, and liquid feeds. With regards to its

affiliates, one example is Radio Republic, a company focused on championing Original

Philippine Music (OPM) using both an online music channel and magazine as their

platforms. Its “activities bring the virtual into the real through…Music Festivals and

Tours.”

These are a merely a few of Tao Corporation’s many subsidiaries and

affiliations. However, one aspect that truly sets the company apart from others in its

calibre is the emphasis it puts on helping others. Embedded in its vision and mission

statements, the company moves forward with the belief that in order to find true

meaning and fulfilment in one’s work, positive contributions must be made to the lives

of others. Such an idea is concretized by TaosPuso, Tao Corporation’s foundation.

The TaosPuso foundation reaches out to those in need primarily by providing libraries

and multimedia rooms to schools, responding to the needs of calamity-ridden, areas

and discovering and enhancing local artistry in music through its various programs.

d. Problem, parameters and limitations

The Problem:

Increased Workload due to Downsizing

Parameters and Limitations of the Situation:

Only Corporate Planning, Finance, and Human Resources and

Development are given access to by the company.

II. OVERVIEW

The company is successful, being one of the Top 100 Corporations in the

Philippines. Currently, Tao Corporation aims to expand and has a confidential project of

having their main business, which is Distribution and Marketing, become more efficient

and be able to gain competitive advantage among other holding companies. The case

study will be presenting what actions are to be done in case other companies choose

downsizing as one of their options to meet their goals. It will also be presenting the

effects of corporate downsizing to the retained employees. Initially having 90 employees

in their management, after downsizing, the company had only retained 50 employees.

Considering that the company has a goal of gaining competitive advantages, Tao

Corporation has concluded that the 40 they relieved of duties are not contributing to the

goals as compared to the 50 they have retained. Because of the downsizing, the

remaining 50 employees have been experiencing increased workload and the increased

difficulty of the work itself.

III. ANALYSIS

Tao Corporation has recently downsized early February 2015 regarding its

managerial team in the head office. The company wants to gain competitive advantage

and has concluded that downsizing would be one of the best options to meet this goal.

The key people involved are the people in each managing department. The company

did not mention how many people per department were removed, but that each

department was affected with evaluation.

Because of this downsizing, the remaining employees have been complaining

about overworking and the increased difficulty added to their workload. Initially, the

company begins operations at 8:30 AM and ends at 5:30 PM. However, due to the

recent downsizing, some employees now continue working as far as 8:00 PM.

According to the company, proper overtime rates are added to the salaries whenever

overtime shifts are being done by the employees. The group assumes that since there

are complaints arising, it may be that the employees are not satisfied or contented with

the current increases. It may also be assumed that due to the increased workload and

difficulty, the employees are becoming more and more stressful as the days go by.

There is also an unrealistic scheduled demand, according to the employees. Currently,

they are blaming their respective managers because of their poor planning of the

distribution of each of their departments’ workloads

IV. Problem Definition-History

The specific problem being addressed is the employees’ complaints of increased

workload and difficulty of the tasks involved in their work. There have been increasing

concerns regarding the working environment and conditions. According to the interview

with their HROD Director, despite not having a big percentage of the employees

involved in this concern, they are worried that in the long run, it may increase and get

worse.

The problem occurs because there are currently dissatisfied employees with the

benefit that they are receiving due to the changes that happened with the company. The

impact is being felt majorly with the Manufacturing and Operations Department and the

Corporate Human Resources and Organizational Development Departments. This is

because of the pressure being added to them on how these respective departments

would be able to manage the current negative effects of the company’s recent

downsizing and the following changes

V. Proposed Action & Resolutions

Better Employee Compensation

- Higher Salaries since employees had an increase in workload

Despite the company’s claims that Tao Corporation provides the proper overtime

rates towards their employees, their employees somehow disagree. The group was not

informed with the current salaries the employees receive due to confidentiality, however

the group does know that on a managerial level, the salaries of the managers would

begin in the high-five digits to a medium-level six digit salary. The group also knows that

an increase of 30 percent towards the hourly rate of their salary should be the overtime

pay that the employees receive.

- Free Snacks after work to help maintain employee health

Another tactic to coping with stress is through proper dieting practices. Having a

proper diet affects energy, alertness, and overall well-being. According to Cooper

Institute, four key areas should be considered. First it is important to monitor fat intake,

second is to consume a reasonable amount of fiber both insoluble and soluble, third

calcium consumption is important, fourth is consumption of foods in antioxidants can

serve helpful.

It is important that the company promotes healthy diets to increase energy levels

and for employees to cope with stress better. This is done through implementing

healthier choices in office cafeterias and taking out the junk food found in vending

machines. It is a costly investment, but it is worth it when you consider that employees

of Tao Corporation is suffering from an immediate shock of increased demand of

workload.

- Exercise Activities before ending of lunch to help keep the employees active

both mind and body

One of the most important tactics is to promote regular exercise. Under regular

exercise, it is important to work on endurance, strength and flexibility. Key activities

include regular walking, treadmill walking, jogging, running, cycling and swimming.

Flexibility activities maintain or improve range of motion and energy. Through constant

exercise, the employees are able to release stress physically and are able to stretch out

their muscles. In a study done by the Mayo Clinic Staff, they mention that exercise can

pump up your endorphins because physical activity helps to bump up the production of

your brain’s feel-good neurotransmitters, called endorphins. Second, it is meditation in

motion meaning that you will often find yourself forgetting about the day’s irritations after

going through a workout as your body concentrates on its own movements. As you

being to regularly shed your daily tensions through movement and physical activity, you

may find that this focus on a single task, and the resulting energy and optimism can

help you remain calm and clear in everything that you do. Lastly, it improves your mood

because regular exercise can increase self-confidence and lower the symptoms

associated with mild depression and anxiety. Exercise also improves your sleep which,

when uninterrupted, can ease your stress levels and give you a sense of command over

your body and your life.

This is why you normally see gyms in companies so that when employees are

stressed, they can take time to work out and release the stress. We propose that the

company set up a similar structure to serve as an avenue for employees to release their

stress due to an overload of work.

References:

Stress Management. Exercise and Stress. Mayo Clinic Staff. Retrieved July 14, 2015 from http://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/exercise-and-stress/art-20044469

Chambliss HO, Huber RC, Finley CE, McDoniel SO, Kitzman-Ulrich H, Wilkinson WJ (February 4, 2011).  Computerized self-monitoring and technology assisted feedback for weight loss with and without an enhanced behavioral component.  Patient Education and Counseling, doi:10.1016/j.pec.2010.12.024

Tao Corporation. Retrieved July 14, 2015 from http://www.taocommunity.com/home