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Pinoy-style HRM:
Human Resource Management in
the Philippines
About 76 million people live in the Philippine archipelago where more than
70 mutually unintelligible languages and dialects are spoken. The national
language is Tagalog, originally the Luzon dialect; but the English language
was introduced to the islands by American occupiers in the early 1900s.
Despite an increasing preference for the local language (Lopez, 1998),
Filipinos are still educated in English and Tagalog, thereby comprising one
of the largest English-speaking countries in the world. Augmenting the
westernization initiated by a distinctly Spanish heritage, Americanization
has penetrated deeper into the Pinoy (local colloquialism for ‘Filipino’)
society than into any other Asian country. ‘The influx of American ideas
and social patterns in a broad range of institutions and the Filipinos’
receptivity to them are well-known’ (Arce and Poblador, 1977: 6).
Consequently, the Philippines stands unique as a Christian, English-
speaking democracy in Asia (Lopez, 1998; Engholm, 1991).
The purpose of this article is first to identify and describe the essence of
human resource management (HRM) practices in the Philippines. The
intention is to highlight the enduring and distinguishing features of Pinoy
HRM and its determining circumstances. This is important since the
Philippines was not included in recent research which studied variations in
HRM in Asian countries (cf. Bae, Chen and Lawler, 1998). Neither can
much be found in the international academic literature on HRM in the
Philippines. This article aims to rectify that shortcoming. Drawing on a
multitude of mostly domestic sources for secondary data, the article
attempts to provide a generalized picture of HRM practices in the
Philippines. The analytical framework utilized in doing so includes three
determining forces. First, the substantial cultural influence on Pinoy HRM
through the prevalence of indigenous core values is discussed in detail.
These values remain central to how modern Filipinos think, believe, feel
and act (Jocano, 1989, 1997). Second, the specific economic/political
situation in the Philippines is examined as the restricting context to Pinoy
HRM. Third, the forces of globalization, not least in the form of
multinational corporations operating in the country, are highlighted. The
enduring resilience of Pinoy HRM is indicated by demonstrating to what
extent foreign multinationals in the Philippines have adjusted their HRM
Jan Selmer, Hong Kong Baptist University; Corinna de Leon, Hong Kong.
128 A S I A PA C I F I C B U S I N E S S R E V I E W
F I GURE 1
ANALYT I CAL F RAME WORK F OR H RM IN TH E PH ILIPPIN ES
Economic/Political
Context
ð
ð
Culture
ð Pinoy HRM Globalization
ECONOMIC/POLITI CA L C O N T E X T
Political History
The Philippines was a Spanish colony from 1521 until 12 June 1898 when
independence was won, only to come under the control of the U.S.A. The
republic of the Philippines was proclaimed on 4 July 1946, with Manuel
Roxas as the first president. Ferdinand Marcos was elected president on 9
November 1965 and later re-elected in 1969. Since the constitution did not
allow a third term, he declared martial law in September 1972. Martial law
became one-man rule lasting 13 years, creating economic and political
crises that resulted in national impoverishment. The assassination on 21
August 1983 of Marcos’ arch political rival Benigno Acquino on his return
from exile in the U.S. began accelerated political change. Anti-Marcos mass
rallies resulted in National Assembly elections where the opposition won
about one-third of the seats contested. In February 1986, Acquino’s widow,
Corazon, ran against Marcos in the presidential elections. While the
outcome was still disputed, a military revolt in Manila led by Marcos’ two
top officials initiated what later was called the ‘People Power Revolution’.
Marcos fled to exile in the U.S. where he died in September 1989. Corazon
Acquino became the new president and despite seven military coup
attempts, she served her full term of six years. In May 1992 Fidel Ramos
was elected president. Ex-movie actor, former town mayor of San Juan and
opposition politician Joseph Estrada was elected president in May 1998, and
Gloria Macapagal-Arroyo of Ramos’ party was elected vice-president.
