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The Boyden Report: Latin America

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Welcome To The Boyden Report

Welcome to the third edition of The Boyden Report, a quarterly series designed to provide a deeper understanding of the global market for talent.

At Boyden, we work closely with global companies to craft their executive strategy. But that strategy must be continuously re-evaluated. What works in one region may not be effective in another. Each market has its own management dynamics.

The Boyden Report is designed to help you navigate this complexity in the ever-changing global market for talent. Each report will provide you with the context to make sustainable strategic decisions about your executive team.

This third report marks the first time we have extended our research into multiple markets across a region. As a result, we can explore the dynamics of businesses throughout Latin America, where most markets lack the critical mass required for indigenous growth. Local companies have consequently been compelled to create business models and solutions unique to the region, as well as a specific skill-set for executive success.

The region that we cover in this report includes Argentina, Chile, Colombia, Mexico, Peru, Venezuela and Brazil (itself the focus of an upcoming Boyden Report). These economies, previously dominated by foreign multinationals, are now seeing the gradual emergence of their own corporate giants. The leaders of these multi-latinas have developed a suite of skills necessary to succeed and grow businesses in Latin American markets, transforming both the commercial landscape and the profile of successful leaders of multinational organisations.

The diversity of Latin America, and the complexity of its history, politics and culture, has made commentators reluctant to analyse the commercial landscape in regional terms. t has therefore become better known for its tourist delights, artistic talent and cultural contribution to the world, rather than its commercial prowess.

Boyden, therefore, braves new territory in revealing Latin America's commercial story. And what a story it is: the capabilities of executives in the region have led to the creation of impressive 'home-grown' companies such as Embraer, VALE< Gerdau, Natura, CSN Sabó, Marcopolo, LAN Airlines, América Móvil, Cencosud, Grupo Techint, Arcor and Cemex –all major players o the world stage.

But it is not just about the big names. Latin America is seeing a steady rise in local and regional companies that have triumphed over the hurdles of the past and are redefining Latin America's prospects for the future. At present, global economic turmoil is the new challenge for executives in Latin America. Having already faced debt and currency crises, volatile commodity prices and other upheavals in the recent past, Latin American executives can draw upon their experience and agility to navigate through these difficult times.

We sincerely thank the leaders of the multi-latinas and multinational organisations across Latin America who participated in our research, sharing their insights on growing businesses based, or operating in the region. They have given Latin America a rare chance to tell its own story. These individuals are listed in the Appendix at the end of this report.

Chris Clarke
President and CEO,
Boyden World Corporation

John Byrne
Managing Director
Boyden Chile

Understanding the Market

Latin America has long been perceived as a region dependent upon the export of raw commodities, challenged by political and economic turmoil, and dominated by foreign multinationals. Although partially true, this picture is a distorted one, masking the real nature and potential of the region.

Despite the fact that Latin America is often discussed in regional terms, it is not a single, homogenous territory. Latin America has twice the land area of the United States, and stretches from 32° North on the US border, to more than 50° South at Tierra del Fuego. Its physical environments are as diverse as deserts, rainforests, mountains and temperate plains. Latin America comprises more than 20 separate countries which, despite using the common language of Spanish (apart from Brazil), have very different cultures. AS Rafael Alfonzo, President of Alfonzo Rivas & Compañia, Venezuela says, "It is not easy for a Venezuelan to adjust in Colombia, or a Colombia to adjust in Venezuela, or to Argentina, Mexico, or Brazil. The language, it is an advantage, yes, but the customs are different."

Political Progress and Economic and Social Development

In the past decade, particularly in the last five years, politics in Latin America's major markets have been relatively stable. Democratically elected governments are now the norm. Many of the civil wars that blighted the region are now over, inflation is controlled in many countries and the political climate is changing.

"In the last decade, politics was full of ideologies; now the political outlook is more pragmatic and geared to economic welfare. There are good grounds for growth," says Laurence Golbourne, Chief Executive Officer of Censcosud, Chile. The reduced state ownership of key companies has also been beneficial, as Dr. Cristiano Rattazzi, President of Fiat Argentina believes. "In most cases, when the state has stayed out of a big company, it has become much more efficient and much more competitive."

Despite enormous progress, in every region there is still room for political and economic improvement: Venezuela's economy is suffering from political uncertainty, however, it has great importance in the oil and gas industry. In spite of President Uribe's progress, Colombia's drug cartels maintain their determination, Argentina is beset by high inflation while credit for business expansion is difficult to access in many places throughout the region. Continued disparity between the few rich and many poor remains an important issue, as does environmental degradation. In stable countries with growing economies, there remain challenges not necessarily confined to emerging markets: crime, patchy infrastructure, and at times unwieldy regulation and bureaucracy.

