During 2023 and half of 2024, compensation issues have been a very important focus in the search processes. Currently, due to inflation and the lack of salary adjustments by some organizations, many employees have lost purchasing power.
Who won and who lost?
Most multinational companies have had a hard time keeping up with inflation. “Conversations with headquarters are becoming more and more heated,” says one HR director. “They don’t understand the Argentine reality, I got tired of trying to explain to them the level of inflation we have and how that impacts compensation, in addition to the fact that we are losing valuable talent.”
2023 was a very complex year for companies in general. The labor market was very hectic for certain profiles with special abilities to navigate turbulence and lead transformations. Historically, international corporate companies have been the most attractive due to, among other things, economic benefits such as bonus payable abroad, Stock Options, part of the compensation payable abroad if the role is Regional, to name a few more typical ones.
Nowadays, with comparatively much lower inflation, there are still organizations that are fighting for adjustment with their headquarters. Countries like Germany, which had 5.9% inflation in 2023, did not always adjust salaries to compensate for the purchasing power of employees.
What happened during 2023?
Many executives of multinational companies began to look at the local market because local companies have greater flexibility when implementing salary update policies. Even today, when inflation has dropped, they directly adjust salaries for inflation on a monthly basis. Multinationals, on the other hand, frequently saw that their compensation was flattened in comparison to the local market. Suddenly, belonging to a “multi” company was not as economically attractive as before. Therefore, during much of 2023 and early 2024, national companies were greatly favored when looking for highly trained talent.
The big question is whether those employees, who made a job change based on economic issues, will seek to remain in the organizations they chose to navigate hyperinflation once the economy has stabilized.. Do they have development programs in line with expectations? Is the culture open and transparent? What was the change like from working for a Regional Leader to reporting directly to a Shareholder?
Another challenging point is that in recent years there has been a significant departure of international companies from Argentina. For example, some emblematic ones: Falabella, Securitas, Itaú, Nike and Sura. There are fewer and fewer companies with multinational culture.
National organizations with investment power took advantage of 2023 to professionalize themselves by adding executives from the corporate world to their organizations. This strategy is in line with the long-term vision of an organization with shareholders. SMEs are often led by a very strong shareholder, who has the vision of the organization and is the driving force of the business. These organizations are usually “dependent shareholders.” This shareholder is the one who pulls the cart and the rest follow along.
The moment that a manager wants to step away from day-to-day work, the big challenges begin. Who will take on his role? How will he carry it out? Does he have a strong line of succession? There are SMEs that take advantage of these moments to professionalize and attract someone very senior from the multinational market to lead.
- Attract the right person to the role.
- Getting the executive on board correctly.
- Generate a culture of change.
- Allow the executive to make the necessary changes without interruptions once the strategy has been determined by the Shareholder or the Board of Directors.
- Have an appropriate budget to be able to carry out technological, structural, and cultural changes.
The organization will have to be prepared to carry out this disruptive cultural change. Sometimes it succeeds and sometimes it fails. A lot depends on the support and true vocation of the shareholder and the board of directors for the company to transform into something new, different and with a long-term view.
2023 was a defining year for compensation in Argentina, facing a labor market that demanded adaptability and a long-term vision. Local companies, with their ability to quickly adjust salaries in the face of inflation, demonstrated a competitive advantage in retaining talent.
However, This reactive approach may not be enough to ensure long-term employee commitment. The true test for organizations, both multinational and national, will be their ability to develop a robust, transparent and adaptive business culture that not only responds to economic crises, but also fosters an environment of continued growth and professional development.
As the market stabilizes, attention shifts to the sustainability of these policies and the true integration of executives into cultures that value and promote their development. The challenge does not end with economic stabilization; it begins there, with the need to build and maintain an organizational culture that is attractive and sustainable over the long term. Organizations that manage to align their compensatory strategies with their values and vision will not only survive, but thrive in Argentina’s changing economic and cultural landscape.
Managing Partner at Backer & Partners, specialized in executive search for Senior Management and Culture and Leadership Consulting
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
