Globalisation is when people, goods and services have become accessible to everyone in the world. As globalisation has increased, businesses have been able to get their hands on a workforce that is available all over the world. This has led to more roles being accessible for people with different skill sets and experience levels across the globe – namely, the global workforce.
As a definition, a Global Workforce refers to the international labour pool of workers. This includes those employed by multinational companies and those connected through a global system of networking and production, immigrant workers and many more. With the benefits of pursuing globalisation efforts for a company becoming clearer by the day, the need to hire a global workforce to meet the demands of new market expansions grows more important.
But, as you may have already wondered, is global workforce management easy? How can a company develop and maintain a successful workforce in a global environment? Read on to find out:
Challenges of Global Workforce Management
Managing a global workforce can be a real challenge for any company. There are many challenges that come with managing employees who work in different countries, have different languages and cultures, and speak different dialects. Workforce aside, expanding into new markets means that companies need to ensure legal compliance of working in different countries.
Here are some of the biggest challenges of global workforce management:
One of the first things that need to be done when enacting a globalisation initiative is to establish entities within the countries that your company seeks to operate in. This is essential in order for the business to be able to lawfully conduct operations in countries other than the one in which it was founded. A foreign entity could include an association, a company, corporation, proprietorship or trust – although this isn't an extensive list.
These entities have the capacity to accept legal responsibilities, including liability for illegal acts, the formation and performance of contracts, the incurring and repayment of debts, the ability to sue and be sued, and taking on obligations. It also allows companies to legally hire talent from the country they wish to expand into. However, establishing a legal entity overseas could get costly, complex and can take months, especially if you're planning on making sure everything is by the book. This makes it a challenge for many companies as countries across the world have different legal requirements.
Managing a global workforce can be very difficult in terms of effective communication. It is difficult to connect with employees across the globe, especially when they speak different languages and dialects or don't share common cultural values. Moreover, employees who work in Dubai may find it difficult to get into much-needed discussions with those in California since time zone differences between these two locations can go up to 12 hours!
Because of these challenges, effective communication can be tough for companies seeking to utilise a global workforce for their globalisation efforts. Time, energy and resources will be needed to ensure that there is effective communication between all employees across the world, which can be incredibly draining on the company.
Being a globalised company means that you have access to a vast array of talents on a global scale. However, this also means that you need to manage talent across various countries in the world. This can start to get difficult, especially because different countries may have different requirements, expectations and values, which may cause some to lose interest in the job and risk burnout.
In addition to the skills and talent gap, there is also a geographical one. A global workforce is harder to keep ahead of your competitors when they are all over the world, as opposed to in one spot. The skills of your employees need to be up to par with what they are being asked to do, which can be a big challenge when hiring global talent.
Another challenge of global workforce management is being able to organise everyone's workflow in order to achieve a common goal. The company needs to be able to allocate resources so that everyone has the same amount of work to do, or else separate meetings and workshops may need to be arranged in order for everyone to understand what needs to be done. Overcoming this challenge can put a strain on a company's resources, making it one of the main challenges of global workforce management.
Issues That Can Occur While Managing a Global Workforce
The world is a vast, beautiful place - full of unique cultures and heritages that make up the human race. But, with those differences come to their own particular issues when it comes to global workforce management.
Now that we've spoken about some of the challenges that companies can face when establishing an international workforce, let's move on to some of the issues that may arise during these expansions:
One of the primary reasons why companies decide to expand into new markets is for the purpose of hiring talent. Having a wider talent pool allows organisations to have access to top talent or a specific field of people that might not be available in their home location.
However, one of the main issues that could pop up when managing a global workforce is the clashing of cultural differences between members of the company. This isn't exclusive to lifestyle differences, however, as a vast majority of countries around the world also have distinct working cultures. For example, Japan is notorious for its intense working culture, which distinguishes its workforce from others around the globe.
Lack of Engagement
Another issue that may arise when managing a global workforce is the lack of engagement not just between members of staff but between employees and management too. This issue can be a tough one to manage as it is down to both sides; however, as staff aren't able to express their opinions, their views may not be brought up and considered. Plus, a geographical gap can make communication difficult when unmanaged.
