Companies Must Manage Differences to Succeed

Mexico’s oldest companies and the new entrants coming from abroad share a common dilemma: how to adjust to the new world order that is the country’s liberalized energy market. For a behemoth such as PEMEX, a cultural shift is needed, while foreign firms will require local understanding to succeed, says global executive search firm Heidrick & Struggles.

The human resources company not only sources talent for top-executive positions in the oil and gas industry but also offers “leadership consulting and cultural advisory services,” much needed to rapidly increase high-level employees’ productivity in a sector just starting to welcome foreign players after decades of strict national control, says Lewis Adams, Principal at the firm’s Mexico City office.

The Chicago-based firm has over 30 years of experience in the Mexican market and boasts consultants covering every industry in the country. Adams specializes in the automotive, manufacturing, energy, infrastructure and oil and gas sectors. As foreign players start arriving in Mexico’s petroleum industry, he is quick to highlight the challenges they may face, and how Heidrick & Struggles can help them.

When it comes to the firm’s experience in coaching companies through periods of cultural adjustment, “the most interesting example is PEMEX,” Adams says. Heidrick & Struggles held a contract with the NOC for cultural transformation within the organization and worked with its top leaders to “unfreeze and redefine what the new (PEMEX) culture should be.” Despite PEMEX’s executive committee’s willingness to participate in the cultural transformation project, Adams says they came up against resistance within the company and describes it as a “big oil tanker to turn.”

Adams adds that the influence of unions is something PEMEX must overcome, along with their historically hierarchal structure, to create more agility to respond to the changing markets. Employees at PEMEX will often “look upward” before making a decision. Inefficiencies arising from a lack of accountability are compounded by too little cooperation internally, as “PEMEX has tended to operate in silos.” Adams highlights the need for more harmonization between the various divisions that make up the national oil giant.

It is not only the industry’s oldest player who will need to adjust but also its newest ones. According to Adams, new international oil companies “need to have a cultural understanding of how things operate in Mexico” to find success in the country. As the market awaits the influx of foreign firms expected to take advantage of Mexico’s Energy Reform, stark differences in approaches to business practices can become a sticking point for companies used to working in other regions. “There are significant differences between Mexico and the US or Europe,” he says.

While tipping his hat to the improvements CNH and the government have made, Adams specifies bureaucracy and administrative processes as potential roadblocks international newcomers will face. He emphasizes the need for patience and perseverance to overcome them.

Hiring local talent will work in favor of companies aiming to effectively adapt to Mexico’s oil and gas industry, Adams suggests. “The critical point is that they hire people who have previous experience in Mexico or Latin America,” he says, and also points out the leverage companies gain by focusing on personal relationships and networks in Mexico. Candidates with experience in the Colombian or Venezuelan oil and gas markets could be a good option to help incoming companies navigate the new cultural terrain.

When it comes to downstream activity, local demand is already on the rise due to the fast-paced development of the sector. But Adams believes multinational companies will bring in talent from abroad for upstream activity.

It is clear that the ongoing transformation of Mexico’s oil and gas industry will demand huge shifts in the corporate culture of all of its players, Adams adds. As a global company, Heidrick & Struggles is positioned to help both national and international companies.