3 Things You Should Consider When Hiring a Global Workforce
Expanding overseas isn’t a light decision for any company. The top considerations during the planning process are different laws, cultures, and market opportunities. But even if your company finds a viable global market, there’s still the question of how you’ll hire a workforce.
What happens if your business wants to test the waters first? You might be wondering how you can legally hire workers from other countries without establishing a local office or presence.
While going global will bring your company new adventures and expertise, recruiting an international workforce raises challenges. It’s not something a business wants to try to figure out without some form of guidance. Below are three things to consider as you develop your global recruiting strategy.
1. Establishing Legal Entities Takes Time
Most countries won’t let you put one of their citizens on your payroll without setting up a local business entity. So if HR finds the perfect candidate in Portugal, your hands may be tied. A few nations allow companies to register as non-resident employers instead, but there is still some red tape involved.
Whether you establish an entity or go through the non-resident employer registration process, you’ll need to consider time and expense. Each country or market may have different steps and timelines. Some may be more complex and take nearly a year to complete. In other markets, it might only take a month or two.
However, spending time jumping through the regulatory hoops isn’t viable if a business needs to fill a position quickly. It also doesn’t make sense if a company only plans on hiring one employee from the area. In these scenarios, working with an employer of record (EOR) is usually the better choice. You can likely find an EOR service that already has legal entities set up in the countries you wish to hire from.
By adding your employees to their payroll, the EOR you work with ensures you don’t violate local laws. You still oversee the person’s work responsibilities and develop and nurture the professional relationship. Meanwhile, the EOR handles local regulatory compliance, payroll, and benefits administration.
2. Labor Market Conditions Can Vary
Although current assessments of the U.S. labor market have labeled it as extremely tight, conditions could be more favorable elsewhere. It pays to do your research before taking your hiring efforts global. Assume each country or labor market your business plans to enter will have variations in competitiveness and unemployment trends. Average wages could be similar or drastically different from those stateside.
Other variables, such as skill levels and industry concentrations, will also differ. Similar to the U.S., there could be geographical areas like Silicon Valley where certain industries and skills are prevalent. Depending on what type of talent your business is looking for, you may face more or less competition. Trying to recruit a skilled workforce in a city dominated by top local employers will be less fruitful.
However, your business might find other cities where skilled workers have fewer attractive job opportunities. You may have better luck concentrating your recruiting efforts in these areas. Companies can align dominant skill sets with hiring needs by determining where universities and trade schools have campuses. Just be prepared to research and match the offers your typical ideal candidates are receiving and accepting from local employers.
3. Cultural Differences Can Pose Barriers
Companies that hire international workers have more than different languages to consider. Professional expectations and norms rooted in culture influence lunch breaks, time off, and compensation. Cultural norms can also directly impact how businesses evaluate candidates during the hiring process. It may be normal and acceptable to use personality tests in one country but be offensive or illegal in another.
Before you ramp up your overseas hiring efforts, you’ll want to perform a deep dive into the culture. Cultural norms may shape dress code policies in businesses that establish local offices and hire for in-person work. You don’t want to implement business casual dress if the locals are accustomed to professional attire. If workers typically take a two-hour lunch and a month of vacation, your operational plans will likely need to adjust.
As you assess cultural differences in the markets you’re thinking of hiring from, your business may decide they’re too challenging. Employees in non-Western countries may not respond well to Western leadership styles, creating the need for outside intervention. Higher cultural barriers often require help or insight from a local or experienced third party. If your business believes the barriers are too high, redirect your focus to a country with less cultural distance.
Cultural differences may also influence your plans for managing an international employee or team. Will you oversee their in-office work remotely or allow work-from-home arrangements? Other possibilities include relying on a local manager or relocating a current employee who has knowledge of the area. You’ll need to plan travel budgets and timelines if you don’t want to remain a 100% remote leader.
Global hiring can be an attractive solution to your talent needs, but it involves legal, logistical, and cultural considerations. Very few businesses can decide to hire international workers and bring them on board within days. Evaluate the different avenues your business can take to remain in compliance, including working with an EOR. But don’t forget to be realistic about local labor market conditions and cultural norms. By aligning these crucial factors with your business needs and risk tolerance levels, you’ll be better able to strike the right balance.