Research Projects

Culture & Leadership

National culture and productivity in Brazil

We face a challenge as a nation. Our national culture contains elements that have a strongly negative relationship with productivity. Contrary to statements that are based on common sense, low productivity is related more to the impact that Brazilian culture has on management and its consequences in organizational terms than to the low level of education of the workforce (Migueles, C. & Zanini, M.T. (orgs) 2021).

This culture has three striking characteristics: a high concentration of power and its discretionary use at the top of organizations; little interpersonal and institutional trust; and an over-focus on the short term. The three main consequences of this model are: a limited capacity to add value to the production process and create quality; low capture of the collective intelligence; and high transaction costs and high perceived risk in producing medium and long-term value.

The distance between the prescribed task and the actual task is large in this context. This affects the quality of the operation, even though it is invisible, and generates the perception at lower levels in the hierarchy that their superiors, the mid-level managers, are their enemies and there to make their work difficult. In practice, this resistance ends up breaking the bonds of spontaneous cooperation and trust. Understanding these factors and how they act in each organization is relevant for developing change management processes that focus on specific issues and are capable of producing the desired results.

In the case of organizations in Brazil, our in-depth research found barriers to excellent performance that are linked to aspects of our historical, economic and political formation, but which it is not appropriate to go into in depth at this time. It is worth noting, however, that among these aspects are points that are critical for excellence and that form the so-called “organizational liabilities”. We list some of them below:

1. A tendency to high power distance and ready acceptance of inequality;
2. A short-term focus;
3. Poor personal discipline;
4. Reactive, short-term planning;
5. A tendency to avoid uncertainty;
6. Victimism;
7. Fatalism.

There are, however, factors of Brazilian culture that can go o make up organizational assets, as is the case with:

1. Flexibility;
2. Creativity;
3. A tendency to cooperate;
4. Active and collaborative interaction:
5. Little resistance to management efforts to change when trust is established for this end.

If we have a society in which the distance between the top and the bottom is large, and there is a very high aversion to uncertainty, a focus on the short term and low confidence, these causal factors need to be opposed if we want to perform better. A focus on “behavior” is typical of segmented approaches, which are the opposite of integrative approaches, which are able to bring about real change. This is the main source of resistance to change.

Contrary to what it might seem, focusing on removing these deeper causes that we diagnosed produces faster, longer-lasting, and more profound results than superficial behavioral approaches. But the way to bring about this change is through learning and participation that combines strong discipline in terms of results with increased flexibility for testing new ways of working. This approach simultaneously enables leaders to be developed and high-performance teams to be formed.

Observation: The content of this site was written by Professors Carmen Migueles and Marco Tulio Zanini, and they alone are responsible for it.

Human Factors in Risk Management

Objectives of the research line

The objective of the Human Factors in Risk Management Project is to generate and share knowledge, best practices, and impact methodologies:

• in risk losses and unmeasured losses;
• in a reduction in accident rates;
• in an increase in the competitiveness of Brazilian organizations;
• in improvements in risk governance and a reduction in possible impacts on the external environment (society and the environment) and the internal environment (work-related accidents and occupational diseases).

Applied research in human factors in risk management

One of the main objectives of CESGRi is to develop methodologies that are able to improve safety, productivity, and innovation through the appropriate treatment of the intangible factors that affect the social organization of work. This will ensure that the social aspect of complex socio-technical systems contributes in a structured way to the results, and helps with the development of evidence-based intangible asset management.

Intangible factors, such as culture and a tendency to trust others, act as informal and flexible coordination mechanisms that are hidden under the formal structures of organizations, and this has either a positive or a negative impact on the ability of individuals to cooperate in order to produce results. The management methodologies that were developed in other historical and cultural contexts (such as American and Japanese methodologies) do not give the same result when replicated in other contexts. The reason is that these methodologies are not culturally neutral and work well where they were devised because they adapt adequately to the local culture and institutions. They are the product of local efforts to solve concrete and observable problems, and when they give the expected results, they end up joining the list of management solutions as if they were applicable and replicable solutions in any context.

