Corporate challenge: How to structure Latin American regional operations
With economies surging in Latin America, multinationals in the region face some tough challenges: How to structure their growing operations and how to find enough talent for the expanding business.
Those were among topics discussed at WorldCity’s HR Connections July 19 in a session led by Renata Serafini, human resources manager at Electrolux Major Appliances Latin America and the Caribbean.
Founded in 1919 and based in Sweden, Electrolux is a global powerhouse, producing such household appliances as ovens, washing machines and refrigerators. In 2012, it reported revenues of 110 billion Swedish Kroners (nearly $17 billion) and employed roughly 61,000 people worldwide.
In Latin America, Electrolux long concentrated its business in Brazil. But in 2009, the company began a push into other markets and developed a regional team based in Miami, Serafini said.
Since then, regional sales have tripled to roughly $1 billion last year, and HR functions at regional headquarters have expanded far beyond basic concerns of benefits and pay, Serafini said.
Electrolux structures its Latin American business in clusters: heavyweight Brazil on its own, Mexico separate and then, the Southern Cone, Andean region and Central America & the Caribbean, she said.
Other companies use different models.
Insurance company AIG did a study last year on possibly restructuring regional operations and chose to keep Miami as its Latin American base, said HR Manager Rosa Vargas-Bruno. It found Miami cheaper than New York, Houston and cities in Brazil and other Latin American nations.
Miami also offers a diverse talent pool and easily attracts talent from the Latin American region, said Sabine van der Meuelen, outgoing HR chief for Medtronic Latin America, based in the Miami area.
“Miami is a place people want to come to. You can get everyone here,” said van der Meulen.
International Meal, a restaurant chain from Brazil, adopted a hybrid structure for its regional expansion: a financial headquarters in Brazil and operational headquarters in Miami, said Enrique Riesco, chief people officer.
Miami offers a neutral base to manage Latin America: Being in Brazil or Mexico means the culture and issues of that big market could overshadow other markets. And Miami also has the benefit of relatively low crime, compared to many cities in Latin America.
“One of the big issues” in choosing where to locate top executives, said Riesco, “is security.”
In developing the HR function at the regional headquarters, a key challenge is limited HR staffing, a WorldCity survey of HR managers found.
Respondents said they’d like to add HR personnel that have “hard” skills – to analyze increasing volumes of data – and with “soft” skills – to develop and motivate talent.
Yet often, those skills come in different people. The problem comes when soft-skill types must master data to convince top execs to hire hard-skills staff, they said.
“I’m evidence that an HR person can learn numbers. It was a near-death experience,” joked Lazaro Acosta, senior manager of HR operations for Latin America for Israel-based TEVA Pharmaceutical.
“Data is critical,” Acosta said. “It’s almost like weapons if you are going to fight a war.”
HR Connections is one of six event series organized by media company WorldCity to bring together executives on international business topics. The HR series is sponsored by the University of Miami School of Business Administration, European Institute of Social Capital, executive search firm Diversifed Search and law firm Littler Mendelson, which specializes in employment law.
The next HR Connections meeting is set for Sept. 20.