SHRM Delegation to Cuba Finds Entrepreneurial Buzz in Havana and HR Issues Similar to U.S.

 

In the first of three posts, Howard Wallack writes about a SHRM delegation visit to Cuba.

President Obama and Cuban President Raul Castro announced normalization of diplomatic relations between the two countries last December, and, at a flag-raising ceremony in mid-August, the U.S. Embassy in Havana was reopened.  In light of this incipient opening of Cuba for Americans, a SHRM-sponsored executive HR delegation visited Cuba this month to investigate how non-U.S. companies already operating on the island manage, their HR challenges and the prospects for the future.  The group of 14 was made up of HR and non-profit leaders.

Our intensive five-day agenda was organized by To Cuba Now, an authorized and licensed educational exchange provider. The agenda included meetings with legal experts on employment and foreign investment law, HR practitioners from governmental and private-sector firms, representatives of foreign companies operating in the country, a University of Havana expert on U.S.-Cuba bilateral and economic relations, an architect working on urban planning and restoration of Old Havana, and U.S. Embassy staff.

What we learned about business operations in Cuba:

Business opportunities aren’t as imminent as we hoped, but are on the horizon.

Foreign companies can operate in Cuba, and a year ago the government announced priority sectors for foreign investment. According to the Portfolio of Opportunities for Foreign Investment, allowable structures include joint ventures, ‘international economic association contracts,” and, in specially approved cases, enterprises with 100 percent foreign capital.  Priority industries include agriculture, tourism, energy, mining, transportation, health and biotechnology.

The Cuban labor code was updated in mid-2014.  The Cuban government recognizes work as both a right and a social duty of every citizen with fundamental concepts of equal work, equality, nondiscrimination, prohibition of child labor and protection of youth, guaranteed work periods, rest periods, and paid vacation, health and social security.

Hiring in Cuba by foreign firms must be done through a state-run hiring agency.  Non-Cuban companies and organizations can conduct their own recruitment and selection efforts, but a list of their preferred hires must be submitted to the appropriate governmental hiring agency for review and approval before contracting. People we met with had mixed experiences, sometimes positive and other times arbitrarily administered, with the approvals often delayed or withheld and without explanation. One employer shared that he waited a year for a response, and all the candidates were rejected.

Once hired, employees are paid wages at levels set by the state for their job category, though pay-for-performance bonuses above the required levels are now being permitted.  One international hotel chain shared that they use the results of monthly customer service surveys and feedback received on employees’ results to determine incentives for performance.

Even with the restrictive employment circumstances, HR professionals in Cuba face very similar concerns and issues for the future that we face in the United States. Staffing, competencies, compensation, motivation and engagement are all in play, albeit from a decidedly different point of view and skill levels.

Entrepreneurship is rising fast and permitted in 201 different activities by the government.  The category of self-employed workers, known locally as cuentapropistas, is growing fast and now estimated to be approaching 500,000 individuals.  Among the job categories now allowed
“non-state” activity are restaurant owners (paladares), barbers and hairdressers, electricians, artisans, carpenters, locksmiths, animal groomers and trainers, manicurists, messengers, music and art instructors, various classes of repairers, translators, room rental, drivers, and more.  As a result, at least in Havana, there is an entrepreneurial buzz.

Infrastructure is poor and in need of immense investment. Power outages occurred frequently in our hotel, and the stock of existing real estate is in poor condition and short supply.

Next: In the next installment, Howard Wallack writes about general impressions of Cuba.

Howard Wallack, SHRM-SCP, is director, global business development at SHRM.

 

 

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COMMENTS 4

Comments

Howard's observations are accurate - the Cuban people are receptive and welcoming to U.S. people. But there are many steps to doing business there.

In the 1950's, Havana was an amazing city in so many ways - the architecture, music and arts. It is already special!

Visitors, the American Embassy and Cuban reinvention leadership seem to realize that Cuba-restored is a pearl to be cherished.

Reesa Woolf, member SHRM delegation to Cuba
ConfidentSpeaking.com

Employee Engagement is a fundamental economic issue in Cuba's future. This motivation-to-work is key to increasing ROHC and generating wealth there to raise all boats.
"In the decade of Human Capital, HR must lead."

Hello Harold,
I am traveling to Cuba in early Nov with the People 2 People Delegation. Do you have any suggestions, recccommendations, must do, etc.

Regards
Larry

Hi Larry, I'm sure in terms of things to see/do, you'll be in very good hands with the P2P team and your experienced tour co-leaders. If your group will be visiting any rural areas, like we did with our visit to Viñales in Pinar del Rio province, be sure to take bug repellant, as we all got bit up on that day trip. Take comfortable walking shoes suitable for cobble-stone streets in the old city center yet versatile enough for lots of dancing. In addition to San Carlos market for handicrafts and paintings (being sure to spend enough time to carefully peruse the very wide variety of offerings and be ready to haggle), don't miss the next-door Viejo Almacen de Madera y Tabaco (Old Wood & Tobacco Warehouse), which has been restored and turned into an upscale microbrewery, with live bands and/or video DJ. It surprised us -- it's as modern and sleek in design as anything you'd see elsewhere, and the three types of beer (Pilsener-style, amber, and dark beer) are tasty. For live music, both Café Habana (Melia Cohiba Hotel) and La Taberna in old Havana had excellent and genuine shows. Would recommend dining more in the paladares than in state-owned restaurants, as the difference in quality is noticeable better in the more entrepreneurial, privately owned establishments. And instead of all the mojitos, daiquiris or piña coladas that you[ll be offered, try the older aged añejo rums, straight up. Enjoy the adventure and ¡buen viaje! Howard

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