James Peters is the President of Global Expansion, an Equus Software company.
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When it comes down to it, the world is changing — businesses are growing, enterprises are expanding, markets are becoming globalized. But what does this all mean for businesses? Well, that all depends on how you and your organization choose to approach this changing world. Should you choose to remain a domestic operation, then it might be as simple as nodding your head and saying something along the lines of “business as usual!” But on the other hand, if you plan to become one of those growing businesses or one of those expanding enterprises, then you might have your eyes set on that global market that is becoming ever more dependent on international businesses.
If you choose the latter, then you might be faced with critical decisions as you plan your international expansion. How do you plan to hire employees overseas? Will you simply hire domestically and inform your new employees that they’ll be based in a newly acquired office space in Berlin? London? Moscow? Paris? Or do you actually hire professionals who are based in those cities? And how do you proceed in doing so?
Does the responsibility fall on your HR department? Do you require your HR department to instantly become aware of the various rules, regulations and employment standards that govern employment in international cities virtually overnight? Or is there an easier way to onboard international employees while allowing your HR team to remain focused on their domestic duties?
At the end of the day, human capital is always the most important type of capital for businesses. So, as you plan your international expansion, you’re going to have to make the critical decision of how you choose to employ and leverage your human capital. And more than likely, that’ll come down to working a global employment company (GEC) and a global professional employment organization (PEO).
What Is A Global Employment Company?
If you plan to set up an expansion overseas, then the concept of a borderless workforce is certainly coming into your discussions, right? If it’s not, then it should be. The fact of the matter is that in order for your organization to succeed overseas, you’re going to need to determine an effective way to hire, train, onboard and protect your employees who will go on to build your new expansion project from the ground up. And at the end of the day, the talent market is competitive enough domestically, so just think about how much more competitive it’ll be to fight with companies from multiple countries to attract high-end talent to your organization.
This may bring to mind the idea of working with a global employment company, whose sole purpose is to help businesses in the international marketplace acquire talent. While that may sound like a PEO, and the two are similar, most expanding companies set up their own GEC. How is that possible?
A global employment company is an incorporated entity that forms as part of a company’s group structure. From there, the GEC can perform various functions related to the employment, salary and compensation and benefits of international companies. In addition, it can serve to simplify and centralize the operational processes of a multinational company with an international employee population to meet related business needs and talent requirements.
Multinational Companies And Multinational Workers
“Multinational companies increasingly have international mobile employees (IMEs) who perform services in more than one country, other than their country of citizenship, during a single taxable year,” explains the National Law Review. A global employment company is “an entity established by a multinational company to employ its IMEs. In effect, the GEC serves as a leasing company that is responsible for the employment, compensation and benefits, immigration and income and social tax matters for IMEs.”
So in essence, a GEC is an entity that can be set up by a multinational company looking to expand internationally. In effect, you’ll incorporate your new operation and establish this leasing company to manage salaries, benefits and other employment-related issues within the country that you’re expanding into. This helps to ensure that everything is set up legally, both in your home country and in your host country, which is often the most difficult and confusing aspect of expanding overseas.
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