In today’s busi­ness world, there is more pres­sure than ever to main­tain a high rate of growth and reach new rev­enue goals. And growth usu­al­ly means hiring.

The work of HR is an impor­tant part of that work, espe­cial­ly where fast-grow­ing com­pa­nies are con­cerned. There are many rea­sons why going beyond bor­ders and hir­ing tal­ent inter­na­tion­al­ly can help a com­pa­ny reach its objectives.

Why International Hiring?

Growing globally Grab Market Share

Over the last ten years or so, com­pa­nies have seen huge growth, but they’re start­ing to exceed their size region­al­ly.  As a result, com­pa­nies are hir­ing inter­na­tion­al­ly to take advan­tage of new mar­kets and job appli­cant pools.

Deb­bie Millin is the Chief Oper­at­ing Offi­cer for Glob­al­iza­tion Part­ners, the orga­ni­za­tion behind the Glob­al Expan­sion Plat­formTM.  Millin says one pop­u­lar way com­pa­nies kick­start their expan­sion is by hir­ing sales peo­ple in new coun­tries where they want to expand.  At the end of the day, com­pa­nies need to grab glob­al mar­ket share and hir­ing those work­ers is a good way to start.

Competitive Advantage

Millin says com­pa­nies are going glob­al ear­li­er and faster than they used to, because if they don’t, some­one else can use the idea and set up an in-coun­try com­peti­tor.  One exam­ple:  Didi and Uber.  Uber didn’t get into the mar­ket quick­ly enough and lost out to Didi.

Accessing a larger applicant pool

Millin says you must go to the tal­ent.  As the world con­tin­ues to devel­op, it’s going to feel much small­er than it does now.  Orga­ni­za­tions must start look­ing out­side their cur­rent region­al offices to scout the best tal­ent avail­able. Unem­ploy­ment rates are low, and hir­ing is com­pet­i­tive so stay­ing in your own back­yard could severe­ly lim­it the tal­ent pool.

The Contractor Trap

But acquir­ing inter­na­tion­al tal­ent does not nec­es­sar­i­ly mean hir­ing con­trac­tors. This is one of the com­mon mis­takes com­pa­nies make. Lead­ers iden­ti­fy great tal­ent in a place like Brazil or France and attempt to hire those work­ers.  The only prob­lem? Inter­na­tion­al con­trac­tor laws are the same as those in the Unit­ed States; if the per­son acts like an employ­ee, they are an employ­ee. Fol­low­ing this action opens the com­pa­ny up to sig­nif­i­cant legal risk and finan­cial penalties.

Falling into “the con­trac­tor trap” real­ly is a trap, because it’s not always easy to get out. If the rela­tion­ship with the con­trac­tor begins to dete­ri­o­rate, they could eas­i­ly expose the work­ing arrange­ment to the author­i­ties, and you could poten­tial­ly owe back tax­es, fines, unpaid ben­e­fits and more.

When com­pa­nies are tru­ly ready to go after the best glob­al tal­ent, hir­ing full-time makes the most sense. The best tal­ent wants a full-time role, with ben­e­fits, and oppor­tu­ni­ties for growth.

Where’s the growth?

Based on data from Glob­al­iza­tion Part­ners, Millin says the fol­low­ing 10 coun­tries are at the top when it comes to expansion.

  1. Cana­da
  2. UK
  3. Sin­ga­pore
  4. Mex­i­co
  5. Chi­na
  6. Aus­tralia
  7. Brazil
  8. Ger­many
  9. India
  10. South Korea

The UK tends to be the first stop after Cana­da 90% of the time, but that’s chang­ing with Brex­it. Com­pa­nies are more hes­i­tant to enter the UK of with the uncer­tain­ty of what Brex­it will bring, show­ing how impor­tant it is for com­pa­nies to be aware of the social and polit­i­cal issues in a coun­try as you plan your glob­al expansion.

