The challenges of hiring a global team (and how to overcome them)

The People Collective’s website ❤️

With the onset of COVID-19 (who else is tired of that word by now?), a lot of companies went remote. And when they went remote, a lot started thinking ‘Hey, if we can all work from home, why shouldn’t we start hiring people in different countries?’.

Hiring globally is one of those things that, as your company grows, you will start thinking about. The benefits of opening your team to different geographies and cultures are many, so it’s definitely something to take into consideration.

Some of the great things about having a global team are:

  • Access to a global talent pool
  • Local knowledge of a potential new market for your product or service
  • Diversity and new perspectives

So yeah, that’s all great.

But having a distributed team doesn’t come without its operational challenges. It’s one of those things that will require you to put some thought in advance, to make sure it’s successful.

But before we dig into it, please take into consideration that this is not legal advice and you should always consult with your legal team before you start hiring globally.

What to think about beforehand

There are going to be a few things from a People perspective that you will need to take into consideration before you embark on this journey. Trust me, you are gonna want to make this as easy as possible on yourself.

Even before you get into the details of how to hire or engage new team members globally, first you should check if they can be based anywhere abroad. This is particularly the case if they will be managing sensitive data as part of their day-to-day work.

Example: you are a health tech business with HQ in the UK offering services to the NHS. As part of your offering, your software developers have access to sensitive data that they use to deliver your service. Unfortunately, this will make it challenging for you to hire backend developers outside of the UK or EEA.

You will want to check with a Data Protection Officer before going ahead to make sure you are good to go.

Once you’ve learnt that it’s ok for your team members to be based in the target country, you need to know how you will engage them. Hiring someone as an internal employee is not the same as going the Employer of Record route. Nor simply engaging them as contractors.

This will depend heavily on wether you have a local entity in that country or not.

  1. You have a local entity

If you have a local entity in that country then you will be able to hire people as employees the same way as for your HQ. Eventually, this is where you want to be. It ensures a standardised employee experience no matter where your team is based. But before you start opening offices left, right and centre, take into consideration that setting a legal entity can take up to 12 months depending on the country. It’s simply not worth it if you have less than 10 people based there. Also, in some countries it’s even harder to close a legal entity than it is to open it.

In this scenario, here’re some things you’ll need to sort out before you deliver that first offer letter:

  • Payroll: You’re going to need to have a local bank account so get your finance team to help with that. Once that’s in place, you’ll need to make sure people get paid. Either partner with a local or global PEO (Professional Employer Organisation) or bring in local knowledge to take this onboard (in-house).
  • Benefits & Pension: there’re will be local statutory benefits that you will need to comply with and those will change country by country. Ideally, you’ll also be able to offer benefits beyond what’s statutory. Unless you already use a global benefits provider, partner with a local broker who can help with this.
  • Employment contract: the most basic thing. Make sure you have a template you can use. This, of course, has to be compliant with local regulations. So…
  • Get local employment law support: this one is crucial. It’s not just about having someone running your payroll, sending out contracts and administrating your benefits programme. You also need to have someone with deep knowledge of local employment law to ensure you stay compliant. As with payroll, you can choose to outsource it to a local or global PEO or bring in local knowledge to manage it internally.

2. You don’t have a local entity

You’ve decided that setting a legal entity in every country you hire is not the right choice for you at the moment (hint: it shouldn’t be!). Here are a few things that you will need to think about before you start hiring:

Decide if you are going to employ people through an Employer of Record (EOR) or if you will you have an independent contractor arrangement.

Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organisation that will hire and pay your employees on your behalf. They can also offer a benefits package on your behalf. Unlike a PEO, an EOR takes on full administration and liability of the employment arrangement for you.

Using an Employer of Record will allow you to engage with overseas candidates without having to set up a local entity or risk violating local employment laws.

If you decide to go the EOR route, you’re going to need to choose your partner. I will not be recommending vendors or partners, as this is intended as a partner-agnostic piece. But here’s a list of questions to help you with that.

