The transferability question: comparing HRM practices in the Philippines with the US and Canada 1

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1 Int. J. of Human Resource Management 15:7 November The transferability question: comparing HRM practices in the Philippines with the US and Canada 1 Maria Carmen Galang Abstract A survey of Philippine corporations was conducted to find out the prevalence and impact of practices in hiring, training and development, performance appraisal, pay and occupational health and safety. Overall, many of the practices that are prescribed in Western management can be found in most of the responding firms. Organizational characteristics were also found to be associated with some of the practices. Many practices were related to perceived organizational performance but only a few practices to voluntary turnover rate. Comparisons with US and Canadian data show that there were differences in most practices, but with the Philippines showing a higher extent of the HRM practice, and more correlations with organizational characteristics than the US and Canadian samples, suggesting that many of the practices developed in the West are easily transferred. Possible explanations examined include differences in country context, differences in sample characteristics and methodological artefacts from cross-cultural non-equivalence. Keywords HRM practices; Philippines; comparative studies. The question of transferability of management practices still remains paramount in the minds of international managers, primarily because of a dearth of empirical evidence and inadequate conceptual frameworks that can provide more specific guidelines. The current study attempts to fill the first gap by providing empirical data on an Asian country that has not been well researched but which promises potential for international business. The Philippines has a largely English-speaking population of more than 75 million with an adult literacy rate of 94 per cent. Its performance in the economic crisis that hit the East Asian region in mid-1997 provides confidence for foreign investment: it still posted positive, although modest, growth rates, and instituted sound fiscal and economic reforms (Lim, 1999). Political risks may be a concern, but judging from the past two recent political upheavals, 2 turnover in power is usually quick, with relatively minimal disruption. A survey of the top 1,000 corporations in the Philippines was undertaken in late 1998 to examine the question of transferability of various human resource management (HRM) practices commonly found or prescribed in Western management. Specifically, the survey sought to determine (1) the prevalence of such practices in the Philippines, (2) the nature of the business organizations in which these practices are utilized, and (3) the organizational outcomes that are associated with such practices. Maria Carmen Galang, Faculty of Business, University of Victoria, PO Box, 1700 STN CSC, Victoria, BC, Canada V8W 2Y2 (fax: þ ; The International Journal of Human Resource Management ISSN print/issn online q 2004 Taylor & Francis Ltd DOI: /

2 1208 The International Journal of Human Resource Management The Philippine survey is part of the best practices in HRM research consortium, which provided comparative data on the practices in the United States and Canada. The Best Practices consortium In 1991, a consortium of researchers from various institutions worldwide was created to address the following questions (Teagarden et al., 1995; Von Glinow, 1993):. Which HRM practices are most used currently? How effective are these practices?. Which practices are related to organizational effectiveness and to employee job satisfaction?. Are there universal best HRM practices or only situation-specific best practices?. Does HRM effectiveness vary with business strategy, national culture or subculture, or the firm s external environment? Data are now available from twelve other countries Australia, Canada, China (People s Republic), Indonesia, Japan, Kenya, South Korea, Mexico, Peru, Taiwan, the United States and Venezuela and two regions Latin America and the Gulf states. The consortium arrangement addresses the difficulties in international management research (e.g. complexity, cost, access, time constraints, methodological challenges). Collection of country data is undertaken and personally funded by each member, but, by pooling together these various data sets, all members have access to data that one might not otherwise have had because of resource constraints. Because members also either come from or have substantial exposure to and understanding of the country being surveyed, the ethnocentric bias that has plagued much of international research is reduced. Each member is able to reformulate the questions so as to achieve conceptual equivalence. Although a standardized questionnaire is used so that data can be compared, the consortium arrangement also allows each member to incorporate other items of personal interest, while keeping in mind the practical consideration of the questionnaire s length. Existing literature One of the primary driving forces when the best practices project started was to provide guidance to business decision-makers in an increasingly global world, in terms of the best way to manage human resources that would benefit both the organization and its members given various contextual characteristics (e.g. culture). Is the practice in country A used in country B, and with the same positive results? The current state of research and theory is not able to provide adequate answers (Teagarden and Von Glinow, 1997; Tung and Punnett, 1993). There is not much work covering several different countries simultaneously, and that was the impetus for the best practices consortium (Von Glinow, 1993). The Price Waterhouse Cranfield Project (Brewster, 1993) surveyed selected European countries, but none of the emerging economies so far. Moore and Jennings (1995) covered Pacific Rim countries, and Pieper (1990) included several countries around the globe (both excluding the Philippines however). Verma et al. (1995) covered the newly industrializing economies in Asia including the Philippines. The country reports in Moore and Jennings (1995), Pieper (1990) and Verma et al. (1995) are based on a more qualitative approach, and often do not cover the same range of HRM practices. The best practices project, on the other hand, utilizes the same data-gathering instrument that would provide quantitative comparisons, and aims to cover countries in different regions of the world.

