After
10 years of multinational growth, Latin American companies are facing the
problem of retaining and motivating key performers. Jacqueline Vitali reports
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.
