MODERNIZATION CREATES RESISTANCE

By mid August 1984, our children were back in school. From a large, physically and academically well organized school with over one thousand three hundred students in Salta Lake City, they were transferred to a very small school in the Lomas de Urdesa, in Guayaquil; The Inter American Academy was a school with only 200 students, most of them the children of expatriate executives who had been, transferred from their countries of origin, such as the US, Europe and Asia, to Ecuador. Ecuador was living in these days a time of relative economic prosperity resulting from a rare period of political stability and government openness to private business and foreign investment. President Febres Cordero had just taken over and he was a supporter of private enterprise and free market, therefore, opportunities were opening for foreign investment and several companies were coming to the country to expand and or open their businesses.
All but a very few teachers in the school were American, they were a mix of mostly young teachers coming from different places in the US who had been hired in a special fair in Minneapolis where American schools around the world were offering working opportunities to teachers who wanted to have an overseas experience which would allow them to know the world and simultaneously make a buck before returning to the US after two or three years.
In spite of the youth of most teachers, the school was good; it kept good academic standards and prepared students very well for their future attendance to US or other International universities, through the International Baccalaureate program. Spanish as a second language was taught by local teachers with an impressive, almost astounding success. We felt our children were in good hands academically. By mid school year, my wife, Fanny who had been a teacher for many years, was invited to join the school as a teacher of Spanish as a second Language. She worked there for seventeen years until the year 2001 when our daughter Angie, the youngest in the family, graduated from the school.
At work, my mission continued. Among the innumerous deficiencies Molidor had as a result of decades of poor management, the company did not have a policy regarding salary revisions for its 130 people. The Blue collar workers were given a raise once a year when the government, generally at the beginning of each year, raised the minimum salary through a law that would barely recognize the effect of the previous years’ inflation on the workers’ salaries. As a result, all its blue collar workers’ salaries were kept at the minimum level allowed by law. The rest of the employees only had a raise whenever the big boss pleased to do so, without a policy, without following a procedure, and without regard to the reaction of the other employees around, not to mention the market. It was a really chaotic situation with which nobody was happy, but nobody would complain about either, for fear of being seen as a trouble maker, and therefore, becoming a candidate for dismissal. In those days, as it is today, Ecuador is one of those places where most qualified and educated workers consider themselves happy to have a job, so, they care for it as a precious thing that places them among the “privileged” to have a job. That is not necessarily the case with blue collar workers, especially when they belong to a union. Unionized workers feel very secure in their jobs because of a very protective Labor Code that severely penalizes the employer and rewards the worker if dismissed. As a result, the quality and productivity of labor is very low and gets worse as seniority becomes an additional rewarding issue when a worker is dismissed.
Considering the above, I started a program of periodical evaluations of the white collar workers, and encouraged the mill’s operations’ manager to start a program geared to reward productivity among the blue collar workers in the mill. A totally uneducated, quasi-illiterate operations manager, an American red neck from the Deep South, who considered the mill his private ground, and the workers in the mill like slaves in a Southern Cotton plantation, did not like my suggestions at all. He considered my suggestions as an unwelcome intromission in HIS private ground. I suspect he did not like me at all because I was ONLY an Ecuadorian, and as such, in his mind I was not qualified to make suggestions to him, a descendant of some kind of Lords from the South. That created a tense situation which led in a certain occasion to a confrontation of ideas, a field in which he had none, and he could only say that he thought I was “on the take”, something he brought abruptly and of course was never able to substantiate.
My evaluations program for the human resources started, as a sample format, I used the evaluation sheet we had been using at Northwest Pipeline, with some needed changes, of courses. Personal evaluations were to be made to all salaried white collar workers, at least once a year, on the day of the employee’s anniversary. Special care was put in making sure that the person was evaluated in all aspects of his or her work, placing special emphasis in their ability to create ideas and suggestions, to follow instructions and demonstrate leadership. The person’s weak as well as strong points had to be clearly indicated and the evaluation was to be personally discussed with the person being evaluated by the evaluating supervisor. A training program was to be suggested for the employee to work on his/her weak points and the person in charge of such training had to be suggested in the same sheet of paper. The evaluation sheet would be then delivered to me for a review, and then to the general manager for the final approval of the salary adjustment suggested. Soon things started to move forward, people started to work with an additional motivation; their expected salary adjustments would now be the result of a well thought of, and carefully prepared and discussed evaluation, which they will be very well made aware of. This created the need for a “Human Resources Department” replacing the existing “payroll desk” which did nothing but pay the people on the due time.
Back in 1984, the medical care provided by the Ecuadorian Social Security to its affiliates was very poor, and most often their doctors took the easy path of ordering the workers to go home and rest for three days to two weeks for a minor problem. This produced a lot of unproductive paid time to the workers, which I thought could be reduced, if the company paid a privately provided health care through an insurance policy. This is on top of the fact the company had an in house part-time doctor to take care for the workers’ minor health problems. Unproductive time could be reduced, I thought, and prepared an analysis of the lost time costs vs. a company paid private medical insurance for the workers, It was a no brainer, therefore, by 1985 such medical insurance for the workers was established and worked well for many years until the company was liquidated in 2008. The workers were happy to have a much better medical care for them and their dependants, while the company gained good will and reduced its lost time costs dramatically.
Believe it or not, up until 1984, Molidor, a wholly owned subsidiary of American companies, did not have its monthly financial statements translated to dollars as it has always been required for a reasonable understanding, by the shareholders, of the numbers therein. The monthly Sucre –denominated financial statements, as was the procedure, were mailed monthly to the Kansas City parent company office with no comments or footnotes whatsoever, and I guess, were placed somewhere in somebody’s files to never be looked at, or analyzed. A total waste of time and paper, as well as a total lack of information about the subsidiary’s operations for the entire year, until the external auditors did the translation of the year-end financial statements, on their own and without anybody in the company knowing how it was done, before submitting their annual auditors’ report to the shareholders in KC. That seemed to me one of the most important priorities I needed to work on. By September 1984, I had started already the process of conversion of the financial statements to dollars, following the regulations of the American Institute of Certified Public Accountants (“AICPA”). It took about three months of hard work to compile the historic dollar costs of all PP&E and Long-term Assets and Liabilities, for purposes of their translation to dollars using the corresponding historical exchange rates, but, as of December 31, 1984, and for the first time in the company’s history, we were able to submit our financial statements to the parent company, as prepared in-house, by our group, without any external help, following the rules and regulations of the AICPA. Our work was fully validated by the external auditors and, KPMG did not have to do that for us anymore. The general manager of the company, whose involvement in the day to day activities of the company was near nil, limited himself to applaud our achievements without a clear knowledge of what we were really doing.

In my next posting: CHANGES CONTINUE