Brazil and China share interesting ways of appointing business leaders.

Alfredo Behrens1
July, 2009

When it comes to business leadership, management textbooks do not question that the business
manager must be appointed by the shareholders. Because the practice has worked well where
most of the management thinking has taken place, it is considered the appropriate way to appoint
leaders of subsidiaries too. There, however, the workers may respond less effectively to managers
chosen by people who do not share the national culture.

Two decades ago Jack Perkowski realized that the Eastern Dragon was awakening and he had
better be among the first to move in. He figured out that transportation was where the action
would be and that owning an auto parts industry would be the accessible way to surf the uplifting
trend. With a Harvard Business School degree and some investing banking experience, Mr.
Perkowski raised capital and in the mid nineties founded Asimco, in China.

Joint ventures were the rule then and not speaking any Chinese did not help Mr. Perkowski in
spotting suitable local partners. But in at least one of his initiatives he got particularly lucky by
investing in a company that came with a competent manager: Li Jienan. This man would eventually
retire, opening the always hard-to-plan-for succession issue. Yet Mr. Li suggested the unthinkable
to an HBS graduate: an election among the workers to determine his successor.

Mr, Perkowski still did not speak any Chinese and was at a loss to suggest an alternative to an idea
that did not fit any management textbook. He took a deep breath and decided to trust the
manager who had done so well for so long and agreed to his suggestion to hold an election by the
workers to determine who would run the company.

As it turned out, the man elected was whom Mr. Li would have chosen in first place. So a
perplexed Mr. Perkowski asked Mr. Li why go through all the fuss and the risk if the outcome
would have been the same? Mr. Li replied that by proceeding to the appointment through an
election, all the workers had been given a fair chance to decide who they would be run by, playing
moot the argument that others candidates would have been equally or more deserving. Now ‘the
new general manager can begin with a united factory.”

1
Professor of Cross-Cultural Management with FIA, International MBA. Alfredo may be reached at
ab@alfredobehrens.com or through the phone +55 11 38280554.
 Mr. Li’s wisdom seems so obvious that one wonders
why that decision is not practiced more often. Perhaps
it is because the management of organizations has its
roots in the management of armies, where soldiers
could be expected to vote more emphatically for
generals less likely to send them to death in the
battlefields. Dying for one’s country is not how wars
are won. General Patton knew it well when he argued
that wars a won by making the other “poor damned
Would any of the above have been chosen
bastard die for this country.” Yet, since the enemy is
by his men to lead them to battle?
hard to persuade, dying for one’s country needed to be
glorified to enlist soldiers to fight when they would rather not, that being the reason to appoint
generals without consulting the soldiers. It should be different in for-profit in organizations but
management scholars do not seem to have realized and business leaders are thrown by
shareholders upon workers who can only vote with their feet and leave when they do not like the
new boss.

The Asimco case may be taken for a fluke. But perhaps it is not. That it took place in a collectivist
society like the Chinese one is very telling, for it is in these societies that consensual decision-
making and subjecting the interests of the individual to those of the group are more highly
praised.

Brazil is also a collectivist-oriented society and the founding charter of the very successful
engineering company Promon clearly asks its collaborators to put collective interests before their
individual ones. At Promon, the leader is also chosen by its workers. Not surprisingly, Promon’s
CEO was also chosen the leader that most MBAs, foreign or Brazilian, would like to work for, even
though he was running against successful CEOs, such as those of Southwest Airlines and Wal-Mart.

Perhaps there is a lesson to be drawn from this evidence, because the risk to appoint the wrong
leader is the greatest when it comes to managing subsidiaries. Then, a worker is less likely to share
headquarters’ own culture. A worker works more effectively under leaders better attuned with
the workers’ culture than the leaders foreign owners would normally choose; unless they are
foreign owners like Jack Perkowski, who might agree that his company could be better managed
by a man appointed through an election.

Read more in:

Perkowski, Jack. Managing the Dragon. New York, Random House, 2008.

Behrens, Alfredo. Culture and Management in the Americas. Stanford University Press, 2009.