In this paper you will examine how a leader would address communication breakdown in the context of cultural difference found in “On Trial” dilemma.

I Academy of Management Executive, 1994 Vol. 8 No. 1 -'^iJ'^'^!a^^

Thinking of a plant in Mexico?

Mariah E. de Forest

Executive Overview With the tripartite U.SJCanada/Mexico North American Free Trade Agreement (NAFTA) now signed hy the principals and approved by Congress, it will be of interest to see whether the dire prophecies about the impact ol this treaty will come true. For example, it has been predicted that U.S. manufacturers will take advantage of low Mexican wage rates and move their operations wholesale to Mexico, and that Mexican industries such as textiles, paper, lurniture, petrochemicals and auto parts will take a beating because of a flood of better-engineered American products coming to Mexico without tariHs.

While we may reasonably expect that both predictions will come true to some degree, the important point is that many U.S. executives will not be considering a plant in Mexico. For efficient and profitable operations in Mexico, a U.S. company must work within Mexican behavioral expectations and avoid overbearing superiority. Only about ten percent of American maquiladoras' are actually efficient and profitable by U.S. standards, according to Banco de Mexico. Many of the other maquiladoras manage to get by only because of low wage rates. In my view, maquiladora success and profitability would be more widespread if their parent companies and plant managers took Mexican values into consideration and were more sensitive to Mexican mores.

Mexican workers and managers welcome their exposure to American business methods, and are eager to adapt when given ihe opportunity.

The opportunities for American business in Mexico are great.^ But the actual job of managing a Mexican fabricating or assembly plant is a challenge for even the best of managers—because not only must the production get out on schedule, there is the added twist of dealing with a different culture and language. For example, believing that a good grievance system was the ticket to preventing labor problems from blowing up in his face, one American manager in a steel conveyor plant in Puebla^ installed a three-stage system in which complaints would go first to the immediate supervisor, then up the chain of command, with strict time limits and the guarantee of prompt management response. Since no grievances had ever arisen from the floor through this new grievance process, the manager was astonished one day when the entire plant walked out. Unlike their more assertive neighbors to the north, Mexican workers typically avoid directly confronting their superiors with complaints because such behavior is considered seriously antisocial in the context of a basically authoritarian society.

In comparison with U.S. workers, Mexican workers may not follow through on tasks, they tend to be activity oriented rather than problem solvers and appear to assume that companies exist to provide jobs rather than to make a profit. In

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Stepping out onto the typical Mexican plant floor, a visitor is immediately impressed by the cordial and good natured atmosphere. This impression is not misleading— characteristically, the Mexican desire is for harmony rather than conflict.

most instances, however, these behaviors are simply the result of the French- style, rote-learning Mexican educational system, as well as years of economic protectionism, rather than fatal flaws in the Mexican character. Having grasped this fact, it is a small step to undertake training of Mexican managers and employees specifically designed to teach goal-oriented work, problem-solving skills and the importance of initiative and profitability. Mexican workers and managers welcome their exposure to American business methods, and are eager to adapt when given the opportunity. It is only when Mexicans are asked to adapt to values that conflict with local beliefs, customs, norms of respectable behavior, and views of the proper role of authority that problems inevitably arise.

Job Expectations Mexican firms have tended to reflect the same traditional structure as the government, the church and Mexican society itself. Most have a rigid hierarchy, with power vested in the person at the top, a position often inherited, or acquired through friendships and mutual favors. Most top managers balance competing interests through consensus rather than engaging in open competition. Mexican firms tend to reward submission, direction, and loyal personal service—remember, personal service—to the person in authority.

After the Mexican Revolution put an end to the old patron system of haciendas and peons in 1922, Mexican labor law endeavored to modernize the old feudal relationship by outlining mutual obligations of employers and workers. Under current law, employers have significant responsibility for the conduct and improvement of workers' lives, assuring their "life, health, dignity and liberty." Moreover, a job is more than just an exchange of money for labor—it is also a social right, just as being an employer is a social and economic obligation.*

It is the interrelation of "paternalistic" employer obligations toward workers, together with workers' duties to the employer—rather than a simple economic exchange—that underlie the unspoken expectations in today's Mexican workplace. When Americans accept that Mexican employees, by law, can and do expect from their jobs something other than just a paycheck or a chance to get ahead, and when Americans respect the employer's admittedly paternalistic social obligation, then good labor and community relations, and efficient operations, follow much more easily.

