The Evolution of an SMEs Global HR Strategy

global hr evolutionFor many Small and Medium-Sized Enterprises (SMEs), their first step into international waters is not very strategic. They are more likely seeking out a quick solution to an urgent problem such as recruiting an international worker, setting up an international entity and legally engaging global workers. In those early days, it’s less about strategy and more about survival.

As time goes on, the SME finds itself standing up straight and enjoying some kind of HR and payroll solution for its global workforce. They have stabilized. But what does their global footprint look like now?

Well, it’s probably a set of patched together solutions. For example:

  • 75 workers in Canada or the UK who are rolled into the SMEs domestic payroll program, with the added benefit of an HRIS system to manage them
  • 35 workers in another country being payrolled by one of the Big 4, with no HRIS
  • 26 workers in another country being payrolled by a local payroll company (who speak a different language and are in a time zone 8 hours ahead of the company’s central HR department), with no HRIS
  • One or two independent contractors in one or more countries, with no HRIS

That doesn’t exactly sound stable. Here’s what the HR Director at the SMEs day might look like:

  • Approve payrolls in 5 different formats from 5 different people
  • Respond to PTO requests from international workers via individual emails, due to a lack of an HRIS system
  • Obtain “proof of compliance” for each country by reaching out to five different people, three of which do not speak English as their first language
  • In an effort to respond to the CFOs request for a global workforce costs, spend the whole day (and four more days) consolidating a variety of payroll information into one standard report that can used for any kind of sensible analysis
  • Respond to an unexpected compliance penalty from an independent contractor that wasn’t working compliantly after all, to the SMEs great surprise

There is a better way. As SMEs continue their global journey, they will need to take a more strategic approach to global HR. They will need streamlined payroll processing systems, consistent HR policies and overall global visibility into their global workforce. At this stage in their evolution, many SMEs look to outsource these functions to a global HRO partner such as SafeGuard World International, who provides HR solutions for every step in their global journeys. From a Global Employment Outsourcing solution which is a legal alternative to the independent contractor model and an HRIS & compliant payroll solution for 1-50 employee populations to high-technology solutions for larger populations, where the SME enjoys all the benefits of cloud-based payroll systems.

Companies such as SafeGuard World International also provides a range of HR professional services to help both multinationals and SMEs during every step of their global journeys including entity establishment, recruitment (RPO), country-specific employment contracts, HR helplines and more.

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Navigating Global Growth: Why it’s not Smooth Sailing for HR

islandgrowthSo the company executives are making high-level strategic decisions about how, where and when to expand globally. On Monday, the thinking is, let’s get into the emerging markets, let’s get in early! So HR starts looking for Recruiters in Africa and partners up with Finance to look into setting up a Business Entity in Peru.

Oh, wait, forget that idea. Now management has decided instead to invest in the mature markets and have asked HR to hire a finance team, a dozen sales managers and two administrative assistants, within 6 weeks.

It’s not Smooth Sailing for HR

This is simply the reality of growing internationally, especially as the mid market and small businesses are taking their high-growth companies abroad. Deciding which markets to manufacture in, where to sell products and services, to name a few examples, are key strategic decisions that every organization has to make, and they have very real consequences. But that doesn’t make the HR professional’s job any easier.

It’s never been easy for an HR department to manage transition during a company’s high growth stage. New head counts are approved, then un-approved, then re-approved and it’s a dynamic environment. Not to mention that many high-growth companies don’t even have full scale HR departments; the HR team likely consists of one or two individuals who are wearing all of the HR hats such as recruiting, performance appraisals, and of course, payroll and benefits.

Imagine now having to manage these tasks outside of the company’s home country. In the home country, the HR professional will at least have a Business Entity, a general understanding  of how to recruit and a method for processing payrolls. Now try to do that in a foreign country. Definitely not smooth sailing. Sounds like one of those recent pleasure cruises where all the guests got sick!

Turn on the Cruise Control

There is a Cruise Control switch to smooth out a choppy boat ride. While all these emerging companies  have been expanding internationally, global service providers have been right there with them, providing global HR services to support their global journeys.

SafeGuard World International is one of the leaders in this space and can provide all the help that HR needs as their corporate executives navigate their  global growth strategies: global managed payroll, global employment outsourcing, HRIS & payroll for Small to Medium Enterprises (SMEs), as well as Independent Contractor Employment Agreements, Global RPO and country-specific recruitment, in-country entity establishment and a range of other HR support on a multinational scale.

HR can relax and enjoy the journey!

 

 

Sales Manager in Poland? Brazil’s national healthcare? Recruiter in Singapore?

Do these questions sound familiar to you?

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They sound familiar to me because these are the questions we get from our clients everyday. SMEs are going global, fast, and they need help. This is just a sampling of questions we get from our clients relating to international HR.

How does one navigate global HR?

Well, in the past, many organizations would solicit help from a global HR Consultant or a tax attorney but these options are not always affordable for a growing small business. Since they are growing one country at a time and often have tremendous cost pressures, they need to take a more measured, methodical approach to global HR.

