As a company expands globally, they are faced with significant challenges in establishing operations in new jurisdictions. Whether setting up a complete bricks and mortar office or a network of remote staff building business on your behalf, there are several considerations we look at in this article. As your business looks to expand, you can get in touch with us to discuss the legal, salary and logistical ramifications of such an effort, and avoid common misconceptions or mistakes.
We also work as part of a global recruiter network with CFR-group, which means that no matter the major international market you’re reviewing, we will connect you seamlessly with representatives on the ground where you want to be. CFR was formed in 1997 and now works closely with retained search and selection firms across the globe. By maintaining these close relationships, clients can trust that when seeking talent in a new market they will be presented with a customized and confidential search to suit local cultures, in the manner to which the candidates are accustomed.
One example is that of Germany, in which employers are required to provide a positive reference letter regardless of the performance of the employee. Employers have learned to write and read reference letters using a common code to differentiate the required positive reference from a real one. These nuances can only be completely understood with local professionals to aid in your search and is a key benefit of organizations like CFR.
Compensation: No matter where you want to expand to, understanding financial expectations is of the utmost importance
Your business might want to procure a factory representative in China, or perhaps your European Union based operation wants to enter the US market with a sales manager for the first time. We recommend understanding the salaries and benefits, health insurance and payroll costs that potential employees will expect. These in particular vary dramatically across markets and many traditionally held expectations will have changed. The most common issue we see are managers with rigid preconceived notions of compensation, so be open and thorough in your research. Often we see that, when someone is looking to hire in a lower-wage country, the professionals capable of representing a foreign corporate will likely be at the higher end of their local salary range. This might contrast the employer’s expectations of a lower salary, even when the conversion places it quite low by the company’s own home country standards.
What is an Employer of Record, or Professional Employer Organization (PEO), and how can they help ease the burden of international expansion?
At Goldbeck Recruiting, we work with different professionals that complement our own talent sourcing activities to provide an end to end solution. One of these are Employer of Record or Professional Employer Organization services, which exist to host your new employee, providing them with their payroll, your local bookkeeping, and sometimes even pooled benefits services. Doug Peng is the Vice President of Canadian Payroll Services (CPS), and describes their offering as a payroll and employment compliance manager for Canadian remote workers.
“We provide back-office support for international organizations looking to employ Canadians remotely, or to start building a presence in Canada. As a PEO, we are the legal employment representative for your remote Canadian employees, ensuring they are paid on time and that you’re in compliance with Canadian and local law. We take care of the administrative details of employment, so you can work with the talent you need.”
You may be thinking you can simply hire the person as a contractor and continue the relationship as a business to business one. However, this does expose you to several issues that would be covered by a traditional employee contract. CPS says “you don’t have the same level of employer protection when it comes to intellectual property, non-disclosure, and non-solicitation. Independent contractors are also legally allowed to set their own hours and schedules, take on additional clients that could be your competitors, and even hire substitute workers to perform work on their behalf!” Read the full article here.
So, where does this leave us now?
- You’ve determined a potential market in a new country,
- Decided on what employment structure to use, and
- Feel comfortable with your budget.
- Who to hire then?
The next step will be to carefully review the demographics of potential hires, as there may be large differences in the availability of talent with the groups of specializations you require. You might need to consider an individual who meets a good fraction of your needs and consider additional training, or someone with generalized experience that can learn your unique product. This will be coupled with the fact that in Canada in particular, a very low unemployment rate means organizations must move quickly to secure top talent, as many job seekers are fielding multiple offers within a matter of weeks or days in some cases. For more on this, read our article “Strong job growth adds strain to already small candidate pool”.
With the right team you can ensure your expansion efforts are successful with minimal stress. Call us to discuss next steps.