3 Galang: The transferability question 1209 The development of theory that incorporates an international perspective has barely started (Teagarden and Von Glinow, 1997). Given the global scope of the best practices project, we are able to encompass different contexts that will eventually provide empirical support for a comprehensive theory that identifies the salient factors driving differences and similarities, as well as factors influencing successful transfer. What empirical research is available has been limited to a few countries or a particular region (e.g. Brewster, 1993; Moore and Jennings, 1995) and therefore is not a sufficient basis for making generalizations. Hence, there are as yet no definitive answers to what is universal, and what is context-specific, however context is defined (e.g. cultural, legal, political, economic conditions of a country). Methodology A fourteen-page questionnaire was mailed in 1998, half from Canada and half from the Philippines. Jobber and Saunders (1988) have shown that the country of origin of the mail survey affects the response rate, but that such effects would differ depending on the country involved. My contacts in the Philippines had advised that a survey originating from an overseas university would have some prestige and credibility and therefore increase response rates. No study has been done on the Philippines, so that information gathered from this strategy would be useful for future surveys in the Philippines. In terms of response rate, there was not much difference: eighty-two returns from those mailed in the Philippines and eighty-six from those mailed in Canada. In terms of organizational characteristics, chi-square analysis found significant differences in only two aspects, employment size and unionization. There were more companies that were bigger (more than 1,000 employees) among those who responded to the Canadian mailing, with twenty-five respondents (37 per cent less missing answers) as opposed to ten respondents (15 per cent) in the Philippine mailing, and there were more companies that had fewer than 250 employees in the Philippine mailing, with thirty respondents (41 per cent) as opposed to fifteen respondents (22 per cent) in the Canadian mailing. The respondents from the Canadian mailings were also more unionised (62 per cent of sample, n ¼ 41) while those in the Philippine mailing were more non-union (56 per cent, n ¼ 38). In terms of HRM practices, only with respect to experience as a hiring criterion and training as a reward did the two groups differ, with the Philippine mailing having a higher mean for experience and the Canadian mailing having a higher mean for the training practice. Follow-ups were made to ensure a higher response rate (Ferrell and Krugman, 1983): first, a postcard reminder, with the necessary contact numbers to request replacement copies if needed; second, a telephone follow-up; third, a new cover letter and a complete set of survey materials. As a way of enticing respondents to complete the survey, a stamped envelope addressed to the research assistant based in the Philippines was provided and a summary report offered to respondents. Ninety-three of the whole sample (55 per cent) responded they wanted a copy of the report, and there were no differences in terms of organizational characteristics between those wanting a copy and those who did not. Variables 3 HRM practices The practices covered by the survey included the functional areas of hiring (number of practices ¼ 8), training and development ðn ¼ 10Þ; performance appraisal ðn ¼ 11Þ; pay ðn ¼ 9Þ and occupational health and safety ðn ¼ 10Þ; for a total of forty-eight practices.

4 1210 The International Journal of Human Resource Management Respondents were asked the extent to which the listed items applied to their organization, using the following scale: 1 ¼ not at all; 2 ¼ to a small extent; 3 ¼ to a moderate extent; 4 ¼ to a large extent; 5 ¼ to a very great extent. Organizational characteristics Information about employment size, unionization, industry, foreign ownership, product diversity and organizational life cycle was also gathered. In addition, perceived competitiveness of the business environment and status of the HRM department were measured through a 5-point scale, with only the extreme ends anchored as very false for 1 and very true for 5. Perceived competitiveness of the business environment consisted of four statements: marketplace competition has increased dramatically; conditions in our business environment are rapidly changing; government regulations are rapidly changing; the technology in our product/services is complex. Internal reliability for this scale was at a ¼ 0:67: Status of the HRM department was the average rating given to four statements: it is viewed as an important department in the company; it works closely with the senior management group on the key strategic issues facing the company; it seems to keep informed about the best human resource management practices that are used in other countries; it is viewed as an effective department. Internal reliability was at a ¼ 0:83: The average score was computed only for those respondents who indicated that they had a separate HRM unit. Organizational outcomes Perceived organizational performance was measured by a 5-point scale consisting of ten items, with internal reliability at a ¼ 0:92: Respondents were asked how accurately each of the following described their respective companies (1 ¼ very false and 5 ¼ very true): produces high quality goods; has a promising future; manages its people well; is flexible enough to change; has high quality people; has strong unified culture; is very effective overall; has very satisfied workforce; has very productive workforce, and is seen as leader in industry. Voluntary turnover rate was determined by the question: About what voluntary turnover rate has your company had in the last year? with an option to answer don t know. Results of the Philippine survey Profile of respondents Responses to the mailed questionnaire were received from 168 organizations. Leaving out the questionnaires that were returned undelivered ðn ¼ 27Þ; this constitutes a response rate of 17.2 per cent. Most of the organizations belong to the services sector (55 per cent), while 32 per cent are in manufacturing, with most (60 per cent) having more than one related product/service. The majority (74 per cent) have 1,000 or fewer employees, with an average voluntary turnover rate of 8.19 per cent. A little over half (53 per cent) are unionized; and, among those unionized, 57 per cent have more than half of their employees belonging to the union(s). Of those who responded to the foreign ownership question (n ¼ 81; 48 per cent), thirty-six indicated that they are wholly locally owned, and twenty are 100 per cent foreign-owned. Only five organizations (3 per cent) did not have a separate HRM unit. HRM departments had an average of 14.4 employees, ranging from a minimum of one to a maximum of 197, with the median at eight.

