Human resources has the most difficult job of almost any department when companies expand internationally. The benefits can be significant — research by McKinsey shows that half of all corporate growth in the decade up to 2019 came from foreign markets — but they are certainly hard-won.
From unearthing cross-border talent to overcoming cultural clashes to the “simple” process of paying foreign employees, there are certainly a lot of challenges facing HR teams.
The goal of this article is to make things easier. We’ll face those challenges head-on and outline strategies to make a measurable difference in your international expansion efforts.
Who to hire and how to hire them
It’s hard to argue that recruiting foreign talent isn’t the biggest challenge facing HR teams during an international expansion. It’s on them to find capable and talented individuals who will drive growth in new markets. No pressure, then.
Planning the logistics of hiring talent
The first challenge is deciding how the logistics of hiring international employees will work. One option is for the expanding company to establish a legal presence in the country. This is the safest but slowest method.
A second option is to hire employees as independent contractors. This is faster but can fly in the face of local employment laws.
The third is to use a third-party company like an employer of record (EoR) that has a legal presence in the new market and takes care of all employment-related matters. These firms offer several benefits for growing companies, writes the team at TCWGlobal, an employer of record formerly known as TargetCW. The benefits include:
- Staying compliant with local labor laws.
- Expanding faster without setting up a legal presence.
- Reducing costs associated with international expansion.
- Obtaining additional administrative support.
But first you have to find them
The second challenge is to find new employees. This is now a lot easier thanks to the proliferation of global and local job boards, but it’s still not necessarily a walk in the park.
If you are looking for talent, the team at Hawksford, an international provider of corporate, private client and fund services, recommends reaching out to local chambers of commerce. They can connect you with local executive search firms or consultants who can help you find the specialists your company needs.
Staying on top of local employment laws
Finally, HR teams must also contend with local employment laws that can vary significantly from one country to the next.
“When hiring outside of your organization’s typical area of operation, ensure that your HR department has read up on local labor laws in that particular country,” writes Alexandre Diard, chief marketing officer at HR platform PeopleSpheres. “Failure to maintain legal compliance may impact your organization’s image and work-force branding.”
You can also work with a third-party company to manage the process.
“Consulting firms or professional employer organization (PEO) solutions can help companies navigate international hiring complexities,” writes Adrian Fisher, CEO of PropertySimple, a national property portal.
“A PEO, for instance, can guide companies on how to comply with local employment and other laws,” Fisher explains. “It can handle hiring international employees, compensating according to local laws and regulations, and, should it become necessary, terminating employees to reduce risk – while adhering to a particular market's regulations.”
Onboarding and training new staff
Hiring international employees is only half the battle. Chief human resources officers rank training second in their list of priorities behind hiring, according to AchieveNEXT’s study of its peer-to-peer network CHRO Alliance. But, over half of them say their training and development capabilities are weak or extremely weak.
If it’s hard enough to build effective training programs in your country of origin, it’s doubly hard to do so abroad. In many ways, it’s even more vital, too. That’s because thorough onboarding programs ensure new international hires are “well-integrated, productive, and aligned with the company's overarching objectives,” says the team at HR platform and employer of record in India, Rapid.
You can overcome the challenge of creating successful training programs by having “adequate insight into the linguistic and cultural makeup of the target country,” writes Wei Hsu, managing director at INS Global, a provider of PEO and EOR services in China and the Asia-Pacific region.
It also helps to start early, according to the editorial team at global employment platform Oyster.
“Grant your new hires access to your online onboarding portal soon after they accept your offer,” the team writes. “The portal should have all the information they need before starting their new positions and include features like translation tools so the material’s accessible to everyone.”
Introduce new employees to their colleagues before they start, too. This can help make the whole experience less isolating and more welcoming.
Take care to make the material as accessible as possible. Translation is a given, but don’t forget about slang, idioms and other terms that may not make sense to a non-native speaker, adds the Oyster team. “Be patient with new employees who stumble over their words occasionally or misunderstand a phrase as they get acclimated.”
Establishing local and global working cultures
Culture is critical. In a 2021 survey of 3200 global leaders and employees by PwC, over two-thirds (67 percent) said culture is more important than operations or strategy.
Yet developing company culture in cross-border organizations is often overlooked by HR staff, who are more concerned with hiring and paying employees.
The differences in cultures can be stark, and teams must take them into account during both the hiring and onboarding phases. While the Western world is transactionally focused, for instance, employees in the East care more about building and honoring relationships.
It’s just as important to build a cohesive global company culture. But this, too, can be difficult, says Ruth Stern, content marketing manager at HR platform Bob.
“With people working worldwide, speaking different languages, and accustomed to sometimes contrasting work practices, building a cohesive company culture can be challenging. It’s the responsibility of the HR team to ensure that everyone, wherever they work, feels comfortable and included within the company,” Stern writes.
Regular communication and all-hands meetings for the entire organization can go some way to creating a sense of unity between physically distant teams, she adds.
“It’s also a good idea to leverage a people management platform. This HR tech can provide a forum for HR, management, and individual contributors to share company updates. It allows HR professionals to recognize and celebrate people’s achievements more easily and create an open, inclusive, and collaborative company culture.”
Developing a global purpose can help too, say McKinsey’s Asmus Komm, Florian Pollner, Bill Schaninger and Surbhi Sikka. “HR can articulate and role-model desired individual mindsets and behaviors linked to purpose by identifying ‘moments that matter’ in the company’s culture and translating purpose into a set of leadership and employee norms and behaviors.”
Paying international employees
Working out how to fairly and effectively pay new international employees is the final challenge HR teams must overcome. The good news is that if you work with local third-party providers like PEOs and EoRs, paying employees is pretty straightforward. They can make payment on your behalf in the local currency.
The more pressing matter is creating a global compensation strategy.
“Having a global compensation strategy allows companies with a dispersed workforce to provide fair, competitive benefits within their budget—regardless of where their employees live,” writes the team at Omnipresent, a PEO and EOR company. “It guides the way you structure compensation and pay brackets across your organization, helping create a fair, equitable system for determining compensation packages.”
Paying attention to total compensation is key, says Antoine Boquen, CEO of Horizons, a global EoR. “Pay structures across the company should be set, taking into account not only differences in wages and salaries, but differences in social contributions, benefits and all components of a compensation package. For example, in some countries, 13th-month pay is a legal requirement, whereas in other countries it is market standard, but not an obligation.”
Managing global payroll can be just as tricky, especially when dealing with dozens of different local providers. Centralizing everything can help make the process much more manageable, says Shane Martin, who was senior account executive at Utmost Corporate Solutions for 10 years.
“[Centralized employee benefit solutions] enable Benefit and Compensation Managers to design and manage employee benefits in multiple countries in a fair and effective way. These schemes have many advantages over a collection of local schemes,” he writes. “For example, a single scheme can be established for all qualifying multinational employees and mobile employees. Within this, multiple categories can be implemented to comply with local regulations and practice.”
It’s for this reason that HR teams and CFOs use a platform like Payslip to manage payroll providers across the globe and onboard new teams in weeks. Learn more about how Payslip’s global payroll platform can help you expand internationally by booking a demo today.
Images used under license from Shutterstock.com.