Seeking Harmony in the Workplace In the Mexican mind, the sense that "all is well" occurs when every rank, from the top down, is in its place, working harmoniously. Stepping out onto the typical Mexican plant floor, a visitor is immediately impressed by the cordial and good natured atmosphere. This impression is not misleading— characteristically, the Mexican desire is for harmony rather than conflict. Compared to the U.S., there is low tolerance for adversarial relations or friction at work. When selecting among job applicants, Mexican employers typically look for a work history that demonstrates ability to work harmoniously with others and cooperatively with authority. Mexican employers tend to seek workers who are agreeable, respectful, and obedient rather than innovative and independent.

United States business embodies such traditional American values as individualism, self-determination, achievement, future orientation, optimism, curiosity, problem solving, and doing more than expected. But traditional

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Mexican ideals stress employee/employer interdependence, mutual responsibilities and loyalty between boss and worker; age, sex and position ranking orders in the organization; collectivism and continuity rather than individualism and change; belongingness and cooperation rather than competition; and not exceeding the boundaries of doing what you're told. Mexican employers tend to reject workers prone to criticize, who take their complaints to a higher authority, who exhibit competitiveness—because these traits disturb harmonious relations, the social fabric.

Equality in union/management relations is valued by employees, management and the union. This norm is sometimes difficult to understand for Americans who are accustomed to union and management often being adversaries. But under Mexican labor law, union and management roles are often complementary and parallel: both strive to maintain a "fountain of employment," one accountable for workers, the other directing the business —although day-to-day relations often fall short of this ideal. Direct management communications to the workforce are welcomed by unions a s a way to cement good relations, and management solicitation of grievances is encouraged. The union cooperates in disciplining workers; management's role is to discipline supervisors. As long a s wages do not fall below the legal minimum, supervisors act reasonably and sports or other social activities are available, Mexican employees view peaceful relations between the union and management a s normal and desirable, rather than a s being coopted.

Ideal Working Conditions Mexican workers generally do not place a priority on working conditions where self-expression, wide latitude of action, and independent responsibility are encouraged. Rather, Mexicans value working conditions where supervisors are understanding (comprensivo), keep their distance and address workers formally, patiently demonstrate a job, yet are flexible enough to lend a hand once in a while. Mexican workers, looking upward from the lower levels of the organization, respond warmly to formal and dignified treatment—in other words, they appreciate it when authority is not abused. Their paradigm of ideal working conditions is the family model: everyone working together, doing their share, according to their designated roles.

Teamwork and cooperation are compelling ideals in the Mexican workplace, but difficult to achieve in reality. Often there are strong allegiances to fellow workers who may be family members, compadres, or neighbors. Nevertheless, Mexican workers respond best emotionally to management exhortations to improve group efficiency or group output, rather than to programs which stress competition with other workers. In practice, Mexican workers often excel when rewarded individually with incentive bonuses.

Minding One's Manners Behavior that is literally counterproductive results from Mexican supervisors' social instincts to mind their manners and preserve the appearance of harmony. For example, maquiladora supervisors may scrap or hide defective work from the preceding department, rather than have to confront another supervisor or report the problem to a manager. Many simply prefer not to get involved. For U.S.-trained maquiladora managers, it goes without saying that relaying information and problem solving are two of the major responsibilities of a supervisor. But failure on the part of American managers to verbalize these priorities often leads to misunderstanding about the supervisor's role.^

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Whether janitor, hopper-feeder or union leader, one's role must be respected as a legitimate and honorable endeavor.

Social manners in Mexico also tend to be more formal and private. An American manager in Nogales kept inviting other Mexican managers and their spouses to dinner at his home on the Arizona side of the border, but they continued to find excuses for not attending. The Mexican managers reported that they resented being invited to admire the American's home and belongings. This was the only explanation they could think of for the invitations. In Mexico, business associates traditionally entertain at restaurants, reserving their homes only for close friends.

The Face of Honor The public image, the face of honor, is carefully observed in Mexico. Putting on a good appearance is tremendously important at all levels of society. A child may quit school because his or her family can't afford good shoes; a new salesman's first purchase is often a proper-looking gold watch. Employees will quit in outrage if criticized in public by their bosses.

Keeping face and minding that of others is one of the reasons for what appears to be excessive flattery, flowery language and other obsequious sounding reference in Spanish conversation. Similarly, status considerations lie behind the pervasive custom of calling people by their titles, rather than by their surnames—much less their first names. Thus, showing respect in a business setting involves keeping a proper distance; that is, being formal rather than friendly, casual and intimate.