In recent decades, business leaders have therefore faced tough commercial environments, but these have, in turn, moulded a cadre of executives who have had to develop new business models, original solutions and a flexible approach to achieving their objectives. Their abilities are highly sought-after, not only in Latin America, but across the world.

"In the last decade, politics was full of ideologies; now the political outlook is more pragmatic and geared to economic welfare. There are good grounds for growth."

Laurence Golbourne
Chief Executive Office of Cencosud, Chile

The Outlook for Latin America

With more internal stability and promising growth prospects, Latin America is poised to capitalise on the resilience of executives, its commercial developments and rich and diverse natural resources.

In this report, we explore three critical areas of influence over Latin America's future: first, the evolution of multi-latinas and the competitive dynamics between these growing companies and multinationals; second, the extent to which the region will depend on commodities in the near term; and third, the distinguishing characteristics of successful executives in Latin America.

Throughout this report, we draw upon the significant knowledge and insight of Latin and non-Latin business leaders in the region. Our interpretation of their views and comments leads us to believe that Latin America's multi-latinas¹ will continue to play a major part in driving the region's destiny, and that Latin American executives have a great deal to contribute to the global economy.

¹ We describe a Latin-based company with operations in at least one other market within the region as a multi-latina. This description also includes companies headquartered in Latin America with operations outside the region.

The Evolution of the Multi-Latinas

In the last few years the world has seen the smergence of new and important companies based in Latin America. Many of these multi-latinas are now global players are some are among the largest in their sectors: Ajemex, Cemex, Gerdau, Grupo Arcor, Natura, Petrobras, Grupo Techint, Companhia Vale do Rio Doce, LAN Airlines and América Móvil.

Throughout this report, we focus on the impact that growing multi-latinas are having on the region, the executive skills required to run and develop these organisations and the part these executives will play in Latin America's economic fortunes.

A Unique Pattern of Growth

The economies of most Latin American countries are too small for local enterprises to accrue sufficient capital to break into more lucrative markets in the United States or Europe. This is only possible once they have expanded into several neighbouring markets, achieving critical mass and a higher level of capitalisation.

These enterprises, or multi-latainas, have therefore developed a unique pattern of growth. This pattern is similar in different markets across the region and is generally formed in three stages, explained in Figure one.

Many Latin executives agree with this analysis. Laurence Golbourne comments, "It depends on size: you need the financial capacity to go somewhere else. For example, we couldn't try and penetrate the US market, because we are too small." Rafael Alfonzo concurs, "I will say that anybody from Venezuela, who really wants to expand, has to go to Colombia and Central America. That's a real opportunity because the markets are not that big and you can get into them fast, and then you can grow. It is much less difficult than trying to be very big at the beginning, like going to the United States."

"To become a multinational, the company has to be full a multi-latina first and then it will have a big enough base to be able to expand to other regions of the world. For example, at Belcorp we have businesses in fourteen countries, thirteen of them in Latin America, and one in the United States. We wanted to go to the US because it is the biggest market, but it has been very difficult to break into – much more difficult than in Latin America."

Eduardo Belmont
President of Belcorp, Peru

Difference in Brazil and Mexico

Organisational growth in Brazil² and Mexico differs from this pattern. These countries both have large economies and very strong trading links outside Latin America. Mexico has particularly strong links to the United States; Mexico is the United States' third largest trading partner. In 2007, the total cross-border trade between the US and Mexico was $347 billion (source: US Census Bureau). In Mexico and Brazil therefore, it is possible, once a company has grown to the size here foreign expansion is appropriate, to become a true multinational – without first going through stage two of the multi-latina growth process.

² While some coverage of Brazil is included in this regional report, an upcoming Boyden Report will focus solely on Brazil. It will be available upon request.

Multi-latinas and Multinationals - Direct Competitors?

The history of multinational involvement in Latin America is a long one. Since 1995 there has been increasing foreign direct investment (FDI) into the region. FDI into Latin America and the Caribbean (excluding offshore financial centres) increased from $30 billion in 1995 to $70 billion in 2006 (Source: World Investment Report 2007).

As they enter the region, foreign-based multinationals finds themselves competing against multi-latinas and other Latin SMEs?

Not necessarily.

