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Pinoy-style HRM: Human Resource Management in the Philippines

Article  in  Asia Pacific Business Review · October 2001

DOI: 10.1080/713999124

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Pinoy-style HRM:
Human Resource Management in
the Philippines

JA N SE L ME R and C ORI NNA DE LEON

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.

Asia Pacific Business Review, Vol.8, No.1, Autumn 2001, pp.127–144

PUBLISHED BY FRANK CASS, LONDON
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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

practices to powerful local cultural imperatives. This analytical framework

is summarized in Figure 1.

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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PINOY - STYLE HRM I N THE PHI LI PPI N E S 129

Demographic and Economic Context

The Philippines had a population of 76.4 million in 1999 of which the
labour force amounted to 32.9 million (43%). The female share of the
workforce was 31 per cent (10.2 million). The level of education was
relatively high with 35 per cent of the age group in 1996 being tertiary
students, of which more than half (57%) were female. The average growth
rate of the population in 1980–97 was rather high at 2.5 per cent. The total
fertility rate (births per woman) is also relatively high at 3.6. Life
expectancy is not high, 68 years. These facts have contributed to a relatively
young population profile of the country. The Philippines had a total GDP of
82,157 million US$ in 1997 and an annual average growth during 1990–97
of 3.3 per cent. Agriculture amounted to 19 per cent of GDP while industry
accounted for 32 per cent and services 49 per cent. Major industries in the
Philippines were food manufactures, electrical machinery, and
chemicals/chemical products. Agro-based products, mineral products, and
fruits and vegetables were the major exports (Westlake, 1999).
Helped by relative stability, GDP grew in the first half of 1999 by 2.4
per cent as compared with only 0.5 per cent during the same period in 1998.
Estimates were raised for 1999 growth from 1–3 per cent to 3–5 per cent.
This economic strength was mainly due to good weather favouring
agriculture which grew 6.6 per cent in the first half from the previous year
(Westlake, 1999). The current political crisis involving the impeachment of
the president has reduced GDP growth projections for 2001 from 4.5–5 per
cent to below 3 per cent, brought the peso down to an all-time low in
relation to the US$ while the Philippine Stock Exchange Index has hit the
lowest level in two years (Suh and Lopez, 2000). The unemployment rate
was at 13.9 per cent in April 2000 and the underemployment rate (wants
more hours of work) at the same month was 25.1 per cent. Both of these
rates were the highest since 1991, showing that almost 40 per cent of the
Filipino labour force were out of a job or were underemployed, indicating a
current state of calamity for the Philippine labour market (Philippine Labor
Force Survey, 2000).

Institutional and Legal Setting

HRM in the Philippines has gained a prominent position in the corporate
structure, with the current focus on manpower development. The National
Manpower and Youth Council was coordinating and evaluating human
resource development (HRD) programmes not only by the government but
also by the private sector who have been encouraged to participate actively
(Andres, 1991). The National Manpower and Youth Council was supplanted
in 1994 by the Technical Education and Skills Development Authority. A
number of other government agencies are involved in non-formal HRD
efforts.
In the Philippines, the practice of human resource management is
governed by a very elaborate legal framework. A number of regulations and
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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

Four different cultures coexisted and intermingled in the Philippines:

Filipino, Hispanic, American and Chinese. Contemporary values arose from
centuries of native village agriculture, based on tribal kinship, and were
moulded by centuries of participation in Spanish Catholicism, influenced by
decades of exposure to American free enterprise, and modified by enduring
experiences of ethnic Chinese presence. The myriad of cultural influences
on today’s society can be summarized as ‘three hundred years in a convent
and fifty years in Hollywood’ (Engholm, 1991: 23) with occasional
sojourns into Chinatown. Although Filipinos give the impression of being
highly westernized, a distinctive Filipino HRM style is kept in place by the
prevalence of indigenous core values.

