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Hiring in Africa – What are your Options?

By January 30, 2017October 7th, 2020No Comments
Hiring in Africa - What are your Options?

Hiring in Africa – and all countries – goes beyond signing on the dotted line. Companies need a strategy for recruiting high-performing talent, vetting team members, and keeping them onboard after initial employment. Businesses that go global with a solid strategy for hiring employees have a greater chance of success than those that dive in blind. We want your team to be successful when you start hiring in Africa. As a result, we pulled together a few resources to give you options for employment along with best practices for onboarding your new talent.

Options for Hiring in Africa

When hiring in Africa, you have two options for workers: employees and independent contractors. The difference between the two working relationships is classified by the substance of the agreement and the employer’s control over the employee’s schedule and performance.

Independent Contractors

Some companies choose to engage with independent contractors to avoid establishing a legal entity in their new country. During this relationship, the company may even use its domestic contract to manage the engagement. We urge you to avoid this type of arrangement.

If you do choose to work with a contractor in Africa, employ them through an employer of record service like International PEO to maintain compliance requirements and ensure an autonomous relationship.

The reason – In Africa, and many foreign countries, employees are entitled to the benefits and protections provided by labor legislation. Since independent contractors are governed by the laws of their contract, they are not entitled to the benefits and protections afforded to employees. If courts classify the worker as an employee, then your company is subject to back taxes, withholdings, and fines dating back to the employee’s start date.

Establish a Permanent Presence

If you want to hire full-time employees in Africa, one method is through establishing a foreign subsidiary. Companies expanding into Africa from other countries typically establish a business in Africa and South Africa through a private company. This option provides limited liability benefits and a separate legal presence without the corporate governance and financial reporting responsibilities of a public company.

Foreign companies can also register in Africa as an external company or branch, which is more limited in its offerings.

When it’s time to register, you will have to follow the requirements established by the Companies Act. This legislation is the central piece of legislation governing the formation, structure, governance and overall regulation of private limited liability companies in South Africa.

When forming a legal entity overseas, it’s always a good idea to consult with your attorney or a global expansion expert to make sure you’re meeting all of the requirements.

Establishing a subsidiary in Africa is one method for hiring employees, but it’s also very expensive and takes months to complete. If you want to get in-country without the time and cost burden, consider using an agile approach to hiring in Africa.

Flexible Methods for Hiring in Africa

Think of global expansion as a startup phase for your business. When your company is beginning its operations, it’s important to stay flexible. As you’ve seen, strategies and goals change along the journey. Without an open mind, your company would miss opportunities and slowly head towards failure. International growth is the same, which is why we encourage companies to stay agile when they enter new markets.

We suggest using services such as International PEO and Foreign Subsidiary as a Service (FSaaS), which are two employer of record methods (EOR) that manage all of the complications surrounding hiring in Africa.

These flexible services can save your company time and money by helping you manage:

  • Compliance
  • Payroll
  • Hiring & Firing
  • Work Permits & Visas
  • Contracts

Onboarding Talent in Africa

Now that you understand your options for hiring in Africa, it’s time to perfect the skill of recruiting and onboarding talent. During globalization, companies benefit by partnering with an in-country expert. This global partner helps businesses:

  • Understand the new market’s culture and traditions.
  • Connect with consumers.
  • Reach out and engage with team members.

Recruiting

For the purpose of hiring in Africa, the first and final points are the most critical.

You need to work with a local that knows the culture inside and out to attract top talent. Markets are growing more and more competitive, which is why you cannot rely on job boards to find new team members. A partner in-country can help with face-to-face meetings, interviews, and gain traction by tapping into their pool of connections.

Retaining High-Quality Employees

Once you’ve vetted and hired your talent, you need to keep them on your team. Turnover is costly, especially in overseas operations. The cost of turnover is equal, if not greater, to half of that employee’s annual salary.

Be sure to study the market and your competition to learn about supplemental benefit offerings, salary standards, and employee expectations in Africa. By offering competitive packages, you can increase productivity and retain employees overseas.

In addition, be sure to keep culture aligned across all of your networks. You can achieve a high-performing culture by:

  • Maintaining regular communication with your team in Africa.
  • Keep expectations for performance similar across borders.
  • Provide regular feedback to all team members.

If you’re ready to start hiring in Africa or another overseas market, give us a call! Our team of international experts can answer your global expansion questions and help you perfect your strategy for a smooth transition into your new market.