Creating a global workforce also requires building and cultivating a working culture that is suitable on an international scale. A lack of engagement within a company structure can make work feel cold, which could lead to a decreased sense of motivation in the long run.
One of the biggest challenges of global workforce management is the ability to create a cohesive schedule for all employees, no matter where they are in the world. This is especially the case whenever a meeting needs to be planned involving key players from each location.
When faced with various subtleties in terms of the numerous labour laws that exist around the world, managing employment in itself can become both a challenge and an issue. This can create problems between managing employees and dealing with the workforce as well as the same method can't be used across the board. Being unfamiliar with local labour laws can also put the company at legal risk.
For example, different countries have different legislation on parental leave and maternity rights, which makes the process of expanding into new markets more challenging as these things need to be put into consideration when hiring global talent. Having to juggle these all while ensuring that productivity remains steady can get quite overwhelming.
However, there is one great solution to solve a majority of the issues mentioned in this article.
How an Employer of Record Solution Helps Manage a Global Workforce
In a nutshell, an employer of record (EOR) is a third party that manages hiring and payrolls on behalf of a company. They also take responsibility for all formal onboarding duties.
Having an EOR on your side can make the process of hiring and onboarding international workers much simpler and more streamlined. In this model, the EOR takes on the responsibility of ensuring that all contracts, benefits, and payrolls are in accordance with applicable laws and regulations, freeing you to focus on managing your remote workers and the value they bring to the firm.
Removes Need to Establish Entities
Companies that want to expand into global markets, or those with remote teams, will often establish as many entities as they need in order to be compliant. This involves establishing a branch office of some kind in every country they wish to conduct business. However, as we've mentioned before, this can be both time-consuming and put a strain on company resources.
Utilising an EOR removes the need for establishing a new entity every time the company seeks to expand into new markets entirely. This is possible because an EOR essentially acts as the company's 'virtual' office, in a sense, and becomes the legal employer of any worker, thereby allowing the firm to spread its resources more effectively.
Ensures Legal Compliance
While an EOR eliminates the need to establish an entity in every country where you want to conduct business, it also comes with the benefit of helping your company become compliant with local laws and hiring practices. Any legal headaches that your company might have faced otherwise will basically become obsolete, allowing the focus to remain on getting things done.
In order to become compliant with all regulations and laws, a company needs to have their hiring practices in place and the process of onboarding new employees to your organisation. This can be done effectively by using a reputable EOR service.
Handles HR Tasks
Once a worker is on the payroll, an EOR will take care of all onboarding duties for them since they are their legal employer. This includes helping with issuing a contract, reviewing employee documentation, ensuring that tax withholdings are administered appropriately, and even offering benefits packages.
An EOR, as the employer of all on-boarded workers, would be responsible for the legalities and formalities surrounding the hiring process. The process of onboarding international employees will become simpler because the EOR company that you engage with will already be familiar with local practices, taking the bulk of the work off of the company.
The Company is in Charge of the Work
At the end of the day, an EOR offers a degree of flexibility and freedom that is unique to its services. It would be worth reiterating that EORs may be the legal employer of a worker, but the extent of their duties solely applies to anything relating to human resources – hiring and firing, payroll and benefits, et cetera. Otherwise, the company is in charge.
Compared to engaging with PEOs, EORs ultimately leave the management of workloads to the company that it works with. More importantly, the company is the one that describes a worker's job function and has the final say in who does what. This gives the company the authority to decide what a worker does in their day-to-day, allowing them similar control as if they were a direct employee.
Bottom line: an employer of record will eliminate on-boarding burdens, provide flexibility for global expansion, and ensure that legal compliance is achieved. They act as your globalisation partner, assisting with global workforce management and ensuring that your expansion plans run as smoothly as possible so that you can focus on what you do best.
Whether you're a small, medium or large company seeking to expand your growth into the global market, consider engaging with a great EOR company to help your company through this process.
Learn more if it's time to explore global expansion for your business.