Managing the lower classes

It takes a lot of hutzpah, perhaps even to the extent of psycopathy, to leave the corporate trove in the hands of a lowly-paid secretary. That is what Brazilian Odebrecht did and the mistake cost the company the largest corruption-related fine in business history: $3.5 billion.

But the mistake was not that miss-match of status and responsibility, which happens frequently in class-ridden Brazil, but not protecting her when she felt threatened by the police on a corruption probe. That was Odebrecht's people management mistake.

Why did it happen?

A heir with an inflated ego took over Odebrecht from his father - hardly an angel either - and multiplied Oderbrecht corporate revenues 130 times; see graph below.

Of course such growth in the real world requires shortcuts and the boss did not hesitate. He structured a bribing operation in defiance of all legislation, national and foreign, and left it to be handled by Maria Lúcia, an employee who had not made much of a career from her early beginings as a mechanographer -four decades earlier (Edition: typist is probably a better definition of her entry level position -see comments below).

The boss must have believed Maria Lúcia owed all to Odebrecht, to the extent she would never betray him. But jail was too high a price for Maria Lúcia to pay when she felt abandoned by the boss; so she spilled the beans.

Maria Lúcia, the secretary who forced the Odebrecht empire to bend its knees.

Headline in O Estado de São Paulo, a leading Brazilian newspaper.

Why did Maria Lúcia feel abandoned?

Odebrecht has a paternalistic style. They like to speak of themselves as a family. Family members take care of each other; except that close family members come first, particularly on matters of finance. Maria Lúcia's humble origins would have disqualified her to become an in-group within Odebrecht, a corporation which grew out the Brazilian Northeast, where class differences are a birthmark.

Ali Baba's 40 thieves were chicken feed

When the corruption probe got serious Odebrecht extended its legal protection to almost 80 corporate executives which would take part of a leniency agreement with Brazil's prosecutors. Odebrecht sort of forgot her old time secretary, who must have felt she had been left-out as a piranha steer. This is a legendary Brazilian rural practice consisting of offering a steer to the carnivorous piranhas when crossing a herd of cattle through a piranha infested river. Reckoning her humble origins, the former mechanographer must have thought that the boss considered her expendable. See her below beeing taken in by the Brazilian Federal police.

People management in Brazil, as in most clan-based organizations in emerging markets, bears the sign of class-ridden societies. A paternalistic-style of leadership is preferred, but it must be, or feel, authentic. When doubt is instilled by shady managerial behaviour, employees of humble origins - the vast majority - will feel managed as in a Last In First Out inventory management style - and they will take care of themselves first too.

Brazilian society is remarkably distrustful. Generalized trust in Brazil loses to all in Latin America except for Colombia - which is coming out of a half a century of civil war. See the graph below which, based on World Values Survey data, shows that Brazil's level of trust runs at about 20% that of the American one. That enough should suggest that people management in Brazil must follow a different path than the American one, even in companies not run by thieves.

The level of trust is higher in India and China, but I bet distrust will set in as those countries urbanize and community-based links are eroded in urban annonimity. There is a lot to learn from the Brazilian experience, not only to manage people in Brazil but also in many more emerging markets.

Read more in Culture and Management in the Americas - Stanford University Press; also in Portuguese by Saraiva, where you may also read Fuzilar Heróis e Premiar Covardes, by Bei. This last book too will be available in English later in 2017.

Ask me for more, or hire me for public speaking in English, Spanish and Portuguese at AlfredoBehrens.com