Is employment compliance holding your business back from become an international enterprise?
A round table dinner discussion, hosted by The HR World and sponsored by Pebl brought together a number of HR and business leaders to address the challenges around expanding workforces to take on global employees. As the need for specific talent increases and hybrid employment extends the reach of employers outside their own country, the discussion sought to identify barriers to employing people internationally and provide solutions and ideas as to how the right talent can be used effectively and compliantly.
The discussion was hosted by The HR World’s CEO Mike Beesley with the conversation led and inspired by Carly Jenner, Vice President, People & Culture (Global Head), Apeel and Lindsay Gallard, Chief People Officer, Six Degrees – two highly experienced HR professionals with diverse experience in creating international workforces.
Overall the discussion brought to light the challenge that organisations often seem to be trying to expand their international presence at a pace that exceeds their own internal capacity. Tensions and difficulties can emerge as a result, around areas such as leadership maturity and organisational structure. Participants noted how HR often finds itself trying to manage issues around business ambition, operational readiness and the consequential risk. Indeed, it seems that often when senior leadership desires a move to an international basis HR is brought in after the decision has been made and charged with making it work – regardless of the realities of the situation, and the challenges this creates legally and culturally.
The need to expand
The situation can be further exacerbated by the sense of urgency that underlies an overseas appointment. The business may feel it needs to secure this talent without delay – it is a necessary and important appointment that will have a swift and noticeable impact on the company. Consequently there is added pressure to navigate the complex regulatory constraints that can exist to make the placement. This results in an onboarding process which may not be the most efficient approach, but because of timing and business need, the resulting model becomes the accepted way of doing things. The business can then gradually find itself building an ever more complex scenario for finding, employing and managing overseas talent.
One round table participant noted that businesses often seem to pursue opportunities without considering the long-term picture. The emphasis is always on exploiting the immediate opportunity rather than reflecting on what the implications might be for the wider organisation in the future. In particular there may be little time for considering what going international may mean from a structural point of view. Taking on overseas employees can therefore create tension between making the move sustainable and safe, while also meeting the immediate ambitions of the business.
Compliance issues around employing overseas talent can extend to many areas including: tax, accommodation, payroll obligations, and local audits, all of which may complicate the picture and make for added expenditure when securing new talent. In some instances the range and cost of compliance can compromise or even prevent companies from using talent from some regions – the lack of knowledge around local employment laws, cultural norms, hiring expectations and more create too much of a barrier for HR and business leaders to manage effectively.
These issues become more significant the less a company – or more specifically HR leaders – know about a country. Therefore, determining a way to address compliance and management issues around the global workforce can be key for organisations if they want to establish a bank of international employees. Using external agencies such as Pebl can address some of these problems and ease the administrative and legal burdens experienced by businesses engaging this kind of talent. Their use can effectively open the business to better talent from around the world.
The three ‘R’s
Company leaders often want to jump in with both feet without first building the capacity to support an international workforce. As a consequence of this while businesses take aim at international opportunities, HR finds itself trying to catch-up in terms of establishing appropriate support systems. One participant boiled down the issue to the ‘three Rs’ of international expansion: Risk, Readiness and Reward. The issue they had to deal with was that “businesses tend to focus on the reward.”
Naturally the way in which businesses set out to fulfil their international ambitions will depend on the size and culture of that business. Founder-led and high-growth firms tend to focus heavily on opportunity, favouring rapid expansion while sometimes overlooking the infrastructure required to support global operations. Larger companies with more resources and more access to international support can find international expansion easier, being able to rely more on the structures and expertise that already exist within their organisations.
Interestingly the HR experts around the table agreed that while compliance issues might be complex for some countries where they are trying to set up, these issues could at least be understood and managed through education and accessing external knowledge and support. However, the issue of internal leadership maturity can present a bigger challenge and be a greater barrier to expansion for these businesses.
The need for leadership
A major theme emerged here around the lack of investment in leadership and management development, particularly in fast-growing organisations where technical specialists are frequently promoted into leadership roles without appropriate training. “Compliance can be managed,” commented one participant. “Where I think it goes wrong is because businesses don’t have the readiness from a leadership maturity, a cultural maturity to make the right decisions.”
Remote working just exposes lazy management.”
Moreover, the scenario of managing a hybrid and certainly geographically dispersed workforce can highlight weaknesses elsewhere in the business. “Remote working just exposes lazy management,” said one participant, an observation which ultimately highlights the strategic and more long-term work HR needs to do in order to ensure remote international working isn’t just possible but sustainable. This is a question of building the required skills within the business, addressing management skills as well as organisational structure.
Interestingly despite the proliferation of remote working and technology supporting hybrid workforces, there was the suggestion that businesses need to specifically work on improving remote management and communications across the organisation. While many workforces are now dependent on technology to keep them together and in touch with one another, there was a sense that increasing personal contact and working to extend the values of the organisation to every employee wherever they may be would lead to a more inclusive culture for the business around the world. This in turn makes the remote worker more engaged and therefore more effective for the business. With good communications remote employees can deliver better value – an important aspect to consider given the efforts made to recruit and support these employees in the first place.
Creating successful international workforces also requires management to have an appreciation of cultural difference across the regions where its workers are stationed. As one participant noted the way in which people in Europe express their feelings about work is very different to how someone expresses themselves in America. Successful management and co-ordination of these workforces therefore requires the ability to understand these differences and to accept and respond to those differences in a sensitive and practical way.
The discussion clearly felt that the increasing globalisation across the workforce along with the consequent need to manage organisational transformation and workforce strategy felt this signalled an opportunity for HR to take a more strategic role within the businesses they support. Alongside this the successful deployment of employee technology, including AI and the governance surrounding that technology, also indicated a greater role for the HR function.
In the case of AI governance in particular, different regions have different levels of acceptance, legal and compliance requirements around this technology use. As such HR is unlikely to be able to simply adopt a single ‘one-size-fits-everyone’ solution to each new location. Local sensitivities as well as local legal demands need to be understood and reflected in policy and procedures.
Local regulations will also apply to other areas of working practice – hours expected to be worked, ‘switch off’ time from business communications and so on. Again, HR must be at the forefront of understanding these aspects of work and ensure they can be met within a productive working relationship.
HR needs to be in the driving seat as expansion occurs.”
Despite the challenges that exist for companies who want to push for a more international workforce, there is clear enthusiasm for and advantages to be gained around employing people overseas. Indeed, the enthusiasm for founder-led businesses and SMEs to go global and exploit the international workforce, has created what the discussion termed as “mini-multinationals” – relatively small companies which work across multiple countries with distributed teams.
If organisation are going to get the most from these arrangements HR needs to be in the driving seat as expansion occurs. It is clear that preparing for such expansion in advance of significant employee investment is desirable if a business is going to go international in a smooth and coherent way. As such these international moves signal another strong reason why HR should gain and retain a seat at C-suite level in order to be able to orchestrate the successful employment and use of international talent wherever it may be.
Pebl enables businesses to build a global team in minutes—no entity needed. Pebl’s AI-powered, expert-backed platform manages hiring, onboarding, payroll, benefits, and local compliance so you can access top talent anywhere.
