Brazil: Booming, Busting… and Now?

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How this beloved country manages turmoil to keep up its talent pipeline.

It was mid-2015 and Sid Ramtri was hitting one of those career crossroads. Then almost 30 years old, he had checked off the right boxes: a position working in the Houston energy scene, a researching stint at Goldman Sachs in New York, an MBA degree in Europe. Now, scanning the globe, he considered his next home base—and went with as unlikely a choice as you could imagine: Brazil.

“Unlikely” because for two years the country had been choking beneath a seemingly never-ending political crisis, with corruption scandal after corruption scandal as well a presidential impeachment. Street protests had become regular Sunday fare in the country’s major cities. Economically, a crushing recession was evaporating the job market, which sent many foreign executives who had hoped for great opportunities fleeing. Indeed, by the time Ramtri arrived in the first half of 2016, foreign worker permits had dropped more than 20 percent from the year before. Even more tellingly, out of 45 countries in a 2016 HSBC survey of favorite destinations for expat workers, Brazil placed dead last.

But Ramtri, who had been practicing Portuguese and had done some consulting work in South America, wasn’t deterred. “Contrary to a lot of the advice I received,” he says, “I decided to go ahead and still cast my lot in with Brazil.”

Maybe he was on to something. Brazil’s present situation may still be a long way from anything someone might call a “turnaround.” But whether it is an uptick in consumer confidence reports or robust numbers from the manufacturing sector, a variety of economic indicators give reason for cautious optimism. These days, business leaders in Brazil are optimistic that the dust from the past summer’s political unrest and presidential impeachment is settling. Harvard Business School professor Tarun Khanna, a renowned authority on emerging market countries, tells us that business-wise, this may be “one of the better times” to come to a country like Brazil. It’s a view shared by Dominique Virchaux, president of Korn Ferry South America. “We’re seeing signs of a turnaround,” he says. “Two-thousand seventeen is going to be a key year to see how much happens.”

Still, as the country tries to move from kneeling to standing, Brazil’s rapidly changing fortunes—booming, busting and now trying to recover in two to three years—has left hundreds of CEOs there asking the same pergunta: How do today’s business leaders best attract talent in such a climate? It’s a question that bugs CEOs all around the world, in countries where volatility is more the norm than stability. When global conditions turn stormy, how do you protect the talent pipeline?

In some ways, Brazil has always held a quirky station in the global business market. It’s often labeled an emerging economy—the B of the famous BRIC countries (alongside Russia, India and China). But with its enormous land and coastal mass yielding a host of rich commodities, from oil to iron ore to soy beans, the country has been a hotbed for multinational companies for more than a century, dating back to the days when Henry Ford hacked his way through the Amazon jungle in search of rubber trees. Brazil’s economic fortunes have meant that Brazil has maintained a steadily growing gross national product rate, attracting both large companies and start-up investment.

But boom times have never come easy for Brazil. This is a country where economic growth was long stalled by staggering import limits, a byzantine tax system and more than its share of political instability. Somewhat quite suddenly, the bottom began to fall out about three years ago when its popularly elected president, Dilma Rousseff, became embroiled in a corruption scandal that spooked foreign investors. A chain of economic events followed, including weakening currency, runaway inflation and downgrading of the country’s investment grade status. In all, it would become one of the swifter shifts in a major country’s fortunes in recent memory, with its GNP falling into negative territory by 2014. And, no, not even hosting the 2016 Olympics could help.

Not surprisingly, the acuteness of this collapse had a direct impact on a talent pool that had come to Brazil hoping for the best of both worlds—surfing before work and living in a hot job market. Now it was a nightmare for those who had invested their lives there. “The crisis spared no one,” Grover Calderon, president of the National Association of Foreigners and Immigrants in Brazil, told a local newspaper. “Not even the very qualified foreigners [were spared]. Many of them lost their jobs because their companies were in hard financial situations.” Indeed, in expat circles, despedidas—Brazilian going-away parties—were getting double-booked by fleeing foreigners. Korn Ferry’s vice chairman for South America, Sergio Averbach, says that it is hard to overestimate how bad things were. “I have been working in this profession for 25 years,” he says, “and I have never seen a crisis as deep as this one.”

