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Human Nature Has a No-Firing Policy

Proving that you can have socially just labor policies and make a profit.
IMAGE COURTESY
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At first, having a no-firing policy sounds counter-intuitive. After all, won't your employees just slack off if they know they can't be terminated? But over the past 13 years, Human Nature has been going against the grain in terms of HR policies, with a focus on lifting people out of poverty. Here's how they make it work.

Showing employees compassion and forgiveness

Human Nature president Anna Meloto-Wilk explains that they had a no-firing policy since she, her husband Dylan Wilk, and sister Camille Meloto-Rodriguez started the company in 2008. But they only clearly articulated it as a core HR policy three years later, when an employee was caught stealing. Meloto-Wilk and her husband were especially shocked since the employee in question was highly trusted and practically like family to them.

Dylan Wilk, Anna Meloto-Wilk, and Camille Meloto-Rodriguez
Photo by COURTESY.

"He was with us from the very beginning. And we were very happy to see the progress that being employed in Human Nature was having in his life—that he seemed to be getting out of poverty. And we were seeing that he was being able to pay off all his debt," she recalls. "But unfortunately, we found out that he had been fudging some of our receipts. For example, he was only asked to buy 10 light bulbs [but] he'd make it 100. And then he would sell off the rest. It was only when we were doing an audit of our expenditures that it was caught."

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This would be grounds for termination in any other company. And it took the Wilks two days before they were able to speak to the employee since they felt so betrayed. When they did speak to him, he admitted that he had stolen from every company he'd worked for. Even when he was an OFW in Saudi Arabia—where it is legal to punish thieves by chopping their hands off—he stole from his company.

"It made us realize that this was actually a behavioral pattern, it wasn't a personal thing that he was deliberately trying to break our trust. But it was sort of like a gambling addiction," Meloto-Wilk explains. "Or it was more of a mindset that, you know, this job is not gonna last, so I might as well get as much as I can from it. There was always that feeling that the other shoe is going to drop. So, it was more of 'Okay, let's just get the most of what we can today and bahala na what happens tomorrow.'"

"My husband told him, 'As much as this is so disturbing and we were very, very hurt by what you did, we decided that we're going to keep you. We just want to assure you that you're not disposable. Because you think that you're going to lose this job any time, it's really going to happen, and we want to break this pattern. We want to break this mindset,'" she continues.

The employee was shocked since he had fully expected to be terminated. He would have been able to easily accept it and move on to the next job if they had. The fact that they didn't fire him made him feel a kind of shame that he had never experienced before. "And when he told us that and he was really asking for forgiveness, that's when we knew that perhaps the pattern had been broken," Meloto-Wilk says.

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Of course, as responsible managers they no longer allowed him to handle money. Instead, they transferred him to departments such as maintenance, where he could avoid temptation. To this day, he is still with the company. Meloto-Wilk says there are many similar stories because Filipino workers—especially those in the informal sector—are so accustomed to being fired. This results in a survival mentality where they aim to get as much as they can out of whatever company they are with while it lasts.

Inspiring loyalty by being loyal to your employees

Human Nature's no-firing policy and approach to employees with grave offenses demonstrates that they have real compassion for their staff. It also shows an authentic commitment to helping Filipinos lift themselves out of poverty. And because Human Nature's staff feel valued, they become driven to do their best at their jobs and look out for one another. This was especially apparent during the pandemic.

Like most companies, Human Nature was badly affected by the economic downturn. A lot of businesses were forced to retrench their staff to stay afloat. During the first ECQ, Human Nature's sales were simply not enough to support their operations. Meloto-Wilk was faced with the decision to either lay off 20 percent of her employees or have everyone in the company take a pay cut. Meloto-Wilk was determined to stay true to their no-firing policy and chose the latter. However, she made sure that those in leadership took bigger pay cuts since they had savings and other safety nets as opposed to the rank-and-file employees.

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"I think [with] those kinds of policies, our employees see that we are genuine in our commitment to make sure that they are not thrown under the bus. That we're here to stay with them. It's been the most difficult time of our career just to keep Human Nature fluid and to survive the pandemic. But I think it's also very satisfying to see that, despite the challenges, we're still here, we're still standing and we didn't have to resort to layoffs," she says.

