Multilatinas Human Capital

Practices survey
Report by GRS Montevideo*

* The survey upon which this report is based was designed and conducted by the Emerging Markets MNCs
Challenge team in GRS Montevideo led by Magdalena Ramada and Christian Tondo. The report itself was
written by Natalia Aranco, Federico Cabrera, Mara da Silva, Agustina de los Reyes, Juan Scasso, Karla Estavillo,
Jessica Gerpe and Magdalena Ramada. John Bremen and Imran Qureshi acted as consulting members of the EM
MNCs Challenge team during design and implementation stages and their help is hereby gratefully acknowledged.

Multilatinas: capitalizing regional strengths

There has been much focus on the emerging
role of Asian companies after the global financial
crisis. In countries such as China, companies
have responded dynamically and effectively to the
turbulence and continued to grow, whereas firms in
the economies of North America and Europe have
cut payrolls and still face significant challenges.
Yet, in these discussions there has been virtually
no mention of companies in Latin America, a
region which has on many fronts weathered the
financial storms more effectively than Asia. Even
before this crisis, many companies were paying
much more attention to prospects in Asia than
in Latin America in spite of the latters strong
fundamentals, such as a skilled labour supply that
rivals China1 and robust domestic markets that are
more mature than many in Asia.
In this report, we examine how some top
Latin American multinationals or Multilatinas
have responded to the financial crisis in terms
of their human capital practices. The results are
striking. We find that unlike in Asia, where firms
face strong attraction-retention issues; these
are only mild in Latin America. The reason is the
relatively strong level of local human capital and
the relative disinterest of foreign multinationals.
This has enabled the Multilatinas with their low
levels of leverage and ready access to capital
to really take advantage of the crisis and
grow strongly.
We conducted a survey in late 2009 with
interviews of 25 companies in Argentina, Brazil,
Chile, Mexico and Uruguay. The purpose of our

2 towerswatson.com

study was to assess to what extent Multilatinas

differ from their counterparts in other regions of
the world in terms of their human resources (HR),
as well as to identify and analyze how Multilatinas
coped with the latest economic crisis. We further
aimed to identify how Multilatinas face problems
of attraction and retention of talent; how they
design strategic rewards; and if there is a global
structure of corporate governance in place to
compete successfully for talent with competitors
from more developed countries. The overall results
point to Multilatinas as a powerful competitive
force in the future, which will aggressively expand
into developed markets.
Several decades ago, local firms were viewed as
weak and ineffective and virtually all the capital
flow was into Latin America. Only developed
countries multinational companies (MNCs) had
the necessary capital and skills to succeed across
multiple markets. This may have been true two
decades ago but is certainly not the case today.
Formally, we define Multilatinas as multinational
firms with headquarters in Latin American
countries that manage their production and/or
provide services in several countries and that
are active on at least two continents or broader
regions. Their increased international presence
over the past decade can be seen in the growth
of outwards Latin American FDI. According to
UNCTAD 2, FDI flows from Latin America to the
1 See Lluberas, R. (2007), The untapped skilled labor of Latin America in
Horizons A global view of Offshoring, Watson Wyatt Worldwide.
2 United Nations Conference on Trade and Development.

rest of the world were USD 13,487 million a year

on average during the period 1990 to 2000. This
figure more than tripled in the past 10 years,
reaching USD 63,207 million in 2008.

improved capitalization is today key to making

the best of opportunities arising from the current
economic slowdown for those with healthy
balance sheets.

After a first stage of increased foreign presence

via expansion of exports, Multilatinas mainly
of Brazilian and Mexican origin started an
aggressive internationalization strategy based
on outward investments. These investments
took place both in form of greenfields and M&A,
although in the past five years acquisitions
have been the preferred mode. In fact, after an
industrial transition decade during the 1990s
away from the import substitution models
prevailing until the 1980s and towards an
increasingly export-oriented industry Multilatinas
were able to consolidate their strategy at a global
level. Initially forced to look for new markets as a
survivorship strategy due to increased competition
with developed countries MNCs in their local
markets, Multilatinas were then able to take a
further step forward in their multinationalization
by recognizing that they had a competitive
advantage to serve those new markets not only
through exports but through direct local presence.
This started Multilatinas second phase of
internationalization that focused on more than
just seeking new markets. In contrast to Chinese
and Indian MNCs, whose main motivations to
invest abroad were the need for energy resources
and increased competition in their local markets,
Multilatinas saw this second stage of going global
as a way of growing through the improvement
of their risk profile and hence of their access to
financial resources. Becoming global became a
way of Multilatinas appearing more diversified
in terms of risk and of having cheaper access
to external financing. Still, accompanying this
globalization process with higher levels of internal
consolidation, better horizontal and vertical
integration and strong governance mechanisms
was also needed to start being perceived by
international investors as stable players in the
MNC arena.

Indeed, Multilatinas appear to fulfill all necessary

conditions to take advantage of the current
economic environment for their global strategy.
They followed the trend of other Latin American
firms investing in training and innovation in
organization and production processes rather
than in new products during the crisis, as a
way to cope with innovation risk and to reduce
costs through increased efficiency. This combined
with low leverage ratios position them favourably
to be able to further grow in the medium
term, outperforming those enterprises that
are only now restructuring and balancing their
budgets to deal with the consequences of the
economic downturn.

The year 2000 is seen as the major turning

point for outward FDI and increased M&A activity
among Multilatinas. Still, different stages can
be recognized in the past 10 years of their
internationalization process. Although increased
M&A activity and outward investments were a
constant factor of their globalization strategy, in
the past five years and probably anticipating
and weathering the financial crisis after the
financial turmoil around 2002 in the region
Multilatinas became less leveraged and their

In the context of rapid internationalization, the way

Multilatinas deal with talent and the extent to which
their human resource strategies are aligned to
their global positioning becomes key to understand
how they further differentiate themselves from
developed countries MNCs. Multilatinas recently
increased role as contenders in the global war
for talent, and their growth involving outbound
acquisitions make this a perfect time to survey
their human capital practices.
The results suggest that Multilatinas have much
fewer talent attraction and retention problems
than Asia-Pacific multinationals. The fact that
Latin America has a large and increasingly skilled
talent pool makes their attraction and retention
problems more similar to those of european and
US counterparts than to those of their emerging
markets peers. In fact, Multilatinas are mainly
looking for talent in the local labour supply,
even when recruiting technical staff, specialists
and professionals. This supports the idea of an
untapped skilled labour supply in Latin America 3,
as well as the notion that Latin American talent
is versatile, flexible and mobile across industries.
Further, Multilatinas seem to adapt and develop
the majority of their talent to their firms needs
through in-house and on-the-job training, instead
of looking for specialized talent within their
industry or among their competitors workforce.
This also implies that Multilatinas are not yet
competing for talent at a global level given they
are using the competitive advantage of knowing

3 See Lluberas, R. (2007), The untapped skilled labor of Latin America in

Horizons A global view of Offshoring, Watson Wyatt Worldwide.

