International Issues Assignment

Team “A”

Paul Chabot

Maurice Williams

Southwest Airlines Opportunities for Expansion

Canadian Human Resource Principles

Recruitment Practices

Recruiting and retention is a challenge that SWA will face in Canada. According to a survey conducted by the Business Development Bank of Canada (2013), 74% of employers rate recruiting and retention as their biggest challenge (p. 5), a challenge that SWA will also likely face. Canada is facing a shrinking workforce, which will place pressure on SWA to hire and retain top talent. Approximately 60% of new hires in Canada fall under the service industry, the industry which SWA will fall into. Competition for top-notch personnel with the capacity to learn will be steep. To overcome this challenge, SWA airlines should consider contracting a Canadian recruiting corporation to work with SWA’s H.R. department. These Canadian recruiting contractors are already familiar with Canadian law, hiring practices, have a recruitment structure in place with a pool of candidates looking for employment. These contractors should be a cost-effective solution for recruiting personnel.

Payment Systems

The payment system is more complicated in Canada due to the benefits associated with taxation. The U.S. collects $11,365 USD per capita compared to Canada, collecting a slightly higher than average amount of $14,693 USD (Bloom, 2017). Canada provides many social services that SWA needs to consider as compensation (pay). Canadian citizens enjoy health care and access to quality education for children of all social classes. Colleges and universities are also less expensive compared to equivalent schools in the United States. Benefits usually provided by SWA will now be supplied by the Canadain government, which will relieve SWA of the burden. The government providing benefits commonly offered by SWA will require wages to be adjusted accordingly for increased taxation and the social services offered.

Labor Relations

The Canadian airline industry faces many of the similar challenges as the U.S. operating in a highly dependent union environment. Canada also uses many of the processes used in the united states, such as Collective Bargaining, Dispute Prevention, and Arbitration. Unlike the U.S., where the labor relations laws concentrate on providing a balanced solution that will benefit all parties, in the majority of the Canadian Providences, labor laws are unbalanced and favor union formation. Employees in Canada can be obligated to join a union as a requisite for employment. SWA can expect the same style of governance of unions within the airline industry and the workforce. Unionization rates in Canada have a history of far exceeding the rates in the U.S. If SWA intends to expand into the territories of Canada, they will need to be prepared and educated on laws regarding unions that differ for each territory in Canada.

In a survey based on 90 large Canadian private-sector employers, Canada is positioned to support and train the workforce. More than three-quarters of the survey participants have entered into a partnership with a university, college to grow their talent internally (Hewitt, 2016). The most common training programs are partnerships similar to the concept utilized by SWA in America. Several large U.S. firms and post-secondary institutions have already successfully introduced projects focused on bringing companies and institutions together to close skill gaps and shortages. This previous success is an indicator that SWA is fully capable of achieving the same outcome and have individuals directly transition from school to SWA’s Emerging Leader Development Program, fulfilling pipeline requirements.

Mexican Human Resource Principles

Employers may be faced with a myriad of obstacles when seeking to recruit residents of Mexico. Items such as their Labor laws and other protocols have evolved and are administered by their government. Misinformation, coupled with non-compliance with Mexico’s hiring procedures, might result in hefty fines and other unnecessary expenses for the company that could have been prevented.

Recruitment Practices

Candidates for employment cannot work in Mexico without a work permit, regardless of their ethnic group. Recruiters, when seeking to build up their workforce, predominantly use Social Media platforms like Facebook and LinkedIn to attract people who are seeking employment. Additionally, because Spanish is the national language of Mexico, it is essential that the advertisements on the local radio stations, help wanted announcements in the classified section of the newspapers, billboards, and community employment events are posted in Spanish. This approach would prove beneficial for those who hear about employment opportunities through word of mouth. Mistakenly employing the wrong employee may result in a higher turnover than previously anticipated, and the company may incur further costs for the company and their existing partners.

Payment Systems

Newer regulations require that the net pay for employees can only be posted to Mexican banks that are only approved by the government; this prerequisite is non-negotiable. The currency paid to the employee is distributed only in Pesos, another requirement of the government. Once their payment is received, he or she can have their money converted from pesos to whatever currency they want. Unlike the United States payroll system, employees in Mexico are not required to include their insurance or retirement contributions in the Mexican payroll as deductions. According to the De La Vega & Martinez Rojas, S.C., (2020), “Wages are accounted for daily and typically paid out weekly. Employees who work on Sunday receive an additional 25 percent beyond the regular daily wage” (para. 2).

