Latin America: A Vibrant and Rapidly Evolving Region for Human Resources
As many of you will know, ChapmanCG has its roots in helping Global HR leaders understand the dynamics and challenges of building HR platforms in emerging markets. It is interesting to see the parallels from our earlier days recruiting talent into the Asia region with the more recent need for our expertise in other developing markets. None more so than Latin America. A region rich with cultural nuances, historical importance and political and socioeconomic challenges. Its volatility as a region raises some important questions for HR leaders with regard to future talent investment and strategic location of teams. The following is an overview of some of the key trends and topics that merit a pause for thought.
What do we mean by Latin America? We look at the region in its broadest sense to include Mexico and the whole of Central and South America including many of the Caribbean islands. It is an exceptionally diverse region centered around a few key countries from a global business point of view. Main regional hubs are Brazil, Argentina, and Mexico. Miami/U.S. coming in as a close third or fourth place in terms of Latam hubs. Chile is becoming more prominent. Colombia is being increasingly recognized for its stability and robust talent base. Panama is attracting substantial foreign investment.
Many multinationals still hub Latam out of the United States, especially Miami, but increasingly Dallas, Houston. In many cases, this approach—although not ideal from a time zone perspective—offsets ome of the risk inherent in geopolitical instability, volatility of currencies and perceptions about personal safety.
Talent From Within
Such volatility has caused high potentials to look outside of the region for opportunities. Many HR professionals seek to make a permanent home in other international markets, often citing improved education opportunities and safety concerns. Indeed, it is more common now for talent to move outside of the region than move between countries. Classed as an expatriate, this move comes at a cost, so whether hiring or offering rotational programs, these moves are usually restricted for business/commercial leaders. HR is still view by many as a cost center and support function with little impact on the top line.
It is certainly not all doom and gloom, however, as HR leaders from outside of the region are identifying pockets of promise. While there remains a concern about Brazil as a regional HR hub due to cost, concerns about corruption, and unfavorable levels of regulation/governmental control, there has been increased investment in Colombia and Mexico. This is largely down to two main factors: proximity and good travel connection to the US and an increasing US commercial influence on consumption. On the ground in Colombia, the improvement in quality of life and want for luxury goods is evident.
Enticing Talent into the Region
Home grown Latin America talent is thriving overseas. Exposure to global projects, matrix environments, large scale HR transformations, challenging stakeholders, and best practices have enabled HR leaders to see what “good HR” looks like. What they can bring back to the region is a truly global mindset. However, the challenge of how to entice them back to the region remains. So how do we do that? Compensation and career development opportunities remain the top two strategies.
The region remains an attractive proposition for HR leaders who are interested in the expatriate experience, with people looking at a 2-3-year assignment as a resume builder (and badge of honor). This can be a great success in the short to medium term and serve as a shot in the arm for local talent with improved HR processes being introduced and coaching/mentoring opportunities aiding talent development. However, what happens when then the expatriate assignment ends and the HR leader leaves the territory? It is critical to use this ‘time in region’ to ensure good succession plans and talent development strategies are put in place—strategies that account for the local culture, passion and enthusiasm and can be combined with a solid base of HR practices that can be replicated and remodeled, where necessary.
For expats to achieve success in the region, it is important to enable them access to business leaders so they can feel part of the region and make a real difference to business performance.
Across the broader HR Generalist space and CoE constructs, we find some interesting discussion points.
● HR Operations Although there has been a steady increase in HRSS and HR Outsourcing across the region, there is no ‘perfect’ location or set of hubs. Costa Rica has been a popular location in the past, but its finite talent base means it is unable to keep up with demands of major multinationals. Brazil is difficult due to regulations and its language barrier when compared to other Latin America nations. More popular locations are Argentina and Mexico, followed by Colombia and Panama.
● HR Generalists & HR Business PartnersThere remains a difference in the DNA of HR professionals across the region. Brazilian HR leads have strong Union and Employee Relations/Labor Relations experience whereas HR Generalists in Argentina have evolved through development areas such as Talent Management, Learning and Talent Acquisition. Heavy US cultural and commercial influence on Mexico and Colombia has facilitated a Business Partner-styled HR leader. Chilean HR professionals tend to be domestic and tactical focused, with country heads of HR managing small teams. However, this is changing with Chile today being one of South America's most stable and prosperous nations.
● Talent Acquisition This is an area of great opportunity. As a function, it is still focused around process and less around innovative souring strategies, employer branding and utilizing data to bring its leaders to the table for broader talent planning discussions. Thinking tends to be short-term with a lack of sophistication around talent pipelining. There also remains a heavy reliance on executive search firms as limited access to social media platforms in many conutries make direct sourcing and talent identification a significant challenge.
● Talent Management Another area which looks ripe for investment, but will continue to face the challenge of an ever-shifting geopolitical and socioeconomic landscape. Talent Management had been handled as part of HR Generalist/HRBP responsibility, but more commonly now global talent and development initiatives are constructed at the corporate CoE and implemented through country and regional and HR leads.
● Total Rewards Driven by global programs, it is rare for multinationals to have a dedicated Regional Head of Rewards/C&B sitting in the region. It is more common to have the Head of Rewards in the CoE at the Corporate Headquarters and have a less senior member of the CoE sit in one of the countries who can work through regional and country HR leads to implement policies. As opportunities are limited, it is generally not seen as an attractive area of HR to step into.
Attraction and retention issues are expected to become even more challenging as the region recovers from instability. HR leaders in Latin America have been ‘economic migrants’. As multinationals have shifted their regional HR head roles and key leaders to countries that are more stable and better performing economically, it has been very difficult to develop a robust HR talent base in one location.
Latin America is very similar to Asia 10-15 years ago: the constant change in socioeconomic climate, migration of talent, talent shortages and the cost considerations of bringing expatriates into the region What we have seen in Asia is the establishment and recognition of key regional hubs and the emergence of key players once economic footing has improved. Latin America will be no different. Where these key hubs will exist in Latin America is yet to be fully determined. What this means for the HR leader looking to establish a strategic and effective foothold in the region and a base for talent to develop and flourish is a need to understand the best of what each country can offer and not to think a one-size-fits-all approach will work. It didn’t in Asia and it won’t in Latin America. One thing is for certain. There is a thirst for knowledge and education across Latin America, a real desire to be at the table and to be heard. If political, social and economic stability align, this will enable a platform for talent to develop and we will have a very powerful global player in the game.