Unfortunately, Americans in Mexico are generally oblivious to this daily drama of Latin honor and the sensitivity of Mexicans toward anything that calls their honor into question. The need to save face is what makes it so difficult for Mexicans at all levels to accept criticism and to change; many find it humiliating to acknowledge having made a mistake. Maquiladora management staff meetings can founder for the same reasons—in a Mexican firm, staff meetings often serve as a forum for people to receive orders, rather than to report, discuss and problem solve among managers.^

Role, Place and Status Octavio Paz, the Nobel prize-winning Mexican author and intellectual, pointed out twenty years ago that Mexican thinking is medieval rather than modern; hierarchical and dogmatic rather than pragmatic and open; and ceremonial, formal and ritualized, rather than spontaneous or purposeful. While much has changed since then, it is still often the case that in Mexico's relatively fixed social order people have a particular status and value its observance. Laborers, supervisors, managers, and union officials all honor each other's roles and their relative status or place. Recognizing another's place through symbolic formalities or a bit of flattery is the bedrock of human relations. Whether janitor, hopper-feeder or union leader, one's role must be respected a s a legitimate and honorable endeavor. For example, a union president in a Piedras Negras maquiladora was deeply insulted when an American plant manager failed to introduce him to visitors from the home office. The plant manager regarded him as just another worker, whereas the union leader's place was that of commander of the entire labor force, and, under labor law, possessed equai status with the employer!

In another case, an American manager in a casting plant in Chihuahua habitually wore jeans and rumpled sports shirts, insisted that everyone call him

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Jim, and addressed all the Mexican managers by their first names. Because he felt he was doing a good job of reducing the visible economic and status gap between himself and the Mexicans, he was amazed to hear through the grapevine that the local employees and staff considered him uncultured and boorish. In Mexico, one's level in the management hierarchy is reflected in appropriate appearance—the higher in the hierarchy, the more formal the attire, the fancier the wristwatch, the shinier the shoes.

Americans often note that Mexican managers, usually in business attire, seem to be afraid to get their hands dirty, staying away from the factory floor and sending subordinates instead. American managers, on the other hand, find it more natural to mingle and joke with factory employees, and to attend company functions that include workers. In Mexico, American managers run the risk of being criticized at being too familiar. Nevertheless, we have found that maquiladora workers will respond eagerly to any management actions that communicate real interest and respect for them. Workers find acceptable a manager's mingling with them in the local May Day (Mexican Labor Day) parade, occasionally appearing in the company cafeteria or personally visiting the plant floor from time to time. Such activities, if not overdone, can break down the onerous status distinctions and at the same time correspond to the ideal of harmonious relations in the workplace.

Exercising Authority Mexican workers respond to a person, rather than to any abstract set of work rules, or the exchange of labor for a paycheck. Since workers' lives often amount to being ordered about by people in authority, the desire is that authority be wielded in a kind and sensitive way. Mexican workers typically want to be closely supervised, rather than left alone. If told exactly what to do, they try hard to do it. They, more than their U.S. counterparts, accept their unequal status, simply asking that authority look out for their interests, provide clear instructions and correct them in a civil manner.

Maquiladora workers tend to regard their loyalty bonds with superiors as the key element in job security, rather than any seniority system. These personal bonds are what really determine whether or not workers come to work every day, are willing to work overtime, or work industriously when they are at work.

Maquiladora supervisors are as proud to be working for an American company as is the workforce, and this attitude forms a very positive foundation for management-supervisory relations. Supervisors are called empieados de confianza (confidential employees), which refers to the personal relationship between them and their superiors, rather than to a specific job function. The Mexican supervisor's role is to exercise authority within the hierarchical system of loyalties, and that power is exercised personally.

A supervisor explains why something is to be done or even how it should be done.

In the Mexican experience, power flows down from above; so, whatever other duties a job may entail, what the supervisors actually do tends to be what has been specifically authorized by the boss. It is confusing to maquiladora supervisors if American managers insist that supervisors earn authority and respect from the workers, or show initiative in solving problems. A supervisor's authority cannot be shared (or earned either)—because he or she serves at the pleasure of someone else, whose power flows through them from above. This is what de confianza (of trust) really means.

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Supervisors see their role as strictly following orders to the best of their ability, neither questioning nor taking matters into their own hands, and this is exactly how they view the proper role of their subordinates. The Mexican supervisor's style is to supervise closely, and look for willing obedience. Opinions expressed by employees are often regarded as back talk. Likewise, supervisors generally find it unnecessary and even a sign of weakness to explain themselves or their orders. To explain is not to have the right to give orders, to not be the boss. Organizational communications in Mexico are normally downward, and usually are in the form of directives. A supervisor rarely explains why something is to be done or even how it should be done.