Filipino Core Values

According to Jocano (1989, 1997), Filipino core values make up an intricate
system based on the concept of asal, referring to the inner representation of
external behavioural realities. It is the standard for ideal conduct that is
considered altogether good, desirable, moral, ethical, beautiful and true.
Asal consists of three core elements: kapwa (relational standard), damdamin
(emotional standard), and dangal (moral standard).
The term kapwa refers to equality in status and as part of an entity.
Familism is an expression of kapwa as a relational value, as it embodies
concerns over the well-being of kinsmen. To observe the kapwa standards
properly, the norms of pakikisama and pakikiramay should be followed.
Pakikisama refers to the commonly shared expectations, desires, or
requests to ‘go along’ with someone when necessary for the good of the
group. Functionally, pakikisama means to be concerned about, to be
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PINOY - STYLE HRM I N THE PHI LI PPI N E S 131

supportive of, and to be helpful towards people at all times; it is the

standard for tactful and polite interaction. The strong moral undertone of
kapwa is captured in pakikiramay, encompassing the social conduct to
condole, to express sympathy, to share someone’s sorrows, and to show
pity. Filipinos are compassionate people who are easily moved by other
people’s difficulties. As pakikiramay is the behavioural standard in times
of crisis, one has to go out of one’s way to show concern, or otherwise risk
being ostracized by significant others as well as the general public (Jocano,
1989, 1997).
The second element of the Filipino core value system is damdamin, by
which Filipinos place emphasis on feelings and emotions. This concept
underlies much of the Filipino way of relating to all people, events,
situations, conditions and activities. It is fair to say that emotionalism is
given higher premium than rationalism, especially in interactions having to
do with personal honour, dignity and moral principles. So as to minimize
conflict which could hurt damdamin, the emotionally charged norm of hiya
defines desired social behaviour that avoids offence to others. Other
damdamin norms are amor propio and delicadeza (originally Spanish terms
accepted as part of the Filipino vocabulary) which pertain to the sentiment
and the moral imperative of protecting one’s sense of personal dignity and
preserving self-esteem. Encouraging ego-orientation, amor propio and
delicadeza are often associated with personal eccentricity and extreme
sensitivity. Filipinos get emotionally upset easily when an act done or a
statement uttered is deemed as demeaning to one’s honour, even if not
intended by the other party. The emotional pain resulting from this
‘perceived or real’ insult activates amor propio into aggressive or even
violent responses. Persons who do not observe delicadeza are said to have
makapal na mukha (thick-skinned face). Individuals who are insensitive to
the feelings of others are walang hiya (shameless) and cannot be trusted as
friends. On the other hand, to persons who are balat sibuyas (onion-
skinned), there is no such thing as constructive criticism, as all criticisms are
offensive (Jocano, 1989, 1997). Amor propio requires that self-respecting
Filipinos honour their guests with hospitality, protecting them against
criticism, confrontations and accusations which could lead to unacceptable
aggression (Engholm, 1991).
The third most important value in Filipino culture is dangal which
pertains to social dignity and integrity. As a moral value, it characterizes the
Filipino identity in reference to pride in and commitment to revered ideals,
principles, practices and people. Synthesizing the essence of kapwa and
damdamin, a person who has dangal has a sterling character, firm in
conviction and fair in judgement. Such persons know what is morally right,
feel what is morally good, and act in a way that is morally desirable.
Another norm associated with dangal is utang na loob, a ‘debt of gratitude’
that is established when assistance is sought or extended to another in the
name of friendship. The granting of a favour morally binds the recipient to
reciprocate in the future, even if the giver does not expect such reciprocal
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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