After a series of political blunders and escalating scandals, in November
2000, Joseph Estrada became the first president in the history of the
Philippines to be impeached. After a bungled trial, leading to another
upheaval on the streets of Manila, immediately referred to as ‘People Power
II’, in January 2001 Gloria Macapagal-Arroyo was sworn in as the second
female president of the Republic of the Philippines.
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130 A S I A PA C I F I C B U S I N E S S R E V I E W
laws were promulgated as early as the 1950s, e.g., the Minimum Wage Law
of 1951, the Industrial Peace Act of 1953, and the Medical and the Dental
Treatment Act of 1954. The 1973 Constitution of the Philippines stated as
follows:
The State shall afford protection to labour, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employees. The State shall
assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of
work. The State may provide for compulsory arbitration.
Currently, there are extensive laws on many issues: e.g. rights with regard
to rest, working hours and holidays; minimum wages; hours and conditions
of work; meal and rest periods; hours of work for hospital and clinic
personnel; night shift differential pay; overtime; weekly rest period; benefits
and services; termination of employment; labour relations; labour unions;
collective bargaining; and industrial health and safety (ibid).
CULTURE
132 A S I A PA C I F I C B U S I N E S S R E V I E W
134 A S I A PA C I F I C B U S I N E S S R E V I E W
PINOY H R M
Evolution
HRM as a specialized and systematic business function is a relatively new
field in the Philippines. In the 1950s, human behaviour in organizations was
a neglected issue because companies focused on work simplification and
methods improvement. In the 1970s, personnel management still rated low
in the priorities of organizations, often only operating as a subunit of the
finance or the manufacturing department. Lately, many companies have
begun to reassess their corporate philosophy in favour of regarding people
not as cost but as investment and assets, professing a belief in HRM.
In the case of San Miguel Corporation (SMC), the food and beverage
conglomerate which is historically the largest listed company and biggest
employer in the Philippines, it was the founder himself (Don Andres
Soriano) who led the way to modern HRM. The development of an
institutionalized philosophy in people management took several
generations, but the HRM function has always enjoyed the status it deserves
in SMC (Fajardo, 1997). Since 1990, SMC has built two training centres to
provide highly popular courses in marketing, finance, operations
management, leadership, communications skills and foreign languages
(Selwyn, 1992).
Various management associations have been dealing with personnel
management. One of them, the Personnel Management Association of the
Philippines (PMAP) was founded in 1956. It has promoted and given
impetus to the institutionalization of personnel management. During its
formative years, Philippine corporations were more concerned about
finance, plant facilities and marketing. Personnel programmes were
informal if they existed at all; employees managing the small personnel
units performed clerical tasks and rarely had a say in recruitment, hiring,
promotion or termination policies.
Industrial Relations
Industrial relations are to a large extent regulated by the state. There are
laws guaranteeing the workers’ right to collective bargaining, for union
registration, for certification elections, and for compulsory and voluntary
arbitration (Ang and Palanca, 2000).
The findings of the PLFS showed that just over 40 per cent of the
surveyed establishments were unionized, ranging from 9 per cent in
construction to more than 58 per cent in basic metals, the share increasing
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136 A S I A PA C I F I C B U S I N E S S R E V I E W
with the size of the firm. Of all unionized firms, about 69 per cent had
industrial (or independent) unions; and company (in-house) unions were
more frequent in medium-sized rather than in either small or large
establishments. About 29 per cent of the firms had a labour-management
council (LMC), a feature peculiar to Philippine industrial life. To reduce
unions’ power to incite strikes threatening the much-desired industrial
peace, there has been a vigorous government campaign to promote LMCs
at the firm level as an alternative to labour unions. Both employers and
employees are represented on the LMC deciding on major policies affecting
workers’ rights and obligations (Ang and Palanca, 2000; Standing, 1992).