There are many benefits to using an EOR, but they come with a price tag that many businesses — especially startups — won’t be able to afford.

They still make sense for some roles. A senior role with decision making power, or a sales role with business development responsibilities are examples of roles I’d get through an EOR. Or if the candidate is based in a jurisdiction which is punitive towards contracting, then I’d hire them through an EOR too. But then for other roles a cheaper option can be to bring them in as contractors.

Independent Contractor

A more affordable option to get you started is to bring your potential candidates into a contractor arrangement. As you grow, you’ll want to be able to turn your contractors into employees but, for now, it’s a valid choice.

To go ahead with this option, you will need to define:

  • If entering into a contractor agreement with your candidate is allowed in the target country.
  • If it is allowed, ensure you’re staying compliant with local laws. For example, in Brazil, an independent contractor can only work on a project basis rather than under an on-going agreement.
  • Once you know that entering into a contractor agreement is allowed and you’re compliant with local laws, you’re going to need a contractor agreement template. Make sure you include clauses such as confidentiality and/or non-disclosure, intellectual property, notice, etc.
  • Set up an invoice template.

Bear in mind, engaging candidates as contractors will bring some risk on misclassification so make sure you have the right advice in place to mitigate this.

When hiring globally, you need to comply with the local regulations of your new hires’ home countries. Some policies will change depending on the country your team is based in and you need to communicate this accordingly. If you have an internal handbook or wiki, make sure you spend some time documenting these as it will help ensure everyone’s clear on the differences they can expect based on where they are based.

With the above in mind, make sure you cover what happens with:

  • Compensation.
    How will you structure your compensation now that your team is based in different countries? Will you pay localised, regional or global salaries?
  • Probation period.
    Each country will have different laws on how long you can have employees on probation.
  • Paid time off and working hours.
    Surprise! This will also change depending on the country. Think statutory annual leave, maternity leave, paternity leave, parental leave, sick leave, public holidays, and other statutory leave that might be country-specific.
  • Off-boarding and termination.
    You’ll have country-specific regulations to adhere to before you can terminate an employee. It’s definitely not going to be the same to terminate someone in the US (where most employment is ‘at will’) as it will be in Germany (where employees are protected against unfair dismissal).
  • Benefits & Pension.
    See above.
  • Working days / hours*.
  • Working space, health & safety**.

On working days

Take some time to think about your working days now that you’ve decided to start hiring globally. For example, if you’re a company based in the UAE and your normal working week is Sunday-Thursday, you’ll need to decide if you’re going to want everyone to adjust to that no matter where they’re based.

On working hours

Working hours will also be affected, as it’s hard for someone based in India to adjust to the working hours of a company with HQ in San Diego. At this stage, you need to decide if you’re going to:

  • keep working synchronously and only hire people in regions within a -1/+1 time zone, for example.
  • establish core business hours (i.e. everyone needs to be available from 11am-3pm, HQ time).
  • start working fully asynchronously and allow people to work whenever it works best for them.

An industry good practice for remote-first companies is to support remote employees with co-working space and/or equipment budget. Gitlab has a great policy for that publicly available in their public handbook, so it’s a great place to start for inspiration.

Platforms like Hofy can help with providing and delivering home equipment (for US, Europe and UK).

If you went through the EOR route, then they will help ensure compliance with every other aspect of Health & Safety. Otherwise, make sure you get the country-specific advice.

Some final thoughts

So there you have it. Hiring globally can be daunting at first and will require an initial operational investment to make sure it’s a success. But, if it does support your business strategy, then it’s definitely worth the effort.

Last but not least, I’d like to thank the always amazing Jessica Hayes and Ben O'Mahony for their guidance when I got started on this journey last year. You’re awesome ❤️

What next?

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People consultant at The People Collective, Content curator on everything People, cat lover and Queen’s fan (the band, not the monarch)