Latent premises of labor contracts: paternalism and productivity

Purpose - Labor contracts are built on the basis of different latent premises about expectations of the organizations and the workers. Paternalism is widespread in Latin America, and its diverse forms should be taken into account in the design of HR policies and management practices. The paper seeks to compare two Chilean banks and show that different forms of paternalism exist. As long as the organization is consistent with the premises it works with, productivity is not hindered by either form. Design/methodology/approach - By means of a case study two banks's contractual premises are compared. Each one represents a different set of cultural expectations for the labor contracts. Findings - Paternalistic and non paternalistic premises for labor contracts differ widely, but as long as the organization is coherent with them in its human resources policies and practices, productivity can be achieved indistinctively. Research limitations/implications - The cases are representative of main types of organization's labor contracts, but not statistically representative. Generalizations are possible insofar as other organizations show similar cultural pre‐contractual premises. Practical implications - Human resource management policies and practices need to be consistent with the premises underlying the labor contract and the social bond in order to allow for productivity increases. Originality/value - Paternalism is still present in Latin American organizations, instead of dismissing it as traditional or premodern, acknowledging it will allow for organizations to act more realistically towards its labor force.