In recent years, the globalization trend has witnessed a surge in small US-based companies particularly in high-tech, life sciences and finance sectors, expanding their operations into new countries. As these enterprises venture into uncharted territories, they encounter unique challenges, especially when it comes to compensation and benefits.
The first challenge arises as they recognize the need for oversight and management of benefit programs designed for local nationals. Often, expatriate staff from headquarters or nearby locations manage the local operation, but the need for recruiting high-caliber local talent quickly becomes apparent for cost efficient staffing, or for marketing and selling the company’s products in the new countries. This competition for top-notch local talent involves not only other small employers in the new country but also well-established global players with robust compensation and benefit programs.
Here are some ways multinationals can navigate compensation and benefit challenges in their foreign operations:
Employment Shell Selection:
Instead of establishing a local legal entity, multinationals may consider utilizing a labor intermediary like a Professional Employment Organization (PEO) as the employer of record, or engaging individuals under an independent contractor arrangement.
Package Development:
Formulate comprehensive information about job content and reward packages, incorporating key elements such as job descriptions, working terms and conditions, along with competitive compensation and benefits.
Overcoming Lack of Critical Mass:
Arrange the temporary delivery of core benefit programs, such as pensions, healthcare, life and disability insurance. These can be distributed as cash allowances or stipends to address the challenge of obtaining group terms with low initial headcounts. Other considerations include retail-level benefit costs and tax factors. Businesses should team up with brokers and consultants that offer insurance and financial products at pre-negotiated rates and terms.
Diverse Employee Benefits:
Contemplate the incorporation of benefits that are not typically provided in the head office to address the varying needs of the local workforce. Employee benefits such as transportation and meal assistance, wellness programs and childcare can address shortfall in local social program coverage, leverage tax advantages, group purchasing power and subsidies often provided by government to these programs.
Flexible Design and Delivery:
It is equally important to provide a delivery platform that promotes flexibility to accommodate the diverse needs and preferences of individual employees. Adding a suite of voluntary benefits goes a long way toward meeting this goal.
Global Vendor Networks:
By pooling resources across countries through global vendor networks that leverage our clients’ global footprint, we provide convenient solutions to overcome challenges in obtaining affordable insurance product pricing and favorable terms at the local country level that only reflect the local group sizes.
To be successful, you need the guidance of a global benefits partner to help you understand how to address the challenges of expanding globally.
The HUB International Global Benefits team serves as a strategic partner for multinationals, offering tailored solutions to overcome compensation and benefit challenges in their small foreign operations. HUB’s expertise ensures that businesses can attract and retain top talent while navigating the particular complexities of international expansion.
