Compensation trends for 2018 in Mexico and Latin America

28.03.2018

Compensation trends for 2018 in Mexico and Latin America

 
With salary ranges appearing to maintain a stable trend during the past three years in the Americas (see table below), most companies in Mexico and Latin America must turn their sights toward allowances and benefits as a means to retain their most talented employees.

 

 

Salary increase

Country

2016

2017

2018

Argentina

30.0

28.0

26.0

Brazil

7.9

8.0

8.0

Canada

3.0

3.0

3.0

Chile

5.0

5.0

5.0

Colombia

4.6

6.5

6.5

Costa Rica

5.5

5.1

5.0

Mexico

4.7

4.5

5.0

Panama

5.0

4.5

4.5

Peru

5.0

5.0

5.0

United States

3.0

3.1

3.2

Venezuela

65.0

238.0

683.0 – 1241 *


 
* Venezuela - Hyperinflation budget at 33-60% of inflationary rates projected.
Source: Economic Research Institute: Planning global compensation budgets for 2018.


Given that in emerging economies companies sometimes find it difficult to attract employees with critical skills, high potential and/or top performance, more agile and significant approaches should be developed. One way that has become critical is the concept of Employee Value Proposition (EVP). An employee value proposition is the unique set of benefits which employees receive in return for the skills, capabilities and experience they bring to a company. It consists of five elements: Purpose – Work – People – Rewards – Opportunities. An employee value proposition defines the essence of the company and must be unique, relevant and compelling if it is to act as a key driver of talent attraction, engagement, and retention.

 
Particularly in Mexico, and generally in Latin American countries, the nature of Rewards is becoming a critical factor for talent attraction and retention strategies. More companies are including in their compensation plans the following aspects, which are the trends that employers must look out for in 2018:


Flexibility
Today's technology enables more professionals to change their mindsets about full-time employment; as many would also consider contract-based opportunities that offer greater control over their time, growth, education, and job security. Home-office arrangements, for example, are becoming more frequent and, in many cases, provide more quality life to employees.


Technology
The rapid rise in the use of technology allows employers to deconstruct and disperse work across a global, virtual workplace. This phenomenon is reshaping the nature of work, often redefining how and by whom work gets done.


Personalization
As flexibility in the workplace becomes the norm, employees also want their benefits packages to become more personalized. Companies will see analytics strongly recommending actions to maximize on human capital by: 1) adopting skills-based performance evaluations; 2) customizing pay and benefits to address the employee's life stage and personal needs; and 3) creating alternative paths of career growth.


Health and wellness
It is undeniable that rapid technological advancements have made the workplace a more competitive and demanding scenario and a primary source of stress. Many employers still view health and wellness as an individual responsibility – preferring to stick with approaches like providing medical insurance, sick leaves, and occasional off-site activities. On the other hand, there is evidence that management-led health and wellness programs, thoughtfully planned and coordinated, result in a happier and healthier workplace, with less distress, higher engagement and increased well-being.

Pay and transparency
Base salary continues to be the number one driver of attraction and retention for employees in Mexico and Latin America. However, it is as crucial as ever to not only get the compensation strategy right – managing salary and benefits – but to also ensure the company communicates openly and honestly with its workforce about pay. Employees are more likely to trust and engage with employers who openly discuss and explain their compensation and benefits decisions.
 
The information stemming from extensive research will guide employers in their efforts to develop a modern employee value proposition, enhance talent management strategies and design employee reward programs, with these topics becoming differentiators of organizational success.
 

       

Written by Liliana Herrera, Partner at Steinbach & Partner Mexico and Brazil.

Lilliana advises international and local clients on executive recruitment, talent assessment, and development, and works extensively with companies from the automotive, chemical, trading, and financial organizations.

Contact: Liliana.Herrera@steinbach-partner.com