INTERVIEW With "América Economía"
América Economía was founded in 1986 in the middle of the so-called "lost decade of Latin America." Its founders decided to bet on the economic and social development of the region, creating the first pan-Latin American business magazine. Today, the results of this bet are in sight: AméricaEconomía is one of the most respected business publications of the region
América Economía reporter Juan Pablo Dalmasso asked ART's Managing Director to comment on salaries being offered to Latin American Managers
Atlantic Research Technologies,
L.L.C. (ART), https://www.atlanticresearch.com,
is a global executive search firm, recruiting in the
industrial, high tech and service sectors, for senior- and middle-management
positions in general management, sales and marketing, finance, supply chain,
manufacturing, IT, and human resources.
América Economía: Do you consider that a world talent competition is affecting Latin American labor markets?
ART: "In many industries, we are seeing a boom in the hiring of senior and middle managers in Latin America. In Mexico and Brazil, in general, this trend has existed for many years, with only some pauses in certain market sectors or regions. Economic stabilization in Argentina, FTA's signed by Chile, and the recognition of a good infrastructure in Costa Rica, have helped those countries recently attract more foreign investment, and a consequent recruitment of world class managers, who are earning higher salaries.
"What is interesting about the current global competition for world class talent is that not only are foreign companies entering Latin America and competing to employ the best managers, but also excellent Latin American managers are relocating to North America, Europe, Asia, the Middle East or Africa, and obtaining senior management positions in those regions and receiving high compensation levels. In addition, people from these other regions are coming to Latin America in order to obtain greater opportunities and salaries. People from all countries and regions are going back and forth between countries or continents, and, instead of a classical "brain drain" in Latin America, with Latin American managers leaving forever for more developed economies, we are seeing Latin American managers who had left the region now returning to start their own companies or to lead local business units of foreign companies."
América Economía: Is that producing wage inflation?
ART: "I would not say that there is 'wage inflation.' 'Wage inflation' suggests that salaries are out of control, perhaps due to larger economic forces beyond anyone's control. In reality, no company is forced to offer a high salary, and no person is forced to ask for a high salary. Why have many managerial salaries risen? The local laws of supply and demand dictate what salaries might be asked for and what salaries might be offered. No company pays a high salary unless the candidate has high qualifications that bring immediate value to them. Some people might say that salaries have increased greatly and suddenly, but I would say that if there happen to be many opportunities for that person, and if companies are willing to offer those rates, it is because at that time and place, companies are not seeing enough people with such qualifications and they see great value in that person for their organization. I think that in free markets, salaries tend to be at the correct levels for that market.
"Our company recruits in over 100 countries, on six continents, so we see similar trends all over the world. What seems to be happening is that global companies are creating certain types of management positions that require similar qualifications from country to country, and the salaries tend to be similar. So a General Manager in China at a major company is probably earning a salary that is similar to what a General Manager is earning in Toluca, Mexico or in São Paulo, Brazil or in Atlanta, USA, or in Grenoble, France. A Latin America Regional Managing Director at a global automotive products firm is probably earning a salary that is very similar to a similar Managing Director in North America, Europe, or Asia. These kinds of salaries exist not just for foreign companies, but also for many leading Latin American firms expanding to Europe, North America or Asia. They need top people and many are paying the salaries that are required to find the right people for their business goals.
"The best way to have a chance at earning 'world class salaries' is to develop the 'world class skills' that are considered most desired in one's field. In Latin America, one always hears 'learn English,' and I agree that good English is an investment that could provide a better path of opportunities. But also, I would add that a Spanish speaker should try to learn good Portuguese - especially through work or study in Brazil - and a Brazilian should learn good Spanish. A truly trilingual Latin American manager has a much stronger chance of securing a Latin America Regional Director or Vice President position at the best companies. People who learn German, French, Japanese, Korean or Chinese also could have enhanced career opportunities in their own countries or worldwide. A good MBA also could provide a qualification that companies might consider as evidence of 'world class' training. Best of all, is to have made great achievements at one's companies. In my experience, global companies are most interested in people who bring evidence of success at good companies.
"Much of today's wage growth in Latin America is directly related to years of hard work, sacrifice, dutiful study, and good work successes by Latin Americans who eventually entered the managerial ranks. Higher compensation is not a matter of luck as much as the result of years of good preparation."
América Economía: In which industries have you been seeing salaries rising?
ART: "We have been seeing the strongest growth in the consumer products, energy, and automotive markets, but also in various service sectors. We believe that in many manufacturing sectors, there have been falling salaries or salaries not rising due to jobs moving out of Latin America or due to local instability.
América Economía: Do you perceive a challenge for local or smaller companies?
ART: "The current challenges of globalization affect every company, every city, every country, every industry, and every person. Some companies will not be able to retain their best employees, because these managers might decide to work for larger multinational firms that could afford higher salaries. The only advice that I could offer smaller local companies is to try to find new ways of looking at their companies, their products, and the way that they do business. This is occurring in the United States, Canada, and Western Europe. Some companies in these 'rich countries' will not survive because their management does 21st Century business the same way that they did business in the 20th Century or even in the 19th Century. Nothing is guaranteed or safe for anyone in any country. Latin American businesses have many of the same challenges that are faced in other regions. But there is hope. Some companies see the value of hiring 'world class managers' and paying them 'world class salaries' and often good results follow. We are currently working with a Mexican firm that is seeking a Sales Director in Spain. They have some of the best trained managers, well paid, and they are seeking this kind of person in Spain to lead their business in Europe. A few management salaries at competitive levels sometimes can repay the investment many times over in increased competitiveness in global business.
"The main waste in Latin American business is not in employee salaries, but in the way that business tends to be done. A few good managers can transform local companies into great global companies - tomorrow's Latin America based multinationals - and create jobs for all categories of Latin American workers. The greatest hope for positive change is that this new generation of Latin American managers might help transform the culture of Latin American business management from a privileged club of comfortable 'hidalgos' or authoritarian command-and-control managers into a results-oriented, unbureaucratic, managerial class that is capable of encouraging and nurturing their workers. These are the managers who will achieve the greatest results in any company, in any country, and such managers should have their compensation be directly related to their results, not to their genealogical, class, or political associations.
"Latin American business has never had a problem paying very high salaries to its top executives - many of whom live luxurious lives to a far greater extent than do many of their counterparts in even wealthy countries. So the corporate money is often there. It is a matter of how to allocate it, to whom, and for what purpose. Latin America's greatest challenge will be to demand of its business leaders, results, solid achievements, and good business ethics. If those goals are accomplished, then Latin American businesses could finally fully enjoy the fruits of being in an easily accessible regional market of over 500 million people, as well as being great companies participating globally. This is not an issue of parceling smaller and smaller pieces of a fixed gross national product, so I profoundly disagree with those who are not interested in raising people's long term standards of living by creating "a larger pie."
"Latin America is a region with tremendous growth opportunities for everyone. It just needs business people to take their education and experience as a great opportunity to improve their companies, the lives of their staff, and their nations. With this kind of sincere patriotic devotion, good compensation will come to those individuals, and also, we hope, an eventual end of the cynical cycle of corruption and underdevelopment or stagnation that has plagued Latin America for too long."