"There are both advantages and disadvantages to being a multi-latina. The disadvantages are that you do not have the amount of money that a multinational has, but on the other hand, you know how to take advantage of opportunities in the region. Multi-latinas are smaller, they are faster to respond to changes, they are not that bureaucratic, but thy are accustomed to government bureaucracy, they understand the opportunities and they will take them. Here you have a big advantage over the multinationals, who don't always fully understand what's going on in the countries they enter, and once they come, they find it difficult to adapt."

Rafael Alfonzo
President of Alfonzo Rivas & Compañia, Venezuela

Reference to the need for specific business models in Latin America were made throughout the course of this research. Participants highlighted an implicit understanding among executives in multi-latinas that different markets require a different business approach. This is in stark contrast with multinationals, whose leaders often prefer to replicate a successful model from the home base.

As Gabriel Silva, CEO of Colombia's Coffee Growers Federation explains, "Sometimes multinational companies come with the wrong business models to these markets. An illustrative case took place some time ago when a big multi-latina in the cut flower-producing business was bought by a US-based multinational. Within a few years the new owners were losing so much money that they had to leave the business. Multi-latinas do have a lot to teach foreign investors in these markets. Successful multinationals have open eyes and ears and their new products, new technologies and new business take into account what multi-latinas are doing. Similarly, multi-latinas learn and adapt from multinational competitions."

Joint Ventures with Multi-latinas

Entering into a joint venture with a multi-latina avoids direct competition and maximises the strong position of a Latin company. For example, Alqueria is a family company that grew very fast, from producing 40 million litres of UHT milk 10 years ago, to nearly 200 million today. "This made us attractive to Danone, who took the strategic decision to enter Colombia through a joint venture with us, attracted by tehf act we are number one in the UHT milk market, which we developed," says Carlos Cavelier, CEO and majority shareholder (who really goes by the title of "Dream Coordinator" of Alqueria), and a member of the Danone Alqueria Board of Directors. "We therefore have a strong distribution network, good relationships with the community and a brand that is close to consumers."

This joint venture is an example of how the flexibility and adaptability of a multi-latina can bring advantages to a multinational. "When you develop, you embark on new challenges and ways of dealing with them, reducing and managing risk," says Carlos Cavelier. "Our company brings to Danone the entrepreneurial aspects of a family-owned firm – new ways of doing things and approaching global opportunities. And Danone acted as a mirror, enabling us to see how we operate from a different perspective, how we are different and what better ways we can find to collaborate." Joint ventures with multi-latinas require an integral communication between the business partners, according to Carlos Cavelier. "Permanent communication and team work are essential in order for the alliance to be successful."

Carlos Cavelier's experience with Danone shows how multinationals and multi-latinas have much to learn from each other. In fact, the mere presence of the competitive effect of multinational companies in Latin American markets provides a long-term advantage to multi-latinas as it "puts pressure on multi-latinas to improve their productivity. In the long run multi-latinas need to be able to compete in a globalised world to survive," explains Gabriel Silva, CEO of Colombia's Coffee Growers Federation.

According to Luz Solaegui, HR Director of GE Real Estate in MExico, multinationals and multi-latinas have much to learn from each other, which will enable them to compete effectively. Multi-latinas need to learn "processes and procedures, and how to be an effective, expanding institution." Without these processes, it will be difficult for multi-latinas to expand and grow far, while "multinationals can learn how to do things easier, faster and in a less complicated fashion. They can also benefit from not being so formalised, and having quicker and more incisive decision-making processes."

Jorge Awad, Chairman of LAN Airlines sums up the advantage of multi-latinas. "Creating multi-latinas makes it possible to capture markets faster and create a management team that integrates the know-how of local markets in such a way that it merges local mores with foreign investors and Latin Americans."

"The level of qualified people is a barrier affecting the economic chain. We tend to hire from Brazil and countries with a strong educational background such as Argentina and Uruguay." 

Francisco Itzaina CBE
Vice President Latin America, Roll Royce

Can Multinationals Out-Compete Multi-latinas in the Future?

The multinationals who survive in Latin America have learned, over time, how to conduct business there. As Francisco Itzaina CBE, Vice President Latin America, Rolls Royce says, "There are two types of multinationals. First, those who stay on through the roller-coaster ride and second, those who are only there when the tide in going in the right direction. When you look at history, those multinationals which are long-established have remitted a lot of money from Latin America over the last fifty years; they have competed here for some time and know how to operate in the region. Brazil provides fertile ground for those who understand how to operate here. Look at the banking sector: in good times the bankers rush in, then when things look less good some rush out and the local banks profit from that. On the other hand, HSBC and Santander for example, have been very successful."