Multilatinas Human Capital Practices survey 3

and using the untapped local talent first, but as

such they pose a threat to developed countries
MNCs trying to expand in Latin America, since
they seem better prepared to find and to retain
high skilled workers in these markets.
Moreover, we find that there is a certain mismatch
between employers and employees perception
when it comes to base pay as the main reason
for leaving an organization; here again in line with
similar findings for Europe and the US. In addition,
career development opportunities seem to matter
more as a reason both to join and to leave than in
other regions.

Finally, there is a belief that senior executives in

Multilatinas have weathered so many economic
crises that they have developed better tools to
face them. Our results support this idea in terms
of human capital practices since none of the
interviewed firms sees attracting nor retaining
senior executives as an issue; and the reported
HR practices seem to have been more robust to
the crisis than in other emerging regions in terms
of employees retained. Still, when compared to
the US, Multilatinas have more difficulty holding
onto employees in all categories and they further
declare that their HR strategy lags behind their
peers from developed countries.

About the survey

The study was performed during 2009 and
includes information of 25 Multilatinas from five
countries: Argentina, Brazil, Chile, Mexico and
Uruguay. The surveyed companies have between
just 80 and 103,000 employees; collectively they
total 600,000 employees.
Given the sustained growth of these companies
in this period, we decided to focus this study
on the best-performing Multilatinas only. The
universe of companies surveyed was developed
using the Forbes ranking of multinational
companies, the Multilatinas ranking from the
magazine Amrica Economa, the United Nations
Conference on Trade and Development (UNCTAD),
as well as other sources.
The purpose of this study is to assess to what
extent Multilatinas differ from their counterparts
in other regions of the world in terms of their
HR, as well as to identify and analyze how
Multilatinas coped with the latest economic crisis.
We further aim to identify how Multilatinas face
problems of attraction and retention of talent,
how they design strategic rewards, and if there

4 towerswatson.com

is a global structure of corporate governance

in place to compete successfully for talent with
competitors from developed countries. The results
are further compared with comparable data for
multinationals in other regions, so as to highlight
Multilatinas strengths and weaknesses with
respect to talent management.
We gathered the information through personal
interviews and were hence able to collect both
quantitative and qualitative data, by directly
talking to the Multilatinas HR managers. The
study was conducted during November and
December 2009 based on a questionnaire with
five sections focusing on: workforce planning; the
firms reaction to economic downturn; sourcing
and attraction of talent; retention of talent; and
performance and rewards.
The answers to this survey are based on the
circumstances existing in the geographical
area of responsibility of each HR manager. Of
the 25 interviewed managers, 12 have global
responsibilities and 13 are responsible for the
country where the firm has its headquarters.

Key findings
Worforce planning
When doing a formal analysis of their workforce,
companies focus on local rather than on foreign
aspects of the labour market.
Multilatinas are mainly looking for talent in the
local labour pool, including from other industries,
even when recruiting technical staff, specialists
and/or professionals.
Multilatinas seem to adapt and develop
the majority of their talent to their firms
needs through in-house and on-the-job
training, instead of looking for specialized
talent globally within their industry or from
competitors workforce.
Nearly half of the companies interviewed made
changes in their talent processes to adapt to
the new staffing needs expected for the next
five years. Most changes were among talent
recruiting and selection processes.

Managing the crisis

Almost all companies were negatively affected
by the economic downtown but most believe
they have managed this impact better than other
firms in their industries.
Despite the negative effects of the economic
downturn, around half of the companies made
salary adjustments based on performance
and external benchmarking for all categories
of employees.
During the crisis, companies talent retention
was prioritized over attraction strategies.
In terms of the retention of employees, the
reported HR practices seem to have been more
robust during the crisis than those of firms in
other emerging regions.

Sourcing, attracting and retaining talent

All firms declared the local talent pool as the
main source of recruitment.
The reasons for prospective employees to join
Multilatinas are concentrated, whereas for US
multinationals they are more diverse.
Base pay, employer reputation and career
development opportunities are among the top
three reasons for prospective employees to join
the organization in Latin America and among
the top four in the United States.

With regard to recently graduated and general

employees, Multilatinas acknowledge fewer
attraction problems than US multinationals.
None of the interviewed firms sees attracting
or retaining senior executives as an issue.
The three main reasons for employees to
leave the organization are base pay, career
opportunities and promotion opportunities;
both in Latin America and the US.
Multilatinas have more difficulty
retaining employees in all categories than
US multinationals.
There is a certain mismatch between
employers and employees perception when it
comes to base pay as a main reason for leaving
an organization.
Career development opportunities seem to
matter more as a reason both to join and to
leave, than in other emerging markets.
Multilatinas have far fewer talent attraction
and retention problems than Asia-Pacific
multinationals.
The fact that Latin America has a large
and increasingly skilled talent pool renders
firms attraction and retention problems
more like those of their European and US
counterparts than to those of their emerging
markets peers.
Multilatinas are not yet competing for talent
at a global level, given they are using the
competitive advantage of knowing and using
the untapped local talent first.

Performance and rewards

Almost all companies declared that their
HR strategy lagged behind their peers from
developed countries.
Both salary increases and promotions are
primarily determined by the performance of
the employee.
Still, there is a considerable number of firms
declaring that key HR decisions are made
discretionarily and/or by a select number
of people.
US firms and Multilatinas seem to have a
similar degree of centralization regarding HR
management, and global recruitment and
selection decisions criteria.

Multilatinas Human Capital Practices survey 5

Key terms
Talent: the supply of labour with one or more
specific skills or abilities.
Employee Value Proposition (EVP): collective
array of programs that the organization offers
in exchange for employment, including pay,
benefits, perquisites, work environment, career
opportunities, training.
Total rewards: the complete set of monetary and
non-monetary rewards offered to employees.
Monetary rewards include base salary, short- and
long-term incentives, cash recognition and group
and healthcare and retirement benefits. Nonmonetary rewards include non-cash recognition,
training and development, and work environment.

Critical-skill employees: employees

with the skills an organization needs to
compete effectively.
Top-performing employees: employees whose
performance was rated by their supervisor in their
most recent performance review to far exceed
expectations or find itself in the top 10% of his
or her working group.
High-potential employees: employees
who demonstrate high-level contributions,
organizational values, potential to move up to
an identified position within a given timeframe,
and to assume greater responsibility.

Workforce planning
A large majority of firms (almost 85%) did some
kind of analysis related to workforce planning. An
affirmative answer indicates that there was an
analysis of the mentioned variable for the next two
to five years.
The most common analysis is to determine
how staffing needs will change in the near future;
60% of firms analyze this issue. In addition,
more than half of the companies monitor the
proportion of their employees eligible to retire in
the near future.
Some aspects, such as supply and demand
of talent and the skill-set of workers are analyzed
by around 40% of the companies but only with
a local perspective. Only a small number of
companies claimed to analyze the last three
factors formally.
Almost all of the companies that made a formal
analysis about workforce planning have modified
some of their HR processes to cope with the
excess or shortage of talent. Nearly half of them
(44%) changed their recruiting process to adapt
it to new staffing needs. Among the modified
processes were the selection process (40%),
career management processes (36%), and training
processes (36%).
From the results obtained we conclude that
Multilatinas that carry out a formal analysis of
the workforce also have active roles in terms of

6 towerswatson.com

workforce planning, as almost all of them took

actions to modify at least one of their talent
related processes.