On the Rebound (click the image to enlarge)

But as the cliché goes, where there is despair there is hope. Meet Luciano Macagno, 38 years old and the Brazil country director of Delta Airlines. A rising star in his field, he came to Brazil and found himself at the helm of a major multinational’s Brazil office during the deep recesses of the hard times. But Macagno actually views those difficult years with optimism. Macagno says back in 2012, when he first arrived in Brazil, wealth was all over the place, and he says he saw that that kind of scenario “tends to create a lot of fat and unproductivity in your business.” He sees that changing now during the hard times, creating stronger companies. He even sees how it has strengthened his own career. “I didn’t come here because it was booming but because it was a challenge,” he recalls. “It was easy to be successful in the boom times, but for the ones who are successful right now, this is the ultimate chance to swim with sharks.”

Macagno, an Argentinian, says the key to success in business in Brazil is the ability to adapt to the country’s business culture, which puts a high value on relationships. He notes, for example, that he quickly learned to devote the first few minutes of meetings to people’s family issues or local soccer games “because that will actually bump up the productivity of the whole meeting.” Brazilians, he says, “know how to be successful.” For his part, Korn Ferry’s Virchaux says the country’s long rollercoaster past has the advantage of empowering the local ranks. “Brazilian executives have lived through long periods of volatility,” he says. “They had to adapt fast.”

One adaptation: Attracting foreigners while still cutting costs in belt-tightening times. That’s possible, some HR pros say, by recruiting foreign workers who are either single or whose children have already grown, thus avoiding offering pricey child care or full family health-care packages.

And when we talk about foreign workers moving to Brazil, we’re mostly talking about Americans: The U.S. sends almost double the number of workers to Brazil compared with any other country. So the key to bringing talent back to Brazil really hinges on bringing American talent back to Brazil. Averbach says that calls for looking for talent with deep-seated flexibility and a willingness to navigate unpredictable situations.

The swaying fortunes of Brazil, of course, offer some important lessons on how to pivot in the world of emerging markets. Having tracked such countries for years, Harvard’s Khanna cautions managers not to overpromise the future to candidates. “That backfires,” he says. But he also sees a silver lining in economic turmoil. “The trickier time to weigh a move to an emerging market is when everyone is tripping over each other and going crazy about how exuberant things will be. In those settings, expectations are inflated, managers are a bit too ‘rah-rah’ and prone to overcommit, and people make statements to stakeholders that end up being foolhardy.” Rather than seeing the boom times as the best time to make a move, he says that times like now in Brazil, for example, “is one of the better times.”

That’s how Ramtri, now based in São Paulo, sees it. He says he still gets peppered with the same list of questions: “Why are you here? It doesn’t make sense … this country is too difficult; the United States is so much more comfortable.” Still, while knowing he is swimming upstream, Ramtri thinks that Brazil can make for a “comfortable introduction” to emerging market economies. He says companies are looking for talent, and that the talent drain of the past has created opportunities, particularly for upper management. “Depending on the professional perspective of what kind of platform you come in with, you could actually position yourself into an opportunity in the midst of a crisis here in Brazil.”

Is he right? There is no shortage of wide-ranging predictions for a country as unpredictable as Brazil. Matthew Taylor, adjunct senior fellow for Latin America Studies at the Council on Foreign Relations, says that while he is cautiously optimistic about Brazil’s economy in the long term, “I think the short term is going to be tumultuous.” Still, it’s worth noting that already by the late fall of last year, the São Paulo stock market had returned to its 2012 levels. “The macroeconomics are positive,” says Averbach. “But in Brazil, you never know what can happen next week.”