Business Culture in Latin America

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Business Culture in Latin America:
The cultural values noted in the article on Latin American culture have important implications for the workplace. The following are some ways Latin American beliefs and practices differ from what is common in the business environment in the U.S.

First, the high Power Distance (PD) that Hofstede noted in most Latin American countries has important ramifications. In practical terms, high PD means that social courtesies and formality are more important in Latin America than in the U.S. Latin American managers are expected to be more gracious and respectful than their U.S. counterparts, and the hierarchy is more noticeable For instance, while U.S. managers generally call employees by their first names, it is much more common in Latin America for managers to call employees señorita Martínez or señor Ramírez. Also, people in the Latin American workplace tend to use usted (Ud.), the formal “you,” rather than tú, the informal, “you,” when addressing others, and this applies to both supervisors and lower-level employees. When two members of the executive board converse privately, they may call each other “Jorge” and “Ana,” but in front of employees they are likely to switch to calling each other “señor Zapata” and “señora Gómez.” Finally, Latin American managers typically dress more formally than their U.S. counterparts, and are less likely to work beside their employees and “get their hands dirty.”

In addition to courtesy and formality, it is important to note how a high PD rating affects the way meetings are organized. One Mexican manager commented that meetings in Latin America are typically not thought of as a way for supervisors and employees to exchange ideas. Instead, information flows primarily from the top down in meetings. In other words, it would generally be considered inappropriate and disrespectful in Latin America for an employee to correct a supervisor or make a suggestion in front of other employees. At meetings, supervisors expect subordinates to listen attentively, more than offering input.

Similarly, participatory management styles and employee empowerment are unfamiliar to most Latin Americans, and in many cases are perceived as neither helpful nor desirable. In some instances, global companies have successfully implemented these kinds of managerial techniques in Latin American subsidiaries, but in other cases attempts to solicit employee input and involve workers in decision-making have been met with hostility. One American manager of a factory in Guadalajara, Mexico was told point blank by the head of a local labor union to stop involving employees in decision-making and asking for their opinions. He told her pointedly, “You are in charge. You make the decisions!”

The deference afforded to managers often has an impact on attitudes toward formal rules and regulations in Latin America. Persons in authority are more likely to be obeyed than a written policy, because of the respect they are given and the position they occupy. This attitude contrasts with the U.S., where most people tend to believe that rules should be applied impartially and without exception, in order to ensure fairness and justice.

You are likely to observe all these results of high PD when you visit Latin America, but as you prepare to go to Nicaragua, keep in mind a principle presented earlier: variance within a culture. While Hofstede does not provide Cultural Dimension ratings for Nicaragua, the numbers for Nicaragua’s neighbors are fascinating: Panama and Guatemala both score 95 on PD, and are among the most hierarchical societies in the world, but Costa Rica scores only 35, which is a lower PD rating than even the U.S. earned. For that reason, it is important to be sensitive to how hierarchies play out in Nicaragua specifically.

In addition to PD, it is important to mention the low Individuality (IND) rating that predominates in Latin America. In the workplace, low IND means employees tend to value harmony and good relationships more than personal advancement, and are expected to be loyal, hard-working, and willing to do whatever they are asked to do. In return for their hard work and loyalty, Latin American workers generally expect their employers to be loyal to them as well. Because of the group orientation, the employer-worker relationship tends to be more paternal in Latin America than in the U.S. Latin American firms typically treat employees as a sort of extended family, which often involves a wider range of benefits, such as subsidized or free lunches, more inclusive medical coverage, and holiday bonuses.

Another cultural contrast between Hispanic countries and the U.S. has to do with attitudes toward technology and change. It has already been pointed out that most Hispanic countries score very high on Uncertainty Avoidance (UA), which suggests that most Latin Americans prefer security and avoiding risk. This may help explain why technology is not as prevalent in Latin America as in the U.S. To be sure, poverty is part of the picture, but Latin Americans tend to be less enamored of technology for technology’s sake than many Americans. Due in part to the high UA rating, many Latin Americans perceive less of a need to upgrade, modernize, and replace old technology with cutting edge products. This may affect a given entrepreneur’s attitudes toward technological upgrades, adopting new computing systems, etc. One notable exception to this principle is the use of cell phones—due to infrastructure and bureaucratic issues associated with land lines, there are more cell phones in most Latin American countries than land lines.

Lastly, the importance of family and personal relationships also impacts the workplace. For example, it is more common in Latin America to seek employment with family members, hire family members, and look to the family for help in times of need. In addition, many Latin Americans feel more comfortable doing business with people they know personally, and developing that relationship is often considered an essential first step. Americans who try to move things along more quickly and “get to the point” may become frustrated and/or offend Latin Americans. This means that establishing business contacts and closing deals are best done in person, and may take more time than is customary in the U.S.

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