The problem though is that engaging and managing a global workforce is not the kind of project that can be learned with research on Google. For one thing, you can’t always trust what international payroll companies are posting on the Internet, they haven’t been vetted and may be posting inaccurate or out-of-date information. You can’t rely on this kind of information when it comes to global HR because if it’s not managed properly, you could end up having to pay fees for non-compliance, or end up with a disgruntled worker who did not receive all the benefits they are entitled to under their country’s laws.

SafeGuard World International provides global payroll and a variety of multinational HR solutions to clients of all sizes:

  • multinationals who require integrated technology solutions
  • mid-market companies that have a small yet growing number of employees in one or more countries
  • micro-multinationals who are embarking on their global journeys

We have solutions for as few as one global worker and up to thousands in one, five, fifty or more countries around the world, whether our clients have business entities and local HR specialists or not. We will provide as much or as little support our clients need to help them manage their entire global workforce–compliantly,  wherever they might be in their global journeys.

Our services included global managed payroll, global employment outsourcing, HRIS & payroll for Small to Medium Enterprises (SMEs), as well as Independent Contractor Employment Agreements, Global RPO and country-specific recruitment, as well as in-country entity establishment.

In other words, we can help you find and legally engage a Sales Manager in Poland, tell you what the national healthcare system is like in Brazil AND help you with recruitment in Singapore.

You don’t have to go at it alone, call on SGWI for all of your global HR needs.

 

 

It’s People who Save the World…

Two of SafeGuard World International’s Guardians are currently exhibiting at a conference called Bond. This UK membership body is for organizations working in international development or supporting those that do through funding, research, training and other services.

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Approximately 500 delegates from the UK and international organizations, including NGOs, universities and donors are attending.

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Whether it’s feeding the hungry, caring for innocent victims or sustaining the planet, there’s one common theme—it’s the people who are passionate about these causes that make all the difference.

 

In today’s world, it’s not just about securing donations and fighting for grant money; it’s also about increased pressure from regulatory bodies and an accompanying surge in financial disclosure and HR compliance requirements. Clearly, the rules governing the global non-profit sector are becoming stricter.

At SafeGuard World International, we can’t save the world, but we can help you with your global HR compliance, so you can engage the people that you need to help you advance your cause.

Here’s what we hear from our clients:

First you get the good news; your non-profit just received the funding for a critical project. Fantastic!

Then, you have the less-than-stellar realization that you have to find a specialist to administer the project locally, say, a health professional in India for example. Then, you find the perfect person; you’re back on track. Excellent!

Hmmm, then you suddenly think to yourself, “I don’t have a business entity or an HR manager in India. How am I going to hire her?”

How am I going to hire her?

This scenario plays out time and time again. We talk to clients everyday who want to hire people temporarily e.g., volunteer coordinators, financial managers, missionaries, teachers, healthcare professionals, sustainability experts, agricultural engineers, ecosystem specialists, etc.

These specialized workers are needed in a particular location to set up a program that will eventually be taken over by a local team, such as the creation of a business entity, a sustainability program or a “teach to fish” curriculum, etc. What these assignments all have in common is that they all have an eventual end date. Workers are only needed for a few months, or a few years, neither of which warrant the time and cost involved in setting up a local HR department.

The GEO Solution

This is where SafeGuard World International (SGWI) steps in and delivers its Global Employment Outsourcing, or GEO, solution. SGWI, through its global network of HR, tax and compliance professionals, serves as the employer of record on behalf of our clients. Together, we develop a plan that complies with local HR regulations and addresses the client’s specific goals and objectives.

Speed to Market: You can legally onboard employees in less than three weeks, without establishing local business entities. SGWI becomes the “employer of record” and manages the on boarding. Then, the new employee reports in for duty and works directly with the client to perform the tasks required.

Protection from Risk: SGWI is responsible for complying with statutory requirements, while our clients enjoy having an in-country HR department for talent management that improves the “Employee Experience”. You can mitigate HR risk while knowing your workers are in safe hands.

Complete Control: You can legally engage local workers even without a business entity, regardless of the workers’ status e.g., Independent Contractors, Fixed-Term or full time. Choose short or long-term agreements that align with your business objectives.

It’s people who change the world.

Learn more about how we can help you with your global HR compliance, and take another step in your non-profit’s special journey.

Contact Us. Read about our Non-Profit Success Stories

 

GEO Services:

  • Onboard & Administer Employee Contracts
  • Serve as Employer of record
  • Maintain legally-required licenses, registrations and insurances
  • Administer payroll and Expense Report payments to the worker
  • Administer payments and tax filings to local authorities
  • Off board and manage termination process
  • Global HR Consulting Independent contractor evaluations
  • Permanent establishment risk evaluation
  • Recruitment & Salary/Compensation Guidance
  • Tax & Immigration
  • Employment Law
  • Background Checks
  • Health benefits & pension planning

Why your Independent Contractor may be the Devil in Disguise

 

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The use of Independent Contractors is on the rise, a seemingly attractive option for SMEs looking to go global and for MNCs who are expanding into new countries where they don’t have business entities or HR departments. Seems simple enough: find a worker, draw up a contract and compensate them accordingly. No big deal.

