Birches Group LLC (New York) Introductions Brief Overview of Latin - - PowerPoint PPT Presentation

Warren Heaps Partner Birches Group LLC (New York)

• Introductions
• Brief Overview of Latin America & Caribbean Region
• Presentation on Brazil
• Open Discussion

• Warren Heaps – Partner, Birches Group (New York)
• Renato Rovina – RewardsLab (Brazil)

• Warren is a Partner with Birches Group LLC in New York.
• He manages Business Development and private sector
• utreach, as well as several client relationships.
• Prior to Birches Group, he spent 20 years at Colgate-Palmolive

in various benefits, compensation, HR generalist and global mobility roles, including HR Generalist for Latin America from 1992-1995.

• From 2001-2004, he was the President of the Latin America

Compensation and Benefits Forum (FMCGs)

• Early in his career, he worked for TPF&C (now Willis Towers

Watson)

• He holds a degree in mathematics from CUNY-Lehman

College

• Contact information:

warren.heaps@birchesgroup.com +1-646-837-5586 www.birchesgroup.com

Ren enat ato

• Rovi

vina na

• Renato is a senior HR professional with over 18 years of experience.

Currently providing consulting services to local and international companies, he is the former head of Human Resources at IRB Brasil RE, Brazil's largest reinsurer. Prior to joining IRB, he led the compensation, benefits, employee mobility and HR MIS functions for Banco Itaú BBA. Renato has also worked for other leading organizations such as Vale, Aon Hewitt and Mercer, where he started his career.

• As part of his international experience, Renato has lived and worked in

San Juan, Puerto Rico, Miami and Coral Gables, Florida, Stamford, Connecticut and São Paulo and Rio de Janeiro, Brazil.

• Renato received a Bachelor's degree in Business Administration by PUC-

Sao Paulo, and his MBA from IMBEC-Rio de Janeiro, Brazil. He has attended a management program at the Massachusetts Institute of Technology - MIT and a leadership development program at IMD,

• Switzerland. He served as a member of World at Work's Global Advisory

Council for three years.

• Conta

ntact ct informat

• rmation

ion renato.rovina@rewardslab.com.br +55 (21) 99850-8667

5

• Growth has slowed
• Inflation has increased
• Conditions in Argentina and Venezuela have been especially

challenging

• Overall growth is

projected to be 1.3% in 2016

• In addition to Argentina

and Venezuela, Brazil is forecasted at -4.0%

• Middle class has been

growing (now 35%) but there is still a large inequality and widespread poverty in the region

• Commodity prices have

dropped

• Region must focus more
• n export markets for

recovery

Source: World Trade Resources, World Bank Group

• Inflation is estimated at

5.8% for the region (excludes Argentina & Venezuela)

• Brazil and Colombia

facing higher inflation

• Chile and Mexico stable
• Pressure on wages
• We recommend always

to consider cost of labor, not cost of living, in wage setting

Source: World Trade Resources, World Bank Group

Country Professionals Support Staff Argentina 26.16% 23.96% Brazil 8.21 7.57 Chile 1.0 1.12 Colombia 6.29 7.15 Mexico Not available Venezuela 32.48 31.04

• Birches Group surveys cover all of the Latin America region (except

Mexico)

• We capture both incumbent average data and salary range information
• At each percentile, we can show the going rate as well as the range in

the market (we call this the Market Footprint)

• The next chart shows data across the region for one job at the 50th

percentile

This presentation is informational only. It does not constitute legal or professional advice. The authors do not accept any responsibility or liability for the accuracy, content, completeness, legality,

• r reliability of the information contained in it.

Foc

• cus

us on

• n Braz

azil il

How to adapt to the current Economy

CO CONT NTEX EXT: : THE THE PE PERFE RFECT CT STOR ORM

01

16

Over ervi view w on

• n Bra

Brazil – “A Perfect Storm”

Political Turmoil Inflation Decrease in GDP Record Unemployment

17

3.14 4.46 5.90 4.31 5.91 6.50 5.84 5.91 6.41 10.67 7.25 5.07 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00 12.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 F 2017 F

In Inflation ation

Inflation for 2016 to be out of Central Bank’s ‘target range’ (up to 6,5%) after hitting a double-digit mark in 2015.