Millin says for HR pro­fes­sion­als at com­pa­nies that have decid­ed to take advan­tage of the many oppor­tu­ni­ties asso­ci­at­ed with glob­al growth, the next step is to fig­ure out how to make it happen.

The Process

Decide whether to set up shop in another country

Open­ing a com­pli­ant busi­ness enti­ty in any coun­try is chal­leng­ing – and some are much hard­er than oth­ers. If the com­pa­ny choos­es to set up a branch office or whol­ly-owned sub­sidiary, it can take six months to a year, or longer, before the com­pa­ny is legal­ly able to oper­ate in the region, not to men­tion sev­er­al thou­sands of dollars.

Plus, lead­ers will need to know about local reg­is­tra­tions, bank accounts, corporate/tax fil­ings, admin­is­ter­ing com­pli­ant pay­roll and ben­e­fits in coun­try, and more. Some of the “gotchas” to look out for include bank account set­up – it can take months. And some coun­tries require in-per­son sig­na­tures. It’s not always fea­si­ble to be phys­i­cal­ly in-coun­try through­out the enti­ty set-up process.

Lack of At-Will Employment

In the Unit­ed States, com­pa­nies can hire and fire at will – as long as the rea­son for ter­mi­na­tion isn’t ille­gal. Out­side of the U.S., this is an unknown con­cept. Employ­ers must prove that an employ­ee dis­missal is legal­ly jus­ti­fied, and in many coun­tries, that is dif­fi­cult to do, and evi­dence must be documented.

If legal process aren’t fol­lowed prop­er­ly, the com­pa­ny can open itself up to a wrong­ful ter­mi­na­tion law­suit, which can be vast­ly more expen­sive, and take years to resolve.

No One-Size-Fits-All Solution

Ben­e­fits vary from coun­try-to-coun­try and from indi­vid­ual-to-indi­vid­ual. A glob­al com­pa­ny must adhere to the idio­syn­crasies of each country’s laws and cus­toms and still offer “equal” ben­e­fits to all employees.

On the plus side, so many coun­tries have statu­to­ry ben­e­fits plans that in some loca­tions your com­pa­ny may not need to pro­vide sup­ple­men­tary ben­e­fits at all.

Under­stand­ing the local mar­ket norms can help you stand out as an employ­er of choice.

For glob­al teams, HR should shape equi­table ben­e­fit offer­ings around perks that max­i­mize the qual­i­ty of life for the company’s employ­ees with­in the con­text of their own cul­ture.  Research what ben­e­fits are most val­ued in a par­tic­u­lar loca­tion, and what oth­er employ­ers are offer­ing in that mar­ket beyond what is required.  This helps the com­pa­ny stay com­pet­i­tive, and gives the can­di­date con­fi­dence from the very first inter­ac­tion with your company.

But all of this takes time, as well as local knowl­edge and exper­tise, which can put addi­tion­al bur­den on in-house HR teams who are man­ag­ing the process alone.

Going Forward

So what are the options? One solu­tion to expand­ing inter­na­tion­al­ly is to use a Glob­al Employ­er of Record. An employ­er of record is an orga­ni­za­tion that serves as the employ­er for tax pur­pos­es, while the employ­ee per­forms their work at a dif­fer­ent company.

Specif­i­cal­ly, an Employ­er of Record such as Glob­al­iza­tion Part­ners helps:

  • Onboard employ­ees in over 170 countries
  • Man­age pay­roll and tax­es – compliantly
  • Nav­i­gate the com­plex­i­ties of local ben­e­fits, PTO, and bonus structures

Work­ing with a Glob­al Employ­er of Record pro­vides a quick time-to-mar­ket, until you reach a crit­i­cal mass in coun­try, or you can con­tin­ue with this mod­el indef­i­nite­ly depend­ing on your business.

By Mason Stevenson

Orig­i­nal­ly post­ed on hrexchangenetwork.com