5 Galang: The transferability question 1211 Most of the individuals who filled out the questionnaire hold jobs in HRM (78 per cent of all respondents), and have an average tenure of 7.67 years in the company and 5.69 years in the position. The majority are less than 40 years old (53 per cent) and female (58 per cent). Except for one, all completed post-secondary education (four-year degree), with 41 per cent having some graduate work and 27 per cent a graduate degree. Extent of HRM practices Table 1 shows the percentage of firms utilizing each of the listed practices, among those that responded to the particular item. For all practices, except for two under hiring criteria, there were at least some firms reporting that the specified item did not apply. The top five practices, with the most number of firms reporting that the practice applied at least to some extent, are the hiring criteria of proven work experience in a similar job (n ¼ 166; 100 per cent), ability to perform technical job requirements (n ¼ 165; 100 per cent) and potential to do a good job (n ¼ 163; 98.2 per cent), training to improve technical job abilities (n ¼ 165; 98.2 per cent), and performance appraisal to document subordinate s performance (n ¼ 165; 98.2 per cent). The bottom five Table 1 Frequency distribution (%) of HRM practices in the Philippines Practice Not at all Small extent Moderate extent Large extent Very great extent Hiring criteria Ability to perform technical job requirements Ability to get along well with others Right connections Belief that person will stay with company Proven work experience in similar job Potential to do a good job Fit with company s values & ways Future co-workers opinions Training purposes Provide reward to employees Improve technical job abilities Improve interpersonal abilities Remedy past poor performance Prepare employees for future job assignments Build teamwork within company Initial training for new employees Help employees understand the business Provide skills for a number of different jobs Teach employees about company s values

6 1212 The International Journal of Human Resource Management Table 1 (Continued) Practice Not at all Small extent Moderate extent Large extent Very great extent Appraisal purposes Determine appropriate pay Document subordinate s performance Plan development activities Salary administration Recognition of subordinate for things done well Lay out specific ways to improve performance Discuss subordinate s views Evaluate subordinate s goal achievement Identify subordinate s strengths & weaknesses Allow subordinate to express feelings Determine subordinate s promotability Pay Incentives as important part in pay strategy Benefits as important part of total pay package Portion of earnings contingent on group performance Long-term results more important Seniority does not enter into pay decisions Incentives significant portion of total earnings Very generous employee benefits package Futuristic orientation of pay system Job performance mainly determines pay raises Health & Safety (HS) HS is considered top priority HS management as a strategic concern Existing HS programme is very cost effective Very proactive HS programmes Objectives clearly understood by employees Active promotion of HS programmes Safety as an individual s principal responsibility

7 Galang: The transferability question 1213 Table 1 (Continued) Practice Lack of top management support as significant barrier Legal compliance as main reason for programmes Regular conduct of worksite inspections Not at all Small extent Moderate extent Large extent Very great extent practices (with the most number of firms indicating that this practice does not apply at all) are the use of future co-workers opinions as a hiring criterion (n ¼ 55; 33.1 per cent), top management as a significant barrier in health and safety programmes (n ¼ 43; 27 per cent), right connections as a hiring criterion (n ¼ 36; 21.7 per cent), regular conduct of health and safety inspections of work sites (n ¼ 32; 19.9 per cent) and futuristic orientation of the pay system (n ¼ 28; 17 per cent). Organizational characteristics Various statistical analyses (e.g. t-tests, one-way analyses of variance and bivariate correlations), depending on the nature of the scale used to measure the variable, were conducted to determine whether HRM practices differed according to the following organizational characteristics: employment size, unionization, industry, product diversity, life cycle, foreign ownership, perceived competitiveness of the environment and status of the HRM department. Table 2a shows the F, t and r values from these statistical analyses for hiring, training, performance appraisal and pay, and Table 2b for health and safety practices. The status of the HRM department accounted for significant differences in almost all HRM practices (forty-two practices, or 88 per cent of all practices listed). This result may not be surprising considering that numerous studies in the US have found positive and significant relations between the presence of a HRM department and HRM practices (Galang and Ferris, 1997). The six exceptions are the use of right connections, future co-workers opinions and ability to get along well with others as hiring criteria; seniority not entering into pay decisions; lack of top management support in occupational health and safety, and legal compliance as main reason for health and safety programmes. The next organizational characteristic that accounts for many differences in HRM practices is perceived competitiveness of the environment: almost all the purposes listed for performance appraisal (number of practices ¼ 9, 82 per cent) except for documenting subordinates performance and salary administration; and almost all items under health and safety (n ¼ 7; 70 per cent), except for existing health and safety programme as very cost effective, the lack of top management support as a significant barrier and legal compliance as a main reason for health and safety programmes. For hiring, training and pay, the difference that competitiveness of the environment makes is much more limited. Significant associations were found only for ability to get along well with others, fit with the company s values and ways of doing things and future co-workers opinions as hiring criteria (n ¼ 3; 38 per cent); initial training for new employees and helping employees understand the business as a purpose of training (n ¼ 2; 20 per cent); and the futuristic

