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Latin America's new breed of corporate leaders.


THE LEADERS of Latin America's successful, 21st century companies represent a new kind of executive and this is having important repercussions across the board. Today these people are generally professionals -many of them hold MBAs--with a world view directed toward the sustainability of their business, their environment and their community.

They are knowledgeable about global trends and how these trends pertain to individual industries. They strive for a high quality, professional approach to human resource management, where their family's principles and values form an integral part of their business management. And they are prepared to apply corporate governance of the first order.

These leaders understand that, unlike in the past, when just one person directed the destiny of an organization under a centralized system, they now must develop relationships both within and outside their organization. These relationships help them to influence others and delegate responsibilities, while sustaining long-term commercial ties. The modern leader is an unyielding orchestra conductor who seeks out the support of the best employees, while assuring they get great personal satisfaction from doing their job.

The modern leader has had the opportunity to live in times when education is both more accessible and of better quality than in the past. The region's first business schools emerged in the 1960s and were consolidated in the 1970s. These institutions have brought about an important change in the quality and leadership style of executives running companies today.

A more worldly perspective has formed new leaders who are more concerned about their environmental, social and economic surroundings. This has fostered a sense of social responsibility and genuine concern for resource use that is prevalent in the best Latin American businesses.

One interesting example is that of Ramon Mendiola, CEO of Florida Ice & Farm, a Costa Rican brewery that has decreased its water consumption by 300 percent, thereby contributing to the sustainability of both the environment and the company itself.. Another is Grupo Monge, a retailer operating in Central America and parts of the Andean region. It dedicates 5 percent of its profits to its family foundation, which supports the secondary education of thousands of students through scholarships.

These new leaders have travelled extensively and have a good understanding of key social, political and economic developments around the globe. They also study the major trends in their respective industries, the impact of social networks, and the technological, demographic and social changes that might affect their businesses. They are conscious of the need to establish an explicit strategy for their businesses.

Modern executives also show a greater appreciation for the importance of managing human development. Specifically, they encourage executive performance evaluations and supply regular and objective feedback, so that those with potential can improve, and others can look for work elsewhere. The era of the permanent or "eternal" CEO of the Latin American firm has ended. It is satisfying to see that the leaders of successful companies tend to get personally involved in this area.

The vast majority of Latin American companies are family-owned. The leaders of successful companies have recognized that many people depend on them, especially in their own families. Some business partners from their family might even be fellow executives. For this reason, they often turn enthusiastically to the development of a protocol to establish clear rules that govern the relationship between the family and the company. These protocols often act as tools for "anticipating a family conflict" so that confrontations can be resolved before they provoke unnecessary problems.

This enables leaders to focus on company matters while keeping family harmony intact. In the process, they are able to identify key issues that lend continuity to the company and to the family over the long haul. Some of these issues involve the principles and values of the family, the long-term vision for the family and the company, policies governing dividends and the reinvestment of profits, maximum levels of indebtedness, and desired corporate governance.

It is fundamental, for example, that the longterm vision of the family coincide with that of the business to ensure that the company can proceed peacefully, with strategies that lead to growth or consolidation, diversification, vertical integration or higher levels of risk.

Finally, these leaders seek the support and guidance of formal corporate governors. In the past this kind of support was non-existent. Today the ability of Latin America's new corporate leaders to debate with these directors, but at the same time respond to and respect the decisions of the corporate governance system, is crucial to the success of their companies.

Esteban R. Brenes

The Steve Aronson Professor of Strategy and Agribusiness, INCAE Business School President bac&asociados S.A.
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Title Annotation:OPINION
Author:Brenes, Esteban R.
Publication:Latin Trade
Date:Jul 1, 2012
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