Evidence that multi-latinas can survive and grow – despite competition from multinationals – is present in the extraordinary growth of several large multi-latinas, which have become truly global companies. This companies are now taking centre stag as world players. For example, BRazil's Companhia Vale do Rio Doce (CVRD or VALE) is now the world's second largest mining company and the largest producer of iron ore. Diego Hernandez, President Base Metals, BHP Billiton, based in CHile says that "VALE's success was driven by the CEO, who had an ambitious development plan, based on the sound business in Brazil. They have no problems competing with multinational companies." Other examples include Mexico's Cemex, which is the world's third largest cement manufacturer; Grupo Arcor of Argentina, one of the world's largest confectionery manufacturers; and Grupo Techint of Argentina, a market  leader in steel tubes and other steel products.

For some participants, "These global multi-latinas are the new leaders. Embraer is an example of achievement through management and nothing to do with raw materials like Petrobras and VALE." Embraer was a small player 10 years ago, but now claims to make the same aeroplane twice as fast as its competitotrs. "Leadership is what made the difference," says Luigi Faltoni, Managing Director of 3M, Brazil. He continues, "Embraer found the white space between aerospace companies; they had a clear objective and a clever business model."

Such achievements are powerful and inspiring. "When I was in Miami recently, I noticed LAN Airlines all over the airport, with flags of Ecuador, Peru, Argentina and others flying in colourful celebration," said Diego Hernandez. There is cause for celebration: LAN Airlines is one of the most profitable airlines in the world, due to an unusual business model that combines passenger travel with freight carriage.

The presence and continued growth in size and numbers of globalised multi-latinas shows that multinationals as a class do not out-compete these companies. However, many multinationals are also thriving and FDI into the region is continuing. This clearly demonstrates that in this highly competitive region, no class of company – be it multinational or multi-latina – is at a structural disadvantage. It is unlikely, however, that all players will survive. As Francisco Itzaina CBE concludes, "There is no general rule. Some multinationals can out-compete multi-latinas, some can't."

The difficulties of securing executive talent is an area that puts multi-latinas and multinationals onto a level playing field. Sourcing and securing the right executive talent is an acknowledged global challenge, and there are specific issues to address in Latin America. Francisco Itzaina says, "The level of qualified people is a barrier affecting the economic chain. We tend to hire from Brazil, and countries with a strong educational background such as Argentina and Uruguay."

The past pace of growth adds to the difficulty of hiring enough qualified executives. Itzaina continues, "There is a short supply of highly-qualified executives because the country is growing so fast."

Will Latin America Maintain its Dependence on Commodities?

For the past 500 years, Latin America's economy has been dependent on the export of raw commodities. The region is rich in natural resource, from minerals such as oil (from countries including Brazil, Ecuador, Mexico, Venezuela), and copper (Chile), to foods such as soya (Argentina, Brazil), salmon (Chile), beef (Argentina and Brazil) and coffee (Brazil, Colombia and Peru). This dependence on commodities for a large part of the region's income is likely to continue.

"As long as the demand for raw material increases, it will make this area the pillar that will drive the growth of the regional economy."

Marcelo Awad
President of Antofagasta Minerals, Chile

Over the last three years, global commodity prices, including food, have risen. This price rise is driven partly by the rapid expansion of the developing world's economies. At the same time, high global prices for so many classes of commodities is unusual, contributing greatly to Latin America's economic growth. This is because the region exports almost all types of commodities, from oil to gold to chicken to soya.

"Latin America has to become a major services platform and develop products having a greater added value to avoid the manor fluctuations of the commodities market. As an emerging economy, the region must also develop a financial services platform in order to play a greater role in the world economy."

Jorge Awad
Chariman of LAN Airlines, Chile

However, a reliance on high commodity prices is high-risk, as price declines are translating directly into decreases in GDP – especially for smaller countries relying on only one type of export. Large countries such as Brazil, which exports a combination of oil, food and minerals are somewhat 'hedged' against price declines. Elsewhere, Latin executives are aware of the risks of relying on single exports, having witnessed the economic impact of previous falls, for example, in coffee and banana prices. They readily acknowledge the developments that need to be made.

