Keep Calm and Close your Talent Gap

It’s just so ironic how there are high unemployment rates in so many countries and at the same time, organizations aren’t able to find workers with the skills they need to fill specialized positions. So how can you keep calm and close those talent gaps?

One of the most effective ways to close your talent gap is to expand your search internationally. HR and hiring managers will have more candidates to choose from–not to mention some highly-skilled candidates–while finance may be able to benefit from lower-wage labor markets.

Before the age of the internet, it would have been quite difficult to engage a worker remotely but today, some estimates cite that one in five workers are telecommuting, a statistic that continues to grow. More and more business professionals are working virtually and having huge success so why not consider moving your vacancies from your home country into another country?

Well, I guess it’s not that simple is it. Even if you would be happy to engage an international worker, you really can’t do that legally if you don’t have a business entity in a particular country. Under some circumstances which depend on the nature of the worker’s tasks, you could theoretically engage a worker as an Independent Contractor, well, in some countries you can. But first you’d have to research the laws in that country and you’d have to research it thoroughly. If you relied on country-specific HR laws that you find on a Website, there’s a good chance that the information would be wrong or out of date and then you’d be putting your organization at risk of non-compliance.

This strategy of expanding a recruitment search outside of your home country sounds pretty complex after all and certainly not doing much to help you “keep calm.” But in reality, you can “keep calm” by employing one other simple strategy. It’s called Global Employment Outsourcing, or GEO. If you engage a service provider such as SafeGuard World International, they will engage an international worker on your company’s behalf. Your won’t need to establish a local business entity. You won’t need a local HR expert. And you can legally engage the worker for as little or as long as you need them.

So, you can keep calm and close your talent gaps afterall.

 

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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.

 

 

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.

Rising Guardians: Rising to the Challenges of Multinational Payroll

Rising Guardians

My company’s Founder & CEO, Bjorn Reynolds, and a group of my colleagues, which are affectionately known as SafeGuard World Guardians, are all in beautiful San Francisco at the Moscone Center attending Workday Rising 2013, Workday’s 7th annual educational gathering of customers partners and Workday employees.

2013 has been a phenomenal year in relation to our partnership with Workday. Last May, we celebrated our 3 Year Partnership and our 23rd client has recently joined our journey to become the world’s principle payroll provider.

On May 13, 2010, SafeGuard World International (SGWI) became the first global payroll provider to establish a formal partnership with Workday. The partnership quickly resulted in what was then recognized as a “packaged integration” between Workday’s Cloud Connect for Third-party Payroll and SGWI’s Software-as-a-Service (Saas) global payroll technology system. In early 2011, we became the first multinational payroll provider to process live payrolls for shared Workday clients.

Workday released six updates since this partnership was established, having announced Workday 19 this past April. Many of these upgrades had a direct impact on Cloud Connect for Third-party Payroll, e.g., bi-directional integration (import and export of data). In line with these upgrades, SGWI made the necessary adjustments to its own global payroll technology system.

Today, we are especially proud as we enjoy a “Certified Integration” status from Workday, and proudly serve 23 shared clients across 55 countries.

The Certified Integration provides four key benefits for global payroll customers who are using or implementing Workday’s HCM.

  1. Customers only have to log into one system to manage all of their HR and payroll data, which means the data only has to be entered into one system, and multinational payroll data can be obtained the same way they view and access their Workday HCM data.
  2. The Certified Integration provides a comprehensive and consistent view of payroll analytics across their global footprint, gaining a true understanding of global labor costs.
  3. It provides ease and sustainability of the integration. The main benefit of a pre-built integration is that the difficult and complex work e.g., field mapping, etc. has already been completed and tested, which mitigates risks relating to the relating to the time and effort involved in any global payroll integration.
  4. Once payrolls are implemented, it works forever. It’s hosted, maintained and regression tested by SGWI, and offers SaaS benefits such as full scalability and centralized upgrades in real time, without disrupting the customer’s business.