Figure 1. Formal analysis

Companies that performed a formal analysis of:
Changes in their staffing needs

60%

The proportion of their workforce

eligible to retire

52%

The local supply of talent

48%

The skill-set of local workers

44%

The local demand for workers

36%

The skill-set of foreign workers

12%

The foreign demand for talent

12%

The foreign supply of talent

8%

Figure 2. Changes in processes

Processes changed to address talent surplus
or shortages:
Recruiting

44%

Selection

40%

Career management

36%

Training

36%

Promotion

24%

Employee Value Proposition

12%

Work

8%

Reaction to economic downturn

Almost all companies interviewed were negatively
affected by the economic downturn (96%) but most
of them judge that they have managed this impact
better than their peers.

great extent by the recent turmoil. Only 4% of the

companies said they were not affected by the
crisis; none of them believed they managed the
negative impact worse than their peers.

Within the largest companies interviewed, (those

with more than 2,500 employees), 13 of 14
considered themselves to have been affected by
the crisis. Among the smaller companies, nine
of 11 said they were affected to a moderate or

The most common measures taken by firms to

face the economic downturn were to freeze new
hiring, reduce the workforce, create redundancies
and organizational restructuring; that is, actions
mainly affecting workforce size. Other actions

Figure 3. Impact of the economic crisis

Was the industry of the company negatively affected by the
economic crisis?
Yes, to a great extent

40%

Yes, to a moderate extent

48%

Yes, to a slight extent

8%

Not at all

4%

On the contrary, it has benefited from it

0%

How well has the company managed the negative impact compared with
other firms in the industry?
Substantially better than peer group

2%

Slightly better then peer group

52%

About the same as peers

16%

Slightly worse then peer group

0%

Substantially worse than peer group

0%

Figure 4. Measures and reaction

Actions taken by companies as a reaction to the current
economic downturn:
Hiring freeze

48%

Layoffs/redundancy/reduction in workforce

48%

Organizational restructuring

44%

Reduced working hours

28%

Salary freeze

28%

Sabbaticals

16%

No bonus opportunity

16%

Expenditure reductions

16%

Staff re-allocation across countries

16%

Training reductions

16%

Multilatinas Human Capital Practices survey 7

Figure 5. Salary adjustments

How companies adjusted pay for the following groups of employees, as a reaction to the
economic crisis

Frozen salaries

Increased
salaries

Adjusted
through
competitive
benchmarking

Adjusted
salaries based
on performance

Critical-skill employees

29%

9%

29%

33%

Top-performing employees

26%

17%

26%

31%

High-potential employees

25%

17%

21%

37%

Recent university graduates

33%

19%

29%

19%

General employees

31%

17%

26%

26%

affecting employees compensation package, such

as salary freezes and cutting bonus opportunities,
were not so popular.
Other companies chose to maintain their
workforce, by reducing working hours (28%),
granting sabbaticals (16%), reducing training
opportunities (16%) or re-allocating staff across
countries (16%).
Most companies adjusted their employees base
pay in a similar way for each group of employees.
In most cases where the companies chose to
freeze salaries, the measure was applied to all

8 towerswatson.com

groups of employees. For those freezing salaries

in a differentiated way, recent graduates were the
first choice, while high-potential employees were
the last choice to be affected by the freeze.
Some companies increased their salaries despite
the economic crisis. The group which profited
least from increased salaries were critical-skill
employees, probably because they were already
being paid well in alignment with their degree
of specialization. As expected, high-potential
employees were the last group considered for
adjustments based on benchmarking and those
most rewarded due to performance.

Employers perceptions
Employers were asked their opinion about the
impact of the previously mentioned measures on
employees attitudes and perceptions.
When asked about talent mobility, there is no clear
perception of the effect of the economic crisis on
employees mobility and hence on retention needs.
Managers were equally divided between those
who agree that market mobility will decrease and
those who do not. In fact, 36% of the managers
do not have a clear opinion about this statement
and think that it is highly linked to an employees
individual attributes.
Interviewed managers said that the market is
depressed, but that there is more mobility for
exceptional cases, especially for top-performers
and critical-skill talent. Some firms experienced the
loss of top-performers who were then able to find
other good job opportunities during the downturn.

In line with the previous comment, other

managers mentioned that opportunities depend
on characteristics such as age, expertise or
educational background.
When asked about the statement: Employees
understand salary freeze and benefits cuts, more
than half of companies (58%) find that employees
fully understand pay freezes and benefits cuts
given the economic downturn. Just 8% disagree
with this statement, and 34% do not have a clear
opinion about it.
In the 34% of mixed responses, the most
mentioned argument by managers is that they
agree on the statement provided certain other
conditions are given. They argued that employees
comprehension of these types of measures
depends on how they are communicated; on what
the competition is doing; and on employees
organizational rank. They believe that employees
understand these measures if they are well

Figure 6. Employers perceptions regarding talent mobility

Employees are not going anywhere in the current economic environment

36% Partially agree/disagree

32% Agree
32% Disagree

Figure 7. Employers perceptions regarding the effects of salary measures (understanding)

Employees understand salary freeze and benefits cuts

58% Agree
34% Partially agree/disagree
8%

Disagree

Multilatinas Human Capital Practices survey 9

communicated and they see that there is

consistency in these measures across the firm.
Further they think that if these types of actions
are taken by other companies in the market,
employees are more likely to understand them.
Other managers said that although most
employees realize that cost reductions are
necessary, there is usually a small group of
employees that still claims against employers.
Finally, they declared that employees at higher
bands are more understanding.
With respect to top-performers being demotivated
by the measures taken during the crisis, more
than 60% of managers agree on this, while 25%
disagree on this statement, and 12% do not have
a clear-cut opinion.

Despite the 53% believing employees understand

pay freezes and benefits cuts, only 25% disagree
on top-performers feeling demotivated by these
measures. So, most managers believe that even
while understanding the measures, these will have
an important impact on employees performance.
More than 60% of the companies find that the
current economic crisis is a great opportunity to
recruit top-performing and unskilled employees.
There is a large overlapping of managers believing
that their employees understand their own firms
measures, but that their competitions employees
dissatisfaction is a good opportunity to recruit
talent. This shows that firms rather tend to take
their employees understanding for granted,
even when they seem to recognize that there is
increased mobility within the talent supply.

