In Kalayaan Engineering Co., Inc. we try to develop the human capital with the end objective of promoting inclusive growth. KECI is a Specialty Contractor involved in the commercial installation of Airconditioning, Fire Protection, Plumbing, and Mechanical Works.
KECI was established by my father, Rafael “Paito” Lahoz Jr., in 1966 and I and my brother belong to the 2nd generation management of the Company. KECI is largely dependent on labor which makes up 30% of our operation cost. We employ about 2,000 people nationwide in the 2 central prefabrication workshops located in our main office in Manila and our branch office in Cebu respectively.
However, the major part of our workforce is spread out in various project job sites carrying out installation activities. KECI believes that man is not its only greatest resource, but is also the center and most important part of the business. This is why our core values place an emphasis on relationships with others, where we try to do our share developing our workforce through training and mentoring, as well as through profit-sharing schemes, in order toprovide a better quality of life for them and their families.
Some practices we would like to share are about: safety and health; profit-sharing; providing entrepreneur opportunities and our mentoring program.
Safety and Health Program
Every construction site is a high injury risk environment and our first responsibility to our workforce is to provide them with a safe and healthy work environment. A documented Health and Safety Management System is in place which is certified and assessed by the Occupational Health and Safety Assessment Series (OHSAS) 18001:9001. This is our commitment to ensure that good health and safety practices are part of our culture in the workplace.
Personal protective equipment including steel-toed safety shoes, a hard hat, safety glasses, gloves, safety vests and masks, which are all provided for our employees free of charge. In order to make this a culture, in all our job site, we start each day by conducting a safety and health toolbox meeting for 15 minutes. Here we remind everyone and help them understand that safety rules are enforced because we want them to return to their family in one piece, alive, and without injury, just as when they left home in that morning.
The health and safety program of the Company is an investment made for the welfare of the employees and it doesn’t come cheap. However, an accident can be even more costly, especially if it leads to loss of life or limb. But more than the cost, we invest because we give value to our workforce.
Profit Sharing Program
KECI’s main source of income comes from the commercial building projects where we undertake the installation of the mechanical works. Each project is run and managed by a project team and functions or works independently from each other.
The performance of projects is monitored by Project Managers. Therefore we are dependent on technical engineers in charge of the project team and skilled tradesmen who perform and lead teams to accomplish the work.
One of the biggest challenges we face is the migration of our engineers and skilled workers overseas to seek better employment opportunities. The so-called OFWs or Overseas Filipino Workers are the acknowledged real heroes of our country, who leave their motherland and families behind to work.
The combined amount of their remittances of 24-25B USD a year make up 9.8% of the country’s GDP. Unfortunately, their families are also becoming dysfunctional because of the long periods of separation. Moreover, the robust construction industry has a problem looking for much needed skilled workers.
For KECI, the problem was simple: “How can we provide better employment opportunities for our good engineers and skilled workers so that they do not have to seek employment overseas and needlessly be separated from their loved ones?” It was clear that if they were to stay in the country, they had to be paid well. But can we still be competitive if we paid them well? Thus three years ago, we embarked on a profit-sharing scheme that works this way.
When KECI is awarded a new project, a project team is organized and all details of the project are discussed with them. The novelty of our profit-sharing scheme is that the project financials are openly discussed with the entire team. The Team is then given the overall budget target, with the goal of maximizing project savings.
The team is challenged to operate efficiently and deliver value engineering while maintaining quality standards, making sure that all project specifications are met at the project completion. Savings in budget are profits shared not only with the Project Team, but also with all other departments.
Within the project team and departments, a performance rating system is in place so that bonuses are shared based on performance.
After three years of the program and several fine-tuning policies, the results have been phenomenal. Some members of the project team actually received compensations that would be equal to, or even higher than, net incomes they would have received as OFW’s.
Entrepreneur opportunities
Subcontracting in our industry is an accepted practice. Companies like to do it because it keeps labor costs fixed, protecting their estimated margins. In many instances, it even brings down their cost because a lot of the sub-contractors, especially labor subcontractors, are informally organized and therefore can get away with the tedious and costly regulatory requirements such as Social Security, Phil-Health, Pag-Ibig contributions, and 13th month pay, however in many instances, they get paid below the minimum wage prescribed by law.
Nevertheless, in KECI we believe that in each and every employee, no matter what is their position, there is God’s presence to be appreciated, and therefore their dignity and value for work are given much importance.
It is for this reason that it has always been KECI’s policy not to subcontract any of our projects. Moreover, it was also our way to ensure the quality of work delivered without any shortcuts taken during the project.
In spite of the relatively successful profit-sharing scheme we implemented, we still could not meet the demand for skilled engineers and tradesmen. Consequently 2 years ago, we had to rethink our position. We started to identify potential subcontractors for our projects but made sure that they complied with all regulatory requirements. We limited our choices only to licensed sub-contractors.
One of our responsibilities was to make sure that they would get our projects at a profitable price even as they comply with all regulatory requirements. We went as far as supporting some of the potential sub-contractors who couldn’t meet our requirements by helping them professionalize and encouraging them to get their business registered with the Department of Trade and Industry (DTI) as well as obtain the prescribed license from the Philippine Contractors Accreditation Board.
While this program was already doing well after its first year, we thought of ways to further improve it. Motivated only by concern for our workers, we started to rethink this position and find a way for people who had achieved a certain level in the Company to grow even more by encouraging them to become small entrepreneurs.
Mentoring Program
Over the past years, we also had some an experience with some of the staff who have expressed an interest in further developing their skills and therefore the Company supported them by financing their training and even schooling. One time, we invested in the training of four members of our staff as Master Plumbers.
After the training, all of them successfully passed the board for Master Plumbers. These success stories, made us think of institutionalizing and developing a mentoring program which we hope to launch by the end of this year. The concept of the program is relatively simple.
Every employee should be mentored by a more skilled employee. Wherever possible, a more skilled employee should also mentor a subordinate.
Mentoring is an art and a skill that not everyone possesses. We have seen highly skilled people who are unable to pass on the skill to others effectively. Likewise, we have seen less skilled people who are more efficient in training their subordinates.
Social Impact
For KECI, this may result in fewer profits because they are ultimately shared. Yet this is a price our company is more than happy to pay because of the social impact it provides. For the labor force, our teams are more motivated because the mentoring system becomes a natural catalyst for building relationships.
The profit-sharing system and opportunity to eventually become entrepreneurs themselves make the employees think twice before going overseas to seek better employment. This enables them to stay with their families in the country, and relationships within their families are nurtured and protected.
Last but not least, the above programs promote inclusive growth because of the true human development that occurs empowering workers to improve and giving them opportunities to earn better incomes and provide a better future for their families.