Meloto-Wilk observes that her employees are more motivated to work because they see so many people in their neighborhoods who have lost their jobs and are struggling to put food on the table. "So whenever we have programs like providing food packs and feeding programs, they're very enthusiastic to share. They might not be able to contribute a lot, but a lot of them volunteer. A lot of them also network and tell us how we can, for example, source cheaper vegetables. Because we have a community market so that our people can buy vegetables at a lower price. This was the time when the prices of basic goods really shot up. It's not just financial help, but they're very committed to pitching in."

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Creative interventions

Over the years, very few staff have abused the no-termination policy. And among those who did have violations, a majority have been able to completely turn their performance around. Some were transferred to a different department or given a job function for which they were a better fit.

"I think you need to be able to talk about your values very often, even before the misdemeanor happens. So that when it does happen, it's clear that there was a violation that happened," Meloto-Wilk explains. "And it's very important to train those who are the direct reports for the people because they're really going to be your allies. It's not just down to the HR to deal with those things, because the HR only deals with our people for company-wide programs and when there are disciplinary issues. So it's very important that we also empower the leadership team. We have a mancom that's composed of our managers or supervisors. We also run a lot of new policies or different programs by them so we can get their buy-in."

There are also some cases in which after multiple escalations, it's the employee who decides to resign. This is usually when they don't want to be moved to a different department because it's not in line with their personal goals.

Equipping probationary employees to succeed

Given the fact that Human Nature refuses to terminate employees, it's easy to think this translates into higher standards for regularization. After all, a no-firing policy means that you're stuck with the people you've hired. But the company goes against the grain in this regard, too.

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They've refined their hiring process by giving evaluations during the third month of the probationary period instead of the usual fifth month. This gives employees a better chance of improving and meeting performance standards. In fact, Meloto-Wilk advises her managers to give rank-and-file employees feedback after one month so that they already know what they need to change early on.

They do have higher standards in some areas, such as being on time. But their way of addressing habitual tardiness is unconventional as well. If an employee is late three times, they're transferred to a Gawad Kalinga community where volunteers are expected to show up by 5:00 a.m.

They also make sure to train and empower their supervisors and team leads to act as coaches. "Also, you have to understand a lot of them come from communities where they didn't have the role models [or] training [for] the professionalism or work ethic that is expected in most workplaces," Meloto-Wilk says. "So a lot of that training has to happen in Human Nature during their probationary period."

Human Nature is committed to providing Filipinos from marginalized communities with opportunities to work their way out of poverty.
Photo by COURTESY.
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When it comes to hiring, they also look at potential. This is because as part of their commitment to being pro-poor, they employ workers from Gawad Kalinga communities and underprivileged areas. They work with partners in these communities to evaluate each applicant's readiness to work.

For example, there is a Catholic priest based in Payatas whose parishioners often approach him asking for a recommendation to Human Nature. "We trust him because he has the same values as us. We're here for development, we're here for people and meeting their potential," Meloto-Wilk says. "Then he'll say, 'I would recommend this person but not now. Maybe next year. Allow me to work on this person first this year, and maybe next year he'll be ready for a job in Human Nature.' So it's really that kind of community approach and considering other factors that you don't normally include in the hiring evaluation."

Improving employees' quality of life

Ultimately, it seems like Human Nature uses the probationary period not to see whether new hires are up to snuff, but to help them qualify for regularization. They also pay their rank and file workers a living wage of P1,034 per day—that's nearly twice the mandated minimum wage of P537 per day. Provincial workers get P966 per day rather than the P310–P420 minimum wage. Before the pandemic, they shortened their work hours to 7.5 rather than the usual 8–9, out of consideration for the long commute employees had to endure.

On top of this, they put up a fully-staffed daycare center for their employees' children. When the pandemic hit, they had the teachers at their daycare center provide online classes instead. The idea for the daycare facility came about when Meloto-Wilk realized that their employees had to leave their children at home unsupervised, with neighbors checking in on them twice a day.

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As a mother with six kids, Meloto-Wilk knows how critical stimulation and interaction are to child development, especially for children under five years old. And with the daycare facility located just across the head office, employees could check on their kids during their breaks.

"It makes sense from a development perspective. But I also think from a business perspective, it makes sense because I have less absences, less emergency leaves, less VLs," she says. "Because of course, when your kids are sick, or when you have an emergency, then you leave from work. But since we had that daycare, you know, our workers are able to put in more productive hours into the company and still have that peace of mind that their kids are being taken care of."

