Hiring Tips for U.S. Companies Nearshoring in Mexico

10.17.19

In order to stay competitive, U.S. and other foreign manufacturers have expanded their supply chain operations south of the border. Among the many advantages of nearshoring in Mexico, the accessibility and cost-effectiveness of a skilled workforce ranks near the top.

As more manufacturers begin to explore similar options, there are a few hiring tips to keep in mind when operating in a different country. These guidelines include understanding:

  • Why working with a shelter company is important
  • How to set proper expectations
  • What to do to avoid employee turnover

U.S. companies manufacturing in Mexico have their own standard operating procedures. In addition, they must abide by Mexico’s labor laws and adapt to the country’s cultural norms. Following these tips and partnering with a strong, experienced HR representative is crucial for a smoother, more effective hiring process and operation.

Hiring Tip #1: Work with a Shelter Provider

A well-established shelter provider proves invaluable during the course of hiring new employees when nearshoring in Mexico. A shelter’s HR team handles all administrative paperwork, background screenings, and interviews for the company it works with in whatever capacity is deemed necessary. In fact, Mexico employees are legally considered part of the shelter (since it’s technically the entity). The company’s employee guidelines and code of conduct are then applied as usual.

The manufacturing company provides detailed job descriptions of open positions to the shelter company. From there, the shelter’s HR department:

  • Promotes the positions through various mediums
  • Runs screening and background checks
  • Coordinates skills and competency tests (if applicable)
  • Scheduled and conducts interviews

The manufacturer’s plant manager or other point of contact may come in for a final interview, but in many cases, the shelter provider is given authority to hire on the spot. The HR component of a shelter provider helps to alleviate time and cost constraints, in addition to ensuring compliance is met. This allows manufacturers to get up and running as quickly as possible with a staff of qualified employees.

Hiring Tip #2: Set Expectations Based on Role and Requirements

It’s to the discretion of the manufacturer to decide how active it wants to be during the hiring process. Regardless, representatives from both corporate HR and the shelter company maintain regular communication throughout. This helps to manage expectations about the timeline, candidate quality, job offers, and employee start dates.

The hiring process timeline is dependent on the type or level of position needed. For example, a welding company wants employees who have proof of experience in this specific field and is able to complete skill assessments to demonstrate capabilities. When recruiting engineers in specialized fields like this, there may be particular requirements that may extend the hiring cycle to 30 days. Whereas, the timeline to recruit assembly workers may be much shorter, since the role doesn’t require as much technical proficiency and training can begin after the hire.

The HR process in Mexico can be adjusted to meet the U.S. company policies, which may include implementing drug tests, hearing evaluations, and other requirements to help ensure a proficient employee and positive company culture fit. Once candidates have been thoroughly screened, tested, and interviewed, the next step is the job offer. In Mexico, there’s typically a 30-day probation contract. This allows the hiring company to evaluate the candidate and confirm a good match.

After the 30-day contract, the employee becomes permanent and receives the full benefits package. A shelter company keeps track of this window of time, manages paperwork, and prepares newly hired employees for onboarding and training. When a company chooses not to work with a shelter provider, it bears the burden of recruiting, coordinating, and tracking appropriate candidates in a timely and efficient way.

Hiring Tip #3: Handle Hiring in Mexico Differently Than the U.S.

One thing is for certain when it comes to nearshoring, Mexico hiring practices are not the same as in the U.S. Often, companies make costly mistakes when it comes to HR because they aren’t privy to the protections Mexico has for its workers. For example, “at-will employment” does not apply in Mexico. Companies must be cautious about the cost and other repercussions when terminating employment. There are severance regulations set in place that helps to protect employees, which isn’t aligned with typical U.S. protocol. A shelter company can advise of options that will present the least negative effect for the manufacturer to help them determine the most favorable outcome.

In addition to the hiring process, a day-to-day HR presence is equally important. Like the U.S., there are specific labor and employment laws for sexual harassment and discrimination, which must be followed as well. This level of skill, experience, and consistency is yet another benefit that comes with the services provided by a shelter company.

Hiring Tip #4: Minimize High Employee Turnover

There’s increasing competition with other U.S. and foreign manufacturers as more companies open new plants and begin nearshore services. This indirectly leads to high employee turnover. The unemployment rate has been below the national average in Mexico, which is approximately 5-6%. Part of hiring a solid employee is reviewing qualifications, but a favorable company fit is equally important to consider when choosing the right candidate.

Turnover occurs when an employee doesn’t feel taken care of by the company and turns to the competition. This could be because of salary, benefits, or perks, such as transportation, that their current company doesn’t offer. Manufacturers must match or exceed the industry standard to avoid the cost of employee turnover. A shelter provider can advise on which candidates make the best fit, what to offer in benefits to stay competitive with other manufacturers, and Mexico labor policies and regulations.

How IVEMSA Can Help with Hiring

When companies decide to expand operations to Mexico, there’s the option of becoming a standalone entity. By choosing this route, manufacturers must source their own trusted individual or group that handles hiring, HR, and all the other critical details that manufacturing in Mexico entails. However, the more cost-friendly, effective method is partnering with a shelter company like IVEMSA.

IVEMSA has worked in the industry for decades and understands the ins and outs of what’s required to get operations started as efficiently as possible while meeting compliance and thus, saving on time and overall costs.

If your company needs help with the hiring process or wants to learn more about shelter services and the benefits of nearshoring to Mexico, contact IVEMSA today for a consultation.
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