Latin america

When multinationals entered the Latin American region a decade ago, the biggest challenge was to find capable staff. Today the problem of how to attract, motivate and retain high-impact performers is beginning to surface.

In Latin America, as in the US, Canada and Europe, total remuneration packages start with base salary but also typically include long and short-term incentive pay and benefits. In countries with a strong flow of foreign investments such as Brazil, Argentina, Mexico and Chile, a fair salary has to be topped up by a package of other rewards, incentives and working conditions.

Surprisingly, one of the key motivators is cars, followed by bonuses. To attract top-level talent in Brazil for example, companies need to provide executives and managers with a luxury car, as well as a defined benefit retirement plan.

But expectations and cultural values regarding total remuneration packages can differ significantly from country to country in the Latin region. “In Argentina where the economic situation is very unstable,” says Luis Perez Van Morlegan from Argentinean-based HR consultancy Bertoni & Asociados/H Neumann International, “many good executives are looking for work but obviously the top performers are employed and not always willing to leave unless another company offers them a substantial hiring bonus. One of the best methods of attraction is a bonus because it is linked to the performance of the employee within the company. It represents a percentage of the annual remuneration which is the equivalent to two to five times the wages.”

Long-term incentives such as stock option programmes were implemented in a growing number of companies in the region, especially in the fast expanding hi-tech and telecommunication sectors. “In Mexico,” explains Hugo Oliveri, a consultant based at the Mexican offices of professional services firm Watson Wyatt, “stock options are becoming a very strong tool to retain highly skilled performers. They represent 25% of the basic salary. Bonuses are given in 80% of companies, which represents 20% of the basic salary.”

A survey carried out by Watson Wyatt in Puerto Rico indicates that despite the high unemployment rate of approximately 11 per cent, base salary increases range from 4.5 per cent to 4.8 per cent each year. And yet, over 50 per cent of those companies surveyed are experiencing difficulties in attracting and retaining critical skills and talent.

“To tackle this problem,” explains US-based HR consultant Douglas H. Hachenburg, “companies have to incorporate pay-for-performance with large opportunities for high performers. A strong recruitment strategy is also important to select the most qualified individual. Finally, improving employee communication in areas such as benefits is also crucial. Bonuses are paid at all levels, with more senior positions eligible for substantial payments, although not as high as in the US. Cars are one of the most attractive and frequent management perquisites in the country.”

For many companies in the region, variable pay continues to play an important role in linking rewards to performance. Programmes that have increased in utilisation since 1998 are: individual performance incentives, team/small group incentives, spot recognition awards and retention bonuses.

But there are also three non-financial incentives that have a strong impact in attracting highly skilled workers in the region – job stability, training and promotion.

However, as work-life balance issues are important in Latin America, benefits that recognise family commitments go down well with employees too. Anna Maria Gonzalez, for example, HR manager of fmcg company Sara Lee in the Dominican Republic, says management at Sara Lee in the Latin region has focused on its employees’ number one priority – their families.

“Dominican companies are following US examples by including family members in fringe benefits, such as life and health insurance, club memberships and so on. But we are also going the extra mile to look after employees by recognising home commitments. Help is given through organising summer camps, Christmas parties and picnics for staff and family members. At Christmas we also give out food baskets for the family,” says Gonzalez. “And this is a great way to hold on to staff.”

Many companies in the region also provide free lunches and vitamins for employees, especially in areas where malnutrition is a problem.

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