Inflation Rate

Source: IBGE – Brazilian Institute of Geography and Statistics; 2016 and 2017 Forecast: Boletim Focus Sept. 26, 2016; (Central Bank report based on analysts projections)

%

18

Gr Gros

• ss

s Do Domestic estic Pr Produc

• duct

7.5 3.9 1.9 3 0.1

• 3.8
• 3.14

1.3

• 6
• 4
• 2

2 4 6 8 10

2010 2011 2012 2013 2014 2015 2016 F 2017 F

GDP is expected to contract by 3,14%, resulting in two consecutive decreases (2015 and 2016).

% of GDP Growth/Reduction vs previous year

Worst result in 25 years Two consecutive contractions

• 1st time

since 1930

%

Source: IBGE – Brazilian Institute of Geography and Statistics; 2016 and 2017 Forecast: Boletim Focus Sept. 26, 2016; (Central Bank report based on analysts projections)

19

Unem Unemplo ployment yment

9.5 10.2 10.9 11.2 11.2 11.3 11.6 11.8

6 7 8 9 10 11 12 13

January February March April May June July August

Source: IBGE – Brazilian Institute of Geography and Statistics; Sep/2016; trimester data

Unemployment hits highest percentage (11,8%) since 2012 (around 12 million workers affected)

% of Unemployed Workers - 2016

%

20

RE REFL FLEC ECTION TION ON ON HU HUMA MAN RE RESOU OURCES ES POL OLICIES ICIES AN AND PRA RACTICE TICES

02

21

Co Collectiv ective e Ba Barg rgai aining ning

8.2 7.8 5.5 9.8 9.5 9.6 9.8 9.5 9.6

• 1.6
• 1.7
• 4
• 6
• 4
• 2

2 4 6 8 10 12

August/2015 July/2016 August/2016

Average Increase Median Increase Inflation Index Average - Actual Gain Median - Actual Gain

Source: FIPE – Fundação Instituto de Pesquisas Econômicas [salarios.org.br]

Employers negotiating increases below the inflation reference index (typically INPC – National Consumer Price Index)

%

22

How HR w HR is n s navi vigating gating the he st stor

• rm
• Amplified communication with employees
• Support in headcount reduction as payroll remains flat or grows

below inflation

• Streamline of organizational structure [less levels] and review of

cost structures (punctual change of more senior employees)

• Review of performance management programs – more direct link

with performance and focus on top performers [especially for top executives]

• Review of benefit plans (mostly focusing on healthcare plans) and

introduction of cost-sharing mechanisms to reduce costs

• Improvement of Governance processes due to reputation and

corruption risks

23

Emplo Employment yment Pr Protection ection Pr Prog

• gram

ram

• Government-sponsored “Programa de Proteção ao

Emprego (PPE)” – Employment Protection Program (Law 13.189/2015)

• According to the government, over 60,000 job posts were

preserved in around 100 companies its first year

• Reduction in the number of hours worked and salaries

for a determined period of time

• Specific criteria must be met
• Unions need to be involved in the agreement

Reference of companies that are using/used the PPE: Volkswagen, Ford, Mercedes-Benz

24

Go Government ernment In Initiati tiatives es / Leg Legislati slation

• n
• New payroll reporting requirements (eSocial) –

effective 2018

• Major reforms pending:
• Labor law reform
• State Pension System (INSS) reform
• Review to outsourcing laws

25

DO DOIN ING BU BUSIN INES ESS S IN IN BR BRAZ AZIL IL

03

26

HR R Pr Prof

• fes

essi sionals

• nals ne

new w to

• the

he en envi vironment

• nment
• Understand local market data for total

compensation competitiveness

• Review of “stock” of labor liabilities [court cases] to

identify potential flaws to current HR practices

• Audit of current job levels/descriptions vs. actual

duties performed by employees

27

TH THAN ANK K YOU OU

28

BG Office Survey Country Partner Office

• Salary and benefits surveys
• Salary scale design
• Job evaluation, competencies and performance management solutions

using our Community™ system

• Consulting on compensation, expatriate management, HR policy and
• rganization design

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New for 2016:

• Bermuda
• Belize
• Curaçao
• Grenada
• Marshall Islands
• Micronesia
• Palau

In 2017:

• Cayman Islands
• French Polynesia
• Turks & Caicos
• Vanuatu