Figure 8. Employers perceptions regarding the effects of salary measures (motivation)

Top-performing employees will be demotivated by pay freezes and benefits cuts

63% Agree
25% Disagree
12% Partially agree/disagree

Figure 9. Employers perceptions regarding the effects of the economic crisis on

talent attraction
The current economic environment is a great opportunity to recruit
top-performing and unskilled employees

61% Agree
30% Disagree
9%

10 towerswatson.com

Partially agree/disagree

Employers perceptions
Companies that agree that employees understand
salary freeze and benefits cuts also agree
that top-performers are demotivated by these
measures in 57% of the cases. This seems
contradictory, especially if employees are believed
to understand that these actions were not related
to their individual performance.
Overall, more than half of managers thinking
that employees understand these measures
still anticipate a decline in top-performers
performance due to demotivation. On the other
hand, and as expected, all those employers who
do not think that employees understand the
measures, also agree top-performers will
be demotivated.
Of those employers who think that employees
are not going anywhere in the crisis, 62% also
think that the current economic environment is
a great opportunity to hire, which seems to be a
contradiction. In fact, if labour market mobility
is seen as low, it should also be thought that
recruiting new talent is difficult.

There seems to be a tendency among managers

to see more understanding for measures taken
during the downturn among their own employees
than among those of the competition. In
addition, some firms think that they can take
advantage of the current situation: as the labour
demand is low, employees who are looking for
another job when leaving a sinking ship may
accept a lower salary than in normal times,
representing a great opportunity for firms which
can afford new hires.
On the other hand, if firms think that employees
are moving, it is reasonable that they feel this is
a good opportunity to hire this is consistent with
the 83% overlap between those two answers.

Effects on talent attraction

and retention
More than 40% of the companies find that the
retention of talent is not affected by the crisis.
This is consistent with the thinking that there are
fewer opportunities in the labour market due to the
economic downturn.

Figure 10. Employers perception salary measures and motivation

Top-performing employees will be demotivated by pay
freezes and benefits cuts

Employees
understand salary
freeze and
benefits cuts

Agree

Partially agree/
partially disagree

Disagree

Agree

57%

7%

36%

Partially agree/
partially disagree

62%

25%

13%

Disagree

100%

0%

0%

Figure 11. Employers perception attraction and retention

The current economic environment is a
great opportunity to recruit top-performing and unskilled
employees

Employees
are not going
anywhere in the
current economic
environment

Agree

Partially agree/
partially disagree

Disagree

Agree

62%

0%

38%

Partially agree/
partially disagree

44%

12%

44%

Disagree

83%

17%

0%

Multilatinas Human Capital Practices survey 11

On the contrary, another 44% think that it

is now more difficult to retain talent. The
strongest argument for this is that employees
with outstanding performance may find other
opportunities in the market during crisis times.
This belief is consistent with managers seeing
their employees demotivated by salary freezes
and benefits cuts.

More than half of the interviewed managers think

that the attraction of talent will not be affected
by the crisis. The rest of the opinions are divided
between 20% that think it will be positively
affected and 28% that it will be negatively affected
by the current economic environment.
Some of the most mentioned arguments for
negative effects are higher competition in the
labour market and bad publicity for companies
that had to freeze salaries, cut benefits, or
fire employees. On the other hand, the main
reasons for positive effects are the increase
of (potential and actual) labour supply and the

Only 12% of the companies think they can

benefit from the crisis in terms of the retention of
employees. The main reason mentioned is that
there are fewer opportunities in the market and
this can reduce turnover.

Figure 12. Effect of the economic crisis on talent retention

44% Not affected

44% Negatively affected
12% Positively affected

Figure 13. Effect of the economic crisis on talent attraction

52% Not affected

28% Negatively affected
20% Positively affected

Figure 14. Effects on talent attraction and retention

Effect on talent retention

Effect on talent
attraction

12 towerswatson.com

Positively
affected

Not affected

Negatively
affected

Positively affected

0%

40%

60%

Not affected

23%

54%

23%

Negatively affected

0%

29%

71%

Figure 15. Effects on talent retention and employers perceptions (understanding)

Retention problems

Employees
understand salary freeze
and benefits cuts

Yes

No

Agree

79%

21%

Partially agree/
partially disagree

88%

12%

Disagree

50%

50%

Figure 16. Effects on talent retention and employers perceptions (motivation)

Retention problems

Top-performing employees
will be demotivated by pay
freezes and benefits cuts

Yes

No

Agree

73%

27%

Partially agree/
partially disagree

100%

0%

Disagree

83%

17%

Figure 17. Effects on talent retention and employers perceptions (mobility)

Retention problems

Employees are not going

anywhere in the current
economic environment

Yes

No

Agree

50%

50%

Partially agree/
partially disagree

89%

11%

Disagree

100%

0%

availability of more qualified workers looking

for new opportunities
With respect to the interaction of the economic
crisis effects on talent attraction and on talent
retention, 60% of the companies that think the
effects on talent attraction are positive also
think that the effects on talent retention are
negative. Although at first sight this seems to be
contradictory it may be evidence that:
The reasons employees consider when joining
an organization are different from the reasons
they take into account when deciding to stay in
that firm.
Firms take advantage of the crisis to change the
profile of their employees.
Firms may be positively biased when believing
employees understand their measures and while
focusing on finding new talent they fail to see
the needs of existing staff.
Of the 28% of the firms that were negatively
affected in their talent attraction, 71% were also

negatively affected on talent retention, showing

that almost 20% of companies faced difficulties to
maintain and to attract new talent.
Seventy nine percent of the employers who think
that employees understand the reasons behind
salary freeze and benefits cuts also acknowledge
having talent-retention problems. This depicts
a mismatch between the way employers believe
these measures were understood by their
employees and their employees actual reaction.
It further supports the fact that firms seem
positively biased towards believing their employees
understand their measures and failing to see their
actual needs. On the other hand, it also may imply
that firms retention problems are not related to
measures affecting salaries or benefits.
The perception that top-performers will be
demotivated by the measures taken in the
economic downturn is reinforced, with 73% of
the employers agreeing with this statement also
declaring retention problems.

Multilatinas Human Capital Practices survey 13

On the other hand, 83% of those who think

top-performing employees will not be demotivated
also have retention problems, which could
be implying:
A wrong perception from employers of
top-performers motivation.
A tendency to believe that measures are well
communicated and understood and will not
affect the workforces performance.
Myopia or lack of a global overview that sees
both retention and talent performance from only
a single perspective.
That retention problems are of a more structural
nature and go beyond the specific actions taken
during the crisis.
Among those firms which agree that employees
mobility is not an issue in the current economic
environment, 50% declared retention problems.
This again shows that there is a mismatch
between the way employers perceive the labour
market environment and the problems they are
facing in their own firms.
During the economic crisis, Multilatinas focused
on retaining employees with remarkable features,
such as top-performers (88%), critical-skills (80%)
and engaged employees (76%). Furthermore, they

14 towerswatson.com

Figure 18. Priorities during economic crisis

Actions consider as priorities during current
economic downturn:
Retaining top-performer employees

88%

Retaining critical-skills employees

80%

Retaining engaged employees

76%

Attracting recent university graduates

44%

Attracting critical-skills employees

36%

Replacing high-earning employees with

cheaper talent

16%

Replacing older employees with

younger talent

12%

said that they stopped hiring during the economic

crisis. This decision coincides with the focus
declared by managers on retention rather
than attraction.
Attraction of recent university graduates was a
priority for 44% of the companies, and attraction
of critical-skills employees for only 36%. Few
companies declare using the current economic
situation to replace high-earning employees
with cheaper talent, or older employees with
younger talent.

