Efficient international human resource management, means putting in place a strategy to effectively manage your global workforce. Here we set out five tips for developing an international human resources strategy, and managing an international workforce.
Recruit the Right Talent
When building your global human resources strategy, you should consider the benefits of recruiting staff from overseas. Often, other countries (including developing nations) can provide a highly skilled and educated workforce, at a fraction of the labor cost of other countries. As well as cost advantages, other potential benefits of an international workforce include:
- Performance gains through diversity. For example, a recent McKinsey report, Diversity wins: How inclusion matters, observed that ethnically and culturally diverse executive teams outperform companies with less diverse teams, by an average of 35 percent. There is every reason to think that a more diverse workforce can provide your global business with a competitive edge;
- More innovative product and service offerings. Organizations that can share knowledge and skills internationally have added potential to innovate;
- Customer service. An international workforce enhances the ability of your business to serve customers from all over the world.
Summary: Your international human resources strategy should emphasize the way in which global expansion can improve your recruitment practices.
Increase Global Mobility
As part of a global expansion, it is worth considering the transfer or secondment of some head office staff to the new country of business. In its 2019 Global Assignment Policies and Practices Survey, KPMG noted that:
- 60 percent of survey participants identify international assignments as a top program goal for supporting their global expansion;
- 47 percent of surveyed businesses noted that global assignments were a crucial component of their talent development programs.
The potential advantages of sending your workforce overseas include:
- Having people on the ground to carry out market intelligence;
- Managing a new branch in another country in line with the global enterprise’s ethos and work processes;
- Transferring essential technical know-how to the new operation;
- A development opportunity for staff who seek an international assignment.
Summary: There are significant benefits to allowing company staff to transfer between different branches and posts of the company across national borders. To ensure your approach is fully compliant, consider professional global mobility and visa support.
Optimize Employee Compensation and Benefits
As a major cost of business, and having a significant impact on workforce wellbeing, employee compensation and benefits need to be carefully managed with any offshore operation. Matters you need to take into account include:
- Compliance. Employer obligations are often the most significant compliance requirements for enterprises, and they can differ radically depending on the country. As well as payroll compliance and taxes, you need to be on top of health & safety, accident insurance, health benefits, parental leave, and a whole host of other requirements;
- Benchmarking compensation and benefits appropriately. It is not enough to simply have compliant payroll and benefit processes in a new location. You also need to ensure that you are meeting the societally accepted standards in that country. For example, both Germany and New Zealand allow employees to be hired on a probationary basis (in New Zealand, currently small businesses only). However, in Germany that practice is standard, whereas in New Zealand it is still relatively unusual;
- Cross-company fairness. One of the challenges of international staffing which is composed partly of staff from abroad, and partly of local staff, is the need treat all staff fairly. Resentment from local employees who perceive their conditions to be worse than offshore counterparts can have a significant effect on operations.
Summary: When expanding overseas, your human resource management strategy needs to take into account both the legal/compliance implications of expansion, as well as standard practice in the new country, to ensure that compensation and benefits are fair.
Focus on Training and Development
Enterprises need to consider how they will ensure that their entire workforce receives the training and development that will allow their organization to prosper. This may need to take into account linguistic and cultural differences in the new country. This includes:
- Compliance training. For example, all workers dealing with customers in the European Union will need to understand the implications of the General Data Protection Regulation (GDPR). Employees will also need training with respect to any country-specific compliance obligations;
- Training in business processes. The global enterprise will need to ensure, for example, that consistent quality of product or service is guaranteed across its different branches.
Summary: International human resources strategy needs to take into account both global and local elements of training and development.
Choose the Right Organizational Structure
The way in which you set up your global enterprise will have a significant impact on how you manage your human capital. Consider, for example:
- A joint venture in a new country with a local partner will likely mean the workforce of both parties working closely together. There will need to be clear reporting lines of staff to the respective organizations, as well as a mechanism to deal with dispute resolution between workers in the different organizations;
- A wholly-owned subsidiary managing your affairs in the country in question may be useful in order to ensure uniform and seamless worker processes across the enterprise. However, it must be noted that there can be significant set-up and ongoing costs to establishing a local entity of this form;
- Engaging a Professional Employer Organization (PEO) to employ the workforce in the new country. While staff still report to your enterprise, the PEO ensures that this is done in full compliance with local laws.
Summary: Your international human resource management needs to consider how chosen business models and organizational structures will impact on your workforce.
For any company expanding into other countries, it is essential to have a strategy in place for the expansion. This applies equally to international human resource management, as it does to other aspects of the expansion. By focusing on recruitment, global mobility, compensation, training, and organizational structure, you will be in the best position to exploit the benefits of global expansion.
New Horizons Global Partners provides expert human resources, payroll, recruitment, and compliance support for enterprises making the move into a new territory. Employing expert partners to support your move is the best way of making your international expansion a success.