Brazilian workforce needs more than traditional compensation, BCG study finds

09 June 2016

Brazil is in the midst of a sizable economic and political crisis, falling into a deep recession at the same time as its political system struggles under the weight of a continuing corruption saga. When attempting to reduce employee turnover and increase engagement during periods of economic recession, employers may be less able to use the traditional incentive of increased compensation. A report finds that factors like employee appreciation, career development, learning and work-life balance may be the most critical incentives – both for employee retention and attraction.

Brazil is currently facing crisis on numerous fronts. Its economy contracted -3.8% last year, while losing 1.5 million jobs. As a result of collapsing commodity prices, a further -3.5% contraction is forecasted for this year – leaving the South American country in a deep, dangerous recession. Furthermore, the widening gap between productivity and labour in Brazil – compared to other emerging economies – is another troubling development. Simultaneously, the Brazilian government has been rocked by scandal: President Dilma Rousseff was recently suspended from office and faces the prospect of being removed from power after accusations of unlawful budget manipulation.

In a new report from The Boston Consulting Group (BCG) – ‘Understanding Brazil’s Workforce in a Troubled Time’ – the global consultancy digs into the attitudes of employees in the country, while examining how employers can improve retention and attract talent at low cost during economically troubled times.

Top ten indicators of happiness on the job

Employee values

BCG’s research, which utilises recent interviews as well as survey responses from 11,282 Brazilian employees and 203,756 global employees (representing 189 countries) in 2014, finds that a variety of ‘soft’ values – rather than just compensation levels – are most important to creating an ideal workplace for Brazilian employees. 

The most important factor as rated by Brazilian employees is 'appreciation of one’s work'; this value is also the top-rated factor globally. Everybody, seemingly, wants to know that they are valued for what they contribute to their workplace. 'Learning and career development' comes in second place in Brazil, well above its number six position in global attitudes. 'Good work-life balance' achieves the third-highest ranking among Brazilian respondents, followed by a good relationship with superiors – both in line with international rankings. Appreciation of company values comes is the sixth most important factor. 

Brazilians actively looking for new job

Retaining and attracting staff

BCG’s report finds that Brazilian employees are keener to move onto new opportunities in the early years at a job, with the desire to find different employment decreasing as the length of tenure increases. In the 0-3 year category, 66% are actively looking for new opportunities, while 31% are not actively looking but open to a new role. In years 4-20, 50% respond that they are actively looking for a new position, while in the 20+ year range, only 42% say they are actively looking to a position elsewhere. The research report reveals that manual workers and skilled office workers are particularly eager to find a new employer, at 68% and 53% respectively. In a not so shocking finding, demotivated employees are much likelier to look for a new position in contrast to those who are motivated, at 67% and 47% respectively. 

The research highlights that some levers for higher retention are particularly difficult to create – like seniority and length of service. Addressing employee demotivation is, as such, a good place for employers to focus on. By fulfilling employees’ key workplace preferences, like work-life balance and career development, employers can curtail demotivation and, in kind, lower employee turnover while aiding talent recruitment.

“Competitive pay is necessary, but it isn’t sufficient—that’s one of the big takeaways here,” summarized Thiago Cardoso, report co-author and Principal at BCG’s Rio de Janeiro office. “As a Brazilian company, you’ve also got to know how to say thank you for a job well done, create a collegial atmosphere, and give your people a chance to learn and develop. The companies that do that in the future are going to win the talent war.”

Reasons for working abroad

Overseas experience

The BCG survey also examines Brazilians workers’ willingness to seek employment overseas, revealing a number of differences between global and Brazilian attitudes. The most important factor driving Brazilian workers to seek a position overseas is to “broaden their personal experience”, at 72% (compared to 65% globally). In second is a desire to 'acquire work experience', at 70% of respondents (compared to 65% globally). Wanting to 'experience a different culture' ranks third at 64% (compared to 54% globally), while 'learning a new language” is seen as important by 63% of Brazilian respondents compared to 47% globally.

Moving for 'better career opportunities', the third most important factor for global respondents, ranks fifth for Brazilian workers – with three out of the top five reasons for overseas work experience being personal factors rather than simply career-related (assuming that learning a new language does not further career aspirations).

The survey also notes that few Brazilian workers are actively taking steps to find overseas employment: less than one in ten were actively engaged in job hunting overseas, and only one in a hundred were starting to prepare visa arrangements.

Digitization could add $240 billion to Mexico’s GDP by 2025

22 January 2019

New in-depth analysis by McKinsey & Company ranks Mexico 55th in digital maturity out of 151 countries. When compared to countries with similar economic output, Mexico is in good shape, but the country has “yet to achieve the kind of world-class digital transformation that fuels productivity and economic growth.”

Countries that have adequately transformed, such as Estonia and Malaysia, have incomes close to Mexico, but punch “above their weight” when it comes to digital maturity. Mexico is about halfway there. Taking steps to improve its global digital position, however, could increase the country’s GDP by  7-15% (approximately $155-240 billion) by 2025. Such an increase would be powered by increased productivity and employment in existing industries, new digital businesses, a broadened expanded information-and-communication-technology (ICT) sector, as well as the successful labor force transition into the digital world.

Mexico is the second-largest economy in Latin America, meaning it is in the unique position to set the regional standard for a “digitally enabled” government.

For their analysis, McKinsey & Company researchers Alberto Chaia, Gonzalo Garcia-Muñoz, Philipp Haugwitz, Max Cesar, and Andre de Oliveira Vaz defined digital maturity using four categories: government, foundations, economy, and society. The study also laid out steps that Mexico could take to improve its digital maturity. Of these four factors, Mexico has the most work to do in digital economy and digital foundations, categories in which its scores are just below average – and which are highly correlated.

