Companies continue to look for best human resources strategies in Latin America

15 September 2011

Multinational companies continue to explore how to best structure their businesses and employees in Latin America as they continue to look for ways to capitalize on the myriad opportunities throughout the region.

Despite the region’s impressive growth, there’s no model formula for success and many firms are still searching for what works best for their people and products, a gathering of human resources executives said during WorldCity’s HR Connections on Sept. 13.

The list of issues companies must deal with is long. Safety, salaries, taxes, quality of life for employees, company hierarchy and previous responsibilities are all key factors.

HR directors are learning to operate within their companies' new economic realities, said Stacie Thomas of Bacardi.

On top of that the “uncertainty of the economic forecast is really a question, said Howard McCarley, director of the Universite des Talents of North America for Club Med. “We just finished budget season, it’s almost like running two budgets.”

There’s “the real one and the one you’re actually going to hit,” replied Stacie Thomas, vice president of human resources for Bacardi U.S.A.

Companies are also facing the challenge of having no fresh blood in their ranks as hiring freezes abound and people hold onto their jobs “like barnacles,” McCarley said.

Meanwhile there’s heavy competition for management-level talent throughout the region, and those being scouted for jobs know they’re in demand, and their value.

With “how hot Latin America is… it’s translated into salaries, making it impalatable to some of our clients as to what they have to pay,” said Marjorie Kean, managing director for Diversified Search. “You bring people into a general management position and they end up making more than the head of the region.” That theme rang true for many of the heads of human resources in the room, as did how much more complicated the job becomes when they start looking at hiring in Brazil.

 “We end up not looking at Brazil unless it’s absolutely required because the salaries are outrageous, Kean added. A “general manager in Brazil is making $600,000” a year.

Much of that is due to the tax structure in Brazil, profit sharing between companies and their employees and the fact that many workers are unionized, including management. In an attempt to deal with those costs, some companies are looking at ways to vary their compensation systems so they don’t find themselves paralyzed by payroll.

Companies can use creative compensation strategies to get around the high cost of hiring in Brazil, said Western Union's Sara Baker.

Later, a handful of HR heads whose companies are in the midst of restructuring their global operations also discussed the challenges and opportunities they’ve seen as the business takes on a new shape.

“We have a new CEO and we’re moving from a regional structure to a business unit structure,” said Sabine van der Meulen, director of human resources for Medtronic Latin America. We are “moving to about six business units, which are all medical devices, and you have people sitting in Minneapolis who will now be managing the world for their business lines.”

With all those changes, communicating who reports to who and that no one has lost their authority is key to ensuring the overhaul runs smoothly

“The perception is that region/country managers will lose a lot of power,” van der Meulen said. We have to “help them understand they still have authority even though their people now report centrally.”

The popular trend, it seemed, is to have country or regional executives responsible for their area’s profit-and-losses while also managing a business line so marketing can be tailored to customers of that area.

Kean of Diversified Search said Procter & Gamble used this strategy to its advantage to deal with smaller countries that might not warrant dedicated staff.

“If you were the country manager for Brazil you also ran the diaper line for the region, the head of Venezuela ran toothpaste,” she said. That “allows you the cluster regions so instead of having a general manager in small countries you end up having one person be the general manager for the cluster.

“They become the head of a product line,” she added, “so they end up having people reporting to them and they have more control over the” business.

HR Connections is one of seven event series organized by WorldCity to bring together executives on international business topics. The HR series is sponsored by the University of Miami School of Business Administration and Diversified Search. The next HR meeting is set for Nov. 14.

For Diageo's Foreman, managing change means avoiding 'awful-izing,' much more

26 May 2011

Managing change is tough, but some pointers can help: Communicate the benefits early and clearly. Get top executives to champion the cause. And follow through long-term to make sure change sticks.

Jennifer Foreman, a human resources professional with global spirit company Diageo, shared those tips and led discussion on change management at WorldCity’s HR Connections May 13 in a lively talk punctuated with such terms as “survivor syndrome” and “awful-izing.”

