This is Part one of a two-part series on Latin America’s evolving talent market.

Throughout the last decade, the so-called commodity super-cycle, which lasted until 2012, was one of the main reasons behind the Latin America’s rising economic growth and expanding middle class. As economic growth picked up in various countries of the region, so did the number of multinationals that arrived to the region to take advantage of the favorable business environment. The increasing presence of multinationals created a heightened demand for talent in the region that, so far, the market has been unable to fully supply.

However, while Latin America’s recent economic slowdown has somewhat abated talent attraction and retention problems, many economies in the region are expected to stabilize over the next few years, once again pushing up the competition for talent. In fact, results from a recent FSG survey (clients click here to access) show that the attraction and retention of professionals in key positions is expected to become more challenging in the coming years.

Some issues to come

• In terms of talent attraction – Results from FSG’s talent management survey show that 71.4 percent of HR executives believe that leadership/management positions will be the most difficult to fill as experienced executives will be in high demand, as companies look to overcome the potential headwinds generated by increasing competition. Specialized sales professionals will also be in high demand, as their experience will be crucial for successful sales growth in a region whose companies will have limited demand for their products and scant available resources. Results from our survey also showed that almost half of the surveyed executives believed that the lack of language skills will be the main obstacle for recruiting talent in Latin America, followed by a lack of experience and misalignment in salary expectations.

• In terms of talent retention – Our survey found that 50 percent of HR executives have misaligned perceptions about their company’s most important attributes to retain top talent versus what employees see as important. For example, 81.2 percent of HR executives consider company reputation and brand to be the most important attributes for retaining talent and culture to be the least important. However, our results also show that one of the two most important reasons for staff turnover is poor cultural fit. These results demonstrate the significant misalignment between perception and reality regarding companies’ strengths and weaknesses with respect to retaining talent.

As talent management problems in Latin America are not only cyclical (misalignment in salary expectations associated with rising inflation) but also structural (lack of language or technical skills because of flaws in the education system, and a missing adaptation of existing degrees to the evolving needs of the private sector), companies will need to take a strategic and innovative approach to remain competitive when attempting to attract and retain talented professionals.

In an effort to help companies understand some of the most actionable approaches to attract and retain talent, FSG developed a report for clients that identifies lessons learned from a survey and conversations with HR executives across Latin America. We will be looking at some of these best practices in our next blog post on LATAM’s Evolving Talent Market.

For an in-depth analysis of this topic, FSG clients can access the full report on the client portal. Not a client? Contact us to learn more.