Diverse Cultures, Challenges, Opportunities
Latin America (LATAM) generally refers to territories in the Americas where the Spanish or Portuguese languages prevail: Mexico, most of Central and South America, and in the Caribbean, Cuba, the Dominican Republic, and Puerto Rico. It covers approximately 13 percent of the earth’s surface area and its population is close to 600 million people today. A region known for its diverse and rich culture, natural resources, developing markets, it was also in the world’s spotlight when Brazil hosted both the 2016 Summer Olympics and 2014 FIFA World Cup.
Despite recent economic challenges, the region continues to attract both in-region cross-border and global company relocations. The flow of expatriates in to the region has increased significantly during the past ten years as political institutions increasingly become more open, democratic and stable.
The International Monetary Fund’s most recent Regional Economic Outlook on Latin America states that, after disappointing growth the past few years, economic activity in LATAM remains on track to gradually recover as the global economy gathers steam and recessions end in a few countries within the region.
The long-term growth outlook has LATAM’s focus on priorities such as:
- closing infrastructure gaps,
- investing in human capital,
- encouraging female labor force participation,
- reducing labor market informality,
- enhancing governance and curbing corruption, and
- furthering trade and financial integration.
Set to be one of the biggest economic accelerations of 2018, expectations are for LATAM to grow at its fastest pace since 2013. Relocation activity should also keep pace with this economic activity.
Yes, NEI’s Handled That!
Experienced mobility professionals usually agree that managing successful relocations in LATAM can prove more challenging than in other parts of the world. The need for patience and flexibility is paramount here.
NEI has three decades’ experience consulting and servicing clients who deploy employees into, from and/or within LATAM. Our own Account Executives -- the single point of coordination for client international assignees -- have personal experience abroad, language skills and knowledge of cultural differences. We also partner closely with experienced on-the-ground service partners with expertise, skills and knowledge of what’s required to successfully support client relocations in each unique LATAM country.
Our LATAM experience goes far beyond common LATAM relocation “hot spots”. Urban, rural and in between, NEI has managed all such locations for our diverse client base across Mexico, Central and South America.
Consider an example of two dozen employees from the U.S. and Mexico heading to a remote, coastal area of Brazil. In addition to facing culture shock, the local market had limited housing availability, schooling challenges and complex visa, payroll and immigration requirements. Many in the group faced a different lifestyle than accustomed to at home and, with limited options, many also found themselves moving from large homes to very small apartments.
Because face-to-face meetings in LATAM are so critical to establishing trust, several members of NEI’s international leadership team personally traveled with the client contact to Brazil to meet with local client HR stakeholders, immigration, tax and payroll partners, client expats currently on assignment, and DSPs to gain first hand understanding of challenges and housing/living conditions near the work site.
NEI’s international team collaborated with client team members to streamline information, gather feedback and find practical, on-the-ground solutions. NEI also coordinated two days of local cultural training and on-site language training at the work site. Further, NEI addressed all employee relocation concerns directly and acquired answers to all employee questions from involved parties where needed.
By NEI leadership travelling directly to the site and investing ourselves in the outcome directly, strong, face-to-face relationships were built, a clear understanding of both business and cultural practices at the work site were gained and our full commitment to the client’s project success was clearly demonstrated.
Setting Expectations, Being Proactive
NEI Account Executives manage relocating employee expectations right from the start of each move. Doing so for LATAM relocations is especially important. Delays are commonly at the top of the employee/family’s concerns list and need to be considered appropriately when doing business in LATAM. For instance, household goods shipment coordination in LATAM can be challenging as there are no “open borders” as in the European Union. What seems to be a simple land shipment from one country to another can take longer than expected and many LATAM countries have strict, but fluid, rules around when a person is eligible to bring a shipment into or out of the country.
For instance, a client assignee relocated in 2016 from Ecuador to Argentina, but he was unexpectedly repatriated in early 2018. However, because of his business travels and the time he spent out-of-country, Argentina restricted him from relocating his goods back to Ecuador. NEI worked with the client to provide a creative solution to allow the employee to bring back some of his goods and compensate for the goods that could not be brought back.
NEI also proactively prepare our clients’ mobility teams for the unique nuances of each LATAM country and even individual cities within countries. When all involved parties are aware of these challenges, participants’ expectations can be established early on.
Consider this intra-LATAM example when flexibility was key: An assignee and his wife, who was five months pregnant, accepted a permanent move from Argentina to Sao Paulo, Brazil. The area of the city they needed to be in had limited temporary living options and numerous cases of Zika virus, a serious concern for the couple.
NEI’s Account Executive was highly empathetic to the couple’s requirement that any temporary living unit shown to them have mosquito netting across all windows -- regardless if units had air conditioning. Initially this request proved difficult as 1) appropriate property inventory was scarce; 2) apartments were being booked extremely fast; and 3) it was a challenge to source netting appropriate for keeping out mosquitos. The couple sought creative options.
Our Account Executive worked with our temporary housing service partner, who was resourceful and understood the family’s concerns. Once the couple selected a property, NEI and the temporary housing partner helped them immediately identify a local, trusted mosquito abatement company. NEI quickly coordinated reimbursement, approved by the client contact, and the appreciative couple settled into Sao Paulo with much less apprehension, eagerly expecting their newborn.