8 1214 The International Journal of Human Resource Management orientation of the pay system (n ¼ 1; 11 per cent). Overall, perceived competitiveness of the business environment accounted for differences in twenty-one practices (44 per cent). Employment size accounted for differences in six of the training practices (60 per cent), but only a few in the other functions (two practices in performance appraisal and one pay practice). Unionization, industry, product diversity and organizational life cycle accounted for only a few differences in total (n ¼ 4 or 8 per cent; 7 or 15 per cent; 2 or 4 per cent; and 1 or 2 per cent, respectively), while foreign ownership was not significantly associated with any practice across all functions. Organizational outcomes Correlations between HRM practices and organizational outcomes were computed. Table 3 shows the correlation coefficients (r) between each of the listed HRM practices and perceived organizational performance and voluntary turnover rate. All five functional areas were associated with perceived organizational performance (a total of forty-two practices, or 88 per cent). All listed purposes in training and performance appraisal were significantly correlated with perceived organizational performance. In pay, only seniority does not enter into pay decisions was not significantly correlated. Likewise, only one listed occupational health and safety practice was not significant (legal compliance as the main reason for health and safety programmes); and lack of top management support as a significant barrier was in the negative direction. In hiring, three of the criteria listed were significant and in the positive direction: ability to perform the technical requirements of the job, fit with company s values and ways of doing things, and belief that the person will stay with the company (five years or longer). Having the right connections (school, family, friends, region, government, etc.) was also significantly correlated but in the negative direction. None of the health and safety practices were significantly related to voluntary turnover rate, but the number of significant correlations in the other functional areas was very low (a total of 11 practices, or 23 per cent). Comparison with US and Canada In summary, HRM practices that are commonly found or prescribed in Western management can also be found in the Philippines. This should not come as a surprise to those familiar with the country, as much of the management education is modelled on US theory and practice. The results would, of course, be more meaningful with some comparative data, particularly with Western countries. Table 4 shows the means for the Philippines, US and Canada (the Canadian and US surveys did not include health and safety practices). Analysis of variance with post hoc comparison was conducted for each HRM practice to determine whether means differed significantly across the three countries, and which country differed significantly. As the bold and italic text in the table indicate, there is much similarity between the US and Canada, which is expected, given their geographical proximity, closer economic relations, cultural affinities and similar economic systems. What is surprising is that the means of most of the practices for the Philippines are significantly higher than either the US or Canada, or both. Although there was not an explicit hypothesis as to directions, one would have expected that, HRM being a creation of Western management, the Philippines would have had lower levels of such practices. Nonetheless, there were strong similarities across the three countries. In terms of means, four were in the top five most prevalent practices in all three countries: the hiring criterion of ability to perform the technical job requirements (this practice also had the

9 Galang: The transferability question 1215 Table 2a HRM practices significantly associated with organizational characteristics HRM function Phils. ðn ¼ 168Þ U.S. ðn ¼ 145Þ Canada ðn ¼ 126Þ Employment size Hiring Ability to perform technical job requirements F ¼ 4:24* Right connections F ¼ 4:50* Improve technical job abilities F ¼ 4:97** Improve interpersonal abilities F ¼ 4:77** Remedy past poor performance F ¼ 3:84* Training Build teamwork within company F ¼ 5:51** Initial training for new employees F ¼ 6:51** F ¼ 11:59*** Help employees understand the business F ¼ 3:94* Provide skills for a number of different jobs F ¼ 3:66* F ¼ 4:35* Recognition for things done well F ¼ 4:82** Lay out specific ways to improve performance F ¼ 4:33* Appraisal Evaluate subordinate s goal achievement F ¼ 3:53* F ¼ 3:49* Determine subordinate s promotability F ¼ 3:38* Pay Portion of earnings contingent on group performance F ¼ 3:14* Incentives significant portion of F ¼ 3:99* total earnings No. of significantly associated practices 9 (23.7%) 7 (18.4%) 2 (5.3%) Unionization Hiring (none) Training Build teamwork within company t ¼ 2:29* Appraisal Identify subordinate s strengths and weaknesses t ¼ 4:11* Pay (none) No. of significantly associated practices 1 (2.6%) 1 (2.6%) 0 Industry Hiring Ability to get along well with others F ¼ 2:91* Training Remedy past poor performance F ¼ 3:36*