Systems, Rules and Discipline To the average American, the Latin way of life is comparatively less disciplined at home and work. In general, the Mexican approach to regulations seems to be the rule of men, not laws. Rules tend to be a loosely applied set of guidelines, or an indication of what ought to be, but not necessarily what's done. For example, once across the border, no parking signs are rarely honored. One-way streets frequently have traffic in the opposite direction. It seems a s if no Mexican feels compelled to follow disembodied directions. Stop signs, wait your turn signs, injunctions to wear ear plugs or safety glasses, and even attendance or seniority and job-bidding policies simply are not adhered to in Mexico. The person of authority, such as a policeman or boss, is more likely to be obeyed through the strength of his or her ability to affect the life of the individual. Americans emphasize fairness and justice if everyone follows the rules. In Mexico, if there is no strong, cohesive force that has a strong emotional, religious, or authority basis, no one follows the rules.

Time In contrast to the U.S., time in Mexico seems neither linear nor progressive. History does not advance. Mexican time tends to be either right now or some other time. Dates and meeting times are more flexible—in fact, the entire Mexican notion of what being on time actually means differs from the American interpretation. At a microphone assembly plant in Nogales, a newly arrived American plant manager loudly pounded his desk in frustration because his middle managers never showed up on time for the daily ten o'clock staff meeting. When these tardy managers were queried, it was discovered that none of them even wore a watch. They felt that their gold watches should only be used for special occasions and not for daily use in the factory where they could get damaged.

Americans emphasize fairness and justice if everyone follows the rules. In Mexico, if there is no strong, cohesive force that has a strong emotional, religious, or authority basis, no one follows the rules.

In Mexico, appointments are often agreed to simply to create a pleasant encounter and avoid any disappointment. Moreover, in Mexico, the first priority is often assigned to the last request, rather than to the first. What often frustrates American managers, and is difficult for their parent companies to understand, is that life is siower in Mexico. Frequently, maquiladora schedules are confounded by delays of one sort or another. Basic systems may break down; banks may suddenly not have pesos; phone service can take months to be installed or repaired; obtaining a box at the post office can involve months of negotiations; electricity to the entire plant can fail. The production line of one telephone equipment wiring plant near Monterrey was shut down for half a day, idling about 500 workers, because a truckload of vital parts failed to arrive on time. After some frantic telephoning, the truck was found at the border, awaiting a lost routine Mexican entry permit.

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Freedom to Americans is a national religion, but the same term in Mexico often connotes license, and lack of moral standards.

Mexican employees are faced with similar problems almost daily. It can take an entire day to obtain license plates for a car, or several hours in one of the smaller towns to make a long-distance phone call from a special booth in the center of town. Businesses and government offices open and close at all hours, seemingly at random. The town buses bringing employees to the plant may simply stop running, or go somewhere else.

Possibly it is in response to this uncertainty in daily life that factory employees can legally take three days off per month without penalty. Americans who are familiar with local conditions can plan intelligent remedies (such as providing a company bus) rather than wringing their hands over high absenteeism and tardiness.

Compensation The kinds of wages perceived as fairest in Mexico are based on an underlying sense of quid pro quo. Rather than an impersonal wage scale, Mexican workers tend to think in terms of payment now for services rendered now. A daily incentive system with automatic payouts for production exceeding quotas, as well as daily/monthly attendance bonuses, works well. The paternalistic nature of the employer, as well as the need to keep wages low, leads many employers to add on a series of small but meaningful benefits, such as weekly food baskets, bonuses for quality, free meals, free bus service, free day care.

The preference in Mexico for incentive pay also provides the rationale for establishing rigorous production standards. Unions support standards when those standards form the basis for production bonuses. Higher rates of pay for higher job classifications are a problem, because companies may not, under Mexican law, reduce an employee's wages when downgrading his or her job. Again, companies can avoid this problem by paying one fixed base rate and adding incentives and bonuses which are not considered wages.

Attitudes Towards Americans Mexicans are ambivalent about Americans. The Mexican view of the U.S. is highly colored by history from the Mexican angle: by past invasions by the U.S., excessive American ownership of Mexico's natural resources until foreign ownership was finally outlawed in the thirties, and the daily contrast of a struggling and dependent country with the strongest national power in the world. Some Mexicans also resent the invasion of American pop culture and view with disdain the drug addiction, violence and pornography observed in the U.S. Freedom to Americans is a national religion, but the same term in Mexico often connotes license, and lack of moral standards.