Sourcing and attraction of talent

Almost two-thirds of companies reported having
difficulty attracting critical-skill, top-performing and
high-potential employees. Most of them believe
that the difficulty is relatively modest, but a few
firms (8%) declared major problems when hiring
workers from these categories.
However, only a minority admitted to having
problems when attracting recent university
graduates or general employees. Moreover,
none of the interviewed managers think that
the attraction of recent university graduates is
a major problem.

of attraction. Approximately one-third of the

companies mentioned that employees are
attracted by the base pay and the nature of
the work. Other reasons, such as working
environment, promotion opportunities, organization
culture and job security, were also mentioned by
the interviewed managers.
All firms in our analysis use the local talent pool
as the main source of recruitment. This happens
for all categories of employees. Companies only
seek foreign talent in specific cases where certain
capabilities in the local market are scarce.

Interviewed HR managers believe that there

are specific characteristics of their companies
that make them attractive. Career development
opportunities and employer reputation are
indicated by 56% of the companies as elements

The foreign talent pool and potential repatriates

are rather seen as sources of executive talent
and talent with a very specific set of skills. This is
consistent with the broad availability of technical
talent at reasonable cost in emerging markets;
while senior executives and talent with soft skills
are rarer.

Figure 19. Reasons for joining the firm

Although companies tend to restrict the search

for employees to the local market, they do not
limit it to their competitors. Above 75% of the
companies recruit personnel from companies in
other industries.

Top reasons a prospective employee would be

attracted to the company:
Career development opportunities

56%

Employer reputation

56%

Base pay

36%

Nature of work

32%

Working environment

24%

Promotion opportunities

20%

Organization culture

20%

Job security

16%

As expected, when looking for general employees

more companies recruit from other industries than
when looking for employees with specific skills.
Professionals, while also mainly recruited from
other industries, still have the highest proportion
of intra-industry recruitment, with 25% of firms
declaring this cadre comes from competitors.
In line with these findings, more than three-quarters
of interviewed Multilatinas claimed not to monitor or
recruit their employees from their competitors.

Figure 20. Attraction problems by category of employees

0

10

20

30

40

50

60

Critical-skill employees

70

Percentage
80

68

High-potential employees
68
Top-performing employees
60
General employees
40
Recent university graduates
24

Multilatinas Human Capital Practices survey 15

Figure 21. Local versus foreign sources of talent

0

10

20

30

40

50

60

70

80

Percentage
90
100

Technical/professional
83
7
10
Other specific skills
67
19
14
General employees
83
7
10
Senior management
55
18
27
Local talent

Foreign talent

Potential repatriates

Note: the category Other specific skills includes employees with industry-specific skills that
cannot be considered as technical or professional staff.

Figure 22. Sources of talent by industry

0

10

20

30

40

50

60

70

80

Percentage
90
100

Technical/professional
75

25

Other specific skills

82

18

Senior management
78

22

General employees
92
Companies in other industries

Competitors

Figure 23. Recruiting and selection

Recruiting and selection decisions are
based on:
Global criteria

56%

Country/region specific criteria

36%

Ad hoc

8%

Recruiting and selection decisions are

taken by:

16 towerswatson.com

A local recruiting team

72%

An individual manager

28%

A global recruiting team

16%

Recruitment and selection decisions are in the

hands of a local recruitment team in 72% of cases.
In the other 28% these decisions are taken by
individual managers, who mostly act in conjunction
with a recruiting team, either global or local.
In 56% of the cases recruiting and selection
decisions are based on global criteria, which
are applied by either a local or a global team.
Almost 8% of the companies apply ad hoc criteria
and claimed not to have a specific process for
recruiting and selection. In these cases decisions
are taken by local recruiting teams, either alone or
combined with a manager.

Retention of talent
When firms were asked about retention of talent,
76% of the companies declared difficulties
holding onto high-potential workers, while 72%
have problems retaining top-performers and 68%
retaining critical-skill employees.

experienced retention problems despite adjusting

salaries through competitive benchmarking or
external comparison.

The majority of employers declared having moderate

problems in retaining employees in these three
above mentioned groups, while only a few of them
considered retention here a major problem.
Keeping recent university graduates as well as
general employees is a problem for more than half
of the interviewed firms, but the difficulty is lower
than for other categories.

Almost all companies (88%) declared lagging

behind their peers from developed countries in at
least one of the components of their HR strategy.
Performance assessment of talents and offering
career development opportunities were the most
mentioned areas in which companies think that
they lag behind peers from developed countries.

Of the interviewed companies, 80% declared

experiencing difficulties retaining one or more of
the following groups of employees: high-potential,
top-performing and critical-skill employees.

Of the interviewed Multilatinas 24% also find it

difficult to link performance to pay and to develop
a total rewards philosophy. Almost 90% think that
they are competitive in terms of the compensation
offered. Finally, the leadership skill of executive
talent is not seen as an area for development by
80% of the firms.

Companies that freeze salaries had problems

holding onto employees in at least one of these
groups in 86% of cases. Retention problems also
appeared in companies that increased salaries,
but to a less extent (60%). Finally, 85% also

Although only 12% of firms believe that they lag

behind their developed countries peers regarding
the level of compensation offered, 60% of the
managers said that employees leave the firm due
to base pay. On the one hand, this could reflect

Figure 24. Retention problems by category of employees

0

10

20

30

40

50

60

70

Percentage
80

High-potential employees
76
Top-performing employees
72
Critical-skills employees
68
Recent university graduates
52
General employees
52

Figure 25. Retention problems and salary adjustments in high-potential, top-performing and
critical-skills employees
Retention problems

Measure taken
by the firm

Yes

No

Freeze salaries

86%

14%

Increase salaries

60%

40%

Adjust salaries through competitive benchmark or

external comparison

85%

15%

Multilatinas Human Capital Practices survey 17

Figure 26. Lags in HR strategies

Areas where your organization lags behind its developed countries peers
in terms of HR strategy:
Performance assessment of talent

28%

Offering career development opportunities

28%

Linking performance to pay

24%

Development of a total rewards philosophy

24%

Communication of Employee Value Proposition

20%

Leadership skills of managers/supervisors

20%

Generating long-term commitment among employees

12%

Level of compensation offered

12%

Material resources and tools available

12%

Figure 27. Top reasons for leaving

What are the top three reasons that employees give for leaving
your organization?
Base pay

60%

Career development opportunities

52%

Promotion opportunities

40%

Nature of work

20%

Relationship with supervisor/manager

20%

Work/life balance

12%

Work-related stress

12%

Force majeure

12%

a mismatch between employers and employees

perceptions about the competitiveness of the
remuneration package. On the other hand, it
may evidence a situation in which Multilatinas
are losing their employees to local firms and
not to developed countries multinationals.
Regarding other reasons for leaving the firm,
52% of managers mentioned the lack of career
development opportunities and almost 40%
felt that lack of promotion opportunities is also
an important reason for employees to leave
the organization.
Several factors mentioned as reasons for leaving
a company were also declared as the main
reasons for joining, such as career development
opportunities, base pay and nature of work. This
apparent inconsistency could be reflecting a high
level of competition for talent in the labour market.
It also seems to confirm the tendency of taking

18 towerswatson.com

own employees for granted while focusing efforts

on attracting new talent. Further, it displays a
better external marketing of the firms practices
than internal communication.
Of the interviewed companies, 60% say that base
pay is mentioned by their employees when leaving
the organization.
It is remarkable that this reason is mentioned to
a greater extent in companies that adjusted their
salaries or even made general salary increases,
62% and 80% respectively, than in companies that
freeze salaries (43%).
One explanation for this apparent paradox may
be rooted in conditions before the crisis. Some
companies paying below market averages may
have had to raise base remuneration in an attempt
to keep staff. Judging by the answers, these
companies have not been entirely successful.

