To effectively manage human resources in the Americas, watch out for tax issues, legal requirements, currency controls and cultural differences between countries and between generations.
Brazil, for example, will charge income tax on all payments made by a Brazilian entity – even if a worker is on assignment in another nation. Mexico has yet to clarify new laws on outsourcing. Venezuela limits how much foreign exchange can be taken out of the country. And younger generations, especially in the United States and big cities, tend to want more flexibility on the job than their older peers.
Those were just some highlights of the first annual HR Americas, a special multi-panel presentation organized by media company WorldCity and held Nov. 8 in Coral Gables. About 35 people attended, including speakers who traveled from Argentina, Mexico and various U.S. cities for the event.
HR Americas featured four panels on the coming talent war; legal and tax tips; HR software and tools; plus diversity and inclusion at the workplace.
Authentic leaders, speedy recognition for millennials
The first panel on talent touched on millennials, the generation born from the early 1980s through the early 2000s. Millennials generally want more work-life balance, more mobile technology, more community engagement and less hierarchy on the job than older generations. They are quick to jump ship if their expectations are not met.
Their demands exacerbate a growing problem faced by employers, especially in the fast developing economies of Latin America: How to find talent that can be future leaders and stay long-term.
One way to address the talent crunch is to seek out “authenticity” in new hires and future leaders, not just mastery in such subject areas as finance or marketing, said panelist Dr. Logi Romero-Simpson, lecturer of management at the University of Miami School of Business Administration.
That means finding people who know themselves, their strengths and weakness, their values and their goals. Such self-awareness prompts consistency on the job, and consistency is “what attracts people” they lead to stay motivated, said Romero-Simpson.
To find “authentic” leaders, recruiters can ask such questions as: “How would you describe yourself? What are your qualities and defects? What are your values? Where do you see yourself in five or 10 years? How do you feel you can contribute to the organization?,” Romero-Simpson suggested.
Leadership matters, because exit interviews show the main reason that people leave jobs is because of problems with their supervisor. “People leave supervisors. They don’t leave companies,” said panelist Martin Ibanez, senior partner and region leader for talent and rewards at Mercer in Argentina.
To expand their talent pool, companies also are getting involved to improve education in their communities. Walmart, for instance, has a program that teaches finance skills, said Ibanez.
To nurture millennials, some firms now practice “reverse mentoring,” where a younger employee teaches an elder about how they think and what they expect at work.
Others are turning to social media to recognize employee achievements. Kudos on Facebook or the corporate Intranet offer a faster route than traditional employee recognition programs, such as annual reviews, for a younger generation more accustomed to instant results, said Ibanez.
Get tax, legal questions right to save big
In going global, companies too often assume that business overseas is similar to their home nation. They should take more time to study the laws and rules of other countries and plan accordingly, said panelist Juan Carlos Varela, managing shareholder and co-chair of law firm Littler Mendelson in Venezuela.
That’s the case for social security taxes. Many European and U.S. companies have extended their HR policies assuming the existence of double-taxation treaties common in their homelands. But those treaties do not exist among many Latin American nations, said panelist Adriana Laurino, Latin American practice leader and tax partner at accounting and consulting firm KPMG in Argentina.
The upshot: a company in Argentina that sends a staffer to work in a Colombian affiliate would pay social security taxes on that employee in both countries, since there is no double-taxation treaty. To avoid that double cost, the Argentine unit could put the employee on unpaid leave or terminate the employment relationship in Argentina while the staffer is in Colombia. But arrangements must be made to avoid any adverse impact on the employee´s future retirement benefits, said Laurino.
While it’s usually best to pay employees in the country where services are rendered, that’s not always possible – given foreign exchange controls in some nations such as Argentina and Venezuela. Employees transferred to those countries often prefer to be paid overseas, so they can get access to foreign currency, said participant Deborah Hernandez, HR vice president for the cargo division of LATAM Airlines Group.
For companies doing business in Brazil, it’s vital to know that Brazilian labor law favors the employee and litigation is common. Employee lawsuits are long and often hard to decipher – until you reach the end, “like the Venezuelan soap operas,” joked attorney Varela.
“It’s at the end of the 100-page report you realize: Wow. That’s what this guy is claiming,” said Varela.
Mexico’s recent labor reform also raises other concerns. Questions remain over how to interpret new language on profit-sharing and on out-sourcing, said Martin.
Questions of interpretation are common throughout Latin America partly because laws, rules and regulations tend to be less detailed than those in the United States, said Laurino. To make her point, she held up a copy of the U.S. tax code – a fat book – and a copy of Argentina’s tax code – a thin chapter.
“Sometimes, its easier to show than to tell,” said the Argentine tax specialist.
HR: From a “cost” to a profit center
Technology also is changing how HR departments operate. The trend now is toward more analytics, more data stored in the cloud and more data accessed from mobile devices, said panelist Gabriel Alvarado, the Mexico-based director of Latin America and the Caribbean for workforce software company Kronos.
HR departments, like information technology departments before them, also are starting to shift from cost centers to profit centers for big corporations, said panelist Daniel Ciechanower, global vice president for Cloud OEM Sales, a new business launched by software company SAP and its SuccessFactors unit.
Years back, IT departments became so powerful within big conglomerates that they started to offer services beyond their own company to other companies in their group. Some IT units even were spun off as separate consulting companies, said Ciechanower.
That’s now happening to HR departments. No longer reliant on IT staff to enter their data or analyze it, HR units are gaining power within big organizations. They’re starting to serve other companies in their group and generate profits, Ciechanower said.
The 8 a.m. to 2 p.m. sessions wrapped up with talks on diversity and inclusion featuring panelists Jennifer Brown, who leads her own consulting firm in New York; Dale Jones, president of Diversified Search in Philadelphia, and lunchtime speaker Erby L. Foster Jr., director of diversity and inclusion for The Clorox Co., based in San Francisco, who is pictured at the top of the story.
HR Americas was an extended edition of HR Connections, one of six event series that WorldCity organizes to bring together executives on international business topics. The HR series is sponsored by the University of Miami School of Business Administration, law firm Littler and executive search company Diversified Search.