Yet, s i d e by s i d e with this r e s e n t m e n t a n d m o r a l c o n d e m n a t i o n exist a s p i r a t i o n s for t h e m a t e r i a l b o n a n z a lying just a c r o s s t h e border. M e x i c a n s h a v e a fascination with the U.S., a n d MTV h a s e n a b l e d Mexico City to b e a s f a s h i o n a b l y current a s a n y w h e r e in t h e world. M e x i c a n s a l s o a d m i r e a n d e m u l a t e t h e s a m e n a t i o n a l a n d o p e n - m i n d e d a t t i t u d e s they criticize. Expectations of American m a n a g e m e n t a r e extremely h i g h in m a q u i l a d o r a s . In s p i t e of local e n v i r o n m e n t a l s t r a i n s c a u s e d by t h e influx of foreign p l a n t s , t h e m a q u i l a d o r a industry a s a w h o l e is v i e w e d by m a n y in Mexico a s a n economic savior. They trust a n d respect American know-how. It is a l m o s t u n i v e r s a l l y b e l i e v e d that A m e r i c a n o p e r a t i o n s in Mexico benefit local e c o n o m i e s , u p g r a d e Mexican industry a n d p a y well.

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It is almost universally believed that American operations in Mexico benefit local economies, upgrade Mexican industry and pay welL

But, Americans are also feared in Mexico. Strange plant rumors circulate daily in maquiladoras, since few workers have enough real-life experience with Americans to be able to judge with any accuracy the meaning of what American managers do. Unfortunately, lack of fluency in Spanish leads many American managers to scurry through the plant, avoiding any contact with employees. However, quite often, a smile or nod can convey what language cannot.

A Final Word Modern management is needed in Mexico and is ardently desired. Mexico as a whole, and particularly in the northern states, understands that the maquiladora industry needs to be able to manufacture and assemble at a level of efficiency and quality that compares favorably with what can be accomplished in the U.S. American managers in maquiladoras must also understand their difficult but fascinating position of being goodwill ambassadors, social luminaries, teachers and educators. In sum, the future holds real promise as long as the culture, beliefs, and customs of Mexico are kept in mind.

Endnotes ' A maquiladora is a U.S. plant in Mexico, used either for manufacturing or assembly work, under the 25-year-old maquiladora program. Under this program, so long as the finished product is largely exported, U.S. investors can establish wholly-owned assembly plants anywhere in Mexico outside of Mexico City, thereby gaining access to labor at one-seventh to one-eighth the U.S. cost, electricity at one-third of U.S. rates, and various tax benefits. U.S. firms have established approximately 2,400 plants employing 475.000 workers in Mexico under the maquiladora program. Of those plants, about 350 are scattered throughout central and northern Mexico, and the rest lie along the border. Only the value added by Mexican labor is taxed on bringing the product back into the U.S. Under NAFTA, the Maquiladora Program will become moot, and even the U.S. tariff on value added in Mexico will be eliminated over time.

^ Not all American branch plants in Mexico are successful; according to many accounts, about ten percent of the maquiladoras annually fold up and leave, often to seek the lower-cost areas of Thailand, China, etc. The remaining ninety percent are successful in varying degrees. However, in my experience, a number of Mexican branch plants do manage to meet and even exceed the levels of productivity of their U.S. facilities.

^ The identity of this plant and those in following examples have been changed.

* Under Mexican labor law the government mandates minimum wages, profit sharing, social security payments, fifteen days' wages for a Christmas bonus, vacation bonuses in addition to vacation pay, required training for employees on company time, providing sports and cultural activities, and so forth. Since so many employee rights and benefits are already mandated by law, including the right to a permanent job once past a probationary period, Mexican unions currently serve employees mainly to give them symbolic clout with management relations; when the unions go sour, however, a strike is easy to accomplish. This can and does happen in maquiladoras from time to time—but only because some American managers refuse to learn Mexican labor law and assume management rights are the same as in the U.S.

^ In the case of a supervisor's reluctance to personally slight a fellow supervisor by reporting defects, we have recommended the use of written forms requiring simply recording quantities of good and bad pieces received. This objective and quantitative device eliminated any personal affront, and automatically fed the information to the production manager.

^ I find it helpful to provide Mexican managers with training experiences in how to set and discuss agendas and reach conclusions for action, enabling them to learn first-hand that making a mistake or a wrong decision is just that and not a loss of honor.

About the Author Mariah E. de Forest is vice president of Imberman and DeForest in Chicago and has served a s consultant to maquiladoras of a number of major American companies. She has directed a number of company seminars discussing the successful management of Mexican and Latin American plants.

For permission to reproduce this articie, contact: Academy of Management, P.O. Box 209, Ada, OH 45810

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