action, or else to be condemned as walang utang na loob (no debt of

gratitude) (Jocano, 1989, 1997).
Many behaviours are considered ‘very Pinoy’ if they reflect the nature
of asal as embodied in kapwa, damdamin and dangal. Filipinos take great
care to protect others from hiya, mainly through the avoidance of overt
conflict. Filipinos have great respect for fellow humans, regardless of rank
or status; such that it is common behaviour to reject the supplications of
street beggars with the very polite phrase patawarin po (‘forgive me, sir’).
The attention of salesmen and waiters is called by the euphemistic greeting
of ‘boss, boss!’. There is a natural willingness to share within one’s group,
as pakikisama requires the individual to make sacrifices in personal welfare
for the sake of the societal good (Engholm, 1991).
The three core values underlie and give direction to Filipino modes of
communication as well as decision making. Pagsangguni means ‘to
consult’, which enables others to participate in the decision. Filipinos
expect to be consulted on all matters, because normative social interaction
should be democratic. Paghihikayat means to persuade or to convince, the
underlying motive which explains why in discussion Filipinos do not go
directly to the point and are almost always ambiguous in their
communication. Filipinos desire not only to be consulted, as proof that they
have an important role in the situation, but they also want to be persuaded
by others, so as to be given a sense of belonging. The third mode of
communication is pagkakasundo, which refers to consensus. Filipino
culture is not confrontational but consensual in orientation, preventing the
violation of any core principles. Conflict-avoidance is sought after because
the Filipino value system emphasizes respect, honour and dignity of those
one is interacting with (Jocano, 1989, 1997).
The indigenous values have survived in the contemporary Filipino
society, although to a lesser extent in urban than rural areas. The core
values remain central to the way modern Filipinos think, believe, feel and
act (ibid.). Other common social practices in the Philippines are respect
for elders, deference to superiors, and kindness or tolerance towards
underlings. The group-conscious Filipinos expect trustworthiness from their
family.

Collective Identity through Social Acceptance

The main characteristic of Filipino culture is collectivism (Hofstede, 1980),
whereby collective identity arises from a strong sense of group belonging
fostered by the need for social acceptance (de Leon, 1987). The core value
of amor propio protects the Filipino from the loss of social acceptance. Hiya
delineates behaviour as socially acceptable or unacceptable. Utang-na-loob
strengthens the bonds of social acceptance through mutual reciprocity.
Pakikisama is derived from the notion of bayanihan (community), fostering
cooperation through a sense of togetherness. Essentially, dangal is a sense
of integrity that is social rather than personal, which arises from an
ingrained sensibility to social harmony. Collective identity is paramount
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PINOY - STYLE HRM I N THE PHI LI PPI N E S 133

among Filipinos, in that individual interests are subordinated in the kinship

orientation of the extended social network (Silos, 1985).
Early Filipino tribal society was organized along kinship lines; but
during the Spanish colonization, Catholicism was superimposed on the kin
relationships that comprised the social system. The blood-brother bond
coincided with the compadrazco system of Spanish Catholicism, resulting
in large extended families founded on both blood lines and godparenthood
(compadre means godfather in Spanish). Since family membership was
crucial, exclusion from the group became a Filipino’s worst anxiety
(Engholm, 1991: Jocano, 1989, 1997).
Philippine society is a universe of kinship groups, each putting group
pressure into play. Rivalry between kinship groups is the hallmark of
Philippine society and politics. The kinship structure places group pressure
not only on its members but on other groups who may pose a threat by
harming a member. As each person is an outward extension of his kin group,
shame or blame of an individual involves the whole network (Andres, 1985;
Engholm, 1991; Roces and Roces, 1985).
Family and group connections are relied upon to procure various
favours, from tax breaks and kickbacks to lucrative business contracts. It
has been estimated that about 80 individuals control 450 of the country’s
major corporations, and six families control 90 per cent of the economy.
Without access to this elite group of business people, there is little hope of
success. However one’s network can be expanded by the compadre system,
by which non-kin become family members by means of godparenthood
initiated at baptismal or wedding ceremonies. A godchild is called an
inaanak, or created sibling. A measure of the social status of the kinship
network is exhibited by the prominence of the godparents of the baby or the
wedding couple. Therefore, community leaders are often sought after as
godparents since the relationship extends the parent’s political clout and job
references. Prominent godparents can have hundreds, if not thousands, of
godchildren. Filipino bureaucrats are under constant pressure to respond to
their kin-group members and ignore others, including their bosses
(Engholm, 1991; Roces and Roces, 1985).
Early social studies pointed out that the peculiar characteristic of
Filipino collectivism is high segmentation, through the division of society
into mutually exclusive ingroups (Lynch, 1970). The consciousness of tayo
(us with you) as opposed to kami (us without you) emphasizes an awareness
of one’s primary group and a disregard for nonmembers (Hollnsteiner,
1981; Silos, 1985). Such small-group centredness explains the inevitable
formation of various barkada (ingroup) and the competition between
factions, stressing the importance of intragroup cooperation and intergroup
conflict in Filipino organizations (de Leon, 1987).
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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.

