Strategic Workforce Planning: Mexico

In today’s increasingly globalized world, companies from across the world are looking for ways to improve their business practices, remain competitive in the international market and meet future demand. This is especially true with several major world economies facing rising uncertainty in terms of growth. 

Effective workforce planning and identifying key business objectives can help to achieve your organization’s objectives and attract the required talent for your future workforce. Companies can also use quantifiable data to identify what can be improved and how to improve it.

Good workforce planning can help with talent management, especially in international countries. Companies who want to hire in Mexico may be wondering how to implement a strategic workforce plan. 

What is Strategic Workforce Planning?

Having a successful strategy for your organization can help you achieve success with your short-term and long-term goals. Strategic workforce planning can help you identify the talent needs of your company, which can help you identify relevant strategies to address talent shortages or understand other requirements to grow. 

Setting up an effective strategic workforce planning framework requires businesses to develop a plan that aligns with business goals, values, and the organization’s mission statement. 

Having an effective hiring strategy can help companies quickly adapt to changing market conditions, demographic changes, and other important economic barriers. Examining your own workforce can also help you implement greater diversity and a more inclusive workplace. 

Why is Workforce Planning Important?

Strategic workforce planning is good human resource management. It ensures that you have qualified employees in the right positions at an appropriate time. Having a plan in place can also help you anticipate future staffing needs before they impact operations as your company builds a market presence.   

Benefits of Strategic Workforce Planning

Having an effective HR plan can help growing businesses in several significant ways. Companies that have a developed plan can address important organizational issues, such as minimizing skill gaps, improving retention, and developing succession plans for skilled workers. As of 2021, only around 46% of businesses use metrics to uncover skills gaps, and many are unaware of the costs of losing a skilled worker. 

Planning for the Future

Companies that have an understanding of their employees’ information can build a more effective HR plan for the future. For example, companies who have identified their workforce as being mostly older workers can develop a strategy that infuses the organization with young talent to avoid productivity drop-offs and the need to reskill existing employees. This can also allow them to pre-plan for the future when a majority of their workforce retires. 

Additionally, growing businesses can identify areas where new talent needs to be recruited to support the organization’s long-term expansion strategy. This can help businesses invest in sectors or employees that can drive growth. 

By planning for the future, you can avoid any potential issues that come with employee retirements in important positions. 

This is an especially vital benefit with rising early retirements and demographic changes. 

Better Recruitment Practices

Businesses that have a strategic workforce planning framework in place can evaluate employees and gain insights into what skills or characteristics are needed to help the organization succeed. 

With this information, companies can refine and customize their recruitment criteria along with identifying employees who perform well. Businesses can adjust the interviewing process to accurately portray the organization’s needs and effectively identify qualified candidates.

Understanding the current market conditions can also help your company develop compensation and benefits packages that can keep you competitive when hiring skilled workers. 

Decreased Employer Costs

Companies with strategic HR planning and a detailed overview of their workers can maximize profits and optimize employee productivity. This can help ensure that a company is adequately employed, as companies with too few employees may not be productive enough, and companies with too many employees may face budgetary limitations. 

Identifying what areas can be improved and how your company can improve them helps businesses allocate resources when hiring employees. For example, companies that only need short-term work may find it beneficial to hire temporary workers or independent contractors. 

Having a strategic framework in place can also help you identify candidates for internal promotion, which can help further reduce the recruitment and on-boarding costs for employers hiring in Mexico. 

How to Build a Strategic Workforce Planning Framework 

Having an effective workforce planning process to identify talent gaps and take the necessary steps to fill them is a vital step for companies who want to grow. Not only can it lead to reduced employer costs, but you can also ensure a better workplace culture and implement more diverse hiring practices. 

Align With Your Long-Term Business Strategy

An effective plan to build for the future should align with an organization’s values and business goals. This can help your company prepare for the future and develop strategic objectives that support sustainable growth. Hiring employees in areas of need, or recruiting more skilled workers can help your company experience productivity gains and increased quality of work. 

Understanding what your business is trying to accomplish can help you ensure that the right candidates are hired in the right positions. With detailed insights, you can address employment issues as they arise. 

Examine Your Workforce

Gaining insights into your team can help you identify gaps where you might need to hire talent to support long-term success. Metrics that can help you track important trends include your overall headcount, turnover rate, churn rate, and much more. 

Understanding your workforce’s demographics and aspirations can help you plan ahead. Identifying your business’s skills gaps means you can implement training or other practices for employees to fill vacant roles and fulfill responsibilities. 

Set Achievable Targets

Companies hiring in Mexico can develop an effective strategic framework by setting realistic and quantifiable goals. Understanding what your specific goal is, defining metrics that can help you monitor progress, striving for an attainable goal, having a relevant desired outcome, and setting a specific timeframe to achieve your goals is vital. 

Identifying SMART goals is one way you can set achievable targets and strive for success.

Additionally, monitoring staff and performance metrics can help you use real data to objectively identify areas for improvement within your current work culture. 

Understanding the Mexican Economy

Hiring strategically and developing an effective HR plan in Mexico can help your company attract and retain the best talent available in the area. Hiring in Mexico can bring your business several advantages, including the ability to access a market close to major North American economies and build a presence in a growing global economy. 

Engaging an employer of record (EOR) in Mexico can help you remain compliant with the country’s local labor laws and regulations. 

Economic Strength

Mexico has the 14th largest economy in the world and has experienced steady growth over the last few decades. The country has strengths in various industries, such as agriculture, mining, energy production, finance, and production of important substances, such as hydrocarbons. 

