A few years ago, companies with true global workforces (aside from the casual off-shoring operation) were exceptions. Today, having workers in more than just a few countries is becoming the norm.
As the world becomes more interconnected and competitive, it’s not enough to simply know your industry inside and out anymore. To stay ahead of the curve in this new era, you need a workforce that is prepared to compete anywhere in the world at any time.
If you’re an HR professional and your company is expanding globally, the potential for increased risks and compliance challenges may be cause for concern. But don’t worry! There are a number of risk management strategies that can help mitigate these issues. In this article we’ll outline five steps to take now to prepare for future challenges later on down the road.
1. Understand the risks associated with a global workforce
In order to mitigate risk, you must know what the risks are. Understanding the risks associated with a global workforce allows your business to get clear about how to navigate these new waters and what help you may need along the way.
Here are some of the areas where a global workforce could pose risks to your organization:
- Liability insurance requirements
- Background checks
- Client-specific Non-Disclosure Agreements (NDAs)
- Termination specifications
- Document collection and verification
- Data breaches and cybersecurity
Fines, penalties, and litigations are the cost of not understanding or mitigating the risks associated with a global workforce. In many countries, the penalties and fines for not operating compliantly can be in the thousands and even lead to imprisonment.
By understanding the risks associated with a global workforce, you can access your risk readiness for creating an extended or global workforce. The most common and costly mistake organizations make is failing to realize that foreign markets operate differently from the U.S., a fact which can lead organizations into difficulty as they attempt global expansion.
2. Be realistic about costs associated with expanding globally
Cost is a huge risk associated with integrating and managing a global workforce. While your global expansion efforts may be driven by a desire to reduce costs, this outcome is only possible with a strong global workforce strategy in place. Check out our 4 Tips for Creating a Global Workforce Strategy.
Costs associated with expanding globally can vary greatly depending on your industry and the extent of your global endeavor. Appropriate action can only be determined through a clear plan and strategy.
Some of the unnecessary costs can be mitigated through compliance. You can be hit with huge penalties if you fail to comply with a country’s payroll laws. These costs greatly affect your bottom line.
Two areas we recommend investing in when expanding globally are cultural sensitivity training and HR tech.
Cultural Sensitivity Training
A global workforce is a workforce that spans multiple time zones and borders. People work differently in different parts of the world. For a successful global expansion, ensure fair treatment of diverse cultures by creating cultural sensitivity training. Create awareness programs for workers that encourage inclusivity. Support management by giving them the tools they need to have a clear understanding of the differences between working hours, holidays, and vacation time between countries.
As the world becomes increasingly interconnected through technology, it’s easier for employees and workers around the globe to communicate with each other and share ideas across different cultures and languages. But as these technologies make collaboration easier in certain ways they increase risk in others.
As of 2020, the average cost of a data breach is $3.86 million. HR tech innovations are critical for increasing your cybersecurity. AI is helping many businesses increase their security and compliance. Implementing AI can save you time and money and improve the ROI on your global expansion efforts.
3. Conduct periodic reviews to make sure you are complying with current laws and regulations
In our rapidly changing world, laws and regulations can change in what seems like the blink of an eye. Compliance is an absolutely critical part of a successful global expansion. In order to manage risk, you must stay on top of current laws and regulations.
SHRM lists “underestimating the importance of compliance” as one of the 10 biggest mistakes new HR professionals make. However, the rapidly changing nature of the gig economy means that new and seasoned HR professionals alike make this mistake.
Every country has different laws you need to follow. In an article titled, “5 Security Factors to Consider When Expanding to Global Markets“, Crunchbase points out that, “Other countries have implemented many different kinds of laws and regulations around what your company can and cannot do. While it may seem obvious that you should review your legal standings in your target markets, a country’s laws can quickly become complicated–and you will still need to comply with them.”
We recommend you set up a monitoring system that can alert you to changes in laws and regulations. A compliance partner or EOR like GreenLight who works with top labor lawyers can update classification in real time as these laws can and do change quickly. For more information on compliance, check out our article, How to Stay Compliant with International Workers.
4. Make sure there are clear lines of communication between levels in the organization
In order to manage the risks that come with a global workforce, it is important for there to be clear lines of communication between levels in an organization. Quality communication is at the heart of all great relationships. It’s no different for relationships within your business.
Remote work and the gig economy have challenged our communication skills for the better. Instead of being able to walk over and ask a coworker for input or advice, you have to be more intentional about communicating with your team. There are many popular tools that can help you facilitate quality communication in the workplace: Zoom, Slack, Google Docs, and more. These are all excellent resources when teams span across time zones and borders.
When you’re operating a global workforce, it’s important to make sure everyone is on the same page. For example, some workers may be privy to certain pieces of proprietary data that others aren’t – and vice versa. This means your team must understand and have access to as much information as possible while still being within their wheelhouse.
5. Build a culture of safety and compliance across your global workforce
Risk management starts with your company culture. If running a safe and compliant company is a priority for upper-management, you will see the trickle-down effects of this dedication.
Compliance isn’t just about avoiding getting in trouble with the law. Though it’s worth pointing out that SHRM lists misclassification as one of the workplace litigation trends in 2021 that employers should note. Compliance is also about making your workers feel safe, valued, and cared for.
Showing your people that they matter to your organization is one of the reasons we created GreenLight. GreenLight is the world’s first AI-driven classification engine. We’re the 21st-century solution for businesses that want to avoid the headache of misclassification. We provide the technology and resources needed to ensure your local and international hiring workflow is legally sound. Our mission is to make sure that workers are always paid promptly, reliably, compliantly, and seamlessly.
Expanding to a global workforce can be an excellent way to grow your business. By following the tips given above, you will mitigate most of the risk associated with a global workforce, and GreenLight is ready to help. Schedule a demo today so you can start hiring abroad with ease.