Human Resource Practices

The Philippine Labour Flexibility Survey (PLFS) can serve as an example
of how HRM is practised in the country. The PLFS was a national survey of
a random sample of 1,311 industrial firms, including construction, trade and
manufacturing companies (Standing, 1992).
It was found that in most industrial sectors a slight majority of firms had
less than 10 per cent share of total employment that was non-regular: that
is, casual or temporary labour, contract labour, unpaid labour and
subcontracting. Such a limit was not evident in the industrial sectors of
construction, wood products and food processing. On job rotation, about 24
per cent of firms followed such a policy regularly and 13 per cent applied it
occasionally (ibid.).
In response to the question of whether there was gender preference in the
recruitment of production workers, over 56 per cent of the establishments
preferred men and only about 12 per cent preferred women. However about
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PINOY - STYLE HRM I N THE PHI LI PPI N E S 135

a third of the organizations’ stated recruitment practices were indifferent to

the sex of the applicant, presumably indicating a non-discriminatory stance
(ibid.).
About 47 per cent of all the sampled firms provided (or paid for) initial
training for newly recruited production workers; that is, by category, 72 per
cent of all electronics firms, 32 per cent of construction companies, and 35
per cent of those in basic metals. In contrast, less than one-third of all firms
had retraining activities for established workers to improve job performance
or to facilitate moves between similar jobs; specifically, 51 per cent in
electronics to about 20 per cent in construction and in wood production.
Even worse, only about 25 per cent of the firms arranged retraining to
enable workers to upgrade their skills, grade or status; in fact, as little as 12
per cent in construction and non-metallic mineral products. Evidently there
is a need for further improvement in attempts to achieve technological
dynamism through skilling and reskilling. On the other hand, 15 per cent of
the firms admitted to ‘poaching’, acquiring higher-level skills from other
firms (ibid.).
Only about 21 per cent of companies provided all three types of training.
The most common situation was that firms did not carry out any training at
all, or provided only initial-level training for newly recruited workers. The
combination of all three levels of training were most common in the
electronics industry, in large-scale and in foreign-owned firms; but such
programs were least frequent in construction, wood products and small-
scale enterprises. The majority of firms with 50 or fewer employees
provided no training at all. Over 88 per cent of all companies that supported
training of newly hired production workers merely provided informal on-
the-job training as opposed to institutional teaching or formal
apprenticeship (ibid.).
For management level training and development, Ayala Corporation is
an interesting case to note. This company has interests in real estate and
hotels, financial services, food manufacturing, agribusiness,
telecommunications, insurance, electronics and information technology. At
Ayala, more than 45 per cent of the total human resource budget for 1994
was allocated to personnel development. Potential leaders are regularly sent
to training courses at Harvard and the Asian Institute of Management. More
than half of the managers rose from the ranks and have been with Ayala
more than 15 years (Far Eastern Economic Review, 1997).

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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PINOY - STYLE HRM I N THE PHI LI PPI N E S 137