With previous research we were able to confirm that adjustments are necessary for constructing knowledge and methodologies that are suitable for meeting the challenges we face, or adapting so that imported management methodologies work as we would wish in our particular cultural context. Continuing with this research we were able to isolate the three dimensions of national culture that, together, act as an intangible liability in our economy, something that drains teams of time and their energy, and has a negative impact on competitiveness and the ability to innovate and act safely (Migueles, Zanini, & Lafraia, 2019; Zanini & Migueles, 2018). Research in organizations that have reduced the negative impact of these factors proves that in terms of the culture of organizations it is possible to mitigate these impacts by making way for the construction of intangible assets (such as trust and horizontal coordination that facilitate innovation, knowledge management and the production of desirable results in safety management and HSE).

There is little research on this topic in organizations and this hinders efforts to recognize, analyze and address these factors, and this is essential for introducing new management models and improving on existing models so they become suitable for our context and have a greater impact on the results of Brazilian companies.  A lot of effort went into finding shortcuts using existing methods, toolkits, dashboards, and others, but for them to be successful we need to understand the real objective conditions within which decision-making processes take place, leaders act and teams learn

Observation: The content of this site was written by Professors Carmen Migueles and Marco Tulio Zanini, and they alone are responsible for it.

Segurança em Sistemas de Governança Híbrida (Terceirização e Integração Inter-firmas)

 Presentation and justification

The average accident rate involving professionals working for outsourced companies is still disproportionately higher than that of the hiring company. Ensuring co-evolution in safety outcomes is a risk management frontier in Brazil.

We first began to see hybrid governance emerging in the 1970s when the exponential growth of companies and their operations made centralized control and management inefficient in the face of the increase in business complexity. Alliances, partnerships, mergers, and acquisitions, in which some degree of autonomy is guaranteed to those that are acquired, and activity outsourcing are among the main arrangements in this topic. Coase (1937), Davis and North (1971), and Williamson (1979, 1999) were the first to start studying modes of governance that are complementary to contracts between firms in markets. They analyzed the new topology of these arrangements, the specificity of the transactions in each business, and the costs and risks associated with them. Starting with more classic governance arrangements, such as the market and hierarchy, Williamson (1994) observed the emergence of intermediate forms of governance, and analyzed the complexity of these arrangements, and found how difficult it was to analyze them using simplifying strategies. Because they have unstable characteristics, he called them “hybrids”.

The role played by the national context within which these solutions emerged, and by national culture and institutions in the initial shaping and development of these arrangements has yet to be adequately studied. Our research demonstrates that the configuration of Brazilian arrangements has had a strong impact on the topology of interactions between the firms that are found here, and continues to undermine our ability to increase value production and safety in supply chains. Formal contracts are incomplete by nature and represent a poor reduction of the reality and numerous alternative alignment efforts are needed for these arrangements to reach their full potential. The studies undertaken in the 1980s and 1990s made it possible to differentiate between hierarchical and hybrid structures more clearly. While the former are facilitated by the clarity that exists in the relationship between property rights, command rights, and management, the latter constitutes the interdependence there is between assets and interests, where only some of each firm's transactions form part of the participating firms. When this intersection is clearer and more oriented toward producing value, it becomes easier to work with interests that are encapsulated for generating trust and cooperation. The issue of safety falls clearly within the area of the intersection of interests and its joint treatment can generate innovative solutions for these relationships. Analyzing these relationships makes way for innovation. It enables a more rational review to be undertaken of the way in which the combination of resources and the sharing of a subset of decisions emerged and evolved during the course of the relationship, with a strong interaction with institutions in each society, thus offering new prospects for combining resources. Many of the specificities expressed in the legal arrangement, in the evolution of the ways in which production is organized, and in the history of each society, have an informal and often unconscious influence on these contracts, rob them of their rationality, and reduce cooperation.

Hybrid governance can include a broad portfolio of inter-company collaboration, in which property rights remain distinct and joint decisions are taken, which requires a specific coordination mode (Ménard, 2005).

