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Attract, retain and find employees and partners in Peru

by: Valeria Rodriguez Brondo, Associate Partner of Hofstede Insights

 

Important!

  • Patience and tolerance: regarding time and deliveries, with both employees and partners are desirable.
  • Respect for hierarchy: Peru is a highly hierarchical and centralized country that resembles the Inca structure. Bosses consider their employees as being of a different kind of person, particularly if they come from indigenous origin.
  • Motivation to work: Peruvians can be perceived by expats as lazy. However, a lower motivation for reaching the objectives is related to the fact that their preferences go through human contacts and family, over personal recognition and/or wealth.

 

Short Introduction

The Andean region was the center of an important and original civilization at the dawn of History. Today's Peru occupies the center of that geographic space that houses the main archaeological heritage of South America. The syncretism and interaction within different ethnicities characterize all cultural processes, languages, worldviews and ancestral traditions, sustaining the identity of its peoples, being an essential part of its diversity.

The Spanish arrival in Peru altered the Andean cultural process and meant the birth of new Creole and mestizo expressions and manifestations. Castilian Spanish, art, literature and the Christian tradition of Europe, together with the Andean tradition, form the backbone of Peru today.

To the European cultural contribution, fundamentally Hispanic, the African cultural presence is added with the culinary, traditional dances and musical influence – one of the richest in America -, as well as poetry. Subsequently, the Asian presence displays a change in Peruvian gastronomy, providing cooking techniques as well as the innovative use of ingredients from Peru.

Peru has a pyramidal organization1, that means that you must expect loyalty, hierarchy and implicit order.

 


Wursten, Huib “The 7 Mental Images of National Culture”, Hofstede Insights, 2019

 

Patience and tolerance with both employees and partners are desirable. It is important to establish clear processes of mutual convenience to generate a commitment between the parties.

 

Partners

The main issue when it comes to finding and retaining a partner has to do with connections. In a country where clientelism is accepted, you must bear in mind that your partner must be a person connected to various companies and circles of influence. That is the way you will have to start the business. Also, to retain it, you must build a relationship of trust that goes beyond doing business. This involves going out to eat,  meetings during the weekend, meeting family and friends, among other relationship-building rituals. Remember that for this type of society, the relationship is above tasks, make sure to invest time to generate this.

 

Hiring employees

Hiring and layoffs are relatively simple due to the degree of informality (working under the table) existing in the country. The way of hiring is usually by acquaintances, recommendations, and exchange of favors, it is a society where patronage and clientelism are accepted. Therefore, your employees will expect favors in exchange for loyalty.

Employees are often hired for short periods, the legislation is flexible, good treatment is highly valued, and employees value being hired by foreigners. Work is flexible, Peru has a very high level of informality, being above 60% in urban areas and above 80% in rural areas, reaching in some places, more than 90%. The cost of hiring is high, and for this reason, many companies hire under a "payment of fees" modality, something like outsourcing, so they significantly reduce their costs.

Companies that want to do business and hire workers in Peru should know all the local payroll rules and how to comply with payroll cycles. Peru's Length of Service (CTS) compensation is a legal benefit granted to workers for the time they spend working for a company, which is done at the time of retirement. The CTS is deposited every six months in the bank of the worker's choice. Employers deposit 50% in May, for the period worked from November to April, and 50% in November for the period worked from May to October. If a business fails to submit the CTS payment in a timely manner, it will be required to pay interest accrued from the due date to the date the payment is made.

 

Regarding the bosses

Employees respect the hierarchy 100%. Being a society with a great acceptance of unequal distribution of power, the boss is seen as a father/mother who takes care of them but also gives orders. Orders are always top-down and instructions are very important. If employees are left without a mandate, they should consult their bosses for instructions. You should not expect total autonomy from your subordinates.

Employees value commitment and compliance with legislation since they cannot always count on it (as we saw, informality is very high). The "problem" that a foreign boss may face is the feeling that the employees lack "autonomy", as they will be waiting for you to tell them exactly what to do, how and when.

 

Decision-making

There is also a great need for centralization in decision-making and formalization. Often you will find that everything is written and there are many rules and procedures (even if they are not followed) due to the high intolerance to uncertainty.

 

Motivation

Motivation has to do with the "reward and punishment". Promotions are usually linked to personal relationships and not so much to employee performance. Keep in mind that control is expected by subordinates, as is centralized decision making. Don't expect a lot of innovation from employees, since this type of behavior is usually sanctioned because people are expected to follow what was ordered.

If you come from a society where the distance to power is not high, try to give clear instructions to your subordinates, show interest in their work, try to be present, ask about their families and be considerate.

 

 

American manager arriving in Peru

A manager from the United States, arrives in Peru to manage a development bank. He was proud of his "advanced management", in which people were completely autonomous, which for him was a sign of trust and a good manager. It took him months to find out through indirect communication channels that most of the employees were upset with his management. They thought he was an incompetent manager, unable to give orders and organize work. They also felt that he was not interested in them, as he rarely asked about their work.

In Peru "no news = bad news", while in the United States "no news = good news". What does this case leave us as learning? Is it something we could have foreseen? 

If we look at Peru through the "lenses" of Hofstede's 6-dimensional model,  and we compare it with the USA, we can see differences in power distance between both of them. In societies like Peru, it is desirable for bosses to be benevolent and caring, visible all the time, asking questions to their employees about their work and checking if everything is complete and well done. Peruvians accept the inequalities and superiors are often inaccessible and have privileges. 

On the other hand, this could be something unusual from an American perspective, because in societies with low power distance, they expect independence. So, having a “checking boss” means that he/she doesn’t trust in your work. 

In conclusion, if you are a boss in Peru and you come from a non-hierarchical country, keep in mind that your employees will expect clear orders from you and that you have everything centralized and under control. Too much independence towards them can be interpreted as a lack of interest on your part and as a consequence, the motivation of your employees will decrease.

 

References and interesting links

Embassy of Peru in Argentina

Edward T. Hall “Beyond culture”, Garden City, N.Y.: Anchor Press, 1976.

Wursten, Huib “The 7 Mental Images of National Culture”, Hofstede Institute, 2019

Hofstede Insights “Compare countries” https://www.hofstede-insights.com/country/peru/

World Bank “Doing business in Peru”, June 2020 https://www.doingbusiness.org/en/reports/subnational-reports/peru

TMF Groupe “How to do business in Peru” https://www.tmf-group.com/es-co/search-results/?term=peru