10 1216 The International Journal of Human Resource Management Table 2a (Continued) HRM function Phils. ðn ¼ 168Þ U.S. ðn ¼ 145Þ Canada ðn ¼ 126Þ Document appropriate pay F ¼ 2:81* Appraisal Document subordinate s performance F ¼ 2:57* Discuss subordinate s views F ¼ 2:86* Identify subordinate s strengths F ¼ 2:80* F ¼ 3:52* and weaknesses Pay Long-term results more important F ¼ 2:47* No. of significantly associated practices 5 (13.2%) 3 (7.9%) 0 Product diversity Hiring Proven work experience in similar job F ¼ 3:50* Prepare employees for future job assignment F ¼ 3:96* Build teamwork within company F ¼ 6:24** Training Initial training for new employees F ¼ 4:99** Help employees understand the business F ¼ 3:71* Provide skills for a number of different jobs Appraisal (none) Pay Incentives as important part in pay strategy F ¼ 3:21* F ¼ 3:79* Job performance mainly determines F ¼ 3:87* pay raises No. of significantly associated practices 2 (5.3%) 5 (13.2%) 1 (2.6%) Life cycle Hiring (none) Training Build teamwork within company t ¼ 5:85* Appraisal Determine appropriate pay t ¼ 22:00* Pay Futuristic orientation of pay system t ¼ 4:57* No. of significantly associated practices 1 (2.6%) 2 (5.3%) 0 Business competition Hiring Ability to get along well with others r ¼ 0:19*

11 Table 2a (Continued) HRM function Phils. ðn ¼ 168Þ Fit with company s values and ways r ¼ 0: U.S. ðn ¼ 145Þ Canada ðn ¼ 126Þ

12 1218 The International Journal of Human Resource Management Table 2a (Continued) HRM function Phils. ðn ¼ 168Þ U.S. ðn ¼ 145Þ Canada ðn ¼ 126Þ Potential to do a good job r ¼ 0:18* r ¼ 0:27** Fit with company s values and ways r ¼ 0:28* r ¼ 0:31** Future co-workers opinions r ¼ 0:25** Provide reward to employees r ¼ 0:19* Improve technical job abilities r ¼ 0:45** r ¼ 0:45** r ¼ 0:24** Improve interpersonal abilities r ¼ 0:42** r ¼ 0:24** r ¼ 0:41** Remedy past poor performance r ¼ 0:44** r ¼ 0:26** r ¼ 0:25** Training Prepare employees for future r ¼ 0:48** r ¼ 0:35** r ¼ 0:43** job assignments Build teamwork within company r ¼ 0:55** r ¼ 0:37** r ¼ 0:53** Initial training for new employees r ¼ 0:49** r ¼ 0:22* r ¼ 0:21* Help employees understand the business r ¼ 0:41** r ¼ 0:36** r ¼ 0:35** Provide skills for a number of r ¼ 0:43** r ¼ 0:36** r ¼ 0:37** different jobs Teach employees about r ¼ 0:56** r ¼ 0:19* r ¼ 0:31** company s values Determine appropriate pay r ¼ 0:36** Document subordinate s performance r ¼ 0:42** r ¼ 0:25** Appraisal Plan development activities r ¼ 0:47** r ¼ 0:34** r ¼ 0:33** Salary administration r ¼ 0:39** Recognition for things done well r ¼ 0:39** r ¼ 0:30** r ¼ 0:23* Lay out specific ways to improve r ¼ 0:46** r ¼ 0:26** r ¼ 0:27** performance Discuss subordinate s views r ¼ 0:44** r ¼ 0:25** Evaluate subordinate s r ¼ 0:46** r ¼ 0:21* r ¼ 0:32** goal achievement Identify subordinate s strengths and weaknesses r ¼ 0:51** r ¼ 0:29**

13 Galang: The transferability question 1219 Table 2a (Continued) *** p,.001. ** p,.01. * p,.05. HRM function Phils. ðn ¼ 168Þ U.S. ðn ¼ 145Þ Canada ðn ¼ 126Þ Allow subordinate to express feelings Determine subordinate s promotability Incentives as important part in pay strategy Benefits as important part of total pay package Portion of earnings contingent on group performance r ¼ 0:42** r ¼ 0:31** r ¼ 0:38** r ¼ 0:27** r ¼ 0:29** r ¼ 0:20** r ¼ 0:25** r ¼ 0:38** r ¼ 0:24* r ¼ 0:27** r ¼ 0:23* r ¼ 0:25** Long-term results more important r ¼ 0:37** r ¼ 0:29** r ¼ 0:28** Pay Seniority does not enter into pay decisions r ¼ 20:23* Incentives significant portion of total earnings r ¼ 0:22** Very generous employee benefits package R ¼ 0:33** Futuristic orientation of pay system r ¼ 0:37** r ¼ 0:27** r ¼ 0:20* Job performance mainly determined r ¼ 0:38** r ¼ 0:29** r ¼ 0:38** pay raises No. of significantly associated practices 34 (89.5%) 25 (65.8%) 28 (73.7%)