Diageo's Jennifer Forman spoke about managing change

“You try to keep that part of the change curve as short as possible,” Foreman told the group. “You need two-way feedback channels, so you can set the record straight.”

Foreman shared lessons learned from directing two efforts.

She recently helped transfer some HR functions from Diageo’s Latin American and Caribbean region into a shared services center in Norwalk, Conn. And she’s now helping roll out a company-wide software system. Both efforts involve changing how people work in a region where Diageo employs about 2,000 people in 13 countries with three main language groups: Spanish, Portuguese and English.

Foreman said the efforts taught her to distinguish between “project management,” which is more task-oriented, and “change management,” which “is making the culture and behavior shift to ensure the change is sustainable.” She aims for long-term and sustainable change.

Key to success for change, she has learned, are five points:

• Training for new roles.
• Communications to convey the benefits and process.
• Re-designing the organization to match what is new.
• Working with stakeholders both inside and outside the company, including suppliers.
• And being clear on gaps to close “to get from here to there,” such as teaching factory workers to use computers so that they can fill out forms that move online and would no longer be completed by local HR staff.

The change works best when top managers champion the effort “right through the resistance,” Foreman said. And when steady communication clearly explains why the change will help, she said.

But why did Diageo centralize some functions in Connecticut?, asked Marjorie Kean, a managing director in Miami for executive search company Diversified Search and sponsor of the event series. How did the company explain that in Latin America, beyond citing cost savings?

Managers emphasized that standardization would make it easier for everyone to work in the same way and raise the quality of operations, Foreman said. For example, some units in Latin America lacked the newest software, and new systems mean Diageo will invest to upgrade systems for everyone, Foreman said.

Still, it became impossible to standardize everything – when countries have different labor laws, business cultures and languages. Even translation of newsletters about the change became complicated: “Brazilian Portuguese is not Portugal’s,” Foreman said.

In the end, Diageo eased the transition by shifting some staff from the Latin American region to work in Connecticut, so an employee calling from Jamaica might get the same HR person who helped back on the island. And the company made some exceptions for shared functions to be performed back inside the region, especially in Brazil where law requires that some forms be signed locally, she said.

“We actually have someone sitting in Brazil who works with shared services,” said Foreman.

What about ways to deal with resistance to the change from managers or employees, what worked?, asked Francia Baez, head of global Diversity & Inclusion at global payments company Visa.

Trying to go around top managers who reject new programs “never works. You have to everyone completely aligned,” Foreman said.

It’s also vital to recognize the stages that come with change and communicate differently at each part of the curve: First, when people hear of the change and react with shock. Next, when they think the worst and “awful-ize.” And finally, after the change, to deal with “survivor syndrome.”

LAN's Deborah Hernandez talked about the importance of monitoring "radio pasillo," or hallway conversations

Hallway talk invariably raises concerns that staff in headquarters doesn’t understand the needs of staff n field offices. How did Diageo deal with that concern in its new ventures?, Hernandez asked.

The company made an effort to involve staff from every country in the change, asking for their input throughout the process. Even now, a member of the shared services team in Connecticut sits in on meetings with managers in the region, so that everyone can coordinate together, said Laura Quevedo, Diageo’s HR director for Mexico, Venezuela and Colombia.

Even so, managing change remains difficult. Many mergers and acquisitions fail, said Santiago Leon, group benefits specialist for insurance firm ACC Hall in Miami. What may be most important is selling change to people affected: “selling the need and selling the benefits,” Leon said.

Foreman said she’s learned from her efforts to focus not only on selling but also on follow-through – to make sure the change can be sustained and the behavior and culture has shifted.

“You can’t underestimate the cultural implications of change,” said Foreman.

HR Connections is one of seven event series organized by WorldCity to bring together executives on international business topics. The HR series is sponsored by the University of Miami School of Business Administration and Diversified Search. The next HR meeting is set for July 15.