You would not attempt to solve a crossword puzzle in many languages, would you? Similarly, why would you hire from the market?

Where families are tightly knit, societies are oriented towards groups. The frequent and intense family relationships train people to interpret subtle signs, to detect inconsistencies, to tune in to accepted behaviors. People become artists in interpersonal relationships. But it takes time. The time that it takes is what allows trust to be built, or not. 

Yet, time to adjust and trust is not what people have when people belonging to different groups are thrown in to work together. This is the reason behind the ineffective teamwork patterns at corporations where people are selected from the market mostly for their competencies.

That is how people are selected in America. That is what the managerial wisdom received from abroad, and espoused by most prominent local BRIC business schools tell us to do. But the context here and there is different. What works well in America, works less well in Brazil or India, where trust must be earned because it is never granted to outsiders. In these countries, we might be exquisitely polite, but we are not trusting as people are in America. We take longer to feel comfortable with the other.

No amount of expensive team-building exercises deployed on hires from the market will promptly deliver the neat array that internal referrals offer in terms of fit. Assembling teams with people hired from the market is like attempting to complete a jigsaw puzzle with pieces from different games. The shapes might fit, the picture will not. That is why you are unlikely to see a crossword puzzle with many words drawn from different languages. There must be enough in common for the puzzle to have a solution.

Naturally, where competencies are paramount, hiring from the market makes sense. I would not be comfortable being operated upon by a surgeon I know is there mostly because she is a friend of the hospital manager. But even at the operating room, fine tuning between people is essential to success. Team effectiveness takes time to develop, more so where people are of a collectivist bend.Therefore, in societies like Brazil, China or India,team effectiveness requires that the hiring emphasis is placed in bringing into the corporation the proto-teams that already exist outside of it. Because people come with trusting networks, it is easier to build work teams out of those networks than to hire from the wide market and then to try to build the trust which readily exists between people who have known each other for long.

This, alas, is the secret of the success of Brazilian Samba Schools, orthe Mumbai Dabbawalas or of the Palanpuris in the diamond trade business. The teams were already informal teams before they were folded into organizations. The importance of affinity-based teams becomes more evident in high-value globally traded goods and this trusting relationship is what makes the global network so effective; market-contract relationships make little sense when trust is all that is necessary, or even mandatory. 

Character assessment is time-consuming, it requires more time than a corporation may devote to it. This is why, once a collaborator’s character has been revealed, to the required level of trust, it makes more sense to hire through that collaborator’s network than from the market. 

Established but low-performing corporations can increase performance by re-creating the engagement wonders of start-ups, Samba Schools, Dabbawalas  and Palanpuri diamond traders. Corporations can do this by emphasizing hiring by internal referrals to build trusting self-managed teams. High-trust teams develop ownership and pride, which is what drives performance. Effective autochthonous organizations show us the way, which we have lost by emulating management techniques out of context.