PRACTICAL TIPS FOR STAFFING A NEW ENTITY IN LATIN AMERICA
Over the last 17 years, Harris Gomez Group has been helping companies from all over the world expand into Latin America. It is amazing to look back and see the different paths that companies take when entering a new market. Some are more successful than others. One important area that often determines if a company will be successful is whether a good team is employed from the beginning.
There are generally two choices when staffing a new entity – bring in an expat or hire a local team. We have put together some tips based on the experience of our clients.
It is no surprise that the cost of bringing someone to Latin America can be substantial. Expats generally expect housing, transportation, return trips, healthcare, moving costs, private education and further support for their family. You better be sure that the employee is going to fit well with the new culture and surroundings. Bringing the wrong person can be an expensive exercise so going this route needs to be taken with care.
- Bring someone that can speak Spanish. If possible, bring someone that was originally from the country you are trying to enter as they will understand the local culture and are more likely to fit into their new surroundings.
- There is a variety of factors that need to be discussed before sending an expat. Get advice! You need to understand the risks and costs associated with bringing the person and potentially removing them if it does not work out.
- Foreign managers will need local work contracts. They will be employed under local labor laws which mean you have to follow the laws of the country you are operating in. Ignorance is not a good defense and will be expensive for companies who do not understand this.
- Generally, it is a good idea to send expatriates when there is an already existing business or contract in place. A good example of this is when a company purchases a local company. Expats can help the local management teams with technical areas or implementing certain systems and processes from the parent company. Expats tend to do better in supporting roles.
- If you are starting a new entity from scratch, it is generally advisable to hire someone local since they will need to perform sales, take advantage of relationships, and understand the legal / business environments. All of these things are better handled by an experienced local employee.
Hiring Someone Locally
Hiring a local employee can be beneficial since they will already have the relationships, language, and culture. It also has risks since they will not understand the companies culture and will be working independently with little supervision. It requires trust and some good instinct to get it right. Don’t be mistaken though, even those with good instinct get it wrong! We have seen some bad hires over the years but the below should help minimize some of that risk.
- The Anglo culture is very trusting. Just because someone speaks English, does not mean they are a good fit. We have seen everything from translators to graphic designers hired by foreign companies. Networking is great but candidates must be vetted. Ensure they have the skills and contacts that they say they do.
- Use headhunters and local contacts to direct you to the right candidates. This may add some cost but you will get a better pool of candidates to choose from then trying to do it yourself with little local knowledge.
- Understand the local salary market – you get what you pay for. People often think that labor should be cheap in Latin America. It is not always the case. Good people will command good salaries. That is not to say that you won’t see some type of discount compared to salaries say in Australia. It is important to understand the local labor market so that you find the right balance of not paying too little or too much.
- Often companies will start by hiring a Business Development/Sales Manager. When starting a new company, this person is not going to have much admin support. It is important that they can handle the administrative duties as much as they can sell and grow the business. We cannot tell you how many times we have seen accounting books in a mess because the person hired could not save a receipt if their life depended on it.
- Back to the trust issue, set up a check and balance. Let me say that again… set up a check and balance! Provide enough powers that the person can do day-to-day activities but limit other powers so that they can never get into too much trouble. I have seen employees give themselves raises, open bank accounts, and enter into agreements on behalf of the company. A simple check and balance solve this all.
Whether you choose to bring in an expat or hire someone locally, it is important to understand everything involved. The person you hire should reflect your market entry strategy. If you are entering with a contract in hand, hiring someone locally and then pairing them with an expat could be the right way to go. If you are starting from scratch, perhaps hire someone locally and have them work first in your home country for a few months. A bad hire will keep you up at night so don´t lose sleep and take the time to do it right.
“Time spent on hiring is time well spent.” – Robert Half
Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Peru, Bolivia, Ecuador, Brazil, and Argentina. Over the last 17 years, we have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.
To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at email@example.com