To help your business grow, you may have decided to expand into international markets. Or maybe you’re having a tough time recruiting staff near your home base. You determine you want to try enlisting the people you need from a global talent pool. While hiring international team members can be the right move for your company, it does come with some caveats.
Hiring globally is not the same as onboarding an employee who lives a stone’s throw from your headquarters. Adding international staff members to the team isn’t even the same as hiring remotely across your home country. You’ve got different labor laws, local business regulations, and cultural considerations to navigate. Let’s look at how to successfully handle those intricacies so you can start building a globally diverse team.
1. Payroll Considerations
Onboarding an international team means dealing with the realities of managing a global payroll system. You have different tax structures, benefits, and currencies to consider. Various time zones, national holidays, and average local pay rates are also part of the picture. You may need to make employer contributions to a country’s social benefit programs.
Keeping track of everything and flawlessly executing it can turn into a headache. The complexity only increases as you onboard team members from a wide range of global locations. A professional employer organization can help simplify matters. Provided you have a business presence in the country of hire, a PEO can handle payroll and benefits so you don’t miss a beat.
Working with an HR partner enables you to pay your global employees correctly and on time. You may still need to oversee compliance-related issues, such as classifying workers correctly. Alternatively, you can work with an employer of record instead of a PEO. EORs function as legal employers, which saves you from having to maintain a business entity in the country where you intend to hire workers.
2. Establishing a Local Legal Presence
Stateside, if your business wants to hire someone from the next town over, you usually don’t need to do anything special. Your company is already legally registered, and the prospective employee is authorized to work for businesses in the U.S. If they live in a different state, you might have a few distinctions in labor laws to pay attention to. But for the most part, it’s smooth sailing.
As suggested above, it gets a bit more complicated when you expand your recruiting horizons to a different country. Most nations require companies to establish local legal entities to hire employees. You’ll have to register, pay fees, and get government approval. The process can drag out for months, a year, or longer. This investment might make sense if you hope to expand into the market and hire several locals.
However, establishing a local legal entity can become too tedious if you just want to onboard a handful of employees. Working with an EOR removes this barrier, since these organizations become your new hires’ legal employers. An EOR will already have established legal entities in various countries. If the country where you wish to employ people is among them, you can start hiring right away. EORs also make sure you stay compliant with a nation’s labor laws.
3. Recruiting Nuances
When you recruit overseas, you’re entering territories where employees’ expectations may not be what you’re used to. Labor market conditions, cultural differences, and government regulations can impact what workers look for in an employer. For example, 58% of people between the ages of 15 and 64 in Italy have a paying job. At the same time, only 3% of employees work extended hours.
The employment rate in Italy is below the OECD average of 66%. In addition, the percentage of employees working extended hours is below the OECD average of 10%. These numbers may point to a more relaxed culture in terms of work commitments. Therefore, organizations may experience challenges filling roles with mandated overtime and long working hours.
Nuances like these can impact your global recruiting strategy. You may need to adjust everything from job ads to how you design open roles. Partnering with recruiting agencies that know the area puts you in a better position for success. In the early stages, recruiting agencies can also help you determine whether a labor market is a good fit. You can determine whether making adjustments is feasible or whether you should move on to other venues.
4. Safeguarding Information
Assembling a global team may impact your data management practices, including those related to intellectual property. For instance, if you hire team members who live in the European Union, GDPR rules will apply. The EU’s General Data Protection Regulation stipulates that employees can request to see what information you have on file about them. They have a right to know how you’re using their data and can request corrections if there are errors.
Employees, especially former ones, may even request the removal of their information from your databases. Since onboarding team members requires the collection of sensitive data, those individuals might not want it perpetually stored in your systems. Before hiring employees in another country, consult with legal professionals to ensure you understand local information security regulations.
Another aspect of data security you will want to check out is laws about intellectual property. These regulations can vary between countries, so you could put trademarks and trade secrets at risk. In some cases, you may be able to add intellectual property clauses to employee contracts. But you’ll want to know what protections local laws provide and where you might need to proceed with caution.
Handling Global Hiring Complexities
At some point, recruiting from your backyard may not be enough. You might need to expand your talent pool overseas due to business growth and a demand for diverse skills. Yet hiring international employees comes with challenges and details you can’t ignore. By working with HR partners who have the expertise to navigate them, you can successfully onboard a global team.
