As the world becomes more accustomed to remote work, the barriers between companies and global talent are thinner than ever. The great news is that entrepreneurs looking to build an international team can now do so.
The advantages of international hiring are incredible. Remote companies, and international companies in particular, tend to be more productive, more inclusive and more sustainable than local ones. Creating a culturally diverse team brings invaluable new energy, ideas and knowledge. Unleashing the power of international recruitment means accessing a much wider talent pool.
But hiring international employees can be risky if you're unfamiliar with local payroll, taxes, benefits and legal compliance in each country where you're looking to hire people. In this article we will discuss the advantages of international hiring and how to go about it.
Advantages of International Recruitment
International recruitment offers the opportunity to find qualified professionals in new places that were previously inaccessible to us. This opportunity presented by the shift from face-to-face to remote work, drives us to have a wider network of employees who have hard-to-find expertise, or who are highly specialized in one area. Even existing employees within the company can benefit from this exchange of skills.
Expanding into new markets
If you want to expand into global markets, international recruitment can bring legitimacy to your brand, whether you are just starting out or an established company. Employees who are familiar with a local market you want to expand into can guide you through the issues necessary to open an office such as:
- Language skills
- Knowledge of local customs and business etiquette
- Established professional networks
- Knowledge of local companies and contacts to pave the way to introductions
- Knowledge of salary and social expectations of employees
- Professional and social support for staff relocating to open a new office.
In other words, hiring international employees gives your company a soft landing when entering new markets and allows you to build trust quickly in new locations.
How to hire international employees?
Although hiring international employees can be very beneficial according to global trends, it involves various legal procedures and authorizations. The steps to hire an international employee are as follows:
Employment, immigration and payroll laws:
Employment rules, immigration requirements and payroll calculations set by the government are different in each country. It is imperative to comply with both home and host country laws. This is because payroll is recorded in the host country and employees are entitled to receive their benefits in accordance with local law.
You are expected to follow a different hiring process when hiring international employees. This is because hiring foreign nationals to work abroad would be more time consuming than dealing with domestic workers. Also, when hiring foreign workers, be sure not to rush the process too much. Be sure to describe how and why the employee will be an asset to your company.
A streamlined onboarding process familiarizes employees with desired expectations and company protocols. Glassdoor researchers believe that an extensive onboarding experience would make about 82% of employees work for the company longer, thus improving employee retention. Therefore, the onboarding process is bound to improve employee focus. Make sure you create a dedicated onboarding checklist to give international employees the space to raise relevant questions or concerns.
Create better relocation packages:
Any employee would evaluate job benefits when deciding whether or not to accept the job offer. Since your foreign workers are coming from various companies to join your team, you should offer them attractive relocation packages or other similar benefits.
Obtain certification and work visas.
Before hiring an international employee, you will need to provide evidence of a shortage of resources in the country to fill a vacant position. When hiring foreign workers, you, as the employer, would have to sponsor a visa. This process can be time-consuming and incur significant overhead costs.
Paying international employees
Once you've found the right people to hire, paying them can raise another set of issues. Each country in which your employees work has rules about how to pay workers. This can include everything from pay frequency to tax withholding. It's important to know the compliance rules so you don't expose your company or your employees to unnecessary fines, fees or penalties.
Other considerations have to do with the mechanics of paying international employees. Questions to consider include:
- In what currency will you pay them?
- Do you have foreign currency accounts for each of the countries in which your employees live?
- How will you transfer money? Will you use a bank or a financial technology service provider? Here Crema can help you.
- How will you pay employees if they are not in a stable country, are displaced or have become refugees?
- What payment method does your new employee prefer? Does he want to be paid in his local currency or yours? Is it legal to pay in a currency other than the local one?
- How will you manage exchange rate fluctuations?
Paying international contractors
If, in addition to employees, you plan to hire international contractors, or international freelancers, there are other factors to consider. You will need to take additional steps to ensure that you do not take unnecessary risks. One of the most common problems is the misclassification of employees as contractors, the consequences of which can be serious from both a financial and reputational standpoint.
Overall compensation management
Before making an offer to an international employee, it is important to determine your global compensation policy. You can take several approaches, but you must be consistent and transparent so that all employees are treated fairly and feel valued.
Your strategy for paying international employees should take into account:
- How many international employees you expect to hire.
- How many countries your employees will reside in
- Whether your current employees will move to another country to reside.
Considerations for compensation packages include:
- Stability of the local currency
- Cost of living in each country
- Local inflation rates
- Standard of living for your company's employees
- Government entitlements in each country, including social programs such as healthcare coverage.
- Common fringe benefits in each location, which differ from country to country.
- Relocation costs, depending on whether you initiate the relocation or the employee requests it.
- Out-of-pocket expenses for expatriates who maintain residences in two countries.
- Tax compensation for employees who have tax obligations in more than one country.
Find a Global Payroll Solution
If you already own an entity in one country but want help managing payroll, benefits and compliance, a global payroll solution may be the best option. Global payroll services require you to own an entity, but if you have already spent the money and time to open your entity, global payroll is often less expensive than full EOR services.
A global payroll solution often acts as an extension of your own legal or HR department. With global payroll services, you can outsource payroll processes, benefits administration and certain aspects of compliance. However, you will still be ultimately responsible for things like the proper classification of your employees.
Despite all the information provided, and as complicated as it sounds, hiring international employees is a wonderful idea to expand your team, as well as your ideas of it.