After the People Power Revolution of the late 1980s, President Aquino
rolled back the more repressive elements of Marcos’ labour policy. However
such a change did not substantially strengthen the labour movement and has
not promoted more stable industrial relations. If anything, easing of the rules
governing union formation has resulted in even more fragmentation of the
labour movement. Labour federations are being further organized into so-
called labour centres, the largest of which are the Trade Union Congress of
the Philippines, the Lakas Manggagawa Labor Centre, and the Kilusang
Mayo Uno. Currently, there are about eight national centres, 155 national
federations along a myriad of political lines, and more than 5,600
independent local unions. However, despite this impressive institutional
setting, as of 1998, only 10 per cent of the work force were organized into
trade unions and those who were covered by collective bargaining
agreements were even fewer (Ang and Palanca, 2000; Kuruvilla, 1998).
The unions rely on the minimum wage as a floor for collective
bargaining, and their economic muscle is weakened by the restrictions on
strikes, the government’s crackdown on illegal strikes, and employer’s
replacement of striking workers. Subcontracting of labour and the use of
casual workers has increased five times, also contributing to the demise of
union power. Accompanying an extremely weak labour union movement,
there has been a steady decline in real wages, job security and labour
standards (Kuruvilla, 1996).
Cultural Links
Available evidence shows that Filipino culture has a profound impact on
HRM practices in the Philippines. High absenteeism was found among
employees who believed there was a lack of concern or cooperation
(pakikisama) among fellow-employees (Andres, 1985). Filipinos have been
observed to prefer to work in groups, whereby face-to-face interaction
increases productivity (Gatchalian, reported in Andres, 1985). Helpful
cooperation (pagtutulungan) was pinpointed by Filipino workers as the
desired characteristic of work relationships which motivated job efficiency
and resulted in job satisfaction. Social acceptance and fear of rejection were
shown to be critical factors of job satisfaction among Filipino managers,
explained by the desire to preserve social harmony within the work
organization (Marzan, 1984).
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GLOBALI ZATI O N
138 A S I A PA C I F I C B U S I N E S S R E V I E W
For the sake of our argument, that Filipino HRM is a distinct and
somewhat resilient style of indigenous business function, two types of
foreign business influences are explored. First, the impact of Japanese
organizations on local human resource practices are discussed. Currently
there a number of Japanese business firms represented in the Philippines,
and their influence, or lack thereof as it may be, is worth noticing since
Japanese corporations have a reputation for tight control over their foreign
operations, especially in Asia (Ishida, 1986), which may favour parent-
country routines rather than host national practices. Second, the experience
of one Western MNC is discussed encountering the ultimate challenge: a
series of prolonged, near-crippling labour strikes.
Western Multinational
Another indication of the pervasive role of Filipino core values on HRM
practices of multinationals is shown in the experience of Nestlé Philippines
Inc., a subsidiary of the Swiss multinational Nestlé Group with a annual
turnover of more than 50 billion Swiss Francs. Nestlé is a giant organization
with operations in over 60 countries, spread over five continents, employing
more than 200,000 people and operating 400 factories worldwide. Nestlé has
been operating in the Philippines for almost 90 years and is considered a
leader in the food industry in the country. Nestlé Philippines Inc. operates five
manufacturing plants and has a total workforce of over 3,400 (Pantoja, 1995).
After a boom period in the 1970s, Nestlé experienced labour relations
problems so serious that its viability was threatened. The strike of the
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140 A S I A PA C I F I C B U S I N E S S R E V I E W
company union in 1982 was to be the first of a series of almost yearly strikes
that carried on until 1987. The company appeared headed for a disastrous
closure, its image tainted with insinuations of unfair labour practices (ibid.).
After a series of arbitration meetings and court proceedings, the issues
were settled one by one, the spate of strikes ended. However the efforts to
win back the hearts and minds of the employees as an organized and
determined effort had just begun. Nestlé embarked on a long-term corporate
culture program, emphasizing two Filipino core values: concern for people
(malasakit sa kapwa) and family spirit. The program was intended to erase
the ‘us or them’ fragmentation brought on by the earlier conflict and give
rise to an ‘us’ spirit. Nestlé launched a wide range of support activities
designed to provide the employees with venues not only for professional
growth and self-improvement, but also for healthy recreation, creativity,
talent enhancement, family enjoyment, and even civic consciousness. The
success of this program is evident from the enthusiastic response of the
employees, a continuing industrial peace, and tripled sales between 1988
and 1994 (ibid.).