They even close all their branches on Sundays. This is to give their employees time to rest and go to church. Because of this, it took nine years before Human Nature was able to open a mall branch. But eventually they were approached by the leasing manager of SM The Block. She believed in the brand so much that she said they could close on Sundays if they were willing to pay the penalties. This opened the door for Human Nature to open in Megamall and other shopping centers.

Human Nature's first mall branch in SM The Block
Photo by COURTESY.
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Most companies keep long working hours, pay minimum wage, and operate their stores on Sundays in the name of profit. But Human Nature's expansion over the years proves that you can have compassionate labor practices and be successful at the same time. As of this writing, they have 595 employees, 300 products, and 29 branches nationwide, with one soon to open in Festival Mall. They also have an 80,000-strong network of dealers.

How to sustain compassionate labor practices and stay profitable

When asked how they managed to apply these policies and become profitable at the same time, Meloto-Wilk says she has two explanations: one logical, and one philosophical.

"The more logical or rational answer would be that we're very committed to excellent products and excellent service. We are always very meticulous about maintaining service levels. We're constantly checking feedback on our products. We come up with new things every two months. Innovation and excellence are really at the core of what we do," she explains.

For example, Human Nature uses PET and HDPE bottles because those are the most recyclable types of plastic. This allowed them to make natural products affordable with less impact on the environment. But as Meloto-Wilk did more research, she found out that the percentage of plastics recycled worldwide is less than five percent. The bigger solution was to reduce the amount of plastic introduced into the market.

While Human Nature started producing shampoo bars with this in mind, they realized that consumers go through dishwashing soap much faster than shampoo. This is what gave them the idea to produce the country's first dishwashing powder, which they could sell in cardboard packaging. Not only did this reduce plastic—it made it possible for customers to save money since one box of powder produced 1.5 liters of dishwashing liquid. It's this commitment to producing high-quality, affordable natural products that has turned Human Nature into a household name.

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Human Nature launched the country's first natural dishwashing powder earlier this year.
Photo by COURTESY.

As for the philosophical explanation for their success, Meloto-Wilk says, "I think we've been able to grow as much as we have because we've been doing things according to how we think it should be done. Because it's the right thing to do. And because we're doing it that way, I really believe God is blessing the work far more than what we can do."

She recalls the time the company was in a very tight spot in February 2021. The 45 percent unemployment rate affected consumer spending, and the sales of their beauty products dropped. The ECQ implemented in March only made their situation more dire.

They were already on a four-day work week and considered cutting it down to three days.
"But then that's really going to make our people suffer even more who've been on four day work week since August of last year. And through no effort or brilliance of our team, there was a Tiktok video on our sunflower beauty oil that went viral," Meloto-Wilk explains.

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"[It] happens to be the most popular product that we have, and also the easiest to manufacture. And it just so happened that we had all the raw materials in stock," she continues. "So you can see it was like complete luck that this person who is not even affiliated with us did a TikTok video. She came up with this concoction of sunflower beauty oil and milk salts, and it's just exploded. Then all of a sudden, we were getting POs from our retail accounts, we were getting huge sales orders from our branches."

Because Human Nature's sales skyrocketed, their employees were able to return to a five-day work week by April. And by May, they could afford to have management work five days a week as well. "I think it's because we try to do the right thing, even when it's hard. I guess there's the providence also, then the blessing that happens," Meloto-Wilk says.

Photo by COURTESY.
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Taking care of your employees can be cost-efficient too

Meloto-Wilk points out that the pandemic has made a lot of workers and employees re-evaluate their expectations of employers. And companies should aim to retain not just employees in higher positions, but rank-and-file staff as well. This is because it's more expensive to keep training new people than to retain them.

"Not many employers think about [that] when they think, 'I'll just hire them for five months because there's hundreds of other people who can replace [them]," she says. "If you have products and services that are targeted to end users, then it's so important that your staff are trained in terms of product knowledge, in terms of customer service, in terms of servicing all of your different stakeholders. I'm not sure if a lot of employers really see the cost of having to keep changing their people and how many customers they actually lose. Because we have people who are inadvertently turning away customers because they haven't been trained properly."

Meloto-Wilk also feels grateful that they have people in senior positions who stay with Human Nature even if they could get a higher compensation package elsewhere. "I'm very fortunate that the managers we do have decided to stay with us and are committed despite having [other] options. Not just because of the compensation but really, because we believe in what the company stands for, and the way that we're trying to change the way that business is being done."

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