HRM Strategies for UK Firms in the Philippines

Introduction

In the current world, an increase in the number of multinational corporations or the process of business internationalisation can be attributed to the state of an ever stiffening marketplace. With stiff competition, companies have had to keep abreast by moving their products and services closer to the customer bases. According to Adam, Voss and Buckley (2010), this process of business internationalisation has had far-reaching consequences on the manner in which the concerned firms adjust their human resource operations and staffing strategies while striving towards securing strategic locations and attaining competitive advantages. Specifically, most of the host countries that constitute markets into which multinational corporations have sought entries continue to be characterised by multiculturalism whereby both the employee groups and the product and service users emanate from varying socio-cultural backgrounds (Armstrong 2009; Sadfar 2012). With these variations, the impact cultural and HRM issues in shaping business internationalisation cannot be overemphasized. This paper provides a critical evaluation of some of the cultural and HRM-related issues that could arise and form a predictor of the level of success experienced by a UK-based firm seeking to locate its call center operations in Philippines. Notably, the paper is based on Hofstede’s cultural dimensions in which key differences between the UK and Philippines will be used to give an insight into issues that could emerge while seeking entry into the latter country’s market.

Human Resource Issues

Howard Perlmutter’s EPRG Model is selected as a theoretical framework guiding an analysis of HR issues in the two regions. In the EPRG Model, the central idea is that senior leaders in multinational corporations hold one of the four primary orientations while seeking to build and expand firm capabilities. These orientations include ethnocentric or home country approaches, polycentric or host-country orientations, geocentric or world orientations, and the regiocentric approach that falls between geocentric and polycentric orientations (Price, 2011). The theory states that ethnocentric orientations operate in such a way that the senior management team’s general attitude is that members of the team or nationals from the home country of the organization exhibit a higher capacity or capability to drive the international activities forward, compared to the employee groups perceived to be non-natives operating at the subsidiaries or headquarters (Perlmutter 1969). As such, the focus of this staffing strategy lies in the assumption that the policies and practices of the operating firm and the home country form a default standard, a basis to which the remaining subsidiaries comply. The merit arising from the strategy is that it overcomes possible shortages of qualified managers that could be experienced in the host country by expatriating workforces from the companies’ home countries. The eventuality is the creation of a unified corporate culture through which core competencies are transferred with ease (Jackson, Schuler & Werner, 2009). However, the demerit of the approach is that cultural short-sightedness may result due to the failure of the ethnocentric approach to embrace workplace diversity and corporate social responsibility. The eventuality could be a potential resistance to change among members of the surrounding community in which the multinational firm could be operating (Olaniyan and Ojo, 2008). Regarding the polycentric approach, the model holds that the culture of the host country is different from that of the home country. Therefore, a centralized and one-size-fits-all approach becomes unfeasible because of its failure to acknowledge the state of multiculturalism and its possible impact in shaping the performance of members of the team. The approach holds further that the local population understands what is best for their operation. Thus, this system advocates for the provision of maximum freedom to these local groups to run company affairs as they deem fit (Rotarescu 2010). The resultant merit is that a polycentric approach alleviates possibilities of cultural myopia and that the implementation process is less expensive when compared to the ethnocentric approach (such as the need for travel expenses in the latter approach in which the expatriates move into the host country). However, the disadvantage is that the polycentric approach limits career mobility among foreign and local nationals; with the isolation of the headquarters from foreign subsidiaries translating into reduced opportunities for synergy achievement (Scott & Barnes 2011).

The regiocentric approach, which lies between the polycentric and the geocentric approach, focuses on more than one country. Thus, the approach groups company subsidiaries into larger regional entities based on natural boundaries. The resultant merit lies in more local responsiveness but the central disadvantage is that the complexity of this approach makes it more expensive to implement (Sadfar 2012; Snell & Bohlander 2011). Lastly, the geocentric or world orientation operates in such a way that the executives seek the best workforces without considering their nationalities. The merit is that the world orientation leads to an efficient utilization of human resources while aiding in building informal management networks and a strong culture. However, the approach falters in such a way that the implementation process could be barred by national immigration policies that could lock out potential expatriates from entering the company’s host nation (Balaram & Adhikari 2010; Sumi 2011; Rahmann 2011).

Overall, Perlmutter’s EPRG Model has been selected because it highlights the characteristics, merits, and demerits of various international staffing strategies. The challenge surrounding the model is that it is organization-centered and overemphasizes internal aspects while disallowing environmental influences as predictors and determinants of expatriate capabilities. However, the model is advantageous because it sensitizes the managers about the critical role played by culture in international business affairs (Fan & Ku 2010; Lee, Naylor & Chen 2011). Indeed, the model is critical because it will not only help to identify the strategies adopted by the UK-based firm but also form a foundation from which valid and reliable recommendations will be made about staffing operations at the company’s quest to establish call center operations in Philippines.

