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Compensation management in Latin America can be a challenging adventure. This topic has not been the subject of many publications nor of intense research, as is the case in many other developed regions of the world. Often, a compensation professional encounters generalities that attempt to simplify market practices in this diverse part of the world.
Given the fact that most Latin America countries are traditionally linked by language, religion, culture and a somewhat post-independence past, there is a strong tendency to treat them all the same. Certainly, there are many commonalities that can be identified, but this should be done without losing sight of the differences among countries. Although some generalities will be found in this article, we will make differentiations wherever appropriate. Understanding the environment that affects companies in the region is a key task in the successful implementation of any human capital strategy. In order to contribute to the understanding of this underexplored region, this article has three major purposes:
* Describe several drivers that may explain the nature of compensation in Latin America (for the purpose of this article we have selected these six major Latin American economies: Argentina, Brazil, Chile, Colombia, Mexico and Venezuela).
* Identify some of the compensation trends in the region over the last three years in terms of salary competitiveness.
* Analyze the compensation mix of each country by levels.
A Useful Roadmap
To gain an understanding of the nature of compensation in Latin America requires the use of a map to orient newcomers (and experienced practitioners alike) to the factors that explain the existence and use of compensation elements in the region.
The model in Figure 1 assumes that compensation is impacted by external or country-related factors and internal or company-related factors. The interaction and combination of these factors ultimately will explain what is driving the existence and value of each compensation element and how each element impacts the company as a whole. ( see Figure 1.)
Weathering the Economic Storms
The national income of most Latin American countries is highly dependent on natural resources or, in some cases, in scattered commodities. Brazil, Mexico and, to a degree, Argentina, do have a strong capital sector. Over the years, the majority of governments in Latin America...