As the businesses environment gets more global, the international competition gets stronger. One of the primary reasons companies decide to expand overseas is to tap into new consumer markets. If a product or service is stagnant in the States, some companies find renewed energy in foreign markets.
Also, global growth opens up opportunities to work with new talent. International employees bring innovation to companies and help diversify the thinking, which may lead to groundbreaking discoveries. Hiring local nationals is also a great way to keep up with international competition and gain trust in new markets.
Many of our clients assume that hiring expats is easier than hiring local nationals when expanding into a new country. Bringing resources from your headquarters, aka “expat hiring,” does have its benefits. Your team member can help set up operations with limited training and you trust them. One of the issues with expat hiring is that in 99% of the international expansion scenarios we see, it is harder to import an expat than hiring people who are already citizens of your new country.
We will explore both scenarios for talent acquisition overseas to help you make the best decision for your company.
Hiring Local Nationals Helps with International Competition
Let’s say that your company expands into France. Your firm sells widgets and you need to tap into the local market to start earning revenue. Prior to your expansion, you did not have a local presence in France. If you want to compete, you need to hire local nationals instead of sending a member of your US team into the market.
A local national is an employee that is hired for a job in their own country. In our scenario, a local national is a French citizen that is hired to work for your entity in France. Local nationals can work for your company on a full-time or part-time basis and are subject to all of the entitlements defined by each country’s labor courts.
Managing employee compliance is a big responsibility for international employers. We suggest using a service such as International PEO (Professional Employer Organization). This service helps employers manage all of the administrative tasks associated with hiring overseas including payroll, taxes, benefits, hiring and firing.
Benefits
Hiring local nationals not only helps your company’s reputation, it’s also beneficial when offering benefits packages. Expats are more demanding about health care needs than local nationals. The reason – expats are making a significant life adjustment by moving to a new country. They may require supplemental benefits and increased pay before accepting an offer.
Local nationals are willing to accept the statutory health scheme of whatever country you are entering.
If you want to beat our your international competition, consider offering supplemental benefits or higher wages even for local nationals. Your goal is to obtain the top talent in your new market and extra benefits will help.
Culture
During your global strategy creation, your company weighed the pros and the cons of entering your target country. It’s safe to say that cultural implications fell somewhere on that list. Hiring local nationals helps your team adjust to the new normal. The local talent can teach you customs, be the buffer with consumers, and help your company build trust in the community.
If you have a great team member in the States that you’re considering exporting, think about the cultural implications. They may not succeed in the new market the same way they do at home.
In some countries, employees may be open and direct. In others, communication may be more complicated and take time. Confide in an international consultant to get insight into your new markets and learn about industry best practices before you start working with local talent. We can help with this! Give us a call at +1 (303) 309-2894.
