Misscommunication while doing business in mexico: what to do?

On top of the regular business challenges, companies with foreign subsidiaries have an added obstacle: communication. Holding companies must deal not only with geographical distance but also with cultural differences that could affect the communication between Group components and hence the Group’s operation.

Thousands of transactions between businesses in the United States and Mexican business entities happen every day; both markets are narrowly linked and with a more efficient communication, operations will benefit and function smoothly. But how can companies improve these processes?

1) Set up regular reporting calendars to stay on track to reach objectives

Subsidiaries must report on an assigned calendar, must send information on their performance and should not delay corporate’s reporting schedules.

It is important for the subsidiaries’ personnel to understand the consequences of not meeting deadlines, of not reporting as requested. They need to see the bigger picture and how they affect other areas of operation.

The calendars should be clear and properly agreed upon. Notice the term agreed: while deadlines and reporting formats are non-negotiable, companies should consider local issues before implementing a one-size-fits-all calendar. When you agree on a calendar, --instead of imposing one--, people will feel committed to it and information will flow more smoothly because employees gave their input and agreed on it.

2) Explain to employees how their actions affect the business

While unintentional, sometimes people can’t grasp the reach of their negligence. So, a good start would be for foreign companies to explain to their Mexican employees how information processes flow and how small deviations affect the company’s operation. Thinking that employees far way will grasp the situation as those at headquarters should not be taken for granted.

Also, employees in your business in Mexico should understand how to prioritize information and differentiate what is relevant from the unimportant. We have had cases where reports were delayed for not being able to identify differences in inventory for a couple of hundred of dollars, only to find out later that someone had just input the wrong data.

3) Make frequent visits to your subsidiary

We also recommend for regular visits to your business in Mexico. It is almost impossible to properly manage a business without having a physical presence on the premises. This reinforces control, provides feedback to people and gives them confidence to continue adequate performance.

4) Improve business monitoring systems

An added tool to improve communication, is to establish regular continuous monitoring. Corporate ERP’s provide this monitoring. However, the investment in software and training is frequently high, specially to maintain all employees trained in these tools.

Another way of monitoring is by taking advantage of the external auditor. Foreign companies usually engage external auditors to validate the financial information they are receiving from their Mexican subsidiaries. Auditors can become their eyes on-site.

By establishing an adequate auditing program, external auditors can support headquarters by reviewing on a more regular basis, almost as internal auditors, different aspects of the subsidiary’s operation, instead of waiting for the year end and for the auditor to report only on the financial statements and the internal control. You can increase the benefits of engaging an independent trusted advisor by increasing the scope of his support, to include reviewing quarterly or bimonthly reports.

But this not only works as a supervising tool: it is common for Mexican employees to trust the external auditor because they know the auditor is reporting to Corporate; they understand the auditor has a direct line to their superiors, so they rely on his advice and support. In a very efficient way, all parts start working towards the same goal increasing the chances for success.

 

We have experience on assisting Mexican subsidiaries keep on track with their reporting requirements. Feel free to contact us for more information on this type of support.

If might also want to read: Reporting from foreing subsidiary:Why it is so difficult to get things done on time? 

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