14 1220 The International Journal of Human Resource Management Table 2b Health and safety (HS) practices significantly associated with organizational characteristics for the Philippines Employment size (none) Unionization Existing HS programme is very cost effective t ¼ 2:70** Very proactive HS programmes t ¼ 2:36* Active promotion of HS programmes t ¼ 2:07* Industry Very proactive HS programmes F ¼ 2:79* Active promotion of HS programmes F ¼ 2:66* Product diversity (none) Life cycle Very proactive HS programs t ¼ 2:04* Objectives clearly understood by employees t ¼ 2:52* Foreign ownership (none) Status of the HRM department HS is considered top priority r ¼ 0:27** HS management as a strategic concern r ¼ 0:35** Existing HS programme is very cost effective r ¼ 0:24** Very proactive HS programmes r ¼ 0:35** Objectives clearly understood by employees r ¼ 0:34** Active promotion of HS programmes r ¼ 0:40** Safety as individual s principal responsibility r ¼ 0:37** Regular conduct of worksite inspections r ¼ 0:23** Business competition HS is considered top priority r ¼ 0:21* HS management as a strategic concern r ¼ 0:19* Very proactive HS programmes r ¼ 0:26** Objectives clearly understood by employees r ¼ 0:21* Active promotion of HS programmes r ¼ 0:25** Safety as individual s principal responsibility r ¼ 0:27** Regular conduct of worksite inspections r ¼ 0:18* **p,.01. *p,.05. highest mean for all three countries); proven work experience in similar job; training to improve technical job abilities, and benefits as an important part of the total pay package. Only one practice in the bottom five, or least prevalent practice, was shared by all three countries: futuristic orientation of the pay system. As with the Philippine sample, the status of the HRM department of the US and Canadian samples correlated with greatest number of practices (34 or 89.5 per cent out of 38 practices, 25 or 65.8 per cent, 30 or 78.9 per cent for the Philippines, the US and Canada respectively), in comparison to all the other organizational characteristics (see Table 2a). Comparing the three countries, however, there were fewer practices that were significantly correlated across all organizational characteristics for the US and Canadian samples. The average percentage of practices that correlated significantly with the organizational characteristics other than status of HRM department was 9.7 per cent

15 Galang: The transferability question 1221 Table 3 HRM practices significantly correlated with organizational outcomes (r) HRM function Philippines ðn ¼ 168Þ Voluntary turnover Organizational performance US ðn ¼ 145Þ Organizational performance Canada ðn ¼ 126Þ Organizational performance Hiring Ability to perform technical job requirements 20.22* 0.37* 0.24* Ability to get along well with others 0.30** 0.23* Right connections 20.17* 20.24* Belief that person will stay with company 0.16* Potential to do a good job 0.28** Fit with company s values & ways 0.27** 0.31** Future co-workers opinions 0.31** 0.19* Provide reward to employees 0.22** 0.21* Improve technical job abilities 20.25* 0.32** 0.26** Improve interpersonal abilities 0.27** 0.30** 0.38** Remedy past poor performance 0.31** Prepare employees for future job assignments 0.26** 0.25* 0.37** Training Build teamwork within company 20.29** 0.37** 0.34** 0.47** Initial training for new employees 20.30** 0.42** 0.25* 0.36** Help employees understand the business 20.22* 0.39** 0.29** 0.40** Provide skills for a number of different jobs 0.40** 0.41** Teach employees about company s values 0.49** 0.31** 0.44** Determine appropriate pay 0.31** Document subordinate s performance 0.38** 0.25* 0.33** Plan development activities 20.22* 0.49** 0.24* 0.44** Salary administration 20.21* 0.31** 0.21* Recognition for things done well 20.23* 0.37** 0.26* 0.52** Lay out specific ways to improve performance 0.44** 0.53** Discuss subordinate s views 0.42** 0.51** Appraisal Evaluate subordinate s goal achievement 0.45** 0.33** 0.42** Identify subordinate s strengths & weaknesses 20.25* 0.46** 0.38** 0.48** Allow subordinate to express feelings 0.39** 0.51**

