Hiring in a Foreign Country: What to Expect
Whether you have already expanded into another country and are hiring local resources or simply wish to draw from a foreign talent pool, there are a few things you need to know when hiring in a foreign country.
First off, this process is influenced by the other country’s own labor laws and regulations regarding foreign entities operating within its borders, as well as your own country’s labor laws regarding international employees.
The two conventional ways of operating in a foreign country are:
- Establishing a local business entity
- Opening a branch
- Employer of Record
You can expect some differences when you are hiring as a locally established entity or a branch of a foreign company. However, let’s start with some of the common challenges and unique conditions, between locally registered business entities and branches, you may need to meet when hiring in another country.
The Labor Laws
Expect the labor laws to be different from your country and manage accordingly. From hiring, to benefits and terminations, several unique laws may clash with the labor law practices you are familiar with. These differences can range from superficial to extremely relevant.
For example, the nuances of discrimination laws may be different, and you need to advertise your jobs and restructure the hiring process accordingly. There might be a culture of labor unions, which may make employee terminations trickier than you are used to.
Familiarizing yourself with these labor laws and proceeding accordingly should be your approach from the very beginning of the hiring process.
The structure and breakdown of the statutory benefits may be different enough that you may have to rethink your compensation structure. Whether or not these benefits are offered to all employees (contractual or permanent), may also differ from country to country.
You should also expect changes in governing when an employee becomes eligible for statutory benefits. Some of these benefits, like healthcare, may require you to familiarize yourself with and seek partnerships with local insurance businesses.
With so many other differences, it should not come as a shock that work culture also varies drastically from country to country, and it is about more than just worker productivity. It might also be about respect, boundaries (or no boundaries) between management and the labor force, and punctuality, among many other nuances.
Understanding the work culture thoroughly takes time and any attempts to modify them should be made after serious consideration. Enforcing your work culture practices in a foreign country might not be the best course of action, especially if they clash with local social culture and traditions.
Expect a completely different talent pool than the one you have access to in your own country. Different countries have different talent pools, and they might also be distributed in unconventional ways. For example, you may be operating in a city where there is no shortage of manufacturing workers, but you may have difficulty finding a qualified civil engineer or HR professional.
This might require you to cast a wider net (within the country) and compensate accordingly, just to meet your talent requirements. It’s a good idea to familiarize yourself with the talent pool you will have access to before you decide to operate in a new country.
The Hiring Process
Expect the hiring process to be different for each country. Hard copy resumes are still quite common in many parts of the world, and you may not get a lot of interested candidates if you employ a strictly online approach to job advertising. Similarly, the interview and testing processes might be different.
In many countries, local employment organizations and HR companies set the norms of how hiring is done, and even if you are not leveraging their expertise, you should still learn from their approach (the established approach) and create a familiar hiring process for most local nationals. Global People Strategist has employee handbooks to ease the onboarding experience.
Hiring in a Foreign Country as a Registered Business Entity
If you have already gone through the process of registering your business in a new country and taken the necessary legal steps, you may be familiar with many of the rules, compliance requirements, and practices associated with local hiring. More importantly, you may have the right clearance and certifications to start hiring in the country. Accounts in local banks also make it easier to run the payroll.
Still, you should be prepared to expect some challenges, even as a registered entity. Withholding tax, compensation structures, contract language, labor/employee rights, working hours, etc., are just some of the things you can expect to be different for each country.
Your goal should be to try and leverage the benefits these “differences” might offer and adapt to the changes so that you can get optimal productivity out of your employees. It’s also important to establish yourself as a good employer when you are hiring in a foreign country. Otherwise, you may not attract the best the local talent pool offers.
Hiring in a Foreign Country as a Branch of an International Business
If your expansion into another country is via a branch office/location, expect the hiring process to be a little more complicated. The first hurdle will be the issue of familiarity. If you are not working with a local partner or are not a recognized entity in the new region, you may have to devise a comprehensive hiring plan to attract the best talent available in the country.
You can also expect some operational challenges. Language can often be the first barrier when operating a branch in a foreign country, followed by hiring your first local employees and managers. Aadmi has translation services that can ease your businesses transition into a foreign country.
Use an Employer of Record to Ease the Process
An Employer of Record (EOR) can make the whole process significantly easier. What is a challenging new endeavor for you is the regular mode of operation for Aadmi’s Employer of Record services. With Aadmi’s Employer of Record services for hiring in a foreign country, you can achieve excellent results with minimal friction, and you may actually save money in potential fines, research, or extra resources you may have to invest in if you oversee the hiring process on your own. For more information on Aadmi’s services, visit Aadmi.com