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Bro. Zeld Sorenson, a Belgian monk, had just been appointed by the superiors of his Order to be the Rector and Chief Administrative Officer of

Bro. Zeld Sorenson, a Belgian monk, had just been appointed by the superiors of his Order to be the Rector and Chief Administrative Officer of Saint Lucien Academy, a secondary school for boys located in San Pablo City. Saint Lucien Academy employed over 200 people in both teaching and non-teaching positions and with the exception of the chaplain and another monk, all the management positions were held by Filipinos. Bro.Zeld, with wide experience in educational administration, had been brought in from one of the Order's schools in the United States to replace the previous Rector who was recalled due to an illness.

Arriving at his office on Monday, April 11, 1998, he was somewhat surprised by the mounds of neatly arranged papers on his desk. He began to work his way through the volume of paper, but after a week decided that he could his time more effectively by looking into the other areas of Saint Lucien's operation such as faculty and instruction, an area which he had been warned needed to be strengthened. In his previous roles as rector of other schools, Bro. Zeld had succeeded in delegating large areas of responsibility to his subordinates and in the process helped develop local people for higher positions. He noted that most of the papers on his desk involved purchase orders and small checks for purchases to be signed. The next most frequent item was request for salary advance loans. He decided to delegate both of these functions.

Bro. Zeld called in his Chief Accountant, Gaston Fernandez, and reviewed existing purchasing and salary loans policies. It was decided that Mr. Fernandez would be responsible for all purchases up to P2,000, and that he would delegate purchasing authority to each department as he saw fit, but in all cases placing a limit on the amount. On the question of salary loans, Bro. Zeld decided that the school's Personnel Manager should take charge of loans to all employees with a base-salary* of P 8,000 or less and that the Chief Accountant would be responsible for employees earning more than that.Accordingly, Bro. Zeld called in Felipe Fajardo, his Personnel Manager, explained the procedure and once morereviewed the school's policies on all salary advance loans. Mr. Fajardo reminded the new Rector that all the faculty and staff were informed at the time of their employment about the conditions under which Saint Lucien Academy advanced salary loans. These were clearly stated in the School's Faculty and Administrative Manual: first: salary loans would be granted only in cases of bona fide emergencies; and second, cumulative outstanding loans to an employee at no time could exceed one month's regular pay.

Bro. Zeld was very pleased with his first set of administrative actions, He had succeeded in freeing himself for the more pressing problems, and at the same time, his two subordinates seemed pleased with the apparent confidence that their new Rector had in them. He then turned his full attention to the problems of the school faculty and instruction.

Six months later, while reviewing the summary financial figures issued by the Accounting Department, one item caught his attention. The entry for "Salary Loan Advances" had more than tripled during the previous six months as compared with the six month period preceding it. Bro. Zeld immediately called in Mr. Fernandez and handed him the financial report. The Accountant's first reaction was that " . . it must be a typographical error." He went off in search of the accounting entries to verify the summary figures. He came back in half an hour looking rather puzzled, with an admission that there was no "error". Bro. Zeld asked him whether he thought there had been "a dramatic increase in genuine emergencies". Mr. Fernandez was quick to answer in the negative. Bro. Zeld next called in Mr. Fajardo, and asked him the same question. Mr. Fajardo was not as categorical in his response. In fact, he suggested that all salary loans which he had approved were justifiable. Bro. Zeld than raised the question of whether all the loans that had been approved during the period in question met the two conditions stated in the school's policy that had been reviewed earlier. Mr. Fajardo's response to this was somewhat more guarded. He pointed out that each case had to be judged on its own merits, and went on to describe hypothetical situations that would warrant special consideration. Bro. Zeld was not convinced about the relevance of these explanations, and asked for a case-by-case review of actions taken by the Personnel Manager. Referring to one loan which clearly violated the provision of limiting all outstanding loans to one month salary, Bro. Zeld asked for an explanation. He repeated this procedure for a number of approved loans. The following exchanges are representative of the conversation that ensued:

Bro. Zeld : Take this case, why did you approve it?

Mr. Fajardo: Oh, he is building a house, Brother.

Bro. Zeld :Well, is that an "emergency"?

Mr. Fajardo: Well, you see, he has nine children.

Bro. Zeld : Why did you approve this one?

Mr. Fajardo: Well, you see Brother, she is the sister-in-law of my wife, and she would

have been embarrassed if I hadn't shown special consideration.

Bro. Zeld decided to challenge the validity of these reasons, and asked in what way could these actions be justified in terms of the school's objectives. In response, Mr. Fajardo seemed to change his tactics. One of the reasons he kept returning to frequently was:

"If he didn't get the loan, I'm afraid it would affect his mental attitude toward the company. Besides, he has been with us for ten years."

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