Nearshore Americas

Why the “Command and Control” Model of US Management Fails to Work in Latin America

Just because US music, fashion, and entertainment have long since permeated and been adopted by Latin America, don’t think that the US corporate style of management enjoys the same reception.  Latin America has its own management style that is as different to the US management style as France’s is to Germany’s.  “I recently saw a situation where a company brought in a top manager from outside the region who was put in charge of a group of executives from the home country that resulted in 25 percent of those executives leaving the company,” said Jane Siegel, a senior scientist at Carnegie Mellon’s Silicon Valley campus.  From 2000 to 2009 Siegel directed the Information Technology Services Qualification Center at Carnegie Mellon’s School of Computer Science before founding and directing ITSqc, LLC a Carnegie Mellon spin-off company that promotes “best practice models for the global IT-enabled services industry.”

Little Assimilation

Although both our interviewees acknowledged that there is cross-pollination between US and Latam management styles, there has been no hegemonic wave of US corporate management style that washed over Latin America resulting in assimilation.

“Part of it has to do with where a country is in its economic development cycle, and a lot of it has to do with the way a country was colonized,” said Arie Lewin, professor of strategy and international business at Duke’s Fuqua school of business and Executive Director of the Offshore Research Network project (ORN), a project shared by nine research universities around the world that collects data from 2,000 companies more than 600 services providers.

He points to giant consumer goods company Procter and Gamble (P&G) as an example of force-feeding a US driven management ethic. “P&G is trying to do it the American way in Brazil and they really have to do it the Brazilian way.  The company has already learned these lessons from adapting their operating model in places like Japan, but for some reason the lessons don’t seem to be carrying over,” he added.

Lewin went on to note that P&G is trying to make local market critical decisions in Brazil from a regional base in Panama and having a bit of a struggle gaining market share for some of its products against national powerhouse brands.

“The senior executive has the personal obligation to protect subordinates, and even take care of the personal needs of workers and their families.”   

Fraternal vs. Resource Unit – Major Differences

Lewin pointed out that corporations in Latin America are not so preoccupied with highly compartmentalized roles that “are as independent as possible and made to require the least amount of coordination,” like their United States counterparts.  He said there is not as much focus on having every job fit a marketplace offering so an employee can be viewed as a resource unit to be inserted or extracted, sort of like in a pure command and control structure.

And that changes how HR functions within the corporate schema according to Siegel, “HR seems to be a lot more personal, they [HR] know who knows what [beyond job titles].  It is more collaborative; people are brought into work as a team and the team is expected to have redundancy within it.”

Protecting Subordinates

And it is not just HR that seems to be more personal, high level executives at Latin American companies are said to have a more paternal role.  The book Managing Human Resources in Latin America written by Anabella Davila, PhD program director at Universidad de Monterrey, and Marta Elvira, Academic Dean at Lexington College, explains that “The senior executive has the personal obligation to protect subordinates, and even take care of the personal needs of workers and their families.”

That familial touch may lend to less rigidity in the organizational structure and a freer flow of ideas from the bottom up.  Siegel says she has seen proof time and again, “I have been to company town hall meetings with hundreds of people where an operational, technical or secretarial employee, maybe two years out of school, will approach an executive with a warm physical greeting and an idea.  It is a very different communication style.”

That experience by Siegel calls into question the findings of the Power Distance Index, an index that “measures the extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally,” according to the index.  If we assume that employees of an organization would be less likely to share ideas if they felt power were distributed unequally, then employees in Latin American countries (many of which rank high in the index) shouldn’t be so open to share ideas with upper level executives.

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If the warmth of a society, less compartmentalized job roles, and a more a more paternal executive mindset actually do contribute to bottom-up idea generation and innovation, it is hard to prove.

“There is no question American companies are more efficient,” said Lewin when comparing them to Brazilian companies.  He said even though Brazilian firms will always get the job done their style is to be “over committed and behind schedule.”

Jon Tonti

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