16 1222 The International Journal of Human Resource Management Table 3 (Continued) HRM function Philippines ðn ¼ 168Þ Voluntary turnover Organizational performance US ðn ¼ 145Þ Organizational performance Canada ðn ¼ 126Þ Organizational performance Determine subordinate s promotability 0.37** 0.50** Incentives as important part in pay strategy 0.27** 0.39** Benefits as important part of total pay package 20.22* 0.37** 0.38** Portion of earnings contingent on grp performance 0.33** 0.34** Long-term results more important 0.45** 0.37** 0.45** Incentives significant portion of total earnings 0.26** 0.38** Very generous employee benefits package 0.44** Pay Futuristic orientation of pay system 20.20* 0.48** 0.23* 0.38* Job performance mainly determined pay raises 0.38** 0.37** HS is considered top priority 0.48** HS management is a strategic concern 0.48** Existing HS program is very cost effective 0.37** Very proactive HR programs 0.49** Health & Safety Objectives clearly understood by employees 0.44** Active promotion of HS programs 0.52** Safety as individual s principal responsibility 0.45** Legal compliance as main reason for programs 20.22** Regular conduct of worksite inspections 0.36** Notes *** p,.001. ** p,.01. * p,.05. The US and Canadian surveys did not include questions on health and safety practices and voluntary turnover rate.

17 Table 4 Means of HRM practices in the Philippines, US and Canada Practice Galang: The transferability question 1223 Philippines ðn ¼ 168Þ U.S. ðn ¼ 145Þ Canada ðn ¼ 126Þ Hiring criteria Ability to perform technical job requirements Ability to get along well with others Right connections*** Belief that person will stay with company*** Proven work experience in similar job** Potential to do a good job*** Fit with company s values & ways Future co-workers opinions** Training purposes Provide reward to employees** Improve technical job abilities Improve interpersonal abilities** Remedy past poor performance*** Prepare employees for future job assignments*** Build teamwork within company*** Initial training for new employees*** Help employees understand the business*** Provide skills for a number of different jobs*** Teach employees about company s values*** Appraisal purposes Determine appropriate pay Document subordinate s performance** Plan development activities** Salary administration Recognition for things done well Lay out specific ways to improve performance* Discuss subordinate s views Evaluate subordinate s goal achievement Identify subordinate s strengths & weaknesses Allow subordinates to express feelings Determine subordinate s promotability*** Pay Incentives as important part in pay strategy*** Benefits as important part of total pay package

18 1224 The International Journal of Human Resource Management Table 4 (Continued) Practice Philippines ðn ¼ 168Þ U.S. ðn ¼ 145Þ Portion of earnings contingent on group performance*** Long-term results more important*** Seniority does not enter into pay decisions* Incentives significant portion of total earnings*** Very generous employee benefits package Futuristic orientation of pay system*** Job performance mainly determines pay raises*** ***p,.001. **p,.01. *p,.05. Values in bold are not significantly different. Values in italics are significantly different. Canada ðn ¼ 126Þ for the US (ranging from 2.6 per cent of all practices for unionization to 18.4 per cent for employment size) and 4 per cent for Canada (ranging from 0 for unionization, industry type and organizational life cycle to 15.8 per cent for perceived competitiveness of the business environment). For the Philippines, the average was 14.5 per cent, ranging from 2.6 per cent for unionization and organizational life cycle to 39.5 per cent for perceived competitiveness of the business environment. Apart from these differences in the number of significant correlations, the US and Canadian samples also show negative correlations. In the US sample, all four practices significantly correlated with perceived competitiveness are in the negative direction, and the correlation of seniority entering into pay decisions with status of the HRM department is negative. Both US and Canadian samples show negative correlations between the use of right connections as a hiring criterion and status of the HRM department. In terms of correlations with organizational performance (see Table 3), the Philippine sample has the highest percentage of practices that correlated with organizational performance at 86.8 per cent (ranging from 50 per cent for hiring to 100 per cent for training and performance appraisal), followed closely by Canada at 78.9 per cent (ranging from 62.5 per cent for hiring to 90.9 per cent for performance appraisal) and a distinct third is the US with 44.7 per cent (ranging from 33.3 per cent for hiring and pay to 60 per cent for training). Across all three countries, the functional area with the highest number of practices correlating with organizational performance was training: the Philippines at 100 per cent, Canada at 90 per cent and the US at 60 per cent. Only one practice (use of right connections as a hiring criterion) was negatively correlated with perceived organizational performance, and this was in both Philippine and Canadian samples, while the correlation in the US sample was not significant.

