CHICAGO, IL--(Marketwired - July 22, 2014) - In today's global economy, more and more multinational corporations are taking advantage of Latin America's low operations and real estate costs, growing talent pool and budding economies to expand into the region. In fact, a recent JLL survey of more than 600 corporate real estate executives found that in the next three years, 66 percent expect to grow their presence in Brazil and 45 percent in Mexico. However, those multinational corporations could fail if they adopt global workplace strategies and standards that don't consider local customs.
"Many global enterprises use a 'one size fits all' workplace strategy for each of their locations around the world," said Bernice Boucher, Managing Director and Lead of JLL's Workplace Strategy practice in the Americas. "Understanding and accommodating cultural norms and unique technology needs in Latin America is the key to success for multinational companies looking to engage employees, improve productivity and maintain a competitive advantage."
Boucher advises that multinational corporations must think locally, even as a global business, to operate successfully in Latin America. Below are three considerations for foreign organizations expanding into the region:
1. Risk Tolerances
It's crucial for multinational corporations to define their tolerance for risk before advancing operations in Latin America. Companies should account for: legal, regulatory, economic, linguistic, monetary, political, social, technological, educational, health, religious, environmental, transportation, security and other implications before taking commerce across borders. Once due diligence and risks are evaluated, corporate real estate is a key factor to build the right workplace locally and internationally. A company's specific location within Latin America, combined with its office space design, can control costs, generate revenue, maximize performance and reduce risks.
"Corporate real estate initiatives must evolve at the speed of the enterprise. Organizations should be constantly evaluating their workplace strategy to ensure it is still relevant and helps reduce corporate risks," said Laura DelaFuente, Vice President of JLL's Workplace Strategy group with extensive experience implementing workplace programs in Latin America. "Implementing pilot programs in groups that have basic workplace strategies already in place can work out kinks on a small scale, mitigating future large-scale roll-out risks."
2. Workplace Mobility
The long, tiresome commutes to the office in Latin America pared with the cultural oppositions to working remotely provide unique challenges and considerations for multinational corporations looking to operate in the region.
Working in a "third place" such as a coffee shop or at home, while prevalent throughout the United States and Europe, is a very new concept for Latin America, owing to a "presenteeism" culture where employees must be physically at work to be considered working. This trust issue that faces multinational corporations underlies what is viewed as a more controlling management style compared to American or European business cultures. Additionally, many employees choose to come to the office to work to avoid spouses, children and maids that can make working from home inefficient and distracting, while forging stronger business relationships with colleagues in a preferred face-to-face environment.
On the other hand, coming to the office offers logistical challenges for employees facing Latin America's overly-congested streets and notorious traffic delays. With 8.5 million motorized vehicles and 62-mile traffic jams, São Paulo is the sixth most congested city on earth. That doesn't even compare to Mexico City, which scored the highest in IBM's Global Commuter Pain Survey in 2011. While the Mexican government is making strides to reduce congestion with the "Hoy No Circula" (translated to "No Driving Today") program, which restricts every vehicle from driving one day per week in Mexico City, the average daily commute is still about three hours.
3. Technology Infrastructure
Technology infrastructure is one of the most crucial elements to consider when expanding operations into Latin America. While dependable wireless internet is expected in developed countries, internet infrastructure is lagging in Latin America and access to both broadband and wireless internet is inconsistent. In addition to the challenges associated with supplying internet, multinational corporations must consider internet security until the digital infrastructure matures.
"In today's hyper-connected global marketplace, technology like wireless internet, email and cell phone communication are crucial to conduct business for any company, either local or international," said DelaFuente. "Corporations, even those in highly-regulated industries like financial institutions, can navigate Latin America's cultural and technological challenges with the support of local, on-the-ground advisors."
Latin America offers an intriguing and significant opportunity for multinational corporations looking to grow. But simply superimposing its headquarters' culture and practices into its Latin American operations will lead to challenges that negate the bottom-line benefits of expanding in a high-potential market.
A leader in the real estate outsourcing field, JLL's workplace strategy team is a key component of its Corporate Solutions business. By creating outsourcing partnerships to manage and execute a range of corporate real estate services, JLL professionals help corporations improve productivity in the cost, efficiency and performance of their national, regional or global real estate portfolios. This service delivery capability helps corporations improve business performance, particularly as companies turn to the outsourcing of their real estate activity as a way to manage expenses and enhance profitability.
JLL (JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. For further information, visit www.jll.com.