However, the challenges involved in developing a value-added economy, particularly in a period of high-commodity prices, is well recognised. Gabriel Silva, CEO of Colombia's Coffee Growers Federation explains, "The challenge is that from a public sector standpoint, many governments depend on commodities for their finances, be that copper in Chile, or oil in Mexico. To do away with that dependency will, to an extent, depend on the ability of governments to generate other sources of income, so that they don't have to rely so much on, for example, the oil or the copper income.

This is often difficult because commodities provide a large proportion of governments' income, so governmental policy is inevitably skewed toward them – thus neglecting the needs of other industries. However, pressure is expected to increase from business leaders, and Laurence Golbourne notes, 'In order to support the industrialising of the region's economies it is essential to have public policies that provide the right incentives."

The Growth of Value-Added and Manufactured Products

Despite the fact that Latin America has a high dependence upon commodities, much of the region has seen growth in industrial and value-added products – especially Mexico and Brazil. Mexico is almost unique in that its economy is increasingly diversified. In 1980, oil accounted for 62 percent of its exports by value; in 2005, oil accounted for only 13 percent.

Luigi Faltoni, President of 3M, Brazil comments, "In Brazil, commodities are just one segment of the economy. Brazil has a solid manufacturing infrastructure, and for example its auto and transport sector is very strong and growing fast. All brand of cars have factories in Brazil." In fact, as Dr Dristiano Rattazzi, President of Fiat Argentina explains, "Brazil has the biggest car manufacturing plant – producing Fiats – in the world. It is building 3,100 cars in a day."

Brazil is not the only country to be adding value and developing its service and manufacturing industries. Dr Rattazi continues, "In Argentina we're about to build a car manufacturing plant that will supply 'powertrains' to all the world." Domingo Lastra, President of ADM, Brazil says, "In information technology, companies used to outsource to India, but there were difficulties such as language barriers and inconsistencies in service. Now, Tata has operations in Uruguay and ADM has software designed in Paraguay."

The opportunities in manufacturing, value-added products and service industries in Latin America are attracting foreign investors: The most recent figures show that in 2006 manufacturing and service industries together received more than 75 percent of total foreign direct investment (FDI), with primary industries receiving only 21 percent of investment (Source: World Investment Report 2007); see Figure two.

There proportions demonstrate a shift in the expectations of foreign investors, based on more sustainable returns from value-added initiatives – a marked change from the high-risk, short-term speculation that led multinationals to race to Latin America before fully understanding the rigours of the opportunities attracting them.

Branding is Needed to Add Value

With good branding, participants acknowledge the possibility of adding value to products traditionally viewed as commodities. This enables them to be traded at more of a premium, and to be somewhat protected against the vagaries of global commodity prices.

"Café de Colombia started by just selling coffee, then we were able to position Colombian coffee as a different coffee from the rest, so we started selling 'Colombian coffee' rather than just coffee, and now we are selling it as 'Juan Valdez coffee', which is our brand."

Gabriel Silva
CEO of Columbia's Coffee Growers Federation

Jorge Awad, Chairman of LAN Airlines, Chile explains the importance of brand. "Latin American countries are in a phase of developing trusted brands. With the exception o Brazil, local Latin American markets are very small, needing an export strategy that makes their brand global and recognisable to other markets. In the wine industry, it is known that Chilean wine already has a uniform brand and that it produces consistently high quality wine. Such recognition of a global brand is key to export growth."

Latin America therefore is a region where, as Domingo Lastra explains, "Commodities will remain as the key driver, but this growth will then drive infrastructure growth and then growth in service industries." This opinion is echoed by another top executive, who expects that "As these economies get more developed, commodity dependence should diminish and industry sectors, especially services, will start to have a higher participation in gross domestic product. It is important to stress that since agricultural and mineral commodities production is Latin America's vocation, they should always play an important role in the local economies."

The Distinguishing Characteristics of Successful Executives in Latin America

To be successful in any market, Luz Solaegui, HR director of GE Real Estate, Mexico notes, "An executive needs to have clear thinking, strong drive, creativity, leadership, motivation, communication and relationship skills."

However, for an executive to be successful in Latin America, a specific attribute is required. Luigi Faltoni puts it clearly. "Flexibility is a distinction. Our bureaucracy is complicated and we need to adapt to unexpected situations." Gabriel Silva, CEO of Colombia's Coffee Growers Federation agrees with this, and notes, "There is one thing about the Latin American pool of talent – they are able to adapt to continuing change in the environment that surrounds them. Latin American economies have more issues that appear daily than in some more stable, possibly dull, economic environments. So the ability to change and be flexible is a great advantage, and often Latin American executives can be more flexible than executives from other countries."