So, as you can see by the smiling faces in the picture above, my fellow Guardians are rising to the challenges of multinational payroll.  It’s a proud day for SafeGuard World International and I am personally very proud to be on this journey with our clients, our partners and all of our Guardians around the world.

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The HRIS Global Payroll Integration Challenge

The HRIS Global Payroll Integration Challenge

The HRIS Global Payroll Integration Challenge Is: A Lack of Data Mapping.

If you’re an expert on HR technology, then you know exactly what I’m talking about. If you’re not, let me explain.

Many large MNCs have a Human Resources Information System (HRIS), which is a technology system that provides a single, centralized view of HR data and can include a variety of modules such as recruitment, training, benefits and payroll.

Within a sophisticated HRIS, the employee data is all integrated, so each employee’s details can be viewed and analyzed within each module. The data “fields” are the same such as their name and title e.g., “FirstName,” “LastName,” “Title,” etc.

That’s great. But what about the global payroll integration.  Here’s the challenge.

Global employees are paid in their respective countries. Their pay slips are distributed locally and are generated by an in-country organization. It could be the company’s local entity that’s generating the pay slips but the local entity may not be using the HRIS. If that’s the case, then their employee data fields are probably different than the HRIS. They might say “First Name” with a space, as opposed to “FirstName” without the space as in the example above. Because of that one little space, the two technology systems cannot “talk” to each other.

If a company doesn’t have an in-country entity and has outsourced their global payroll functions to a local HR or payroll company, they will have the same problem. The local payroll company will also have its own naming conventions e.g., “Name First,” which is completely different and again, will not be able to “talk” to the HRIS.

That’s the HRIS Global Payroll Integration Challenge.

If there’s no integration, then there’s no way to export and import the global payroll data in and out of the HRIS. There’s no way to export the data from the HRIS to the in-country processors and likewise, no way to import the final gross to net data back into the HRIS (or to the General Ledger for that matter). That leaves the organization with two options. They can handle the process manually which would have to be done every pay cycle and for every country in scope (not to mention it takes forever and is less accurate than automated processes). Or, they can get by without having any kind of global payroll integration, which means they will never have a completely consistent view of their global HR data and their international labor costs.

There actually is a third option. The organization can work with a global payroll company that focuses specifically on this global payroll challenge. They have technology systems that “map the data fields” from the HRIS to the in-country payroll companies, which automates the process and gives the organization global visibility into its global HR data. Problem solved.

 

 

 

 

Global Payroll is not a Myth. It’s a Journey.

Global HR FootprintThere’s been a lot of chatter lately about whether or not it’s truly possible to have a globally consistent, fully-compliant global payroll system. Some would argue that its sheer complexity makes it almost impossible to administer an automated and effective  multinational payroll solution.

Yes, it’s true that it is highly complex but it’s not a myth. It’s a journey. It’s a journey that begins with a strategic road map and makes stops across every country in scope.

So what are some of the key steps in the journey?

The first step begins with an analysis of the organization’s global footprint. This includes a country-by-country review of where the company has, or doesn’t have, established business entities as well as identifying the number of payroll entities in each of those countries. And then, a  legal evaluation of existing contractors working in those countries. This analysis will drive the strategic road map.

The next step in the journey is a visit to a cloud, which is the hot technology platform that can be integrated into existing HCMs, accounting and Vendor Management software systems, unifying all the data. The next involves compliance and partnering with a managed service provider who has a global supply chain of vetted HR and payroll companies who are experts on in-country compliance.

Another step is related to global contractors/contingent workers, and having the ability to legally engage new workers in countries where the organization does not have business entities. This can be achieved with a solution called Global Employment Outsourcing, where  a service provider becomes the employer of record on behalf of the hiring organization. It’s completely compliant from an HR perspective which mitigates risk for the organization while giving them new tools to support their global growth.

The total solution has to take a holistic approach, beyond the global HR and payroll department, including finance, technology and risk management and equally important, engagement with regional and local HR teams.

Global payroll is complicated but with the proper planning across a company’s global organization, challenges can be overcome and fragmented processes can be transformed into a standardized system of record.