The Latin American business model as a hybrid of globalization and the region’s historic traditions. This is the cultural framework that defines Human Resource practices within the Latin American company
Some global executives would be surprised to learn that many employees in Mexico like to do their jobs in the presence of such religious images as the Virgin of Guadalupe. Their religious devotion in one example of how local culture affects the styles and practices of work in Latin America. Anabella Dávila, professor of management theory and business history at the graduate business school (ITESM) in Monterrey (Mexico), and Marta M. Elvira, academic director of Lexington College in Chicago, have published a book on this phenomenon, entitled “Managing Human Resources in Latin America.” In the chapter titled “Culture and Human Resource Management in Latin America”, the two scholars identify the cultural values that determine Human Resources in the region. They show how these factors can determine the success and failure of a business organization.
The Company Is Like a Family
The authors define the Latin American business model as a hybrid of globalization and the region’s historic traditions. With the exception of Argentina and Costa Rica, those traditions are characterized by large social gaps and a widespread collectivism that has various manifestations. Dávila and Elvira explain that social differences are manifested locally through benevolent, paternalistic leadership. “The senior executive has the personal obligation to protect subordinates, and even take care of the personal needs of workers and their families.”
Generally speaking, paternalism involves a “father” who cares for his sons by engaging in permissive practices and providing moral support, even if his “sons” wind up being too dependent in many respects throughout their working career. Latin American firms are managed like a family. Latin Americans prefer to depend on someone closer to the center of the organization, and to accept that this authority leads to behavior that avoids conflict and confrontation with one’s superiors. Behaving any other way would be interpreted as an offense against one’s superiors and colleagues. Doing so would have disciplinary consequences.
On the other hand, “Latin Americans value status within a hierarchy because it indicates social distance between the higher-up and his subordinates,” notes the study. Job titles and additional benefits also have a great significance because of the social status that they bring. In Chilean companies, for example, social discrimination exists on the basis of appearance, age and gender, all of which are associated with social status. “Despite this sort of hierarchical status, Latin American companies try to eliminate the existing power distance between directors and subordinates by creating committees that symbolize the egalitarian spirit among all members of the organization,” notes the study. It is no easy task to play the role of supervisor, however, because a boss must assume that role without actually behaving as such.
The collective spirit of the workplace is manifested in several ways. First, there is the importance of personal relationships. Latin Americans expect to be treated with courtesy and kindness while at work. Second, there is a sense of loyalty to the primary group. In Mexican companies, “executives know that the survival of their organizations depends more on social and governmental relationships than on any support they get from the country’s financial system.” Third, popular celebrations play a major role in the workplace, including religious behavior, as noted earlier. This illustrates the hybrid style of management.
The Importance of Social Status
This is the cultural framework that defines Human Resource practices within the Latin American company, especially recruitment and personnel management. For example, social relationships and physical appearance “can explain the cultural content of the glass ceiling in Latin American companies.” In Chilean companies, executive selection and promotion generally reflect physical appearance, age and sex, in addition to social contacts, birthplace and other factors.
Companies generally recruit new workers through their current employees and employees’ family members and close relatives. This guarantees the trust, loyalty and sense of responsibility that are important to keeping the organization together. The family is equally important when promotion is involved. Employees generally put the well-being of their families ahead of their professional careers, especially Latin American women. However, the researchers said there is insufficient empirical research in that area.
On the other hand, Latin American corporate training and development divisions suffer significant internal conflict when it comes time to provide more advanced business training. They realize that new management techniques don’t always fit in well with local tradition; some practices are rejected by employees. So managers feel obliged to provide formal basic education and technical training whenever they modernize work procedures. “The shortage of technical knowledge, formal education, and skills for analysis and communication represent serious obstacles for Mexican workers,” says the study. Moreover, Latin American companies usually devote only a small part of their budget to training.
When it comes to compensation and recognition, family also plays a central role. Not surprisingly, the quality of family life cushions workers from recurrent economic crises. In Mexico, work is considered an obligation and way to enjoy the important things in life, including family. If Mexicans had a choice, they would not work. However, the research should be viewed cautiously, the authors warn, because the culture of work varies significantly according to age, socio-economic level, and educational achievement. Some studies discovered that “manufacturing plants in Mexico made major cuts in their expatriate staffs, and found young, bilingual talent with managerial skills and university degrees [to replace them]. Young managers accepted modern methods of management and production more readily than older managers did.”
When it comes to compensation, Dávila and Elvira warn that individual financial compensation can stigmatize a worker as a “favorite” of management. The worker can wind up being rejected by the group, with grave consequences. In contrast, highly valued benefits for top executives confer extra status – including luxury cars, and private-school tuition for their children.