In comparison to managers from other Asian countries (Singapore,

Thailand, Indonesia, Malaysia), Filipinos expressed high fulfilment in
social needs (Oltramare, 1986). The collective identity so central to the
Filipino psyche operates through the informal, fluid, and interdependent
personal networks within the larger organizational and social systems.
Filipinos working in groups produced higher morale, lower absenteeism,
and lower turnover (Andres, 1985). The camaraderie and loyalty of
pakikisama within the group is a primary motivation in Filipino
organizations (Jocano, 1984; Ordonez, 1982).
Early studies found that the prevalent management style in the
Philippines is authoritative-benevolent (Tan, 1981a; Tan, 1981b; Silao,
1981; Villanueva, 1981). Such evidence corroborated Hofstede’s (1980)
observation that paternalism occurs from a large power distance.
Authoritarianism is acceptable because subordinates expect paternal care in
return for filial loyalty (Silos, 1985).
The compadre nepotism ingrained in Filipino society is directly
applicable to people management. Recruitment usually entails formal
guarantees (police clearances, certifications of employment, diplomas) as
well as informal screening based on applicants’ personal links inside the
company. Consequently, applicants with personal connections within the
firm have a greater chance of being hired, providing benefits for the
employer as well as the employer (Amante, 1993, 1994).
When existing staff recommend applicants for entry positions, an
implicit contract or bond known as the palakasan or kakilala system is
created, supported by the paternalistic managerial style. The bonding
networks could benefit the firm by lessening monitoring costs, as new
recruits are personally guaranteed by managers or supervisors. The Filipino
cultural values of utang na loob and hiya will ensure that the new workers
would honour their social obligations to the person who had recommended
them, by refraining from going on strike or displaying other unproductive
behaviours. A breach of trust of these mutual obligations would lead to
samaan ng loob, which is a feeling of tension between two parties with
implicit reciprocity. Under these mutual obligations, new workers hired
would exercise initiative (kusang loob) so as not to compromise their
guarantors (kakilala) (ibid.).

GLOBALI ZATI O N

Another factor affecting contemporary business firms and their operations

are the forces of globalization. Although the incidence of foreign business
firms is not high, as in many other developing countries, not the least in
Asia, there is an increasing presence of such foreign cultural influence. It is
not easy to measure the effect of such cultural influence on HRM (Jain,
Lawler and Morishima, 1998), but an indirect estimate may be gleaned by
scrutinizing the HR practices of multinationals in a specific host country (cf.
Ngo et al., 1998; Purcell et al., 1999).
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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.

Japanese Business Firms

Headquarters in Japan usually maintain strong control over their
subsidiaries in South East Asia. Localization of managerial positions in
Japanese companies is typically less than in American and European
companies. A survey found that 80 per cent of the company presidents and
two thirds of the directors in sampled subsidiaries were Japanese (Ishida,
1994); whereas, in contrast, top executives of Western-owned firms in the
Philippines are almost always Filipinos (Amante, 1994). Even so, there is
evidence that Japanese subsidiaries in South East Asia are trying harder to
Japanize their operations than are Japanese firms operating in the West
(Fukuda, 1992: 116; Ishida, 1994).
In a pioneering study on the transferability of Japanese management
style, Tomita (1983) found that Filipino employees of Japanese subsidiaries
expressed a limited organizational commitment, unlike the sense of
corporate unity prevalent among Japanese workers. Despite evidence of
good team spirit, the Filipinos insisted that ‘having a job did not mean being
involved in the company’ (Tomita, 1983: 75–6). Japanese collectivism is
an impersonal and abstract sense of cohesion, easily aligned with formal
social structures, by which the family, the corporation and the nation are
unified. In contrast, Filipino collectivism is more particular rather
than universal in orientation, delineating the boundaries between the
ingroup and the outgroups within organizations (de Leon, 1987;
Hollnsteiner, 1970)).
Although the Japanese production system, accompanied by the latest
technologies, has been transferred on a large scale to the growing regions of
Asia, Japanese HRM has not been transferred as smoothly as expected
(Ishida, 1994). In the Philippines, there are indeed efforts by Japanese firms
to transfer Japanese-style human resource practices. However, this transfer
is incomplete, as a process of adoption and adaptation to local conditions is
gradually occurring (Ofreneo, 1994). Generally, Japanese-owned firms in
the Philippines localize HRM by emphasizing Filipino standards and
practices in compensation, hiring/recruitment, job assignments, and the
prevailing motivation/incentive systems (Amante, 1994). Surveys have
shown that the trend of HRM localization has been taking place in Japanese
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joint ventures as well as Japanese wholly owned subsidiaries (Aganon,