Digital maturity of Mexico according to McKiney

The bad news first

Digital foundations essentially encompass the ability of citizens to participate in a digital society. This means internet access, mobile networks, and so forth. “In 2016, Mexico had just 13 fixed-line broadband subscriptions for every 100 inhabitants” the analysis found. “The rate of subscription to mobile broadband is higher, at 61%, but this still leaves a sizeable portion of the population unconnected and thus spending additional time and money getting to physical centers to access government services.” This lack of access causes Mexico to rank 93rd overall in the digital foundations category. 

Mexico’s digital economy, in turn, is hindered by its “shaky” digital foundations. It sits in 92nd place of all countries surveyed. There is a lack of access to high-speed internet, as stated, as well as an unreliable postal service and a lack of bank accounts among the population, with just 40% of citizens aged over 15 having an account. These factors decrease the country’s potential to develop an e-commerce industry that is widely and conveniently used. Exports of ICT goods, as well, account for an astonishing less than 1% of all exported goods and services.

And now for the good news

Mexico’s digital government, which ranks 39th overall, has made great strides in recent years. The creation of, for example, provides "a one-stop portal that consolidates 34,000 databases from 250 government institutions and 5,400 public services. The platform is described as the “centerpiece” of Mexico’s digitization efforts, allowing citizens easy access to important legal documents such as birth certificates, as well as automating internal processes, making workplaces tasks run more smoothly for government employees.

Despite this – and the appointment of a national digital strategy coordinator who sits on the president’s staff - Mexico “receives low scores from its citizens on their overall satisfaction with the convenience and accessibility of government services.” Citizen experience was the worst-rated of those group countries surveyed (Canada, France, Germany, Mexico, the United Kingdom and the United States). There was also a largest perception gap between the private and public sector.

How digital can boost Mexico’s GDP

A digital society, according to the report, “can improve the quality of life for citizens by fostering greater civic participation, providing access to information, and offering new tools for health and education.” As previously shown, Mexico is pushing such platforms, including several subsections of, on which citizens can participate in public polls and discussions, and present potential digital solutions to serious societal problems such as earthquake detection systems.

Mexico is well on its way to achieving a “good” or “very good” digital maturity rating (right now, the country is “acceptable”). According to McKinsey, “There are three basic initiatives Mexican government leaders could consider putting on top of their priority lists [to speed the transition into the upper echelons of digitization].”

First, the Mexican government must define a digital vision and strategy. Second, it must link that vision to policymaking. Entwining the two ensures that digitization acts as a “lever” to a policy’s success. “To establish a clear link between its digital vision and public value, Mexico’s incoming administration may want to consider revisiting the country’s "National Digital Strategy" for 2013 and aligning it with Mexico’s current and future needs, as well as with the new government’s priorities,” the report states. A “test and learn” attitude toward linking digital vision and policy will also be necessary, as the only way to avoid repeated mistakes is by closely evaluating those that have been made, then planning accordingly. Adopting this attitude, according to the report, will necessitate more flexible budgetary strategies.   

The third suggested initiative is all about power to the people. Successful digital transformations are those that are centered around the citizens, rather than the institutions that serve and govern them. This means service delivery is key, and centralization of digitalization efforts – initially, perhaps, in the form of a council that would oversee governmental transformation – could greatly aid government agencies in getting the people what they desire. As Mexico transforms, so would the ways in which ideas are generated and put into action. For instance, the United States has the US Digital Service, which works with the White House, and Singapore relies greatly on the Government Technology Agency, which reports to the country’s president and implements digital strategies.

Digital maturity benchmark

Filling in the cracks

Because Mexico ranks on the low end of the “digital foundations” category, it is obvious that the other four categories, which by nature fall under the “foundations” umbrella, are potentially negatively affected. As such, McKinsey offers five steps that could be taken to strengthen the country’s digital infrastructure. 

Private companies, for one, could be offered incentives to provide broadband internet to “marginalized” communities, such as those in Oaxaca and Chiapas. The study points to India as an example, where the government-created National Optical Fibre Network (BharatNet) “successfully brought broadband services to approximately 115,000 villages, aiming to deliver broadband connectivity to 250,000 villages overall.” 

Talent is also an issue. “In recent years, Mexico has made significant strides to boost the number of college graduates with degrees in science, technology, engineering, and mathematics (STEM),” the report states. In 2016, 25% of university graduates with a STEM degree. 

But degrees aren’t so much the problem as education in general. “Only 17% of Mexicans graduate from college, making the talent pool small.” Programs that keep primary and secondary school teachers in the loop are a must – as are “reskilling” programs meant to train a percentage of the workforce that is soon to be displaced by technology such as automation. 

Rounding out the five suggestions are a system that easily and simply explains new regulations regarding technology - an invaluable resource for startups; the development of cybersecurity units required to monitor the security of such a large, overarching transformation; and a streamlined, interoperable model for data sharing across multiple government agencies. 

It’s an investment

The challenges and obstacles in Mexico’s path to digital transformation are not inconsiderable, but are neither without long-term reward. “Going digital will require an investment of financial resources, extensive coordination among the multiple stakeholders and levels of government, and new regulations governing the growing e-commerce and fintech sectors. It most likely would entail participation incentives for the private sector, since governments should not attempt to 'go it alone.' In the end, both sectors of society stand to reap the value digitization will sow.” 

Related: Mexico leads Latin America in robotization, followed by Brazil and Argentina.