It is also important to recognize the loyalty of employees by establishing ceremonies that honor their seniority. Many benefits, including vacations and retirement benefits, involved ceremonial recognition. However, Dávila and Elvira warn about linking compensation to formal evaluation of workers’ performance. Given the low level of confrontation between managers and their subordinates, the results of that sort of evaluation are rarely used.
Compensation usually comes in the form of fixed salary. Only multinational companies and large Latin American firms provide variable compensation based on corporate performance. Fixed salaries are more appropriate in a hierarchical and individualistic system where more value is placed on the centralization of authority, not on factors that promote teamwork and organizational flexibility. That kind of approach does not reflect the preferences of Latin American culture.
Teamwork, Subcontracting and Geographical Mobility
According to the study, Latin American culture “tends to favor the development of teamwork.” Employees value social relationships based on personal communication and empathy, concepts that are essential to teamwork. Nevertheless, it is not easy to make this work, because power sharing and decentralization run against the grain of such Latin American cultural values as centralization and organizational hierarchy.
The hybrid model of management is clear when it comes to working arrangements. Although employees accept the idea of getting involved in modern managerial practices, they prefer a managerial style in which one senior executive makes the decisions. This frees each employee from taking responsibility. Executives who have higher education are the exception to this rule, however. Sharing responsibility for decision-making has other advantages. It allows companies to resolve conflicts and confrontations. Latin Americans traditionally accept the sort of manager who acts as a mediator between parties in a conflict. “That style may well be necessary, given the dynamics involved when working in groups,” says the study.
Workers feel motivated to share the responsibilities of their team. However, as the authors note, this can also provide “another way for people to cut their individual risk by sharing decision-making with other individuals in the company.”
The authors warn that modern approaches to organizing work may wind up failing in Latin America because of historic rivalries between management and labor during the region’s industrialization process. Sometimes, managers have been accused of exploiting workers. However, this situation changes radically when there is a threat coming from outside and, for example, foreign investment threatens local employment. Whenever that happens, Latin America’s sense of nationalism surges, along with its sense of unity that provokes “the desire to manufacture higher-quality products and use technology more efficiently,” says the study. “Both those goals force senior management to learn how to share information with employees.”
Latin America could benefit from any cut in labor costs that might result from creating more flexible labor contracts. However, it will be hard to convince workers to accept those sorts of conditions. Although many workers have only one option when they go looking for work, the most highly valued employees are, logically, those who work full-time. They receive benefits and promotional opportunities not provided to part-time employees.
The lack of geographical mobility is another challenge for both executives and employees. Some Latin American executives push for their companies to expand beyond borders, and they take responsible positions outside their homelands. However, most executives prefer to stay close to their nuclear families. In an interview, a senior executive of Coca Cola América Latina explained, “Because of personality and culture, Latin Americans generally lack the flexibility they need. In the United States, families get together only once a year, at Thanksgiving. In Mexico and Brazil, families see each other every Sunday.”
Communication within a typical Latin American organization has a hierarchical and vertical structure in which “information generally flows from above, down to the bottom,” says the study. Managers impose those barriers. Add the fact that subordinates lack a spirit of confrontation, and it’s no wonder that communications are less than adequate. There are fewer horizontal relationships, and authority is rarely delegated.
Their Own Styles of Confrontation
Establishing solid, stable labor relations requires personal contacts as well as friendly, social interaction. According to the study, “courtesy and diplomacy are highly valued in labor relations.” Each Latin American country has its own confrontational style in times of conflict. “For example, Argentines prefer a style that involves mediating between parties in a conflict. Dominicans prefer autocratic intermediaries. Mexicans like a style that involves concern for others.” Beyond that, “during times of conflict, Latin Americans tend to identify with their ‘in-group,’ rather than the entire organization, because they prefer social networks based on friendship.”
When multinational managers behave abusively, workers immediately organize unions and confront the company.
In conclusion, the authors make the following proposals: From a social perspective, they recommend putting workers and their families at the center of any additional benefits that the company provides. They also recommend that the Human Resources staff try to satisfy workers’ basic needs, to assure their success. Finally, they argue that HR systems will become more effective if they support job stability, stronger labor-management relations, and the sustainable development of the company.
They warn, however, that “Human Resources departments will not be able to achieve a strategic position in the companies of the region until they demonstrate their direct contribution to overall organizational performance.” The performance of HR departments must be viewed from a cultural perspective. Their challenge is to learn how to use culturally determined Human Resources practices – whose manifestations are hard to predict – and base them more on the organization’s social structure than on its economics.”
Wharton - University of Pennsylvania |