The last few years have brought massive upheavals to job markets and reshaped hiring practices. The pandemic led to an upswing in remote work, and many employees began to reconsider the type of work they wanted to do and how and where they were willing to do it. Since then, even with the pandemic subsiding, HR teams have seen changes in many job seekers’ goals.
Simultaneously, rapid social, political, and generational changes have persuaded many businesses that, to remain competitive, they must adjust their corporate cultures to help attract a more diverse workforce.
Recruiters are closely following these changes and helping employers adapt to the new environment. Washington, DC-based HR professional Devon Palumbo–herself a Millennial–says, “A lot has changed in recruiting since COVID and ‘the great resignation.’ Employers must now be more flexible and invest more time and money to find good talent. But changing their culture and message also opens employers to recruiting from a much larger pool of talent, which also helps retain the talent they already have.”
With the growth of remote work, employers have begun looking beyond their local regions and even beyond their own borders to fill open positions. They realize that tapping into an international labor market provides access to a larger talent pool and may also help them expand into foreign markets. But recruiting and hiring internationally involves considerably more effort than simply locating people with specific skills and credentials. For example, companies must comply with local employment laws or risk stiff financial penalties. A company that posts a job listing without first educating itself about regional and national differences in language, culture, and government regulations will likely confront communication problems, employee turnover, and even financial losses.
Salaries and Employment Status
Companies need to focus first on how they will determine remote workers’ compensation levels–whether salaries should be tied to national averages, workers’ locations, or the company’s corporate levels. Companies must also decide whether each new hire should be classified as an “employee” or an “independent contractor.” The definitions vary from country to country, and misclassifications can lead to hefty tax penalties. This is one area of law where Gertsburg Licata can advise a company on the appropriate category, depending on the nature of the job.
Some companies with overseas workforces retain Employers of Record (EoRs) to handle cross-border compliance. An EoR is familiar with the varying requirements of other countries and can provide outsourced HR services for employees outside the company’s home region.
EoRs offer different types of services, depending on a company’s needs. For example, the Deel payroll and compliance platform handles hiring, admin, and payroll management for companies with an international workforce. Deel also offers a global hiring toolkit that provides up-to-date information about competitive wage ranges worldwide.
Remote is another global HR/payroll service that handles international payroll, benefits, taxes, and compliance.
Global Offices
A company that plans to open its own offices in other countries will want to retain a professional employer organization (PEO). A PEO works with foreign offices of companies whose headquarters are located elsewhere. It handles payroll and tax matters but leaves HR matters to the company’s personnel.
Gertsburg Licata’s Global Business practice helps clients set up global offices and handles unfamiliar international laws or business practices, cultural differences, bureaucratic or political red tape, or issues relating to foreign languages. Our experienced team partners with business law firms in major jurisdictions and leverages close relationships to ensure our clients are always covered, no matter where their business dealings occur.
Cultural Differences
Success in onboarding and retaining a remote, international workforce requires that companies recognize and understand cross-cultural differences–not just during the recruitment process but throughout the entire corporate culture.
The growth of international communications and commerce hasn’t eliminated distinctive cultural differences between regions, including their workplace environments. According to international management consulting firm Hofstede Insights, workplaces in eastern and southern European countries are used to a greater power distance between employees and supervisors. People in those countries tend to observe formalities such as dress codes, extreme deference to superiors, and more use of titles. In contrast, northern European countries are more informal, with employees addressing their supervisors by their first names.
These habits affect how people present themselves during interviews and what sorts of workplace behavior they consider customary. Without understanding these differences, employers will likely draw the wrong inferences about job candidates.
Other common mistakes that can hinder the process of hiring internationally include:
- underestimating the amount of time it takes. Hiring from outside the country involves more administrative hurdles than hiring locally. This can lead to rushing the process to meet a deadline, which can result in hiring the wrong candidate
- language and cultural barriers can slow things down and can result in miscommunications
- unplanned lags in verifying qualifications or contacting and hearing back from references
- all exacerbated by delays caused by working across time zones.
Once hired, the onboarding processes will need to be adapted to suit the needs of employees in different countries. A company might want to offer live or recorded training sessions to help foreign employees absorb all the new information.
Communication
Managing cross-border remote teams requires good communication skills to ensure employees feel their employer’s commitment. Regular video check-ins and team meetings are crucial to connecting with workers you rarely or never see in person.
The company will also find itself with new compliance issues, including foreign taxes, wages and benefits, pensions, health and safety, and local laws regarding probation periods and termination–all of which differ among countries. Even when using an Employer of Record, a company needs to consider these when budgeting for new hires.
One example is Iceland, which would seem easy to hire from at first glance. Iceland’s workforce is English-speaking and well-educated (90 percent of Icelandic citizens have advanced degrees). The four-hour time difference between Iceland and much of the U.S. presents no more difficulties than time differences between other far-flung U.S. states. Yet Iceland’s employment culture is distinctively different from that of the U.S. Importantly, Iceland’s strong union presence allows employees more leverage in negotiating their terms of employment.
Iceland also has more liberal leave policies than the U.S. Employees cannot be forced to work on holidays, are allowed 24 paid days off per year, and are given latitude in terms of sick leave: After one year of employment, they are allowed a full month of paid sick leave. New parents have up to nine months of leave, during which they receive 80 percent of their regular salaries. Any U.S. employer employing an Icelandic citizen for remote work must abide by these regulations.
Hiring an international remote workforce presents numerous challenges. Still, if carried out with a careful, well-thought-out plan, it can pay off bountifully in terms of productivity, employee retention, and company growth.
Michael Callam is president of Gertsburg Licata’s Talent and M&A advisory groups. He can be reached at [email protected] or (216) 573-6000 x7003.
Gertsburg Licata is a full-service, strategic growth firm, specializing in business law, M&A advisory and executive talent solutions for entrepreneurs and executives of start-up and middle-market enterprises. Our proven process ensures time and resources are dedicated to identifying the goals of your organization and how your executive talent needs align with that vision. Our expert recruiters partner with you to build your dream management team, securing the best talent to help drive value for your employees and customers. Contact us today to discuss how we can help you secure your next competitive advantage.
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