Labor Relations

Employers in Mexico are required to abide by the existing Labor Laws. All of Mexico’s employment-related functions are controlled by the country’s Federal Labor Laws (FLL). As an administrative oversight, this precautionary method, referred to as the FLL, provides guidance as it relates to the requirements and adherence for labor unions, their courts, and what protocols must be followed when a person is employed. It is believed that the FLL and its multilayered purpose remains an essential resource in Mexico (De La Vega & Martinez Rojas, S.C., 2020). Additionally, it is expected that an individual who becomes hired into employment is permitted to retain their employment for an undisclosed amount of time in order to establish a permanence of employment; however, unlike their North American counterparts, releasing someone from employment for the sake of minimal cause is not permissible by law. The term At Will is not recognized in Mexico (De La Vega & Martinez Rojas, S.C., 2020). Employers are compelled to factor that there will be some entitlements or expectancies from their employees that will be bargained over regarding certain benefits. The FLL in Mexico dictates the standard benefits, to include monetary time away from the workplace. It is paramount that employers understand that to be successful with hiring and maintaining employees in Mexico, they must familiarize themselves with the requirements and expectancy of their national baseline (Tetakawi, 2020).

Training and Support

Mexico is positioned to efficiently and effectively train and support their employees. Many of the schools that the candidates for employment attended were those that provided increased educational proficiencies complementary for excelling in his or her field of choice, for example, trade-skills. “According to León de la Cruz (n.d.), “Recent changes to the National Labor Law have focused on Workforce Training in Mexico as being critical to productivity gains on both the micro and macro levels (para. 1.). Employees will be involved in continuous learning opportunities provided via industry partnerships and Memorandum of Understanding (MOU) to cross-train employees about their policies and procedures. Mexico and its innumerable partners have agreed not only to provide those who are entering the workforce with the skills necessary to compete fairly but also through systematic training strategies and employ enrichment.

Conclusion

In the preceding paragraphs, we have analyzed Canada and Mexico to make a determination whether the countries are an appropriate fit for the expansion of SWA into the international airline market. Four specific areas specifically addressed were recruitment practices, payment systems, labor relations, and training and support. After close consideration of the four factors Canada and Mexico are compatible due to their business policies, governmental regulations, and airline industry practices aligning with those of the U.S. Additionally, SWA could maintain its concept of flights of less than 500 miles to major destinations in those two countries.

References

Bloom, E. (2017, Aug 7). Canadians May Pay More Taxes Than Americans, But Here’s What They Get For Their Money. Retrieved from CNBC Make It: https://www.cnbc.com/2017/08/07/canadians-may-pay-more-taxes-than-americans-but-theres-a-catch.html#:~:text=Here's%20how%20much%20individuals%20pay,24%20percent%2C%20according%20to%20Broadbent.

Border Assembly, Inc. (2017, October). Mexican Labor Relations. Retrieved from Border Assembly, Inc.: https://borderassembly.com/mexican-labor-relations/

Business Development Bank Of Canada. (2013, February). H.R. practices and Canadian companies. Retrieved from Business Development Bank of Canada: https://www.bdc.ca/en/documents/analysis_research/hr_practices_and_canadian_companies.pdf

De La Vega & Martinez Rojas, S.C. (2020). Employment Law Overview Mexico 2019-2020. Brussels: L&E Global.

Hewitt, A. (2016, March). Developing Canada’s Future Workforce: A Survey of Large Private-Sector Employers. Retrieved from Business Council of Canada: https://thebusinesscouncil.ca/wp-content/uploads/2016/02/Developing-Canadas-Workforce-March.pdf

León de la Cruz, E. (n.d.). Workforce training in Mexico is the law. Retrieved from Técnicos en Mecánica Automotriz: https://www.tecma.com/workforce-training-in-mexico-law/

Skrzypinski, C. (2018, May 17). 5 Ways H.R. in Canada Is Different. Retrieved from Society for Human Resource Management: https://www.shrm.org/hr-today/news/hr-magazine/0618/pages/5-ways-hr-in-canada-is-different.aspx

Tetakawi. (2020, March). Overview Of Mandatory And Elective Employee Benefits In Mexico. Retrieved from Tetakawi: https://insights.tetakawi.com/everything-about-employee-benefits-in-mexico