ORC Sightlines
January 2003
- Multinationals Consider Mexican Labor Law Reforms
- Career Management Gets Renewed Attention from R&D Organizations
- Experiments in Intra-Regional Compensation Beset with Difficulties
Multinationals Consider Mexican Labor Law Reforms
One thing Mexico’s employers, government, and fledgling independent unions agree on is that the country’s 73-year-old labor relations law is in dire need of reform. Employers are frustrated by myriad mandates that restrict flexibility in hours of work, the ability to hire and fire, training, and so forth. The independent unions seek to loosen the stranglehold on organizing held by the official labor organizations affiliated with the Partido Revolucionario Institucional (PRI), the majority political party.
At the fall meeting of ORC’s Mexico Labor Relations Group, a network of multinationals with manufacturing operations in Mexico, members studied a proposal submitted to the government by the independent unions and another drawn up by a tripartite task force of employer, government, and official union representatives. Since then Partido Accion Nacional, the party of Mexican president Vicente Fox, and the other major party, PRI, have submitted a third, joint proposal. While all stakeholders are concerned with what the future will look like if meaningful changes are not undertaken, it is unlikely any major reforms will be made in 2003, which is an election year. In the meantime, multinational employers in Mexico are watching wage settlements closely and eyeing cheaper labor markets in Asia.
Career Management Gets Renewed Attention from R&D Organizations
As companies work to put their R&D efforts on a more business-oriented footing, all aspects of career management—performance measurement, leadership development, retention, and advancement—are being reevaluated by line managers and HR leaders in R&D organizations. Career ladders are one particularly thorny issue. For example, as some companies seek to move away from time-in-grade as the main criterion for advancement, they also grapple with how to incorporate competencies arising out of team-based work structures. One new approach is to add a third branch to the ladder. The classic dual ladder has two prongs—one for individual contributors and one for R&D managers. Adding a third prong permits recognition of individuals in roles that don’t quite fit either of those traditional ladders, such as project management.
Members of ORC’s Human Resources in R&D network (HRRD) agreed at their last meeting that, for many of their companies, the globalization of R&D has further complicated the task of harmonizing the career paths of scientists and engineers with others in the organization. A system that is transparent and transferable, allowing easy movement among global employees, must still make sense in the local context. Companies that are reporting success are tackling these issues with global teams led by line managers or jointly by the line and HR.
Motivated by the need to reward and retain key contributors, HR leaders also reported growing interest in methodologies for measuring performance and tracking potential of professional staff. Many use some form of matrix that plots employees’ performance v. potential or turnover risk v. contribution.
For more information, contact Michal Fineman at 212 719 3400 or michal.fineman@orcww.com.
Experiments in Intra-Regional Compensation Beset with Difficulties
Many global companies have looked at the potential introduction of intra-regional expatriate compensation policies. Such policies are designed to provide employees transferring from one country to another within a given region a different compensation and relocation package than those transferring between regions. The goal has been largely to save money, but also to encourage management within a region to promote mobility without incurring as high a compensation cost as for a full expatriate package.
While some companies have reported good results from such programs, members of ORC’s international compensation roundtables have found that few companies have actually implemented regional policies in practice because they have been unable to articulate a clear logic for using them as opposed to a worldwide (often home-based balance sheet) approach. Those that have experimented with intra-regional policies have often done so by tweaking details of their original policy, for example, removing or reducing elements such as foreign-service premiums. There is little evidence of companies succeeding with more radical departures (e.g., pure localization). In any case, such policies are most likely to work when the countries involved have relatively similar economic and salary levels or share other cultural affinities. For this reason, they have been most successful in Europe, especially if the countries of operation are the richer Western European ones, and rarely pan out in Asia, a region of extreme diversity.
Roundtable participants also noted that outsourcing relationships are coming under greater scrutiny these days. Some companies are bringing outsourced international compensation and relocation processes back in-house, and those that are moving forward with outsourcing are implementing very exhaustive RFP procedures. In some cases, they are turning to third parties to help them evaluate vendors. (ORC, in fact, has provided this service to a number of its international compensation clients.)
For more information, contact Steve Nurney at 212-719-3400 or steven.nurney@orcww.com.