Author:
Chuck Csizmar – CMC Compensation Group
In recent months I have dealt with several US clients who faced an overseas challenge of high employee separations coupled with difficulty in recruiting qualified staff. These companies were at a loss to understand the cause of their problems, as each felt that they were already paying out a great deal more for employees then they were accustomed to in the US.
A quick study revealed that, while the client’s international employees were indeed receiving a great deal more than their American counterparts, in many areas they were in fact being given no more than the minimum benefits mandated by statutory requirement. How do you attract, motivate and retain quality staff when the message of your actions is that you are only willing to offer what the local government says you must?
One client bemoaned having to grant four weeks of vacation upon hire, because it was the law, only to find out that everyone else was granting five or more weeks. By ignoring competitive practice they were paying the price by struggling to build a quality staff. They had earned a reputation in the local market as a “minimalist employer”.
When American companies first establish operations overseas Human Resources faces a number of challenges that they are unaccustomed to back at home. Every country is a separate and unique entity, with differences in HR policies, practices, and statutory requirements, each of which must be acknowledged and addressed in order to maintain a successful operation. On top of that are the vagaries of the competitive marketplace, where the same job is paid differently from Rome to Oslo to Buenos Aires – usually coupled with social charge and benefit distinctions as well.
Operating under the guidance of US employment law and US-based corporate practices is a failed strategy. Maintaining such a US focus (usually for ease of administration) will bring you grief; grief from your employees, from those you hope to hire, and most of all from local governments whose laws you have ignored or bypassed.
If you decide that your business strategy requires you to maintain a staff presence in a particular country, then I would advise you to treat that operation the way you would its US counterpart; provide competitive terms and conditions that will attract and retain the right caliber of employee in that country – and ignore how their packages might compare with US or other country counterparts. If you are not willing to make that commitment, from an HR perspective you would be better off not to engage employees in that country.
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