The results in Figure 29 seem in line with what

was expected since most managers who agreed
that employees understand salary freeze (64%)
state that base pay is not one of the top reasons
for employees leaving the organization.
Additionally, all the managers interviewed who
do not believe employees understand salary
freezes, acknowledged that base pay is one of
the main reasons employees decide to leave the
organization. The retention problems declared by
firms that believe their employees understand the
measures they have undertaken seem thus to
stem from reasons beyond pay.
Sixty seven percent of those who assent that
top-performing employees are demotivated by

freezes and benefits cuts state that one of

the main reasons for employees leaving is
base pay.
The same percentage state that employees are
not demotivated by these measures and did not
consider base pay as one of the main reasons for
them leaving.
These outcomes are also in conformity with our
expectations since employers who state one of
the main reasons for employees resigning is salary
base, would be likely to agree that freezes or
benefits cuts demotivate employees.
The consistency among the results discussed
further supports the idea that most of the 83% of

Figure 28. Interaction of salary measures and base pay as reason for leaving the firm
Base pay among the three top reasons
for leaving the organization

Measure
taken by
the firm

Yes

No

Freeze salaries

43%

57%

Increase salaries

80%

20%

Adjust salaries through competitive benchmark or

external comparison

62%

38%

Figure 29. Base pay as reason for leaving the firm and employers perception regarding the
effects of salary measures (understanding)
Base pay among the three top reasons
for leaving the organization

Employees understand
salary freeze and
benefits cuts

Yes

No

Agree

36%

64%

Partially agree/
partially disagree

87%

13%

Disagree

100%

0%

Figure 30. Base pay as reason for leaving the firm and employers perception regarding the
effects of salary measures (motivation)
Base pay among the three top reasons
for leaving the organization

Top-performing employees
will be demotivated by pay
freeze and benefits cuts

Yes

No

Agree

67%

33%

Partially agree/
partially disagree

67%

33%

Disagree

33%

67%

Multilatinas Human Capital Practices survey 19

Figure 31. Base pay as reason for leaving the firm and employers perception regarding the
effects of salary measures (mobility)
Base pay among the three top reasons
for leaving the organization

Employees are not going

anywhere in the current
economic environment

Base pay

No base pay

Agree

62%

38%

Partially agree/
partially disagree

67%

33%

Disagree

50%

50%

Figure 32. Actions to reduce employee turnover

What actions has your organization taken specifically to reduce turnover in the past 24 months?
Introduced/improved flexible work schedules

28%

Offered more choices or flexibility in benefits

24%

Adjusted staffing levels

20%

Off-cycle pay increases

20%

Increased base pay

16%

Accelerated career development opportunities

16%

Restructured jobs/job accountabilities

16%

Improvement in internal communication (EVP)

16%

firms that disagree with that statement but still

have retention problems are not necessarily failing
on the compensation side.
Of those managers who say that employees are
not going anywhere, 62% also say that one of the
main reasons for them leaving is base pay. At the
same time, half of those who disagree with this
affirmation also maintain that base pay is one of
the main reasons for employees departing.
This suggests that although base pay is an
important reason for employees quitting the
organization, the decision to stay or leave is
driven by factors other than pay.
Actions frequently taken by companies to reduce
turnover are related to the flexibility given to
the employee, and not to base pay or career
opportunities. This shows a discrepancy between
the actions taken by the companies and the
reasons why they consider employees leave. At the
same time, such a discrepancy is understandable
given these types of measure have less impact on
the cost side and are easier to implement than pay
adjustments during economic downturn.
Even though most firms did not take any actions
to reduce turnover in the past two years, certain
measures were mentioned by approximately 20%

20 towerswatson.com

of the interviewed companies, such as introduction

of more flexible work schedules, more choices in
benefits, as well as implementation of off-cycle
pay increases.

Strengths in HR strategy
When it comes to identifying the companys
strengths in terms of HR, work climate is identified
as a major plus by most firms.
In second place, they mention points related
to personal growth opportunities, such as
career development, training and promotion.
Companies said that employees, besides
considering the nature of the work, are
interested in their own development and
preferably on a fast path.
Managers also referred to some characteristics of
the firm, such as the employers reputation, longterm stability, the complexity of the company
generally also related to firm size and the
prospect of facing challenging tasks as positive
aspects for retaining talent.
Finally, they also highlighted their remuneration
package, including salary, compensation levels
and benefits offered to their employees as a
further strength.

Performance and rewards

Almost all companies (92%) take into account
employees performance for salary increases.
In the case of market trends, cost-of-living
adjustments and external benchmarking are also
considered as determinants of salary increases,
although to a lesser extent (75%).

which they operate, while the rest apply different

criteria in different countries.

Finally, just a minority consider seniority and

length of tenure when deciding wage increases.
All the companies in the study say that they
consider performance as the main factor when
deciding promotions. On the contrary, in the case
of length of tenure only 24% of them take it into
account. In general, consideration of length of
tenure is related to specific positions in which
experience is a key aspect.
Further, 88% of the companies apply the same
promotion criteria in all the regions/countries in

This demystifies certain preconceptions about

practices in Latin American firms. According to our
survey, most Multilatinas have global processes
in place that link rewards to performance, similar
to those applied in developed countries MNCs.
Besides, tenure and seniority only play a role in
rewards as a further signal of experience and for
the positions requiring more expertise. The belief
that Multilatinas support long-tenure employees
rather than top-performers can be hence refuted.
Even most of those having started as family-owned
enterprises are today applying state-of-the-art
HR practices when it comes to performance
and rewards. Faster growth paths as a further
ingredient to their performance and rewards
strategy make them sometimes even more
attractive than peers in developed countries.

Figure 33. Salary increase determinants

0

10

20

30

40

50

60

70

Percentage
90
100

80

Performance
92
Market trends
76
Cost of living
72
External benchmarking
72
Seniority and length of tenure
16

Figure 34. Promotion criteria

0

10

20

30

40

50

60

70

Percentage
90
100

80

Global criteria
88
Performance
100
Seniority and length of tenure
24

Multilatinas Human Capital Practices survey 21

Multilatinas versus multinationals from

other regions
Attraction problems

Latin America is the region that claims least

problems regarding attraction of any type of
employees, being also the region where more
multinationals declared having no problem at all
in attracting employees. Please note that the
very high figures of Latin American firms claiming
no problems in attracting talent may just mirror
a certain over-confidence or subjectivity bias in
responses. In particular, most Multilatinas declare
having no recruiting difficulties at all within the
classes of recent university graduates (76%) and
general employees (60%). These two figures are
respectively more than double and triple those of
other regions.