The Effective Strategy

From the findings, the challenge arising from the company’s adoption of a geocentric staffing strategy (which involves the formulation and implementation of immigration laws in the host countries) should be addressed by maintaining the staff recruitment approach by embracing employee training and development programs to empower workforces from the local population. In addition, the company should maintain a geocentric approach but address the challenge of potential resistance to change and problems of differences in corporate and national culture by holding regular seminars and conferences to sensitize groups such as community representatives about the benefits that the hotel seeks to offer to the community. In so doing, the staffing strategy might be characterized by success with minimal resistance due to the resultant aspect of corporate social responsibility. It is also worth noting that the ethnocentric approach should be maintained and adopted in regions where the achievement of a strong local presence could fail due to inadequate expertise among local populations. However, care should be taken to ensure that sections of the employee groups are from local populations while adhering to the host country’s specifications regarding employment processes by multinational corporations entering its markets.

Cultural Issues

The UK versus Philippines: Key Cultural Differences

According to Beardwell and Claydon (2011), successful business operations within multicultural global environments prompt critical issues such as a strong local presence, sensitivity, and responsiveness, recognition, respect, alignment, adaptation, and cultural awareness. On the one hand, a firm may decide to renounce its existent culture in the home country or at the headquarters and strive towards the adoption of a culture perceived to be dominant in the host country or destination (Browaeys and Roger 2011). On the other hand, a firm engaging in business internationalisation could blend its existent corporate culture with that which is found in the host country. Whether the UK-based firm seeking entry into the foreign location of Philippines should adopt the latter or the former approach is worth examining in relation to cultural differences and the key cultural dimensions between the two regions. Hofstede’s cultural dimensions aid in describing the effects posed by the culture of a society on the values held by its members. In addition, the framework informs about the relationship between these values held by members of the society and their behavior (Davoudi & Kaur 2012). It is also worth noting that the framework highlights the extent to which an existing or new culture influences values in workplaces. According to Ishak, Eze and Ling (2010), the context of business internationalisation holds that culture entails the collective programming of the mind in such a way that a category of people or members of one group are distinguished from others. The six cultural dimensions perceived to shape relationships in workplaces include the role of indulgence, long term orientation, masculinity, uncertainty avoidance, masculinity, individualism, and power distance (Hofstede 1991).

Power Distance Index (PDI)

Power distance index (PDI) expresses the extent to which societal members perceived to be less powerful end up accepting and expecting an unequal state of power distribution. Thus, large degrees of power distance imply that the members accept hierarchical orders while low power distance suggests that individuals are likely to struggle to equalise power distribution while demanding justification in cases where inequities are reported (Yang 2007; Margaryan, Colin and Allison 2013). At 35, the PDI for the UK depicts a lower rank. As such, this society believes in the need to minimise inequities among people. The implication is that the nationals in the UK-based firm, the setting of the host country or headquarters, are likely to advocate for an equal treatment of other members of the team. On the other hand, a PDI score of 94 for Philippines suggests a hierarchical society in which members of the society tend to accept hierarchical orders in which all persons have a place and do not prompt any further justification. Thus, a majority of citizens in the Philippines expect to be instructed or told what to do while the ideal boss is perceived to be a benevolent autocrat (Pollitt 2009; Lee, Naylor & Chen 2011).

Individualism versus Collectivism (IDV)

When it comes to individualism versus collectivism (IDV), the dimension is defined as a preference for social networks that are perceived to be loosely-knit whereby individuals struggle to take care of themselves and other immediate members of the family. Indeed, IDV is opposite to collectivism whereby the latter is a representation of the members’ preference for tightly-knit societal frameworks. In collectivism, individuals expect members of the in-group or relatives to help them in anticipation of loyalty that is unquestioned. Thus, IDV holds that either the members define themselves in terms of “we” or “I.” On this dimension, the UK reveals a score of 89, depicting that the society is highly individualist while the people prefer privacy. From an early age, children are likely to be taught to think for themselves and strive towards establishing their unique purposes in life, as well as some of the unique contributions they could make to the society. Thus, personal fulfillment comes first in this society. On the other hand, a low score of 32 for the Philippines suggests a collectivist society. Indeed, these members are characterised by long-term commitments to member “groups” such as extended relationships, extended families, and close family levels. It is also worth noting that such a society fosters strong relationships in which members of the team are likely to take responsibility for other members of the work group (Price 2011). Indeed, the relationships between employees and their employers in such a society are comparable to a family link while decisions about promotion and hiring consider the in-group of the employees (Steger, Lang & Groeger 2009).