This flexibility does not include a relaxed attitude to the rule of law. Francisco Itzaina CBE states this clearly, noting that, "When hiring, I choose an executive for his morality, as well as what he has learned in his career."

A Broader Range of Skills

Our participants' descriptions of successful Latin executives are remarkably consistent regarding the need for flexibility. However, in order to be flexible, executives need a broad range of skills to draw upon. Francisco Itzaina CBE explains, "The challenges of doing business here are such that you develop a greater set of skills, including highly-developed emotional intelligence. You use a much fuller range of skills in Latin America than elsewhere, where you use fewer skills in a repetitive way.

This is one of the reasons why Latin executives are successful in so many different countries." Brazilians especially have an advantage, according to Diego Hernandez, "In Brazil executives are more open and it is easy for them to go abroad. They have more global exposure, and are more flexible and deal better with multi-cultural issues because of the coutnry's own diverse culture."

Executives from Latin America hold senior positions in some of the world's largest companies, for example:

Humberto Antunes
President of Galderma

Carlos Slim
Chair, TelMex and Carso Foundation

Carlos Brito
CEO of merged beverage giant InBev

Carlos Ghosn
CEO of Renault and Nissan

Gustavo Marin
President of Citibank Brazil

Maximo Pacheco
President of International Paper

Pedro E. Suarez
President, Dow Latin America

Enrique Ussher
President of Motorola

A Talent for Finding New Solutions and Managing Crises

Another attribute of successful Latin executives is their resourceful, eclectic nature. Because many business challenges are based on a combination of local factors, executives have to find their own new solutions to complex issues. "Latin American markets require you to find new ways of doing things and making decisions, because the solutions don't exist. Multi-latinas create new models that work in the local environment. In Colombia we have had to do this because of the challenges we have faced. The result is a cadre of executives who excel in strong and resourceful management." explains Cavelier.

Successful executives in Latin America are therefore distinguished by having the flexibility, adaptability and broad range of skills needed to navigate through difficult and rapidly changing circumstances that are, in some cases, uniquely Latin American. These skills can be learned by non-Latins, but there is a strong trend toward training local executives to take the reins in the future.


Will Multi-latinas Drive Latin America's destiny?

Much of Latin America's economic history has been dominated by the influence of multinationals. Their fluctuating investment levels have significantly affected the economies and politics of the region. Does the rise of the multi-latinas mean that this is no longer true – that the region's economy can now depend upon its own, home-grown companies? In short, will multi-latinas drive Latin America's destiny?

Confidence is high. Alan Gegenschatz, President of TNT Argentina says, "I'm quite sure it will happen – we are seeing cases like Natura in Brazil, or Arcor in Argentina that are gaining influence." Eduardo Belmont agrees, "Multi-latinas are getting stronger and helping the region's economies. They are expanding and seeing the possibilities for growth in the region, moving to more countries. However, they are still small in the context of the whole region's economy, although they are becoming a bigger force."

Aristide de Macedo, Vice-President and Andean Area Director, Kraft, is cautiously optimistic, explaining, "Multi-latinas are reaching a size where they are playing a greater part, for example in food and in those commodity-driven countries such as Brazil, Argentina and the Andean countries. But when you look at it from overall perspective, the positioning in terms of revenue means that multinational companies are still far ahead." Certainly, for the foreseeable future, as Laurence Golborne says, we are likely to see a business environment with "plenty of room for different kinds of companies such as local ones, multinational companies and multi-latinas."

It seems likely therefore, that the present growth of multi-latinas into true multinationals is likely to continue, and these companies and their leaders will significantly contribute to the region's destiny. Rafael Alfonzo is particularly bullish. "Once you have reached the limits of your growth in your own country, you have to look for other opportunities, and that is when you can start to invest in another country. Yes, sure, they will become multinationals, I don't have any doubt about that. There are now bigger companies, and some of them have gone very far in the world. Actually Chile and Colombia are looking across the Pacific for opportunities, and are finding these in China and Japan. I think multi-latinas have an advantage; they are smaller, they are faster to respond to changes, they are not that bureaucratic, they understand the opportunities, and they will take them, they are going to be very aggressive, they are going to be very big competitors in the world."

Multinationals have a large part to play in driving the destiny of Latin America. They are continuing to invest across all sectors and the region is becoming an increasingly important source of revenue. Luigi Faltoni confirms this, "Fiat Brazil is a very important part of the worldwide organisation." The automotive industry as a whole in currently investing $5 billion in Brazil to meeting growing demand. Alan Gegenschatz, General Manager of Dutch multinational TNT is also bullish, saying that they are "growing from being player number four to player number one in Latin America."