19 Galang: The transferability question 1225 Discussion While the primary impetus of the Best Practices consortium was to provide comparative data of rich descriptions, an understanding of the factors that drive differences or similarities is necessary in generalizing and developing a theoretical framework. The comparative data for the three countries illustrate differences and similarities, and, while no expectations or predictions were made a priori, an attempt is made to explore possible explanations. Such explorations serve to focus future research in order to advance our understanding, although they may not provide definitive explanations in the current case. Three possible sources might explain the observed differences and similarities: country context, organizational factors or sample differences, and methodological artefacts. While the primary interest in cross-cultural comparisons is differences in country context, one must ensure that alternative explanations because of sample differences or methodological artefacts can be ruled out. Differences in country context Earlier it was pointed out that differences are not surprising considering that the US and Canada are similar in a lot of respects, while the Philippines was not. What needs to be explored is the reason why the Philippines turned out to have higher means. Particularly noticeable in Table 4 is the number of significant differences in the area of training between the Philippines, on the one hand, and the US and Canada, on the other. Being advanced industrialized countries, the US and Canada might already have better trained employees in the external labour market, so that it becomes less important for firms to provide training. Aside from that, the Philippines is still in the catch-up phase, and so will implement what they see as the practices that help, or have helped, these two countries progress or advance. Given the access to information about management practices and the fact that management education has largely been based on US theories, this then is likely to explain the higher means observed in the Philippine sample. The diffusion of management knowledge is supported by similarities in the top five most prevalent practices in all three samples, but the non-similarity in the bottom five, or least prevalent, practices suggests that this diffusion is not complete and is not without influence from other factors. The influence of country context may be examined, not just in the levels of HRM practices, but also in the interrelationships among the variables, both in terms of the number and direction of significant correlations. There do not seem to be any country differences in how the status of the HRM department and unionization compare with other organizational determinants in influencing the firm s HRM practices. Across all three countries, the status of the HRM department, with the highest number of significant correlations, is the most influential and its influence generally is in the positive direction, while unionization, with the least number, does not seem to have a consistent effect on organizations across the three countries. Observed differences in the direction of correlations across the three countries may reflect differences in the underlying cultural values or beliefs. The negative direction for all significant correlations for perceived competitiveness in the US sample, compared to the positive and non-significant correlations for the Philippines and Canada respectively, may indicate a different understanding or belief with respect to what it takes for firms to respond effectively to the competitiveness in the business environment. The negative correlation of use of right connections as a hiring criterion with the status of the HRM department in the US and Canadian samples is as expected, while the observed nonsignificance for the Philippine sample may indicate that cultural expectations are still

20 1226 The International Journal of Human Resource Management driving some of the decisions of some HRM departments. However, as this practice is one of the five least prevalent in the Philippines and is negatively correlated with perceived organizational performance, this may mean that some Western influence is beginning to take place. Thus, while HRM departments in the Philippines may feel that this practice should no longer be used, based on what they know from best practices in the West, expectations from other stakeholders in the organization influence some HRM departments to continue to implement this practice. The non-significant correlation of this practice with organizational performance in the US sample may indicate that this practice is being used in some firms, even if not acknowledged as a best practice, and that some firms may benefit from it. Differences in the organizational profiles of the country samples It should be noted that the samples from the three countries differed significantly in terms of the status of the HRM department, industry sector, product diversity, organizational life cycle and employment size (see Table 5). Only in perceived competitiveness of the environment, perceived organizational performance and unionization were the three samples not significantly different. 1 The status of the HRM department in the Philippines was significantly higher than in the US and Canada, which did not differ significantly from each other. Most of the US and Canadian responding firms were in the manufacturing sector (61 per cent and 44 per cent respectively, compared to 32 per cent for the Philippines), and had more than 1,000 employees (80 per cent and 62 per cent respectively, compared to 26 per cent of the Philippine sample). The US sample had the highest number of firms that had unrelated products and services (22 per cent), with the Philippine and Canadian samples at only 5 per cent and 6 per cent respectively. Voluntary turnover rate was not measured for the US and Canadian samples. One probable explanation of the higher means in the Philippine sample is the higher status of the HRM department in the Philippines, particularly when this organizational variable also correlated with the most HRM practices in comparison to the US and Canada. Gooderham et al. (1999) argued and found that the institutional environment, which is reflected to the differences in the role, status and position of the personnel function within the firm, is a particularly salient consideration in comparative studies, explaining variations in HRM practices in different countries. There are other organizational characteristics in which the three country samples differ, although the effect on HRM practices is unclear because of the inconsistency with what might logically be expected. For instance, large organization size is usually associated with more practices, but there are more large organizations, in terms of employment size, in the Canadian and US samples. There are more organizations in the services sector in the Philippine sample, and it could be argued that the services sector, like banking and financial institutions and consulting firms, is more likely to have the kinds of HRM practices covered by the survey than an older industry like manufacturing. However, the difference in terms of organizational life cycle, where there were more organizations that considered themselves mature in all three samples, seems to contradict this explanation. According to Aycan et al. (1999), the effects of significant differences in the characteristics of samples can be minimized statistically by co-varying them out. Removing the effect of the status of the HRM department, the variable that significantly correlated with the most number of practices, would show whether the observed differences in HRM practices across the three countries (see Table 4) can be attributed to this organizational characteristic, rather than differences in other respects. In order

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