Masculinity versus Femininity (MAS)

Masculinity versus femininity (MAS) holds that a masculine society is a representation of attributes such as material reward for success, assertiveness, heroism, and achievement. Indeed, such a society is perceived to be more competitive (Moen, Gavlen and Endresen 2004). On the other hand, a feminine society prefers the quality of life, caring for the weak, modesty, and cooperation. Thus, such a society is perceived to be more consensus-oriented. Overall, masculinity versus femininity depicts a tough versus tender cultural context respectively (Dib, da Rocha and da Silva 2010). A score of 66 implies that the UK is a masculine society. As such, expatriates or nationals from this setting are highly success driven and oriented. Therefore, workforces drawn from the company’s home country are likely to exhibit a clear performance ambition and live in order to work (Adam, Voss and Buckley 2010). Similarly, Philippines’ score of 64 depicts a highly masculine society in which managers are likely to be assertive and decisive. It is also worth noting that the high score on this dimension in the two geographic contexts suggests that the emphasis of workplace operations is on performance, competition, and equity while conflicts are resolved through fight-outs (Armstrong 2009).

Implications for the HR Management

The implication for the company’s HRM management is that a selection of task forces from either country could assure high performance because in both cases, people tend to live in order to work. For the UK-based firm, employees such as middle managers and the sales managers can be drawn from Philippines because the society tends to embrace desirable, positive, and supportive workplace relationships; aspects that remain critical in attracting and retaining customer bases while seeking to maintain a competitive advantage in the current global marketplace (Mitgwe 2006). With a sharp difference on the PDI cultural dimension, hiring the top management from the host nation might yield a workplace characterised by inequities and dominant centralisation while the use of the top management to control and supervise the activities of the call center operations is likely to witness a workplace characterised by minimal inequities among workforces.

In Relation To Performance Management and Recruitment and Selection Processes

With mixed outcomes accruing form the analysis of selected cultural dimensions between Philippines and the UK, two HR management issues have been selected for analysis. One of the issues concerns performance management band it has been selected for analysis in relation to the cultural dimension outcomes because of the need to align roles and responsibilities (as well as role performance and task completion processes) to the central vision and mission of the company. On the other hand, the issue of recruitment and selection has been selected in relation to the dimensions’ outcomes because of differences in corporate and national cultures between Philippines and the UK, a result that prompt considerations of levels of expertise and preferences among nationals from the two regions. Regarding the recruitment and selection aspect, the UK contexts holds that the hiring managers ought to identify recruitment needs, engage in person specification and job description, advertise the vacancy via external methods or internal methods, and facilitation applications and shortlisting procedures. Other steps include interviews and selection and the appointment of new employees (Laškarin 2013). Notably, the equal opportunities policy holds that discrimination should be avoided while considering aspects such as disability and Two Ticks Symbol, diversity and equality, work-life balance, and confidentiality or data protection. In relation to the Philippines, recruitment and selection procedures include screening, the screening pre-interview stage, examining the applicants’ cognitive ability, and the final panel interview process. Notably, the screening processes entail character and background investigations (Mittal, Batra, Luthra & Maheshwari 2012; Hantuli 2016). Thus, the guiding predictor of qualification lies in the issue of merit and fitness. Performance management in the two regions holds that hard work is undertaken when perceived to be necessary, and schedules remain flexible. Thus, selecting employees from either society is likely to prove viable and exhibit promising outcomes because the members remain happy while anticipating an uncertain future state. The outcome depicts insignificant differences in corporate cultures in relation to performance management in the two regions.

Conclusion

In summary, this paper has provided a critical evaluation of some of the cultural and HRM issues that might accrue in the wake of a UK-based firm’s decision to locate its call center operations in Philippines. The existing scholarly contributions suggest that a consideration of differences in corporate cultures and national cultures between the host country and the home country of a company are critical in steering successful change introduction and management. Hofstede’s cultural dimensions have been used to guide the study. Specific dimensions include the role of indulgence, long term orientation, masculinity, uncertainty avoidance, masculinity, individualism, and power distance. In addition, Howard Perlmutter’s EPRG has been selected to guide the understanding of HR issues in multinational corporations. Whereas the model is insightful, there is a need to incorporate environmental influences as predictors and determinants of expatriate capabilities. From the findings, it is suggested that the company’s decision to higher nationals from the UK or workforces from Philippines should be guided or governed by the relationship between cultural values in the two countries and the long-term, as well as short-term goals and objectives of the perceived call center operations in Philippines.

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