Potential Corruption Concerns
One of the biggest challenges of doing business in LATAM has been the perception of fraud and corruption. According to the World Economic Forum’s Global Risk Report 2017, fraud remains a serious issue, though considerable efforts have been made to lessen it thanks to the efforts of companies, governments and the wider international community. Anti-fraud legislation such as the US Foreign Corrupt Practices Act and the UK Bribery Act have helped to increase awareness on the potential of corruption and fraud in LATAM.
Assignees need to be briefed on potential risks both prior to any LATAM trip and, once in country, with their DSP. By being mindful of this, they can be prepared to understand potential in-country situations they might face and how to avoid them.
Consider the example of an assignee and her family relocated to a city well north of Santiago, Chile:
NEI’s Account Executive collaborated with the client, the immigration service partner and the local DSP to avoid two corruption situations that were well known locally:
- Because it can take up to three months for a work permit in Chile and up to four months for a residence visa, the assignee entered under a Special Tourist Visa for Work Purposes. This allowed her to work until the work permit was received, but the immigration firm and DSP recommended to NEI that the family travel south to Santiago because of known corruption issues at the local consulate. NEI secured approval from the client for this plan and to cover the family’s round-trip flights to Santiago to avoid the local consulate.
- As there was also known corruption in the local driver license agency, where both assignee/husband would have to take a lengthy driver’s test offered only in Spanish, NEI and our on-the-ground DSP worked with the client, so the couple could take the test in Santiago when acquiring their visas. There, the requirements then were a certificate of one’s latest education, a valid license and proof of residency…and there was no reputation for corruption.
Key Cultural Considerations
LATAM is one of the most beautiful, dynamic and welcoming places in the world. Its diverse cultures, growing markets and resources are make it a superb area for global companies to explore and conduct business. With this diversity, it is important for companies conducting business there to remember -- just as in EMEA or APAC – that all Central and South American cultures are not the same and local modifications need to be made accordingly.
We encourage assignees to fully appreciate cultural differences and have pre-move training on items such as how citizens in LATAM countries view time. In today’s world, understanding time orientation in the destination country is critical to business situations and it is recommended in LATAM to arrive on time for meetings, but also be prepared for schedules to dissolve and agendas to go out the window. If a dinner is arranged at a restaurant for a specific time, often after 9 or even 10 pm, expect that the meal often will not start until an hour later after drinks and appetizers.
Likewise, LATAM communications can be much more “indirect” than some are used to and there are plenty of non-verbal signs one should be mindful of. Business casual wear is generally not appropriate in LATAM. Rather, business meeting attire is considered a cultural indicator signaling that “if you look powerful, you will be treated as powerful.” Women typically dress in fashionable business suits; men in suits and ties.
As in EMEA or APAC, more young professionals in the region have English competency, but English language competency should not be assumed. NEI strongly encourages pre-departure language training be maximized as it can result in faster integration on LATAM assignments and maximize each client’s assignment return on investment.
Finally, NEI also advises clients and assignees that, in most LATAM cultures, family is one of the most important considerations. On our calls with assignees, NEI Account Executives adjust the style of the call to ensure they are asking the right questions and addressing any unspoken issues about the family’s expectations to ensure their needs are completely met.
Safety is also a frequent concern and pre-move discussion topic for moves into or within LATAM. NEI takes security extremely seriously, but despite the best security briefings and precautions, unfortunate events can happen anywhere.
Like other regions of the world, assignees / families living or travelling abroad need cultural awareness, risk planning, security awareness and heightened situational awareness. For instance, some LATAM countries are going through challenging political situations. This is especially prevalent in Venezuela where ground travel outside of Caracas should only take place during daylight hours. This needs to be taken into consideration for those who need to transit to a work site outside of the capital city. Additionally, shipping trucks do not travel at night, increasing transit times.
NEI fully appreciates that assignees can have emergencies any time of the week -- not just Monday through Friday -- and are available to assist. Consider the situation of an assignee in Brazil driving home from work on a Friday night. Stopped at a traffic light, he was held up by a gun-wielding assailant demanding his wallet. The employee was fortunate to drive away unhurt and keep his cell phone, but his cash, credit cards and license were gone. Unable to connect with colleagues at his local office, he called his NEI Account Executive at her home in the U.S.
NEI immediately connected the assignee with International SOS that Friday evening for assistance speaking with his local bank, as he was not fluent in Portuguese. He was offered temporary housing at a nearby hotel and provided emergency cash. While he turned down the hotel offer, he greatly appreciated the after-hours care and concern NEI showed for his situation.
NEI Can Help Achieve Your LATAM Goals
NEI provides expert consultation on mobility practice for LATAM, as well as how billing and currency restrictions vary between countries. The goal for each assignment is Service Exceeding Expectations and to reduce employee frustration, anxiety and the number of surprises or delays a family might face. Helping employees focus on their new job responsibilities, assimilate seamlessly, remain productive and contain their and the client’s costs are our top priorities
NEI can help overcome unique legal, logistical and compliance challenges and has the right balance of experience, language skills, cultural understanding and local service partners and experts at local regulations that clients seek to successfully do business in this exciting region, to make moves less complex, more cost-effective and more rewarding for all involved.
We look forward to assisting additional clients realize their unique LATAM business goals. Should you have any questions or how we can help your relocation activity in LATAM, please contact your NEI representative.