1994; Amante, 1994).
Regarding recruitment in Japanese subsidiaries, Filipinos commonly
head Personnel/HRM Departments, and hiring practices are done the Pinoy
way. Although recruitment tests are common, the job could easily be given
to the friend, the mate from the same province, the compadre or the family
referral. Survey data from Japanese firms in the Philippines suggest that, at
the time of recruitment, no less than 16 per cent of the workers had informal
guarantors (kakilala) inside the company (Aganon, 1994; Amante, 1994).
In the Philippines, there are varying levels of adherence to the Japanese
model of job design. Some Japanese expatriates even claimed that flexible
job design as practised in Japan is not workable in the Philippines. At the
incipient stage of a joint venture, strict delineation of job responsibilities is
not very common. Since jobs are usually designed for general tasks, the
employees are hindered from giving the excuse, ‘I won’t do this, it is not
within my job description.’ At a later stage, when the Japanese partners are
acculturated to industry practices after the constant prodding of the Filipino
managers, detailed job descriptions would be written. The usual practice in
big Philippine companies is to conduct job evaluation based on specific job
descriptions per position and to determine wages and salaries (‘job price’)
on the basis of job hierarchies (ibid.).
Japanese managers are said to take care of their employees ‘from cradle
to grave’. Such method of worker motivation is not evident in Japanese joint
ventures operating in the Philippines. Furthermore, monetary incentives are
surpassing the traditional Japanese intrinsic reward system, because local
standards influence wage determination in Japanese subsidiaries. Usually,
head offices in Japan do not issue specific wage or compensation standards
related to local personnel. Furthermore, managers do not have much choice
but to refer to recent legislation or guidelines issued by the Philippine
Department of Labor. The system of periodically fixed minimum wages has
been an institution in the Philippines since 1951; and large Philippine
enterprises use the minimum wage standard as an important reference point
in their wage adjustments (ibid.).

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).
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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 advantage of the firm if management can create a corporate culture

where the company is seen as one big family whose collective interest is
more important than the interests of its individual members (Andres, 1985;
Ang and Palanca, 2000; Jocano, 1988).
These observations seem to indicate that while indigenous values and
norms promote harmony, there is little emphasis on efficiency. Relatively
low labour productivity is an enduring problem in the Philippine economy.
On the other hand, the success and high productivity of Filipinos working
abroad is well known. Physically removed from Filipino society and
mentally liberated from the cultural imperatives of the indigenous values
and norms, these workers in foreign locations feel free to develop their own
full potential within as well as outside the workplace. Such examples
abound, from extremely diligent domestic helpers to highly successful
business professionals working abroad (Ang and Palanca, 2000). It is also
noteworthy that many workers may stay abroad for extended periods of
time, once they get the foreign experience.
What does that foreshadow for the future of HRM in the Philippines?
The seemingly unstoppable forces of globalization continue to change the
world of business at an ever accelerating pace. The vigorously pursued
policy of deregulation by President Ramos has not been overturned by
President Estrada and is likely to continue in the future as it is in tune with
the opening-up of markets worldwide. To survive in this new competitive
environment, changes are required in the way business is conducted in the
Philippines. We may increasingly see autonomous business entities
following Western corporate structures and managed by professional
managers instead of highly centralized family corporations where most key
positions are reserved for family members (Ang and Palanca, 2000).
However, the proven resilience of indigenous values and norms makes any
quick and comprehensive change unlikely. Pinoy-style HRM will still be
around in the Philippines for some time.
One may also ask how the informal and unspoken cultural codes of
behaviour are perceived by the world. Despite the highly Westernized
image of most managers in the Philippines, many cultural imperatives could
be seen as prescribing negative (or sometimes even illegal) managerial
practices if not properly understood. Upholding kinship loyalties as in the
kakilala system of recruitment might be perceived as nepotism, gift-giving
in return for favours received; observing one’s utang-na-loob could be
considered bribery, and friends might be called cronies (Ang and Palanca,
2000). President Estrada has been quoted saying that if a crony delivers,
then favouritism, if there had been any, may be justified (Reyes, 2000),
demonstrating that Filipino core values are cherished at all levels of Filipino
society.
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ACKNOW LE D G E ME N T

The authors are grateful for the helpful comments of two anonymous reviewers on an earlier
version of this article.

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