At a time of global uncertainty, multi-latinas and multinationals are continuing to grow significant businesses across Latin America, developing value-added products and service that will help to secure the region's fortunes. A high proportion of business leaders are successfully capitalising on the ingenuity and prowess of both Latin and global executives who have developed an expertise in these markets. With increasingly stable political environments, governments more keenly attuned to commercial advancement and strong prospects for growth, we surely find ourselves at the start of Latin America's best century yet.

The Boyden View - Hiring For Multi-Latinas and Multinationals

The Global Imperative

The political and economic challenges in Latin America's history have resulted in one significant benefit across the region: they left the executive population with an impressive set of skills, highly valued by both local and multinational companies. Today's younger executives still need to face challenging dynamics to develop the skills for which Latin executives are so valued: flexibility, management and the creativity that inspires new solutions and helps identify opportunities.

"Multi-latinas are well-positioned to maintain and develop the skills of Latin executives and they will play an increasingly influential role in keeping them in the region," comments John Byrne, Managing Director of Boyden Chile. "A significant number are at the stage when international expansion is the next major goal, along with further developing value-added products and services. And multinationals, particularly those who have made a long-term commitment to the region, are continuing to develop at a fast pace, maximising the opportunities upon which long-term success depends."

There is a healthy pool of Latin executives with experience gained in both multinationals and multi-latinas, including international exposure that is greatly valued. Luz Solaegui explains, "It is part of the culture of Latin people that it is good to work in a multinational company, but after ten or twelve years they then look for opportunities to work in smaller or medium-sized businesses, where you get more benefits and pay, and you can then put into practice what you learned in the multinational company."

John Byrne agrees that international exposure is a priority, commenting that, "Long-term executive growth and development depends on gaining the kind of experience and relationship that come with being a truly global executive." Gabriel Silva share the view from a multi-latina, "There is a decent pool of talent in the countries where we are operating, but our biggest concern at the moment is to give young executives exposure to the rest of the world – to give them a chance to mingle and develop relationships worldwide."

The Top Five Hiring Issues

We focus here on the main challenges for companies hiring in Latin America. We must acknowledge that there are certain areas where security is still an issue and needs to be addressed in pragmatic terms. Other factors in hiring and maintain a strong talent base are mobility, branding, specialist skills and assessing the Latin executive.

1 Security

Attracting talent can be difficult in certain countries which, despite recent improvements, have lingering drawbacks in terms of security. The result: executives from within the region, as well as those outside who are reluctant to move. To overcome this, Laurence Golborne at Cencosud, Chile, in common with other business leaders, hires local people and provides them with extensive training from executives within the organisation. Investing in local people is considered important enough to move executives "from the backbone of the company" to build skill in local markets. He comments, "We can train locals to get better and we invest quite a lot in training. It is growing fast."

2 Mobility

In some countries, a difficult economic situation and commercially-frustrating environment means that many of the best people leave to search for opportunities elsewhere. In Venezuela for example, according to Rafael Alfonzo, "Incentives are for the young people to leave, rather than to stay. Professional people are leaving the country and they are very well received in other countries, as we have some of the best professionals in the market." As multi-latinas continue to grow in the region, hopes are high that markets such as Venezuela will become gradually more attractive. John Byrne comments, "The rate of progress is much higher than in recent decades and in the future we expect to see a growing interest among executive who found their home markets less attractive in their youth, but who see just how much things are changing."

3 Branding

With multinationals and multi-latinas in direct competition at times for the same executive talent, it can be difficult for a multi-latina to hire, particularly at an early stage in their growth  when they lack the prestige of the multinationals.  This applies primarily to smaller multi-latinas, for whom hiring becomes mush easier once they have grown in market share and stature.

For executives focusing less on brand and more on career-building opportunities, multi-latinas can be particularly attractice, with little or no compromise on remuneration. Eduardo Belmont explains, "Executives working for multi-latinas can we very well rewarded – their pay is good. Also, there are often more opportunities for executives in multi-latinas, as they have a faster pace of growth and can encourage executives with an entrepreneurial spirit."

4 Finding Specialist Skills

There can be shortages of talent for other reasons, particularly if specialist kills are required, such as engineering. The automotive multinationals have been particularly active in training engineers. "Companies use a variety of different approaches. One is to develop your own training and development programme, another is to go into the schools or universities and help them to develop programmes to train people to meet your needs." In fact, many senior executives have called for greater interaction between businesses and universities. Martin Cabrales, Vice President of Cabrales SA agrees, explaining that "training is fundamental for every type of executive, to give them an understanding of the idiosyncrasies and cycles of every country. This is true not only for multi-latinas, but for multinationals too."