Brazilian specificity and its impacts on our practices

Outsourcing activities as a management practice emerged in the 1980s in order to reduce the administrative complexity of companies that grew in the wake of the integration of economies in the globalization process. Outsourcing became one of the main forms of hybrid structure, and is the one that is most frequently used for organizing activities in the oil and gas sector in Brazil. It emerged in the middle of a movement called “streamlining”, which sought to combine a reduction in errors and fixed costs with reducing management complexity. Some organizations at the time were seen to be expanding far beyond their core activity, and becoming enormous, which was an aspect of risk it was important to reduce. Oil, metallurgical, and other companies in Brazil and the world had more drivers, cooks, cleaners, maintenance technicians, and other professionals than many of the companies that specialized in providing these services. In difficult situations for the specific sector, the risk to the business increased; in addition to the professionals who were needed for the core activity being underemployed, there was also an entire population of support services doing nothing.

If several companies were to share these services this would increase the economic rationale behind allocating these people and create companies that specialized in these areas. This would theoretically provide better services and create growth opportunities, with specific careers emerging in all these areas. This would, in turn, provide the professionals who were allocated to work in companies in which their skills were central to the business with the opportunity to develop and grow. In more mature economies and more egalitarian societies, this process occurred more smoothly and actually increased the social division of tasks, which facilitated the development of new specializations. Hybrid governance increased initial costs in some countries given the need to create new administrative structures and to remunerate capital along the chain, but this increase made sense in relation to the gains in terms of the reduction in risk and complexity.

The context that led to the emergence of outsourced service companies in Brazil was different. In a context of strong inequality, employees in companies with strong unions had disproportionately higher salaries than other citizens, in the same professional category, but without union protection. The cooks, cleaners, drivers, and others in metallurgical companies, and in the oil and petrochemical sector, etc., had wage increases guaranteed by collective bargaining agreements. When they were taken out of these sectors, however, outsourcing made it possible for there to be very large reductions in the cost of labor in the main industrial sectors in the country. Companies offering outsourced labor have become synonymous with precarious working conditions and the poor quality of the service provided. Continuous pressure to reduce costs has created two castes of employees: own employees and third-party employees, who have very different rights and salaries. Hybrid governance in Brazil is developing in parallel with other social and historical processes that affect not only its format and regulations, but also the evolution of internal integration processes.

We have recently observed another phenomenon in the oil and gas sector: the separation between owning platforms, and operating and managing them, which is now being done by multinational companies that bring with them risk management methodologies that require specific adjustments to be made to the cultural and institutional challenges we face. The challenge posed by inter-company integration in Brazil is poorly understood and the health and safety results of third-party companies are witness to the difficulties encountered in advancing this knowledge in order to achieve greater operational safety and better ESG fundamentals. When operational risks are badly understood this can translate into badly dimensioned socio-environmental impacts. We need to understand the challenges of integration and management and develop methodologies that are capable of reducing the associated risks.

Observation: The content of this site was written by Professors Carmen Migueles and Marco Tulio Zanini, and they alone are responsible for it.

The Governance of Multiple Stakeholders

Growth in the scale of engineering projects and in the size and complexity of organizations has not been accompanied by the development of governance solutions that are capable of truly guaranteeing that the interests of stakeholders are taken into account in decision-making processes and management priorities. Recent major accidents in Brazil have revealed significant flaws in the process of building and sharing the information and strategies that make it possible to understand risks and the urgent need to mitigate them.

Balance in the relationship with stakeholders

Developing organizational competence for acting cooperatively with various stakeholders (shareholders, employees, and surrounding communities) is a critical factor for reducing business risks.

There is a great opportunity to work on this element in order to improve the experience of the values and the management culture on which they are based. This generates a cohesive and coherent people management strategy that is aligned with HSE projects, in which admirable profit is the result of the work. of an excellent community in which each individual can, indeed, make a difference. The justification for this can be found in efforts to seek a positive compatibility between long-term economic and social sustainability, and short-term economic efficiency (see Figure 1 below).

Figure 1. Positive compatibility between short- and long-term actions

The objective of this line of research is to investigate the governance model and its ability to promote congruent interests by aligning the multiple stakeholders of the organization in a search for opportunities for improving collaboration and cooperation in safety and risk management.

Observation: The content of this site was written by Professors Carmen Migueles and Marco Tulio Zanini, and they alone are responsible for it.