22 February 2011
Faced with limited resources for government relations across Latin America, Marcos Malfavon tried a novel approach: Recruit a team of executives region wide to share the task, many from sales positions.
But there’s a learning curve for sales staff to master government affairs, he soon found out. Building relationships with officials to discuss policy, laws and other long-term issues “really requires a different level of conversation. It’s not about one sale.”
Participants agreed that government affairs is a growing concern in Latin America, because area governments are more actively investing in and regulating a wide variety of industries, from telecom to energy.
Ideally, multinationals should be pro-active in nurturing relations with officials to discuss policy and legal issues and to offer their input from a business perspective. But few companies have ample staff and resources dedicated to government affairs in Latin America. That leaves most companies reacting instead to proposals that emerge for laws, rules and policies, participants said.
New technology compounds the challenge. Today, with the internet, governments in Latin America can essentially “copy and paste” a law from Scandinavia or elsewhere, translate it and quickly present it for approval in their homeland, leaving public affairs managers with little time to offer input, said Ed Santos, vice president for public policy in Latin America for MasterCard International.
Companies can opt to pay for monitoring services in countries across the region to provide information on new bills and proposals, but the volume of information received can be daunting – especially for one public-affairs executive in Miami with no extra staff to read it all, participants said.
“And the monitoring doesn’t help if you have no relationships built” with lawmakers and other officials to act on the information received, added Craig Prusher, Burger King’s general counsel for Latin America and the Caribbean.
To process all the information, it helps to hire consultants who know what’s important for your company and can provide you specific, actionable data. But that requires an investment in training those consultants about your business and keeping them updated on changes in the industry, said Salvador Perez-Galindo, Visa’s vice president of government affairs for Latin America and the Caribbean.
To leverage extra resources for government affairs, some companies work with industry groups in different countries that can collectively advance their common interests.
But industry groups have limits, especially when members are competitors with divergent agendas, said Alexandra Valderrama, Chevron’s regional manager for Latin America policy, government and public affairs.
“Use industry associations when you can,” Valderrama said. “But when you really need to protect your business, it all goes back to the relationship you’ve built with the government. That is critical.”
“And you really need to show [the officials you’re dealing with] what’s in it for the government. Because if they don’t see that, they walk” without pondering the company’s concerns, she said.
Some multinationals are turning to lobbyists as a way to boost outreach in Latin America. They’re motivated by lawmakers expanding regulation, from internet to financial services and TV.
“We’re considering whether to be more proactive on the legislative level,” possibly hiring lobbyists to deal with proposals before they become law in Latin America, said Jose Sariego, HBO Latin America’s senior vice president for business and legal affairs.
Other companies are looking inside for ways to boost their effectiveness in government relations. Kraft Latin America has been conducting workshops to sensitize executives on how to deal with government officials, using an interactive, board game as part of the training, said Jonathan Baker, who runs corporate and government affairs for Kraft Latin America.
Getting buy-in from top executives is invaluable to energize outreach to governments,, said MasterCard’s Santos.
“You have to have CEO agreement on being pro-active,” Sanros said. “If you don’t, but the time [an issue] cascades down to you, you’re putting out fires.”
Malfavon said Alcatel-Lucent is busy with at least two global initiatives that require outreach to governments. One program is “Green Touch,” which calls for slashing the company’s energy use over five years in a push that involves deploying more efficient networks. The other calls for making and selling a small, box-sized device called “Light Radio” that can replace cell-phone towers.
But the challenge remains to execute those and other government-affairs programs in Latin America in the short term: How best “to leverage resources in the region,” said Malfavon.
Government Connections is one of seven event series organized by WorldCIty to bring together multinational executives on international business topics. The Government series is sponsored by energy company Chevron. The next meeting is set for April 15.