Any business that indeed means business understands that global success is a must. Moving into international waters is a means of gaining new opportunities and diversification. It also enables such a company that ventures into the international market to enjoy reduced labor costs as well.
While this sounds all fine and good, there are certain stormy challenges that the company must weather if they want to succeed internationally. Chief among these challenges is that of staffing. Visit https://www.forbes.com/sites/forbesnycouncil/2019/02/26/five-ways-to-overcome-common-entrepreneurial-challenges/?sh=6fbe2e5b21a6 to learn 5 ways you can overcome common challenges peculiar to entrepreneurs.
We know how challenging this issue can be especially for new businesses that are just trying to make headway into foreign markets. Therefore, we have written this article to intimate you with these international staffing challenges that you will encounter. Not to leave you shipwreck, we have also provided solutions to these challenges that will get you safely to shore.
Let’s get started…
1. Workforce Skills
Getting the right workforce staff with the appropriate skills required for your business is a problem most companies encounter when they move to establish their business in a target country. This is especially true if you are moving to a developing country or location.
You will need individuals that will understand your enterprise’s operations and overall goals. Also, you will need staffs that possess the right skills that can function in that location. They will need to speak the local language and also possess an understanding of business operations in that location.
Solution
To solve this problem we recommend getting skilled workforce through the following methods:
Intra Transfers
This strategy involves the transfer of skilled personnel from your business headquarters to the foreign country. These individuals will then occupy key positions that require skilled personnel. This strategy helps the entire organization to provide overseas assignments to staff who are interested. It also allows for information exchange between both locations.
Partner with Reliable Local Recruiting Agencies
Look for local reliable recruiting agencies to partner with and outsource the hiring process to them. Inform them of the skills you desire and allow them to populate your workforce with such individuals.
The beauty of this strategy is that such third-party agencies can find staff faster and more efficiently than you would since they are based in that country. Also, you get to focus on other pressing administrative needs.
You can go ahead and even hand over all the management of local employees to the agency. They will then handle all the affairs of the hired staff with the agency serving as a middle-man between you and the employees. However, you need to ensure the credibility of the agency before you make this move.
2. Employees’ Salaries and Benefits
Getting skilled workforce is not enough; determining the appropriate salary and benefits is one of the challenges of international staffing that new businesses settling in a new country face. In making this decision, the following should be put into consideration:
- Mandatory Employee Contributions: This includes superannuation/pension schemes, workers’ compensation, health insurance, etc.
- Established Market Benefits: Sometimes, what is considered legal might not actually be the market norm. Therefore, you need to find out what the market you are in considers normal benefits instead of relying on legal documents that don’t translate to everyday market business operations.
iii. The Effect of Wide Salary Differences: Many companies in foreign countries tend to pay staff from the company’s residence country much higher than the indigenous staff. However, if you choose to follow this manner, ensure that the margin is not too wide. Such style has been known to cause a decrease in local staff morale and retention.
Solution
You should get professional advice from established and reliable local market authorities on issues such as recruitment, salaries, and compensations. This will enable you to remain compliant with market norms regarding these issues.
3. Control and Management
There are different forms a business in a foreign nation can take. You could opt for a subsidiary, use licensing or franchising, or you could just partner with local agents. Irrespective of the form you choose, one thing is certain that headquarter of your enterprise residence country must still have control and management of the new branch.
This control is necessary to ensure the branch remains in sync with the overall vision, mission, goals, and values of the company. Furthermore, you must accept that local employees, contractors, and agents can significantly shape the local branch’s brand image via their activities. Hence, the control from the head office becomes very important.
Solution
Transfer of personnel from the head office to the branch is a great way to establish the control and management that is much required. Since these employees understand the values and culture of the organization, they are in the best position to enforce such through top-shelf management styles. Click here to learn more about management styles.
4. Tax Compliance
This is a major challenge that is inevitable when a workforce staff has been established. Since your business is established in that nation, it becomes a tax liable enterprise.
The specifics of tax obligations are dependent on the bilateral tax treaties that exist between the organization’s residence nation and the target nation. Another factor that plays a major role is the target country’s domestic law.
Solution
Before establishing your business in your proposed nation, find out from professionals the best commercial and legal ways that will enable you to optimize your business’ tax liability.
Conclusion
Establishing a business in a foreign nation comes with staffing challenges, and this article has addressed and provided solutions to some of them.