Building a presence in the country can give you access to other North American markets. Mexico’s close proximity to the United States and Canada – along with its involvement in various trade agreements – make it a great choice for growing businesses to consider.

Cost-Effective Workers

One of the challenges for companies who want to expand into North America can be the relatively expensive labor costs. Setting up shop in Mexico gives businesses the chance to build a skilled workforce at a reasonable rate. 

Mexican workers have benefits automatically included in their salaries, while American employees often receive supplementary benefits for things like healthcare. 

In Mexico, the average salary is 399,000 MXN, which is roughly equivalent to around $23,150 USD per year. In contrast, the average salary for an American worker is roughly $59,430 USD.

This can provide companies with the opportunity to recruit from a wide range of skilled workers without needing to pay premium prices. 

Mexican Labour Laws

Companies who want to hire in Mexico will need to ensure that all the local employment laws and regulations are met. Failure to do so could result in noncompliance penalties, which can include significant fines, litigation, or potential criminal charges. 

For example, working days in Mexico generally last for eight hours, and a standard workweek lasts for 48 hours. 

Employee Classification

Like many countries, companies who want to hire in Mexico must classify their employees properly. 

Employees in Mexico must receive a valid contract of employment and receive various statutory benefits, including paid time off, profit sharing, pension plans, employment insurance, and more. Employers are also responsible for handling all the necessary payroll deductions and tax withholdings. 

Contractors in Mexico, on the other hand, are hired on a temporary basis, usually to complete a specific project. Contractors are not protected by civil laws, and the worker is not entitled to federally mandated benefits or time off. Contractors also need to handle their own taxes, though they have greater flexibility and can generally work for other employers simultaneously. 

Statutory Benefits

The various statutory benefits that Mexican employees are entitled to are also something to consider when setting up an effective strategic workforce planning framework. 

Employees are entitled to 12-20 days of annual leave depending on their length of service, along with up to 12 weeks of maternity leave, five days for paternity leave, and up to a year of paid sick leave if medically necessary. 

Employers and employees do not have to provide a minimum notice period before terminating an employment agreement. However, employees who are terminated are entitled to severance pay, which can depend on the reason for dismissal. 

Employees terminated with cause receive prorated vacation and Christmas bonuses, while employees terminated without cause can claim: 

• 90 days of compensation
• 20 days of compensation for each year of service
• A premium of 12 days of compensation, including benefits and bonuses

Employers will also need to factor the mandatory 13th-month bonus in Mexico into any HR plan. 

The profit sharing system is another major benefit international companies hiring in Mexico will need to know. Organizations must divide 10% of their total profits among their entire Mexican workforce. 

Taxation

Companies who want to hire in Mexico will also need to ensure that all tax withholdings and deductions are applied to every employee’s paycheck. Workers are taxed on a progressive scale based on their yearly income or average wages.

Employers will also need to contribute to social security programs, such as the housing fund, retirement, disability or life insurance, and more. 

The Mexican payroll cycle is usually twice per month, with paychecks being sent out by the 15th and 30th of each month. 

Creating a Strategic Workforce Plan in Mexico

To create a strategic workforce plan in Mexico, companies will need to ensure that the strategic framework aligns with the overall goals and values of the business. Employers will need to ensure all local labor laws are obeyed, and that employee expectations in Mexico are met to remain competitive throughout the hiring process. 

By analyzing your current talent pool, you can identify key skill gaps and tap into the Mexican employment market to fill these gaps. Companies may also need to implement certain diversity, equity, and inclusion strategies to accommodate these international workers. 

Companies hiring in Mexico will need to provide an adequate compensation package to attract and retain skilled workers. The general minimum wage can vary between 207.44 MXN and 312.41 MXN, so employers will need to keep this in mind when negotiating salaries within a budget.

Your company will also need to research the Mexican labor market to understand the rules, regulations, employment standards, and any potential problems that might arise in the future. 

This also includes knowing the best practices to hire Mexican employees. For example, companies recruiting Mexican workers may find social media posts for their available jobs to be more effective in Mexico than in other regions, as many candidates use sites like Facebook to look for jobs.  

How To Hire In Mexico?

Companies hiring in Mexico will need to have an in-depth understanding of the local labor laws to remain compliant at each step. Generally, businesses can legally hire employees in Mexico in two ways: set up a local entity, or partner with an employer of record service. 

Set Up a Local Entity

Companies hiring in Mexico can set up their local entity to legally recruit skilled workers. Employers who take this route will be responsible for all the necessary employee costs, such as benefits, payroll taxes, and ensuring all laws are obeyed. 

Your business will need to determine corporate bylaws, register with the local authorities, obtain a tax ID number, open a bank account, depot an initial investment, and more. Ultimately, opening your own local entity can be a time-consuming and resource-intensive process. 

Partner with an Employer of Record (EOR)

Alternatively, companies hiring in Mexico can choose to partner with an employer of record. An EOR in Mexico acts as the legal employer and handles all aspects of onboarding new hires, ensuring proper payroll deductions, administering benefits, and more. 

An employer of record also offers valuable expertise in the market you want to hire in, helping you craft an effective strategic workforce plan framework and avoid non-compliance. 

What is Borderless AI?

Borderless AI provides AI agents within the EOR space. We serve as the legal employer of your company’s international teams and take care of administrative tasks such as payroll and taxes. We offer a wide range of services, allowing you to spend more time on developing your HR plan and managing your staff. 

Speak with us to see how we can help you grow your business in 170+ countries worldwide. 

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