When companies expand into foreign markets, they agree to abide by multiple sets of standards. Some of these are legal, such as benefits and labor laws. Even trickier to navigate are unwritten rules, like cultural norms.
While every country presents its own set of challenges, there are some that apply across the board. Here are five HR hiccups you might face in going global — and a few ideas for alleviating them:
1. Compliance Issues
Failure to comply with wage regulations, taxes, withholdings, entitlements and benefits won’t cause just a hiccup. It might result in steep fines and penalties. And you don’t want to become a company non grata.
To start, don’t attempt to modify your U.S.-based payroll system. Without a global payroll solution, you might find yourself in hot water with other nations’ tax authorities.
Also, don’t assume that your home benefits package will work elsewhere either. For example, many countries require paid parental leave, whereas the U.S. only requires unpaid leave under the Family and Medical Leave act.
The same applies to entitlements like workers’ compensation and unemployment insurance. The legal minimum wage also differs from country to country. An employer of record familiar with these compliance hurdles can save you a lot of headaches.
2. Ethical Dilemmas
Ethics run the gamut from acceptable interpersonal behavior to fair wages and environmental sustainability. The ethical norms of each country vary widely.
As Thomas Donaldson writes in the Harvard Business Review, “Even the best-informed, best-intentioned executives must rethink their assumptions about business practice in foreign settings. What works in a company’s home country can fail in a country with different standards of ethical conduct.”
Do HR managers chuck diversity policies in countries where gender roles contrast with those common at home? Do they build packages with low pay and no benefits just because that’s an acceptable practice abroad? What’s the policy for reporting workplace theft in a country where thieves are executed?
Ethical issues are rarely black and white. But when setting up business in a foreign country, gray areas tend to be even broader.
Ethics needs to be part and parcel of your company’s expansion exploration process. Hire a local consultancy to help you abide by cultural norms. When in doubt, take the high road and accept that not everyone will agree with your decision.
3. Career Ambitions
Most Americans are extremely competitive when it comes to their careers. Workers in many other countries are not. Their culture simply doesn’t put a premium on achieving that next promotion or getting the corner office.
Believe it or not, workers in other countries consider Americans’ career habits and business practices unhealthy and unsatisfying. They eschew the long hours and 24/7 connection to work email. They attribute the American practice of eating at their desks and forgoing breaks to low productivity.
If American companies want to open for business in another country, they’re going to have to conform to business as usual there. Otherwise, HR managers will be unable to attract and retain talented employees. Word gets around, especially about the “new” employer on the block.
These cultural differences may come to a head if teams from home and abroad are expected to collaborate. Take vacation policies: Many European employees take a month or more off each year. Their U.S. counterparts may frown on such frequent or extended vacations. Global HR teams must juggle the sometimes competing interests of minimizing conflict and promoting productivity.
4. Communication and Feedback
For many HR teams, the pandemic was their first experience with employees working remotely. They learned the importance of the communication and feedback loop when workers are scattered about. Documentation, collaboration, meetings and performance evaluations had to happen in new ways.
HR managers can look to those lessons as they develop policies for international operations. Cross-office communication must address not only language and time differences, but also cultural cures. An innocent word in the home country’s vocabulary might have a bawdy or insulting connotation in another. Gestures are also often lost in translation.
HR managers need to establish open lines of communication. There are apps and software solutions that can help. But companies need to find the ones that speak everyone’s language, and to realize that no program can prevent every cultural miscommunication.
5. Team Rapport
Remote work during the pandemic also highlighted the importance and difficulty of building team rapport. Team spirit can be even tougher to build across international borders.
The pandemic has revealed the opportunities of technology for remote connectivity. Happy hours via videoconference kept many a team together, despite the fact that its members couldn’t leave their homes. However, the pandemic also revealed its limitations.
At the end of the day, companies need to make every employee feel like an important part of the team. This holds true no matter where those employees are physically located.
Part of the challenge is creating the watercooler in every workspace, remote or otherwise. But the bigger lifts have to do with ensuring everyone feels fairly compensated, is managed effectively, and treats every other member of the team with respect.
HR leaders need to use all the tools at their disposal. Technologies, cross-office team building opportunities, frequent one-on-one conversations, and appropriate compensation are key. While there’s no one-size-fits-all answer, a growing number of multinational companies have gotten the mix right.
To be sure, HR professionals face epic challenges when their company expands beyond its home borders. Any company exploring global expansion will experience growing pains, particularly in the areas outlined above. It’s all a matter of anticipating those issues and devising plans to address them.
Global HR teams don’t need someone to scare the hiccups out of them. They just need to take a deep breath, steer clear of quick fixes, and be pati