Global workforce management: challenges and best practices
Global Hiring
Payroll
Compliance
Author
Laura Bohrer
Date published
02.04.2024
International business expansion allows businesses to realize their growth ambitions. But it also comes with new challenges. With a growing number of business entities in different markets, effectively managing global operations becomes harder. This includes managing a globally distributed workforce.
What is global workforce management? What are the challenges of global employee management? How to effectively manage a global workforce?
What is global workforce management?
Workforce management is the set of processes and strategies employed by an organization to manage its employees, contractors, freelancers, and any other type of workers.
It encompasses various aspects that relate to different stages of the employee lifecycle, such as hiring and recruiting and career advancement, as well as strategic considerations regarding company goals and corporate compliance.
Global workforce management is the same process but carried out on an international level.
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Global workforce management challenges
Working with a global workforce comes with numerous benefits. However, global employee management also creates new hurdles and pitfalls organizations need to overcome. Here are the main challenges of managing a global workforce.
International hiring and recruitment
The first hurdle businesses need to overcome is to find and recruit appropriate candidates in different business locations. Creating a global talent pipeline and finding suitable candidates to fill specific talent needs for each market can be difficult.
Hiring employees in different countries is yet another challenge because it often involves setting up a local legal entity and requires a firm understanding of local labor and employment laws.
Different employment models
Managing a global workforce means dealing with different employment types. While the main employment types are more or less the same in most countries, the rules and regulations surrounding them differ. This makes it hard for businesses to find the best employment model in each market and remain compliant.
Employee benefits and compensation management
Compensation and benefits management often poses problems for multinational organizations. Employee benefits differ from country to country and businesses must comply with the statutory requirements in every country where they employ workers.
Another compliance challenge that arises in this context is to create a global compensation strategy that respects local compensation laws and ensures fairness towards all employees. Also, businesses need to find a way to create an attractive corporate benefits package that can be rolled out across all geographies.
Payroll management
Managing payroll for a globally distributed team remains one of the major challenges of international workforce management. Payroll processes need to follow local laws and regulations, which creates the need for separate local payrolls to ensure global payroll compliance. This leads to additional challenges, such as multi-vendor management, fragmented payroll data, and low visibility.
Cross-border payments
Cross-border payments are another aspect of global workforce management that often represents a challenge for multinationals. Traditional payment methods, such as SWIFT, are expensive and slow. This not only increases global payroll costs, but it also puts the timeliness of salary payments at risk when payment orders are issued too late.
Employee relocation and global mobility
Managing a global workforce is like managing a large pool of moving pieces. International assignments and self-chosen employee relocation put organizations to the test. While global mobility can help attract top talent, it also creates numerous challenges. These challenges not only include the administration of visas and work permits, but also legal implications on the corporate level, such as navigating permanent establishment risks.
Communication and collaboration
Different time zones can make project management in global teams difficult. Asynchronous communication is a possible work-around, but it is also a lot slower than real-time communication and can decrease project speed. Also, while there are many benefits to working with a global workforce, cultural and language barriers can be blockers of communication and collaboration.
Cost control
Labor is a major cost center for businesses. Therefore, cost control is crucial when it comes to wages and salaries, cost per hire, and any other expenses linked to workforce management. Controlling labor costs is already a difficult endeavor when operating with a local workforce, but it becomes even more complicated when working with a global team.
Global employment compliance
Maintaining compliance across different jurisdictions is hard, especially in areas like payroll and employment. Global employment compliance encompasses a range of different fields, from compliant employment contracts to compliance with local termination rules to respecting country-specific regulations on working hours, workplace safety, and more.
Workplace culture and employee engagement
Establishing a positive workplace culture that creates a sense of belonging and increases employee loyalty requires intercultural competence, a fair amount of creativity, and dedication. Also, since organizing team activities and events across different time zones is difficult, businesses need to find new creative ways to keep their remote teams engaged.
Cybersecurity in global teams
According to Statista, the global cost of cybercrime is expected to rise from USD 9.22 trillion in 2024 to USD 13.82 trillion by 2028. Cybersecurity has hence turned into a top priority for businesses. Keeping systems and data secure is a real challenge when working with a global workforce. With systems and tools being accessed from different locations and devices, the number of potential entry points for hackers increases.
Best practices for managing a global workforce
So, what can businesses do to overcome these challenges? Here are the best practices for effectively and compliantly managing a global workforce.
Using global workforce management software
The ultimate advice for managing a global workforce is to leverage the power of technology. There are many different workforce management tools to choose from, but the best approach is to opt for an integrated global HR and payroll solution that streamlines processes, consolidates data, and offers detailed insights into the business’s global workforce.
Working with a contingent workforce
Global expansion requires agility and flexibility, which cannot be achieved with a workforce that consists solely of permanent employees. Instead, businesses should broaden their employment options by also considering independent contractors, freelancers, and gig workers.
A contingent workforce enables businesses to safely test new markets before entering into any sort of commitment. The best way to approach this is to develop an effective global contingent workforce management strategy.
Developing effective management strategies for a global workforce
Effective global workforce management requires detailed strategies and policies that clearly outline how processes are supposed to work and what is expected. International businesses need several different workforce management policies, including:
Relocation policy,
Global mobility strategy,
Global HR and payroll compliance strategy.
Outsourcing HR and payroll processes
In jurisdictions where an organization cannot count on internal expertise in fields such as employment and payroll, the best strategy is to outsource HR and payroll. Payroll outsourcing reduces compliance risks and enhances payroll accuracy in countries where the organization has a legal entity, but no resources to manage a local payroll.
In cases where an organization neither possesses a local legal entity nor the knowledge to ensure compliance, the best option is to work with an Employer of Record (short: EOR). An EOR is contracted to handle all things employment on behalf of the client business.
Providing cross-cultural training
Intercultural competence is a key requirement for successfully managing a global workforce. This not only includes training employees in management positions in cultural sensitivity, but also providing cross-cultural training for all employees. This training can enhance mutual understanding and prevent problems and conflicts resulting from different communication styles or different use of humor.
Leveraging people and payroll analytics
The more insights a business has into its workforce, the more effectively it can manage its global teams. People analytics can help organizations identify workforce trends and patterns to make strategic workforce decisions. Another important source of information is payroll analytics. Insights gained from payroll can be leveraged to make data-driven decisions regarding workforce planning, labor costs, and more.
Practicing strategic workforce planning
Strategic workforce planning ensures that an organization's current and future hiring needs are met. Especially when operating with a global workforce, preparing for all eventualities by planning ahead is crucial. This includes anything from global talent acquisition strategies to Learning & Development initiatives to career development programs to succession planning.
Simplify global workforce management with Lano
To meet their growth ambitions, businesses have no other option than to expand into new markets and start building an international workforce. While this creates new opportunities for generating revenue, global workforce management brings about several challenges, from managing several local payrolls to ensuring global employment compliance.
There are several best practices organizations can follow to overcome these challenges, the main ones being the creation of detailed strategies and policies that outline processes and procedures and the use of technology to simplify global employee management.
Global workforce management solutions like Lano can help businesses compliantly manage their international teams, from compliant global hiring through a network of vetted Employer of Record partners to consolidated global payroll management. Book a demo with one of our global employment and payroll experts to learn more.
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