SOCIAL entrepreneurship may be a buzzword today but way back in 2004, when Raymond Gabriel mooted the idea of eradicating poverty through entrepreneurship, his words fell on deaf ears.
“Nobody knew what social enterprise was back then. People told us to form a non-profit organisation so they could fund our idea,” says Gabriel.
He refused. The founder and executive director of People Systems Consultancy Sdn Bhd stubbornly persisted with his idea and the people around him gradually came to see that he was right.
The company he founded is a social enterprise that works to eradicate poverty by empowering the low-income group via its entrepreneurship programme. It aims to empower and transform communities for significant, sustainable and continuous change. It also wants to develop the potential and improve the systems of organisations and the government.
Gabriel did not receive any funding for his original idea, so he looked for alternative ways to come up with the money. The company decided to provide training for corporations and channel the profit into free programmes for underprivileged communities.
Over the years, it has trained 13,000 entrepreneurs, including the disabled and hardcore poor. As the company progressed, Malaysia (and the rest of the world) developed a better sense of what social enterprise is, so word about the good it was doing got around.
“Through our programmes, we managed to raise the incomes of our target group by 100% to 400%. And we did this in our first month, without giving them free money or loans,” Gabriel recalls proudly.
Over the years, People Systems Consultancy has tracked a sample of its participants and found that most of them have sustained the increase in their income over a five-year period. As the company began to show tangible results, government agencies and corporations offered it funding to organise training programmes for the low-income group. And it grew organically from there.
The company’s Business Intelligence Programme comprises three days of training and two months of hands-on mentoring. It teaches participants how to generate more income, scale up their businesses, be innovative and stay afloat in the face of competition and communicate effectively. It also introduces concepts such as the Blue Ocean strategy, which teaches them how to open up new market spaces and create fresh demand.
“After the training, we mentor them for two months. During this period, they apply what they learnt from the programme and we track their performance and give feedback. The results are very encouraging,” says Gabriel.
People Systems Consultancy has partnered various government agencies and organisations over the years, including the Economic Planning Unit (EPU), Prime Minister’s Office (PMO), Petroliam Nasional Bhd (Petronas), Malayan Banking Bhd (Maybank), CIMB Bank Bhd, Mercedes-Benz Malaysia, Microsoft Malaysia and Kuwait Finance House. The EPU and PMO have been its partners for more than seven years.
Many of the company’s clients have continued to collaborate with it on social projects. For example, Reach Independence and Sustainable Entrepreneurship (R.I.S.E) is a programme jointly organised with the Maybank Foundation to train people with disabilities. It is one of the foundation’s key regional community empowerment initiatives.
Gabriel says this programme has delivered strong outcomes. “Maybank Foundation invited the University of Nottingham Malaysia to validate our results — a 411% increase in income for the top 40% of the participants within the first three months. The university validated the results in the 10th month.
“It also discovered that in some cases, the results were even better. This was due to the sustainable and continuous growth our programme delivered.”
Gabriel says the company does not believe in giving loans to participants as they may get used to easy money. “There are some banks and corporations that want to fund our participants, but we always tell them to come in at a later stage, such as three months after the programme has concluded. By then, they should have a clearer picture of what they want to do with their business. We will introduce them to the relevant parties if they need loans or certifications to expand.”
In fact, the “culture” of giving out loans is one of the biggest challenges in the company’s efforts to eradicate poverty and create sustainable impact for the underprivileged. Gabriel says it will take some time before people understand that giving out loans or grants to the low-income group does not help eradicate poverty. If anything, it makes the situation worse.
“Our business model does not give people loans for no reason. Even the hardcore poor and disabled will have to start a business and utilise the skills they learnt from the training,” he adds.
“However, some organisations still believe in giving out loans to help transform lives. In reality, without training, these people will not have a sustainable income to service the loan. It would result in a high non-performing loan (NPL) rate, which adds pressure to the whole ecosystem. It does not solve any problems.”
People Systems Consultancy is often put in a difficult position because handouts have become a part of its target group’s psyche. They expect to receive free money or loans to attend a programme and are reluctant to attend the training if they know they are not getting any financial aid.
It requires extra effort to educate them out of this sense of entitlement and convince them that they will benefit from the programme even if there is no easy money available. “We have to make it clear that they will get into deeper trouble if they can’t service the loan. And they will be blacklisted if they don’t pay it back after a period of time. We also make them understand that coming to our programme will help them acquire the skills they need to live independently with a sustainable income,” says Gabriel.
