International human resource management is one of the more tricky elements of running a global business. As we have talked about previously in this post about the importance of international growth roughly 47% of middle market companies earn at least half of their revenues from international business, so although managing international human resources may be difficult it becomes more necessary as you grow. With that being said we wanted to point out some of the biggest issues that we see happening when a company is managing international human resources:
1. Intellectual Property (IP) Issues
Understanding the differences of the “Work Made for Hire” laws on a country to country basis can really throw companies for a loop. Here is a great article about the major differences between some of the larger players out there, you can assume the regulations get more particular in some of the less westernized countries. The largest red flag we throw is when we hear that a business has contractors internationally who are working on/with proprietary company assets. In some countries it is actually illegal to have an exclusive working agreement with someone who is not a full time employee. Even though you may think you have an iron clad contractor agreement, it does not mean that your contractor is not working with your direct competition in country.
2. Managing Labor Laws in Each Country
Most our our clients are already in three or more international locations, which means they have to stay up to date on three or more countries ever-changing labor laws. Thus far we have not found a single software solution that can manage payroll and compliance in 190+ sovereign nations of the world, but the closest we know of is Celergo with their impressive 140+ countries. Celergo is also one of the few companies we know of that will accept compliance liability if their information is incorrect. What if you do not have the ability to work with a company like Celergo or you are working in one of the countries that they do not cover? We have found that there are only two ways to be successful in managing compliance and those are:
- Have a local national who is an expert in the country you are working in, and who alerts you of compliance issues
- Outsource the compliance and payroll administration to a company that has expert knowledge of the area you are working in
Do not assume that your in house domestic expert can just take on additional countries and manage these issues without a hitch, there are far too many variances and unpublished changes to put that responsibility on a person who is most likely already overwhelmed.
3. Managing Hiring and Terminations
Definitely the most difficult and potentially painful part of international human resource management is the hiring process and the (eventually) inevitable termination process. The same concern we spoke about in number two, labor laws, applies even further in practice during these pivotal human resource moments. The most important factor we found that can affect hiring and termination is the quality of your employment contract. There’s nothing worse than trying to get rid of a bad employee, then to find out the country you are operating in has a default 45 day termination period. Having a localized contract doesn’t mean that you can change the law, but going through the process of making a localized contract will at least alert you before hand to potential risks. The point we are trying to make is that don’t try to reinvent the wheel when it comes to employment contracts, there are plenty of International Expansion Consultants out there that can save you all the pain with just a little bit of time.
We hope this was informative, please let us know if you have any country specific questions!