The integration of Filipino core values into the HRD program has led to
Nestlé Philippines being first rank in terms of growth and third in terms of
overall performance within the Nestlé Asia Pacific Region. By changing
focus from the technological and marketing progress of the boom years to
an emphasis on the employees’ core values and cultural background, a
disaster was averted and a foundation built for more fruitful HRM advances
in the future. A first step was to incorporate Filipino core values as part of
the major industrial relations strategy. After all, the employees are Filipinos
and Nestlé is operating in the Philippines cultural environment (Jocano,
1989; Pantoja, 1995).
The related experiences of Japanese and Western multinational
organizations in the Philippines give evidence that the Filipino core-value
system is a strong influence which leads to the adaptation of foreign HRM
practices. The coherent and resilient Japanese work culture as well as the
impersonal and technical Western managerial philosophy succumbed to the
cultural impact.
DISCUSSION
Arriving in the Philippines, one may quickly conclude from the surface of
the society that it is thoroughly Westernized in its manner and attitude.
However, nothing could be further from the truth and anyone who needs to
deal with Filipinos in business or otherwise would need to know something
about the country’s value system. Despite the Westernized veneer, business
as well as other social activities are performed the uniquely Filipino way.
An understanding of these Filipino characteristics will be necessary to
appreciate how people are managed in the Philippines (Ang and Palanca,
2000).
81apb07.qxd 10/01/2002 08:44 Page 141
Conclusions
It can be concluded that distinctly Pinoy-style HRM is identifiable through
managerial practices that are evident expressions of the Filipino culture and
especially its core value system. Despite the onslaught of globalization, a
revealing example of the cultural impact is shown in the prevalence of
recruitment activities in Japanese companies which rely on the kakilala
system. The Western multinational, Nestlé, adopted two Filipino core
values: concern for people (malasakit sa kapwa) and family spirit as
powerful cultural imperatives to ensure socially acceptable work behaviour.
Economic/political factors are also a determining factor of Filipino
HRM. Although the Philippines displays many characteristics of an Asian
developing country, due to the extraordinary influence of American culture
there is a rich legislation on HRM issues, which is supported by government
and private sector initiatives. Yet, the ambitious legal framework may not
indicate how HRM issues are prioritized in practice. During a period of
extended economic and political problems, further deterioration can be
expected in union strength, real wages, job security and labour standards.
Implications
One may wonder whether managing according to Filipino values and norms
is likely to foster both efficiency and harmony or more of the latter than the
former. As Filipinos place a high premium on maintaining harmonious
relationships with everyone, avoiding conflicts is crucial. Managers are
expected to create and maintain reciprocal relationships, to show
compassion, to act humbly and to preserve harmony. The widespread
attitude of bahala na (‘come what may’) originates with the dependence on
an authority figure who in modern times is often the boss. They have a
fatalistic belief that everyone is controlled by forces beyond their control,
which often results in a lack of foresight and planning, or satisfaction with
the status quo. Another observation is that Filipinos tend to do things on a
personal basis. There must be personal contact before things can happen.
Furthermore, actions are not separated from the person who is performing
them. Business decisions that are unfavourable to Filipinos will be regarded
by them as personal attacks rather than as impartial business choices. The
damdamin norm of hiya (a sense of shame) is a powerful rule of conduct
ensuring that no one should be made to lose face. Most Filipinos tend to be
extremely sensitive or balat sibuyas (onion-skinned). Once a person has lost
face in public, this individual will not easily agree to any arrangement that
resolves the conflict. This explains why litigation can last for years in the
Philippines. Traditional society’s patterns of mutual trust and obligation
where debts and gratitude must be repaid, in the trustful expectation that
others would reciprocate, may explain the omnipresence of corruption in the
country. The tendency to promote family interests over institutional or
community interests is due to the high esteem for familial rights and
obligations. As demonstrated here in the case of Nestlé, this can be used to
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142 A S I A PA C I F I C B U S I N E S S R E V I E W
The authors are grateful for the helpful comments of two anonymous reviewers on an earlier
version of this article.
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