In this section, we compare our results with

those from previous Towers Watson studies for
multinationals from other regions.4 According
to these surveys, companies from all regions
experience problems in the attraction of talent.
While companies seem to have difficulties in the
attraction of critical-skill, top-performing and highpotential employees, recent university graduates
are not a pressing problem for most firms.
Additionally, on average multinationals seem to
have moderate to slight problems in the attraction
of general employees.
Problems of attracting talent seem to be less
pressing for US and Latin American firms than
peers in Asia-Pacific (AP) and Europe,
Middle East and Africa (EMEA).

4 Watson Wyatt Worldwide and WorldatWork (2009), Global Strategic

Rewards Survey 2008/2009.

Figure 35. Difficulties in sourcing and attracting talent

Critical-skill
employees

Topperforming
employees

Highpotential
employees

Recent
university
graduates

General
employees

22 towerswatson.com

Region

Great
extent

Moderate
extent

Slight
extent

Not at all

Asia-Pacific

39%

43%

16%

2%

Europe, Middle East and Africa

20%

51%

26%

3%

United States

13%

55%

21%

11%

Latin America

8%

52%

8%

32%

Asia-Pacific

27%

47%

22%

4%

Europe, Middle East and Africa

21%

45%

29%

5%

United States

11%

42%

29%

18%

Latin America

8%

36%

16%

40%

Asia-Pacific

22%

49%

23%

6%

Europe, Middle East and Africa

14%

47%

31%

8%

United States

9%

41%

32%

18%

Latin America

8%

40%

20%

32%

Asia-Pacific

2%

19%

32%

47%

Europe, Middle East and Africa

5%

16%

43%

36%

United States

3%

17%

46%

34%

Latin America

0%

8%

16%

76%

Asia-Pacific

2%

44%

43%

11%

Europe, Middle East and Africa

2%

25%

54%

19%

United States

0%

23%

63%

14%

Latin America

4%

12%

24%

60%

Figure 36. Sourcing and attraction of talent

0

10

20

30

40

50

Percentage
60

Employer reputation
56
34
41
35

Career development opportunities

56
32
40
39

Base pay
36
35
37
46

Nature of work
32
22
14
17

Organization culture
20
34
26
24

Promotion opportunities
20
7
9
5

Job security
16
5
15
17

Flexibility or choices in benefits

12
3
3
4
Organization's product/services
8
18
15
19
Health care benefits
8
15
4
8
Latin America

United States

Europe, Middle East & Africa

Asia-Pacific

Multilatinas Human Capital Practices survey 23

In relation to developing economies, companies in

Asia-Pacific are experiencing problems attracting
employees to a greater extent than those in
Latin America. While 87% of firms in Asia-Pacific
report having talent attraction problems of a
slight to moderate extent, only 36% of firms do
so in Latin America. Even among groups such as
recent graduates, twice as many businesses
admit to having difficulties in Asia-Pacific than
in Latin America. With respect to the attraction
of critical-skill employees in both regions,
around 60% of firms admit to slight to moderate
attraction problems.

Reasons why prospective employees

are drawn to an organization
Although there are important differences among
these four regions, companies state that
employees are mostly attracted by employer
reputation, career development opportunities,
base pay and organizational culture.
The answers provided differentiate Latin American
from peers in all three other regions with respect
to the importance of certain firm attributes.
The firms products and services matter less
in this region than in the other three, while
the nature of work, the employers reputation,
career development opportunities, promotion
opportunities and flexibility are much more
often mentioned as talent attraction factors by
Multilatinas than by MNCs in other parts of the
world. Promotion opportunities and flexibility,

24 towerswatson.com

notably, receive up to treble the proportion of

mentions in Latin America than other regions.
In terms of base pay as an attraction factor,
Multilatinas seem to think more similarly to their
peers in developed countries than to Asia-Pacific
MNCs. For the latter base pay is mentioned as the
most important determinant of attraction and while
almost 50% mention it in Asia-Pacific firms, it is
only cited by around 35% of firms on average in the
other regions.
Furthermore, job security is shared as an
important factor by Multilatinas, European
and Asia-Pacific MNCs, while US MNCs do not
mention it often enough as a reason making them
attractive to talent. The reverse happens with
healthcare benefits and organizational culture,
which matter a lot more to US firms than to MNCs
in other parts of the world. In fact, while incentive
pay, healthcare benefits and the firms products
or services matter to around 20% of firms as
attraction reasons in the US, less than 10% of
Multilatinas see these factors as important. In
the case of healthcare benefits this could be due
to the fact that in Latin America contributions
to the healthcare system are usually mandatory
and hence, they are not considered an additional
benefit in the compensation package. On the
contrary, flexibility, promotion opportunities and
job security are mentioned more than twice as
often by Latin American firms than US MNCs as
reasons for attraction.

Recruiting and selection

decision-taking

retention problems affect critical-skill and topperforming employees.

In Latin America, the majority of the recruitment

and selection decisions are based on global
criteria (56%), a similar percentage to the one
declared by US global companies whose HR
management is centralized (53%).

Latin America seems to have the least

pressing retention difficulties, particularly for
top-performing and critical-skill employees. Here
too, the proportion of firms that declared no
problems in retaining employees is always larger
in Latin America than in the other regions for all
groups of employees.

This result is expected due to the fact that as

companies become more global and extend
themselves, there is a need for the internal
consolidation of HR practices to keep up with
developed countries MNCs standards. This
further supports the fact that Multilatinas have
innovated in their organizational and talent
processes lately, and that they have HR structures
in place that are more similar to those of US firms
than their Asia-Pacific counterparts.

Even though Asia-Pacific companies are more

likely to experience greater problems than
Latin American peers attracting recent university
graduates, this difference mitigates when
considering difficulties of retention, where in both
regions less than 5% of firms say they
have problems.
Altogether the proportion of firms declaring
great or moderate difficulties in retaining
critical-skill, top-performing and high-potential
employees is 1.5 times larger in Asia-Pacific than
in Latin America.

