Judicialization; a hallmark of Brazilian-style management

There are severe weaknesses in the management practiced today in Brazil, in both the public and private spheres. One piece of evidence of this is the increasingly frequent “judicialization of management”. An active judiciary can be a sign of institutional vitality. But the roles and responsibilities of each body need to be clear.

When the courts are urged to act in order to necessarily “fill a space” of decision-making, of action, of control, in short, of management, it seems to be an evident sign that things are not going well.

It is often a role that should not belong to the courts. But it is precisely because the management of organizations cannot cope with its challenges and problems that the courts are then forced to act.

In February, for example, I first drew attention to this  in the column “False solutions...”, in which I analyze a case widely reported by the newspapers at the time about the decision of the Federal Court in Acre to make it mandatory for all public servants, such as doctors and dentists working in SUS (public health system) units in Rio Branco, to clock in electronically.

A typical example of the courts doing something that should be done by management. How is it possible that these managers cannot achieve a minimum of control over the physical presence and work of their own employees?

Cases of this kind have been abounding in Brazilian organizations. A similar example occurred last week in São Paulo, when the courts ruled that the state government's police could only carry out the repossession of a public school occupied by students “if” the public security secretary himself was on site managing the operation. In other words, it should not be the courts determining this, the actual presence of the “security leader” at an enormous security problem; the state administration itself should be capable of deciding it.

This same situation occurs when disillusioned health plan users have only the courts to turn to in seeking a guarantee of adequate services from a good part of the private health care companies. These companies should also provide this to their customers, which most of the time does not happen. The health plans do not seem able to serve them adequately, leading customers to take legal action.

So much so that, according to the Brazilian Association of Health Plans (Abramge), the plans' spending on lawsuits filed by customers doubled in two years, reaching R$ 1.2 billion in 2015, compared with R$ 558 million in 2013, the newspaper “O Estado de São Paulo” reported last week.

Clearly this is the role of the courts. But when it becomes the dominant practice, becoming the way patients claim something that should be a right, it is evidence that something is very wrong. And this also happens with customers of mobile phone operators, cable TV, internet… in other words, since things don't work in organizations, the courts need to step onto the field.

In other words, the bankruptcy of management capability generates, in Brazil, the “judicialization” of management. However fundamental the courts are in social relations, they cannot and should not be seen as a “repairer” of failed management. This denotes the lack of capability that Brazilian management has today to solve problems, which in daily life intensifies the deep distrust that people place in a large share of companies.

One of Brazil's largest construction companies came forward this week and published an official statement, entitled “Apology and manifesto for a better Brazil”, in which the company apologizes for “serious mistakes of the past”, admits to having made a leniency agreement with the courts, states that it will pay R$ 1 billion in compensation, says that they are “implementing a “modern compliance model, based on a strict Code of Ethics and Conduct, in line with the best practices adopted around the world”, and publicly makes proposals to make “public-private” partnerships in Brazil more ethical and lawful.

It is symptomatic. Systematically, it and the other large construction companies would not be delivering what they should – good-quality works, on the defined schedule and at the contracted price – and, in the end, there is often a legal dispute. And then there is an “inversion of values” when a construction company's legal department becomes the department that “adds value” by managing to avoid, in court, having the company pay compensation or the like. A company's legal department does not add value for the customer. It is necessary for most companies, but it is not something end customers pay for, unless, obviously, it is an organization that provides legal services.

This also helps explain the “flood” of lawsuits that pour into Brazilian courts every day, which caused the country, at the end of last year, to exceed 100 million pending court cases, according to the National Council of Justice – one case for every two Brazilians –, with all the economic, bureaucratic and social burdens this generates. Not to mention the long waits for many of them to be resolved.

If the management of organizations were more efficient, this picture could be totally different. The courts would not need to be called upon so much, and we would have a less bureaucratic, more balanced, economically more efficient society, with a lower “Brazil cost”, among other advantages.

In short, organizations need to “work better”. And that necessarily means improving management. Otherwise, the “judicialization of management” will continue. And, increasingly, instead of depending on “deficient managers”, we will be in the hands of, we hope, “competent judges”, whose fundamental training is not, and should not be, managing and running companies.