It is all about education, he adds, and it is time that government agencies and organisations abandon the loan model if they want to empower people. They should look at other workable models with proven results to make a change for the underprivileged group.
“Many Asean countries have high NPL rates because of the loan model. The government should look at building people’s capacity and maximising their potential so that they can be independent. If they are willing to move away from the loan model, it will reduce government expenditure as the money will be channelled to people who really need it,” he says.
“These people will put the money to good use, to grow their business and create more jobs for the community. We think this should be the way forward.”
Another challenge for the company is explaining to people why it has adopted a long-term model that requires at least two months of handholding for the participants. “Many have asked why we go to such lengths because it is a lot of hard work. They ask why we don’t just do a two-day ‘touch base’ programme and why there is a need for mentoring,” says Gabriel.
But as he points out, these “touch base” programmes are lightweight and do not deliver concrete results. “We have seen proven, sustainable results from the long-term model and we are going to continue with it. We will not settle for quick-fix solutions that have little to no impact on the people even if it makes it difficult for us to find partners that share our thinking,” he says.
Gabriel recognises that there are other organisations with good models that could achieve similar impact on the community and he hopes to collaborate with them to create more effect at national and regional levels. The company sees Indonesia, Thailand and the Philippines as strategic markets for it to grow as there is a lot of work it can do on the ground. Having established offices in Indonesia and Thailand last year, it will set up an office in the Philippines in January.
“We engage with the respective countries’ embassies and social welfare departments to roll out our programmes there. They have been very welcoming and are looking to send their staff for training with us. From there, we are looking to duplicate the social impact we have created in Malaysia across Asean,” he says.
Is the company impacted during economic downturns as corporations have less money available to fund programmes? Gabriel admits that there is heavy competition in the market as more social enterprises with similar visions and goals compete for the same pool of funds. However, People Systems Consultancy has a competitive edge.
“I think our business model is what sets us apart from other social enterprises. We deliver strong, sustainable outcomes and tangible results, and we are very transparent in how we achieve it,” says Gabriel.
“We encourage our funders to be on the ground with us to see for themselves. They can see how the lives of the underprivileged are being transformed in a sustainable way and they will be very happy with what we do”
Even in difficult times, corporations still fund social projects that give the best returns. And this is what People Systems Consultancy is good at. The company has consistently delivered its promised outcomes over the years and this has built a sense of trust with its partners. Its entrepreneurship programme is the flagship course of many of the organisations it works with.
The company also organises public training programmes for which it charges a small fee. This helps it to grow in any business climate.
The public programme, which also provides three days of training and two months of mentoring, costs RM3,000 per participant. It has delivered similar results as the programme for the marginalised group as participants have seen sustainable income increases after attending the programme.
“There are a lot of people being retrenched in this economic downturn. They need to do something sustainable for a living. The public training programme offers advanced knowledge and strategies. This will help the participants start their own business if they can’t land a job or if they are interested to be entrepreneurs,” says Gabriel.
“However, the programme is not just about what we do. It is also about what the participants do. They must be willing to work harder and apply the strategies to get higher income. It is a joint effort and requires a lot of hard work.”
The training programme conducted by People Systems Consultancy is done in-house because it has a unique structure, says Gabriel. The training team has to be with the participants for at least two months, and sometimes up to five months, to deliver the desired results. This makes it difficult to outsource any part of the training. The company has 40 staff across Asean conducting the programme.
“We implement a strict standard operating procedure (SOP) to achieve the desired outcomes. It is not an easy process, but we have been able to duplicate the success in Indonesia and Thailand because of our SOP. We are very proud of it,” says Gabriel.
He acknowledges that he is fortunate to have this team of staff who care about marginalised groups and are willing to go above and beyond to deliver the outcomes.
How does he retain talent? “We pay our staff salaries and bonuses that commensurate with multinational corporations and we always promote from within the organisation.
“Passion for the cause is one thing. We can’t expect people to stay with us for the long term if they are underpaid. Good employees deserve to be rewarded and given a career path all the way to the top management.”
Eventually, there will be a CEO from within the company, he says. “Then, I can retire to write my books and put my nose into different training programmes because these are what I am passionate about.”
While Gabriel cannot disclose too much about how much the company makes, he says it has been growing steadily, at an average of 10% for the last few years. He plans to grow the company to a respectable size before turning it into Malaysia’s first public-listed social enterprise.
“I think we can do it in five years. It is a stretch, but looking back, no one could have foretold that we would have come this far. We will take on the challenge,” he says.
“Investors are looking for companies that can provide both financial returns and social impact. I think we are one of the companies that can deliver both.”