Workforces and multinational companies around the world are becoming more diverse in terms of the mix of employees. These range from permanent full-time employees to part-time employees, to contractors, to remote workers and to employee of record workers (EOR) as well as expats, independent contractors, and employee relocations due to global mobility policies.
It is a positive in terms of securing the best available talent in the market and working with a diverse workforce that meets the needs of the business for specific products and services. It also helps with capital expenditure, salaries, and benefits.
The reason for the diversity makes sense and it is certainly the future of payroll, a huge number of multinational companies today are characterized by this kind of diverse workforce. In this article, we are going to examine some of the challenges that HR professionals face when it comes to managing this diverse and disparate range of employee types.
Difficult to manage separately
In the past, the human resource and payroll department may have had valid reasons for choosing to manage different types of employees in different ways in terms of salary, compensation, and benefits. This was understandable, contractors are in place for a fixed period of time and work towards a fixed contract, this contract is different to the full-time employee’s contract.
Global mobility and relocation policies could see specific members of the workforce moving to another country and being paid via a different entity while still remaining a permanent employee in a specific location. Pay, benefits and tax treatment may be different for these employees. Remote workers or EOR employees are often required in countries where the multinational has no legal entity or business presence. Again, tax, benefit, and compensation arrangements are understandably different.
But the challenge for payroll and HR team members is that it is increasingly difficult to manage them all in separate systems with disparate data flows. It is hard for HR managers and leadership teams to get a clear understanding of how many employees are on the books, where they are located, what they are being paid and in what currency. It is a lot of data management and record keeping and does not lend itself to the kind of clear and concise reporting ="https:>that can give helpful overviews of recruitment and staffing levels to leadership teams. So, human resource management and global payroll professionals are increasingly seeking initiatives in software solutions that will help them manage their entire workforce, while also reporting on them in a digestible and easily understood format.
It is a challenge that needs to be met sooner rather than later as workforce diversity is only going to increase in a post-covid-19 pandemic working environment, which has radically altered the rules around the recruitment process.
Segregation of workers is disappearing
We have entered a new working normal, and a very different workforce culture. Remote hiring and onboarding is the new normal and it is common for teams to coexist in multiple locations with a mixture of permanent, contract and remote workers as part of a global team. The segregation of workers is starting to disappear from the workforce. In the past, contractors may have worked together on a specific project and been siloed both within the business as well as from a HR and payroll perspective.
This is really no longer the case and businesses need to adapt to the new future of work and the digital economy in a post coronavirus world, develop new products and services that appeal to a global customer base and carve out revenue share wherever they can find it. Organizations need to find, hire, and pay the best available people to do this, and these employee types are often required to work together for much longer periods of time than they may have in the past.
Teams are diverse, global workforces are diverse and new policies are needed to recognize that the segregation of the past is on the way out, and the new normal will be a technology solution to manage how people work and manage the extended workforce alongside the permanent workforce. This is essentially treating them as one connected workforce regardless of the diversity of worker type within the workforce. Treating them the same, interacting with them in the same way, onboarding them in the same way and paying them from a similar system.
The quicker global businesses recognize that the worker segregation of the past is rapidly disappearing, the quicker they can turn to technology solutions in human resources and global payroll that will enable them not only to manage a fully extended workforce, but also set the foundations for easily recruiting and onboarding new diverse job seekers and workforce types in the future.
The popularity of EOR will rise
Employer of record workforce essentially means that global companies who do not have an entity or business presence in a specific country that they want to be in, can still hire and pay employees in that country. They do so via a professional company that acts as an employer of record, the employee gets hired and paid by the EOR provider, but from a legal perspective, they are contracted to and work for the global business.
From the perspective of the global organization, this is all about speed and efficiency. They may not have the capacity or the personnel to set-up a legal entity in the country they want to hire employees in, they may only want to hire a small number of employees so it will not make sense to invest a huge amount of time and money in creating an office.
Businesses want access to talent and suitably qualified candidates, and they want a process that enables them to hire, onboard and pay them quickly and efficiently. Being able to pay the workforce accurately and efficiently could prove to be beneficial when it comes to the employee experience and employee retention. The EOR service enables organizations to do this, the service provider has access to the local talent, understands the local labor laws, regional regulations, and cultural nuances.
Global organizations then get to tap into this talent network, understand the local market that they are trying to penetrate with their products and services, and hire people who speak the local language and understand the local culture and customs. It makes perfect business sense and allows them to hit the ground running in a new region and gain a competitive advantage. This model of employment is on the rise, and you can expect to see employment of record workforce form a more significant part of the workforce diversity in the coming months and years.
Today’s global workforce is becoming increasingly diverse and requires efficient management from HR departments. Workforces today can be operating in multiple locations due the new normal of remote work and can involve a number of different employment types, so software solutions that can help manage this type of workforce collectively is essential for HR teams. As well as this, segregation is becoming a thing of the past and a technology solution that can manage an extended workforce alongside a permanent workforce is crucial.
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