Ineffective management is wasting the work of close to four-fifths of mankind. We could all do better by tuning into reality: most people in countries like Brazil and India are not Americans or northern Europeans and should not be managed as such. We all know trust is essential for teamwork and for agile business decision-making. However, generalized trust in contemporary Germany is about three to six times higher than in India or Brazil, respectively. Even southern Europe fares at only about half the German level of trust. Western management calls for objective and impersonal rules under the supervision of skill-based selection of managers. However, where people spend a larger share of their lifetimes growing up in tighter clans, as they do in Brazil and in India, relationships are more deeply personal, objectivity is foreign and trusting non-clan members faces a steeper slope.
Business is always turbulent and nowhere is business happy with ambiguity. However, in the western world, a swifter administration of justice turns business more predictable. On the other hand, in countries like Brazil and India, business operates in a far less predictable environment and people seek to navigate through uncertainty along the webs of personal trust, such as are borne within clans and through negotiations across clans.
Clan-styled management is functional in clannish societies because the trust in outsiders is low. Managing people from clans involves subverting mainstream management teachings, from recruiting to retirement.
For instance, in clannish societies, staffing procedures seek to blend existing trusting networks into the corporation by emphasizing hiring by affinities rather than by skills, this is why hiring by internal referrals reigns in Brazil and in India. Here, hiring from the market based on objective skills assessments also secures staff who will be the most competent money can buy, but their effectiveness at work will take longer to fulfill its promise because they will not be as easily trusted once they join existing work teams.
Hiring by affinities calls for a trade-off on skills, but on the job, training takes care of much of the rest. Building skills at work is quicker than fostering trust where trust, and trust is only granted over long periods of acquaintance. These long periods of acquaintance also turn team members into watchdogs who stamp out disloyal behavior; consequently, alignment and organizational citizenship behavior requires less rules, supervision, and incentives.
In clans, preferred leadership styles are also different. Clans favor more paternalistic styles of leadership and the reward structures, also embedded in careers, are likely to reflect loyalty and seniority more readily than the individual’s certification of skills. This does not necessarily mean the death of meritocracy, but it re-signifies meritocracy in less egalitarian societies where opportunities are less equally apportioned and the effort put into similar achievement may carry greater weight.
Mainstream western management does not show much concern with people when they reach the retiring age. Clans differ on this too. In clans, people are frequently reassigned to less demanding functions as they age. While this may sound a waste to mainstream management, among clan members, this care sends a strong signal calling for greater engagement among the young, who perceive the respect and care with which they will be treated as they age as well.
In countries like Brazil and India, one can find highly effective clannish organizations run by people who have not come close to an MBA certificate like the Brazilian Samba schools and Mumbai dabbawalas. Some of these organizations have even become international, like the Palanpuri diamond traders. I would go as far as saying that in countries like Brazil and India, some of the clannish traits have percolated to the local organizations that are believed to be modern because they fit more snuggly into the American paradigm. In countries like Brazil and India, we would at best have hybrid organizations and that's may be why they are found lacking in proper management when measured to the American managerial yardstick.
Too few of the local organizations in Brazil, India, Africa, Asia, and even in southern Europe, would fit into an American management paradigm, and this is why they fall below the radar and confirm why westerners believe that American management rules.
The problem at hand is that the business schools in close to four-fifths of the world have lazily bought American management as if it were the only way to manage.
In attempting to look like American business schools, they have thrown the baby out with the water, and the business clients they cater to may remain forever less productive than they could be if they practiced clan-styled management.