5 Assessing Latin Executives

In an environment where constant change has been the norm, it can be extremely difficult to assess executives, particularly when comparing a number of people who have achieved results in different business contexts. It is essential to work with a search consultant who understands the local market, and the impact of regional issues on it. The consultant also needs long-term experience in understanding the true nature of what an executive has achieved in a specific role.

Hiring for Growth in Multi-latinas

  1. Focus on candidates who have an entrepreneurial spirit and are keen to enter a rapidly growing company, rather than those who are more brand-conscious.

  2. Find executives with fast development potential and the ability to train others. The market is changing and executives need to be able to draw upon different skills – their own and other people's – at different times.

  3. Hire leaders with a well-researched approach to risk – including assessment capabilities as well as risk appetite.

  4. Seek out candidates who are eclectic and solutions-driven, drawing on a variety of sources for their inspiration.

  5. Engage executives with a keen instinct for branding. To achieve significant long-term growth and provide value, a strong brand focus must be adopted at an earlier stage than many would expect "For talent to be visible, there has to be someone who takes a risk," says Jorge Awad, Chairman of LAN Airlines. "This is what enables me to define a company – that it has talented human capital and business leaders with the vision and ability to take risks for long-term investment."

Hiring for Growth In Multinationals

  1. The Latin executive's broad skill set and ability to deal with complex environments are key advantages. Unless there is a very good argument for putting in place an expatriate, hire from the region or beyond.

  2. For appropriate roles, hire truly global executives who have worked in a number of different markets outside the region, whose diverse experience has ensured that they retain a broad skill set.

  3. Hire executives who understand the 'tyranny of distance' and who have built into their thinking how to handle the challenge of a lack of infrastructure, particularly in the development of value-added products.

  4. Latin America is a region with natural diversity. Consumer companies, in particular, need to ensure they adequately reflect the diversity of their customers in Latin America among their executives.

  5. Give Latin executives the international exposure they crave. And give international executives exposure to Latin American markets in order to prevent skill sets from becoming too narrow due to similar work and roles in more mature environments.


About the Report

This report was developed by Boyden World Corporation in collaboration with the business research group Lighthouse Global ( Special thanks are due to communications firm Margolis & Company ( for their perspective and support. The content was created from a combination of primary and secondary data sources, and a series of interviews with the following business leaders:

  • Rafael Alfonzo, President, Alfonzo Rivas & Cia, based in Venezuela

  • Jorge Awad, Chairman, LAN Airlines, based in Chile

  • Marcelo Awad, President, Antofagasta Minerals, based in Chile

  • Eduardo Belmont, President, Belcorp, based in Peru

  • Martin Cabrales, Vice President, Cabrales SA, based in Argentina

  • Carlos Cavelier, CEO, Alqueria/Danone, based in Colombia

  • Luigi Faltoni, Managing Director, 3M Latin America, based in Brazil

  • Alan Gegenschatz, General Manager, TNT Argentina

  • Laurence Golborne, CEO, Cencosud, based in Chile

  • Diego Hernandez, President Base Metals, BHP Billiton, based in Chile

  • Francisco Itzaina CBE, Vice President Latin America, Rolls Royce, based in Brazil

  • Domingo Lastra, President, ADM Brazil

  • Aristide de Macedo, Vice-President and Andean Area Director, Kraft, based in Venezuela

  • Dr. Cristiano Rattazzi, President, Fiat Argentina

  • Gabriela Silva, CEO, Colombia's Coffee Growers Federation

  • Luz Solaegui, HR Director, GE Real Estate in Mexico

  • Other executives who wish to remain anonymouse

The Boyden Reports

Other reports in the series:

The Boyden Report: India – The Sun Rises on the Indian Executive

The Boyden Report: China – Exploding the Myths in China


  • Reid, M. 2007. Forgotten continent: the battle for Latin America's soul. Yale University Press, New Haven and London

  • KPMG's Latin American Capital Flows Survey 2008, conducted by Lighthouse Global

  • World Investment Report 2007. United Nations Conference on Trade and Development

  • OECD – FAO Agricultural Outlook 2008-2017

  • The Financial Times

  • The Economist

  • The Banker

  • New York Times

  • USA Census Bureau