Well, it can be a big deal if the process is not managed properly, and there could be huge consequences for the hiring organization.

Here’s why your Independent Contractor (IC) may be the devil in disguise:

  • He or she works in a country where the rules say that the IC is responsible for filing and paying their employment taxes locally, as opposed to the hiring organization. What if the IC doesn’t make the payments? In that case, the hiring organization would not only be responsible for making the payments retroactively, but may also be subject to penalties, which are often twice what the original taxes were.
  • HR regulations are different for ICs than they are for workers who are deemed to be “de facto” employees; classifying the worker correctly is critical and every country has its own definitions. Often it’s defined by whether they work traditional business hours or on a project basis, whether they use their own equipment, if they are bearing any of the financial risks, etc. This classification will ultimately determine who is responsible for paying the taxes: the hiring organization or the worker. The challenge is understanding the classifications in each country and this is not the kind of information that can easily be found just by searching the internet, at least not “reliable” information. It needs to be researched thoroughly for each individual country.
  • Let’s say an organization has been engaged with an IC in a particular country for several months and is now ready to establish a business entity in  that country. This may involve a parent/subsidiary or partner relationship and thereby, triggers the need for an audit of the company’s financials. If the IC has not been managed according to all of the HR rules and regulations of that particular country, an audit may put the organization at risk for non-compliance and subject to fees. If, for example, an audit reveals that the worker is in fact deemed to be a de facto employee, then the hiring manager may have to comply with additional payroll obligations e.g., benefits, paid time off, etc.
  • If an IC is generating revenue for the hiring organization in any particular country then the organization may be at risk of Permanent Establishment and may be required to pay corporate taxes.  What makes the global IC arrangement particularly “devilish” is that foreign entities tend to be particularly vulnerable when it comes to tax audits and HR compliance, than a local business would be.
  • The real devil may come out when the IC relationship is terminated, especially if the worker is disgruntled. They may take their knowledge to a competitor, refuse to hand over their contacts , or they could sue the hiring organization. This can be quite risky for the hiring organization because the majority of HR laws around the world are designed to protect the well being of workers.

Many organizations find these risks too much to bear and ultimately choose to outsource their global workers to a Global Employment Outsourcing company. That solution mitigates their global HR risks and frees up their time so they can focus on their core business and their global growth strategies.

 

 

Image credit: <a href=’http://www.123rf.com/photo_9519668_disguise.html’>sorad / 123RF Stock Photo</a>

Are Shrinking Wage Gaps Creating an even NEWER Normal for HR?

Shrinking Wages

Cost pressures combined with skill gaps and an educated global workforce have all been contributing to a surge in global recruitment outside corporate HQ locations. This strategy has become less of a nice to have and more of a strategic imperative; a new normal.

But now there’s a newer normal. Definitive research from respectable analyst organizations are proving that wage gaps across mature, emerging and newly emerging markets are shrinking. This is not surprising but it’s interesting to consider how quickly these gaps are shrinking. They are closing up quickly enough that they will have a direct and significant impact on global business within the next two decades.

Countries that have traditionally offered lower wages e.g., China, India, etc., are experiencing a shrinking wage gap compared to the U.S., U.K. and other mature markets. They will slowly and steadily transform from labor markets to consumer buying markets.

This creates a newer normal for organizations overall, but let’s consider how it will impact HR and recruitment.

Migration of Manufacturing

Shrinking wage gaps may mean migrating manufacturing facilities from one country to another, a huge undertaking. Internal managers will have to be relocated to set it up, local workers will have to be hired and trained, finance may have to set up local entities and HR will need to manage the recruitment, as well the ongoing HR and payroll. On top of that, managing payroll for a manufacturing staff is always a tricky endeavor with various labor types, collective bargaining agreements, etc., especially in a country where HR is not accustomed to the local regulations.

New Buying Markets

As countries such as India and China become larger consumers and more countries enter into the buying market, new opportunities will open up for organizations to sell their products and services in a growing list of countries. That’s wonderful but who’s going to do the selling? Sales and marketing staff will have to be engaged, which means more recruitment for the HR folks; recruitment in countries they’ve never dealt with before, where they don’t have an entity or an HR department. What makes this even more challenging are the markets in scope. Take Africa, for example, an emerging region that may offer wage advantages for the organization, but it’s also a region with complex and often unclear HR regulations.

Impacts on HR Regulations

A third and important impact all of this will have on HR involves international HR compliance. Global HR professionals already know how complex it is now, how difficult it is to source country-specific regulations, how they have little confidence in the accuracy of the regulations and how challenging it is to stay up to date on new regulations. That all aside, consider this. As the emerging markets move up the buying ladder and younger emerging markets take a few more steps up the ladder, global economic forces will drive even more HR regulations. Countries will be protecting and nurturing their own economies and these efforts will inevitably drive changes to their HR laws, taxes, social costs, etc.

It may sound daunting but it’s actually quite exciting. Revolutionary technologies and experienced global outsourcing service providers will be there to help HR and their organizations remain competitive in a global economy and thrive in a “newer” normal.