Brazilian Business Goes Global — Here Comes the Culture Shock
WHY YOU SHOULD CARE
Because the International Style doesn’t apply just to architecture.
Marcio Kumruian opened a shoe store with his cousin in an empty part of a São Paulo parking garage in 2000. What started as a word-of-mouth operation serving the university next door eventually moved to a mall and then to an online store. Today the e-commerce company has 13-story headquarters with basketball courts, a Ping-Pong table, open offices, diversity workshops and $148 million raised in a New York IPO in April. Kumruian says he has American business culture to thank.
Netshoes is one of several Brazilian companies trying to distance themselves from the specter of corruption in this country as its economy accelerates after two years of contraction. An estimated 15 IPOs could be held in São Paulo this year, while some companies, like Netshoes, set their sights on New York. Many of them promote what Renato Franklin, CEO of rental car company Movida, calls “a new way of doing business,” leaning hard into international best practices — largely American — to inspire investor confidence. This scramble, along with new regulations, has begun to transform the Brazilian business world, affecting everything from employee habits to anti-bribery measures to efforts to diversify Brazil’s famously white and male companies.
São Paulo and New York–style seriousness on Friday afternoons is catching on at companies all across Brazil.
The culture gap starts with e-mail sign-offs like “hugs.” In other countries, “sincerely” would be appropriate, but in Brazil “treating someone like family is a signal of trust,” says Thiago de Aragão, intelligence director at the consultancy Arko Advice. As Brazilian companies internationalize, Brazilian signs of confidence like company-paid meals have rubbed up against regulations, such as the U.S. Foreign Corrupt Practices Act, de Aragão says, causing “very awkward moments” when executives try to offer wine, for example, to visiting government officials. Brazilians, Aragão says, are learning to adjust.
Although Netshoes takes its cues on office aesthetics from Silicon Valley, other companies, like brokerage firm XP Investimentos, look to Wall Street. XP spent much of this year preparing for an IPO coordinated by JPMorgan Chase and Morgan Stanley. At the company’s Rio affiliate, RJ Investimentos, minimalist glass doors lead to hallways lined with framed photos of traders at work.
“My hours are more similar to the American banking world than those typical to Rio de Janeiro,” says Gilvan Costa as he fields questions from clients via WhatsApp and reviews charts at his desk late into the evening. According to a local saying, one sign of the difference in productivity between Rio and financial hub São Paulo is that Brazil’s national meal, feijoada, usually consumed with copious amounts of the national liquor cachaça, is served on Fridays in Rio and on Saturdays in São Paulo. But according to business experts, São Paulo and New York–style seriousness on Friday afternoons is catching on at companies all across Brazil.
The big push for changing the way Brazil works is not in office design or scheduling, but in rooting out corruption. In 2014 a new law required companies to add compliance measures for the first time. Between 2015 and 2016, the companies surveyed by auditor KPMG with compliance measures in place rose from 57 percent to 76 percent. Influential, too, is a 2013 law that allows reduced criminal sentences for employees who turn in colleagues for corruption. Costa, the broker, speaks on the phone in a truncated style, preferring to schedule in-person meetings. “All of my calls are being recorded by regulators,” he says.
A much-discussed recent cover story in leading Brazilian business magazine Você S/A highlighted how the country’s companies also are aiming to align with international attitudes about increased workplace diversity. “Target programs in hiring and support groups for women workers are the new factors that set apart the companies atop our annual index of best Brazilian companies to work for,” Você S/A’s Elisa Tozzi says. Tozzi says programs to support Black, LGBT and disabled workers are less common, although they are catching on via a few multinationals who make them explicit priorities. For Netshoes COO Graciela Kumruian, “Brazilian companies that don’t pay attention to workplace diversity are behind.” Also, they now can be sued: Brazilian banks Itaú and Santander implemented recruiting programs for Black employees after high-profile nonprofits attempted to sue them for damages under a federal law defining racism as a crime.
Change is still slow — sometimes exasperatingly so. Cristiane Pires, a telecom marketing director, says “countless professional women I know have had to move jobs due to feeling harassment against them would not be responsibly addressed.” For Nina Silva, a project manager for a multinational engineering firm, “we are repeatedly seeing how the lack of real attention — beyond lip service — to retaining diverse employees causes lost profits.” And the fact alone that a Brazilian company plans to IPO on an international exchange does not mean they have abandoned old habits. One of 2017’s most anticipated New York public offerings was that of the meatpacking giant JBS, which recently caused international market shocks when one of its directors taped his own discussions of bribes with Brazil’s president.
Andrea Minardi, a business school professor at São Paulo’s Insper, says sharp drops in JBS’s stock price are part of “a necessary moment for Brazil” because they reflect decreased shareholder tolerance for corruption. In the past, as a saying goes, corruption in Brazil would “end in pizza” — that is, it would go unpunished while its perpetrators instead enjoyed a satisfying dinner.
But one of the latest companies in Brazil to boycott JBS products, saying their values did not align, was Domino’s.
* The original version of this article misspelled the name of Netshoes’ COO Graciela Kumruian.