Understanding Business Culture in the Philippines

September 30, 2024

A group of people join hands together above their heads in a gesture of unity or celebration.

Corporate culture is a fundamental element that shapes the behaviors, beliefs, and interactions within a company, influencing employee engagement, operational efficiency, and the organization’s overall success. In the Philippines, corporate culture is molded by internal company values and the country’s national traditions, social hierarchies, and the broader economic landscape. To fully appreciate corporate culture in the Philippines, it is essential to understand both the global and local influences that shape the environment in which businesses operate.

Defining Corporate Culture

Corporate culture refers to the shared values, beliefs, and practices that guide how employees and management interact within an organization. The fabric binds a company together, influencing everything from hiring and retention practices to productivity and long-term business success. An organization’s culture can be either intentionally designed or naturally evolved from the leadership and values practiced at every level of the company.

According to business research, there are four common types of corporate culture:

Clan Culture: A family-like atmosphere where employees work together with a strong sense of community. This culture emphasizes collaboration, mentoring, and a strong bond among team members.
Adhocracy Culture: A dynamic and entrepreneurial environment that encourages innovation, risk-taking, and flexibility. Organizations with this culture are often at the forefront of new ideas and market trends.
Market Culture: A results-oriented culture focusing on competition and achieving concrete business goals. This type of culture often values productivity, profitability, and market leadership above all else.
Hierarchy Culture: A structured and formal work environment where clear processes, control, and efficiency dominate. Companies with this culture prioritize stability, procedures, and achieving consistent results through careful planning.

Like their global counterparts, organizations in the Philippines can exhibit any combination of these four types of cultures, which are often influenced by the nation’s unique business norms and social structure.

The Influence of Filipino National Culture on Corporate Culture

The corporate culture in the Philippines is deeply intertwined with the nation’s broader cultural values. Filipinos place a high premium on family, community, and respect for hierarchy, which naturally carry over into the workplace. Companies that operate in the Philippines tend to adopt practices that reflect these values, fostering environments where loyalty, personal relationships, and respect for authority are highly emphasized.

Hierarchical Structure

One of the defining characteristics of Filipino business culture is its hierarchical nature. In many Filipino companies, decision-making power tends to be concentrated at the top, with senior managers or executives playing a significant role in guiding the organization. Employees may hesitate to challenge decisions made by those in higher authority, as respect for hierarchy is ingrained in the cultural fabric of the Philippines. This dynamic aligns with the Hierarchy Culture, where stability and control are prioritized, and clear roles and responsibilities are established.

Community and Relationships

The importance of personal relationships and a sense of community in Filipino culture mirrors the characteristics of Clan Culture. In the Philippines, business relationships often go beyond the transactional level; they are built on trust, respect, and sometimes even personal connections. Employees within Filipino companies usually develop strong, familial bonds with their colleagues, and these relationships can extend beyond the workplace, with social gatherings and informal interactions being every day.

Furthermore, building trust with business partners and clients is critical in the Philippines. Networking and personal connections are pivotal in negotiations, collaborations, and long-term business success.

Filipino Business Etiquette

When engaging in business in the Philippines, it is essential to understand and respect the local etiquette, as failing to do so can adversely affect business relationships. Here are some critical aspects of Filipino business etiquette:

Politeness and Respect: Filipinos emphasize politeness and respect in personal and professional interactions. When addressing individuals in business settings, it is customary to use titles such as “Mr.” or “Ms.” followed by their surname or ending the statement with the Tagalog word “po,” which is the equivalent.
Harmony and Conflict Avoidance: Filipinos generally avoid confrontation and seek to maintain harmony within the workplace. Open disagreements, especially in public or formal settings, are typically avoided, with a preference for indirect communication and subtlety when addressing issues.
Punctuality: While time management is essential, the “Filipino time” concept may come into play, where being slightly late is not uncommon. However, punctuality is increasingly expected, especially in more formal business meetings.

Corporate Culture in a Growing Economy

The Philippines is a rapidly growing market, and its corporate landscape reflects a blend of traditional values and modern business practices. Many businesses in the country are influenced by international corporate trends, especially as globalization and foreign investment continue to shape the economy. For example, multinational corporations operating in the Philippines may adopt more Adhocracy or Market Cultures, driving innovation and competitiveness in technology, outsourcing, and manufacturing.

However, the traditional elements of Clan and Hierarchy Cultures remain deeply embedded in many organizations, particularly in family-owned businesses and more established companies. The coexistence of these different cultural elements offers both challenges and opportunities for businesses looking to expand or establish themselves in the Philippine market.

Assessing and Shaping Corporate Culture

Understanding their current cultural orientation is crucial for organizations aiming to optimize their corporate culture in the Philippines. Tools like the Organizational Culture Assessment Instrument (OCAI) allow companies to assess their cultural profile and determine if strategic changes are needed to align the company’s culture with its business goals. By fostering a culture aligned with local values and global business trends, companies can create an environment where their teams are more engaged, productive, and committed to long-term success.

Is Assistance Available?

Corporate culture plays an essential role in shaping the success and longevity of businesses in the Philippines. A mix of local traditions, national values, and global economic trends influences it. Whether fostering a community-driven environment reminiscent of Clan Culture, maintaining the structure of Hierarchy Culture, encouraging innovation through Adhocracy Culture, or pushing for market leadership via Market Culture, companies in the Philippines must strike a balance that aligns with their business strategy and the cultural context in which they operate.

If you would like assistance in crafting your company’s HR manual or any other HR assistance for your company, please don’t hesitate and schedule an initial consultation with one of our experts through any of the following channels below: