When you decide to expand your business internationally, there are a lot of questions to answer. One is how you’ll grow your team and where you can legally hire employees or independent contractors. Given complex labor laws and guidelines, onboarding a global team isn’t a simple task. That’s why you often need the right HR partner to help sort through the details and complications.
Businesses of all sizes can benefit from working with someone who understands the international employment landscape. Furthermore, these partners offer more practical benefits than simply providing cultural understanding, as important as that is. Let’s review how working with the right HR partner can make international expansion less challenging.
1. Payroll and Benefits Become Streamlined
You gain access to a far greater number of qualified candidates when you grow your business internationally. Hiring from global talent pools enables your company to bring the best person for the job on board. But now you’ve made payroll and benefits trickier. Employees in other countries may have different payroll dates or schedules because of various public holidays. Other considerations include time differences and variances in government-mandated benefits.
Your existing payroll and benefits system may not be able to account for all these distinctions. The last thing you want is to pay your global employees late. You also don’t want to fail to provide the benefits your international team is entitled to. Therefore, your company might benefit from working with a professional employer organization (PEO).
If you’ve always handled payroll in-house, you might be asking yourself, “What is a PEO?” A PEO is a firm that can handle employee payroll, benefits administration, and taxes for you. That said, a PEO can only oversee your international payroll if you have legal entities in the places you want to hire from. If you don’t, you’ll need to work with an employer of record (EOR) instead.
An EOR can legally hire global employees on your company’s behalf so you stay compliant with local labor laws. Like PEOs, EORs also handle payroll, benefits, and payroll taxes. Your business remains in charge of managing the work your global team does. But an EOR allows you to hire where it isn’t feasible for your company to establish separate legal entities.
2. Onboarding Experiences Go More Smoothly
Onboarding is a crucial experience for new employees since it sets the tone for the employer-employee relationship. A poor onboarding experience can get the relationship off on the wrong foot. Bad experiences also lower employee confidence, dampen enthusiasm, and increase turnover. These are all good reasons to pay thoughtful attention to your onboarding processes. Companies that structure onboarding experiences can boost retention rates by 50% and productivity by 62% among new hires.
Yet international expansions may involve onboarding remote employees or teams scattered in several countries. Time zone differences and logistics present challenges to structured and streamlined onboarding experiences. Fortunately, HR partners can make the process smoother for your business and its new team members. An EOR, for instance, can ensure employees complete the right paperwork and get the correct benefits set up promptly.
These HR partners may have online portals so global teams can easily submit and review their documents, including employment contracts. An EOR’s online portal may also distribute country-specific employee handbooks or documentation that outlines automatic and elective benefits. For instance, public health insurance may be automatic, but a company may want to offer supplemental private insurance options.
3. Worker Classification Laws Are Observed
Not all businesses grow internationally by hiring actual employees. Some choose to bring independent contractors or freelancers into the mix. This expansion strategy lets companies test the waters or add local expertise to the team before making a commitment to full-time employment.
Like the United States, other countries have classification laws that govern whether someone is an employee or an independent contractor. Businesses sometimes get into legal trouble when hiring international workers as freelancers instead of employees. It’s easy to overlook nuances in worker classification laws that could cost a company. Businesses that break these laws face penalties, back pay expenses, and reputation loss.
While most employers can legally hire freelancers across the U.S., that may not be the case in other countries. Some governments require businesses to have a local presence or entity before hiring contractors or employees. The right HR partner can make companies aware of these stipulations and help hiring managers avoid costly mistakes.
4. Expansion Costs and Timelines Can Be Reduced
Hiring employees in most countries requires the existence of a local business entity. The process of establishing one adds to a company’s costs and lengthens its expansion timeline. It may take a year or more to procure space, file the paperwork, and so on. The cost could well be too much for smaller businesses or those that only want to hire a few employees.
When you want or need to expand quickly, a lengthy and expensive process can block your goals. Luckily, the right HR partner can help you avoid the red tape and hire international teams on your timeline. As noted, enlisting the services of an EOR means your company can onboard employees from different countries without setting up legal entities yourself.
An EOR speeds up the process whether you need to hire one person in Canada or a few workers scattered across Europe. Since an EOR already has a business presence in various countries, your company won’t have to spend extra time or money. Working with an EOR can be a more cost-effective way for businesses to hire small or dispersed global teams. You won’t have to deal with different government procedures, timelines, and fees.
The Right HR Partner
International expansions aren’t successful without people behind them. However, global labor laws and other government regulations can make hiring international workers tricky. Selecting the right HR partner, such as an EOR, makes the process less intimidating and complex. While they handle the details, you can focus on building your team and achieving your international expansion goals.
Lynn Martelli is an editor at Readability. She received her MFA in Creative Writing from Antioch University and has worked as an editor for over 10 years. Lynn has edited a wide variety of books, including fiction, non-fiction, memoirs, and more. In her free time, Lynn enjoys reading, writing, and spending time with her family and friends.