When building teams in the Philippines, you must tailor your remuneration strategy to the local Filipino talent market.

1. Pay a Premium to Attract High-Quality Talent

You might think this is obvious, but often, when small business folks look for talent in the Philippines, they get intoxicated by how cheaply they can hire someone.

A) Understand the Economic Context

The Philippines is an emerging economy with significant poverty. Thus, your talented folks in the Philippines often financially support their immediate and extended family. This is a cultural behavior similar to many other Asian countries. To be direct, if you pay the market rate (or try to pay below it), your Filipino employees will leave you for as little as 5,000 PHP or $130 AUD per month in extra salary. Not because they are mercenaries working for the higher bidder but out of necessity. When a family member has a severe illness that needs expensive medical care, extended family members always try to help. There is no “universal healthcare” or “safety net” in the Philippines, and PhilHealth only covers 15-30% of out-of-pocket expenses. So, with minimum wage being $370 AUD per month and a hospital bed costing $150 AUD daily, it’s not hard to connect the dots. And, if it’s not a sick family member, which is very common, it often is helping fund a cousin’s university fees to get a good education to break the poverty cycle.

B) Pay for Excellent Communication Skills

Typically, for a Filipino to develop business-grade English, they must work for a Western company for several years. We find our super time-poor executive clients want to speak to their Filipino team members “at pace” without having to say the same thing several times for their team members to understand the issue or task at hand. It makes commercial sense because the Australian executive is the most expensive part of the outsourcing equation.

C) Cultural Alignment

Paying a premium will allow you to attract Filipino team members who are more culturally aligned with the way you want to work. Again, suppose someone has already worked for a Western business (Australian, New Zealand, UK, or American). In that case, they already understand what is expected of them regarding their behavior and will perform accordingly. However, if you hire someone who’s only worked with a local Filipino company, not only will their business-grade English be less developed, but you will also need to teach them how to behave and what’s expected of them. Again, if you value your time and that of your Australian team, you will be better placed to pay the small Filipino premium to close the cultural gap as much as possible.

D) Stay Updated with Market Rates

We use two ways to determine what the current market is paying. We have created over forty different roles in the Philippines since 2009, and it’s impossible to stay up to date with every chosen profession, so being able to reference information from Glassdoor and Jobstreet (the number one job board in the Philippines owned by Seek) is super helpful. Glassdoor publishes the average salary Filipino talent is currently being paid. Remember that you will get average candidates if you pay average. To follow up on the advice above, you must pay a premium over the average to obtain outstanding business-grade communication skills with minimal cultural gap. Then, reference this number against what other organizations on Jobstreet are paying. Not the local Filipino or mega-outsourcing companies advertising jobs but other outsourcing providers who hire high-quality talent for other small businesses. You never need to chase the top of the market, but you must be within range to build the best Filipino team.

2. Offer Competitive Benefits

Once you have a competitive salary on offer, you need to ensure that your employee benefits are also competitive.

A) Work-from-Home

The number one benefit is working for a 100% work-from-home employer, but not for the reasons you think. There is enough of an online narrative on Work-From-Home vs. Hybrid, etc., so I won’t comment on that. However, asking a Filipino to travel to the office requires a human being to commute 3 to 5 hours daily. That’s not a typo. Granted, working from home is not for everyone. Still, a large proportion of the Filipino talent market has experienced all the benefits of working from home during COVID and want to spend that 20-plus hours a week improving their quality of life rather than sitting in traffic.

B) Company-Sponsored HMO or Medical Insurance

As mentioned, there is no such equivalent to Medicare in the Philippines. Medical expenses can wipe out the finances of a family without insurance. You need to provide a competitive maximum benefit limit with a trusted provider that can be used throughout the Philippines. Back in 2009, when I started sending work to the Philippines, this was a “nice to have”, now it’s a “must-have” just to be competitive. Also, organizations can offer a free dependent or two. However, we prefer to pay a high salary and let our employees co-contribute to their HMO for their dependents because not everyone values free dependents on their HMO plan.

C) New IT Equipment

Many providers ask potential work-from-home employees to use their equipment or provide very dated computers that affect performance. If someone uses their own equipment, they have no control over their machine whatsoever, and it is a recipe for a data breach. Provide new equipment, and your employees will value it.

D) Team Activities

Yes, it can positively change the life of your Filipino employee, not having to commute 20-plus hours a week. Still, it’s also essential to connect and provide for online and in-person team-building activities. One of the biggest work perks outside being paid well is attending a company Christmas party, not like the lunch you do in Australia, but something very Filipino with games and fun activities.

E) Annual and Sick Leave and Other Benefits

For example, maternity leave benefits of 105 days, premium pay for overtime at 25%, etc. There are many government-mandated benefits (which is code for compulsory). However, during the global talent shortage, there was an explosion of sham contracting arrangements, with small businesspeople hiring Filipinos directly without paying them minimum entitlements. It might seem a little sad to consider this a benefit, but it is for those folks who haven’t been paid in a compliant manner.

This list goes on, but these are the major considerations you need to make when designing your Filipino employees’ remuneration strategy.