Narconomics - Of Cartels and Men

The world of international drug smuggling may seem an odd place to uncover some valuable economic lessons. Nevertheless, the manufacturing and smuggling businesses of the Mexican drug cartels form some interesting parallels with more traditional companies. For example, they seek out new markets when necessary, deal with persistent government interference and, most importantly for our purposes, have continual and costly human resource issues.


The Sinaloa Cartel by the Numbers

The Sinaloa cartel is an international concern with billions of dollars in sales every year. Headed by the narcotraficante, Joaquin “Shorty” Guzman, the cartel hires and loses almost 10,000 employees per year.
Despite this turnover and the general downturn in the U.S. and Mexican economies, the business had a
banner year in 2011.

Success has been good to the Sinaloa cartel and to Mr. Guzman in particular. He is reputed to be worth well over a billion dollars making him the 10th richest man in Mexico and he is widely considered to exert more
power and influence than the late Columbian drug lord, Pablo Escobar. In law enforcement circles, he is
regarded as the most successful drug lord of all time and is often referred to as the “Godfather of the Drug


Different Strokes for Different Folks

To address their continuing turnover problem, the Sinaloa organization is able to draw from a large pool of readily available, albeit uneducated and untrained, workers. As such, it must invest significant amounts of time and money in training, vetting and administering its workforce. Unfortunately for the cartel, as well as the employees, many of these new hires are lost within the first few months or a year.

More traditional companies face the same issues with turnover. Recruiting, hiring and training consume valuable resources that are wasted if an employee is lost for any reason in a relatively short period of time. In addition, traditional companies do not benefit from the same type of “retirement” and “benefits” plans, or lack thereof, as the Sinaloa drug cartel. Traditional companies must be far more selective in their hiring process and pay particular attention to their post-hire, HR practices. To remain competitive, they simply cannot afford to just hire and terminate, at will, like the cartels.



It is not always possible to recruit the very best talent. An HRIS can partially overcome this difficulty by ensuring an organized hiring process that, at least, maximizes the potential of the applicant pool. Furthermore, it can facilitate the administrative functions of the onboarding process. In addition, a well designed and implemented HRIS will ensure a complete and thorough training regimen for all new hires.

The benefits of an HRIS are multifold. Lower HR administrative costs, lessened employee turnover, higher morale and greater productivity are just a few examples. Each of these items has a direct effect on the bottom line. A company needs to avail itself of every cot-cutting and productivity-enhancing strategy it can find. After all, traditional companies are faced with a number of costs such as import duties, income taxes and employee benefits that are foreign to the likes of Senor Guzman.


About the Author 

Carolyn Sokol writes about issues that may affect small businesses such as human capital management, hr management software, and HRIS programs.  She is founder of and contributor to, both of which help match businesses to the right HR or payroll service provider for their particular needs. Her background is in marketing and communications, employee education and training, development of policies and procedures and the ongoing delivery of outstanding customer service.