Retention problems
In all four regions firms have greater attraction
than retention problems. The most important

Figure 37. Difficulties in the retention of talent

Critical-skill
employees

Topperforming
employees

Highpotential
employees

Recent
university
graduates

General
employees

Region

Great
extent

Moderate
extent

Slight
extent

Asia-Pacific

28%

47%

21%

4%

Europe, Middle East and Africa

6%

44%

37%

13%

United States

7%

41%

41%

11%

Latin America

8%

36%

24%

32%

Asia-Pacific

21%

44%

29%

6%

Europe, Middle East and Africa

7%

33%

46%

14%

United States

3%

38%

46%

13%

Latin America

4%

40%

28%

28%

Asia-Pacific

16%

48%

30%

6%

Europe, Middle East and Africa

8%

33%

45%

14%

United States

1%

41%

46%

12%

Latin America

4%

40%

32%

24%

Asia-Pacific

3%

21%

38%

38%

Europe, Middle East and Africa

6%

14%

49%

31%

United States

2%

15%

51%

32%

Latin America

4%

16%

32%

48%

Asia-Pacific

2%

42%

47%

9%

Europe, Middle East and Africa

2%

12%

57%

29%

United States

2%

17%

57%

24%

Latin America

0%

20%

32%

48%

Not at all

Multilatinas Human Capital Practices survey 25

Figure 38. Retention of talent

Percentage
0

10

20

30

40

50

60

Base pay
60
44
45
51

Career development opportunities

52
59
38
51

Promotion opportunity
40
43
33
26

Nature of work
20
9
13
22
Relationship with supervisor/manager
20

35
25
30
Stress

12
10
13
15
Work/life balance
12

30
23
22
Physical work environment
8
1
5

3
Job security
8
5
4
3
Incentive pay opportunity
8
10
5
10

Latin America

26 towerswatson.com

United States

Europe, Middle East & Africa

Asia-Pacific

70

Reasons why employees leave

an organization
According to the surveyed companies, the main
reasons for employees leaving the organization
seem to be similar in the four regions: base pay,
career opportunities and promotion opportunities.
Still, the proportion of managers mentioning
each reason slightly differs from one region to
another. Certain patterns in those differences
are worth mentioning. Latin America is in line
with Asia-Pacific with respect to the importance
of career development opportunities and the
nature of work, but while both regions rank the
first motive as more important than in the US, the
latter prevails more among US managers answers
than in those from emerging markets MNCs.
Moreover, stress and incentive pay are mentioned
by less than 15% of the interviewees in all four
regions and differences among regions are not
significant with respect to those two factors as
turnover triggers.
On the other hand, answers referring to four
reasons for leaving clearly distinguish Latin America
from all other three regions: base pay and job
security are mentioned more in Multilatinas
than in other MNCs, while work/life balance and
the relationship with managers and supervision
seem to matter less in Latin America than in

other parts of the world. This has two alternative

interpretations. On one hand, it can be regarded
as a further indicator of mature and effective
management, as well as healthy organization
structures. On the other, it can be argued that
in developed countries multinationals, as basic
needs like salary and job security are covered,
other factors such as work/life balance and the
relationship with managers gain more importance.
It has to be noted that, according to our
results, although base pay is considered to
be only the fourth-ranked reason for joining
the company, it is the most important reason
mentioned by employees for leaving. This again
highlights a mismatch in perceptions or lack of
clear communication between employers and
employees with respect to their dissatisfaction.
It can also be interpreted as a mismatch
between the entry-level salary and the exit salary,
indicating less-than-expected growth and/or
a slow salary adjustment process.
Finally, Multilatinas and US MNCs assign a similar
importance to promotion opportunities as a reason
for employees leaving, weighing double in the score
from Asia-Pacific. Conversely, with respect to the
physical work environment, US and Asia-Pacific
firms see it as less important, whereas Multilatinas
mention it twice as much; here being more similar
to their European counterparts.

Multilatinas Human Capital Practices survey 27

Conclusions
Latin Americas strong fundamentals have
enabled the region, as well as its growing MNCs,
to better weather the crisis than North America,
Europe and even Asia. Nevertheless, it seems
that Multilatinas and their success in coping
with the crisis are still not included in most
discussions on multinationals as global economic
agents. This report examines how Multilatinas
reacted to the economic crisis in terms of their
HR strategies and it was able to find remarkable
results. Unlike Asian MNCs, Multilatinas face
fewer talent attraction-retention issues and
are currently able to capitalize on the regions
strong level of local talent. This, combined with
low levels of leverage, made it possible for
Multilatinas to effectively weather and even grow
during the crisis. Our survey interviewed the HR
managers of 25 MNCs in Brazil, Chile, Mexico
and Uruguay. Besides looking at the way in
which they reacted to the financial crisis, we also
focused on how Multilatinas differ from their
counterparts in other regions of the world in
terms of their HR strategies.
Latin Americas large and increasingly skilled
talent pool makes attraction-retention problems in
Multilatinas more similar to those of their European
and US counterparts than those of emerging
markets peers. Multilatinas are mainly lookingfor
talent in the local labour supply even when recruiting
technical staff and professionals. In addition,
Latin American MNCs adapt and develop the
majority of their talent to their needs through inhouse and on-the-job training, instead of looking
for specialized talent within their industry or from
competitors. In other words, they are not yet
competing for talent at a global level, but their
strengths in the HR arena combined with their future
growth strategies will change that soon enough,
since they could be better prepared to find and to
retain high-skilled workers in emerging markets.

28 towerswatson.com

Finally, our results seem to confirm the idea of

senior executives in Multilatinas having weathered
so many economic crises that they are currently
better positioned to face them. Indeed, none of
the interviewed firms sees either attracting or
retaining senior executives as an issue. Half of the
interviewed companies made salary adjustments
based on performance and external benchmarking
and most judge themselves to have managed the
crisis better than other firms in their industries.
This matches the conclusion that during the crisis,
talent retention was prioritized ahead of attraction.
The reported HR practices further seem to have
been more robust here during the crisis than in
Asia in terms of employee retention.
When compared to the US, however, Multilatinas
have more difficulty holding onto employees in all
categories and only have less trouble attracting
employees when it comes to new graduates. On
the other hand, they still feel that their HR strategy
lags behind their US and European peers, although
our hard data points to firms in all three regions
having a similar degree of centralization regarding
HR management as well as global recruitment and
selection decisions criteria.
Overall, our study points to Multilatinas as a
powerful competitive force in the future, who will
continue to aggressively expand into other markets.
In fact, Multilatinas seem to have all the ingredients
needed to take advantage of the current economic
environment for their global strategy. By investing
in training and innovation in organizational and
productive processes rather than new products
during the crisis, Multilatinas have prospered with
in-house generated talent. This combined with low
leverage ratios position them favourably to be able
to further grow in the medium term, outperforming
those enterprises that are only now restructuring
and balancing their budgets to deal with the
consequences of the economic downturn.

Towers Watson
875 Third Avenue
New York, NY 10022
USA
Towers Watson is represented in the UK by
Towers Watson Limited, Towers Watson UK Limited
and Towers Watson Capital Markets Limited.
Towers Watson Limited, Towers Watson UK Limited
and Towers Watson Capital Markets Limited are authorised
and regulated by the Financial Services Authority.
Towers Watson Limited is authorised and regulated by the
Financial Services Authority.
The information in this publication is of general interest
and guidance. Action should not be taken on the basis of
any article without seeking specific advice.
To unsubscribe, email eu.unsubscribe@towerswatson.com
with the publication name as the subject and include your
name, title and company address.
Copyright 2010 Towers Watson. All rights reserved.
TW-EU-2010-16730. June 2010.

towerswatson.com