Independent Contractor or Employee?

Posted on March 4, 2010 by | 7 comments


Author:
Mariana Villa da Costa – Littler Mendelson

There are many situations when companies consider hiring “independent contractors” rather than direct employees.  When considering such a step in an overseas market, each country’s labor law should be consulted to determine the specific requirements of independent contractors in that country.  Here are some issues to consider that are commonly addressed by most country labor laws.

Independent Contractor or Employee?
The difference between an employee and an independent contractor is determined based on the requirements that one must have to be an employee.  While each country is different, generally, an individual will be considered an independent contractor and, therefore, will not be covered by the labor legislation, if he or she has independence to perform the work and it is not subordinate to a company’s directives and regulations, and when there is no exclusivity in the relationship between the parties.

5 Questions to Assess Independent Contractor Status

Here are 5 questions to help you determine if a relationship is a true independent contractor:

  1. A worker is an employee if the company has the right to control the manner and means of accomplishing the result desired.
  2. An employee is paid for his/her time and bears no risk of wage loss if the employer’s product is unprofitable.  An independent contractor has the opportunity to profit from the project and the risk of loss, depending on the worker’s managerial skill.
  3. An employee is not required to invest in the employer’s business.  An independent contractor makes some investment in tools, equipment, supplies, and facilities appropriate for his/her business.
  4. An employee may receive training.  An independent contractor has the skills necessary to perform the task without additional training.
  5. An employee enjoys a continuing relationship with the employer.  An independent contractor generally works on one project and moves on, accepting additional projects when and if available.

Key Considerations for Independent Contractors

Before engaging an independent contractor, be sure to consider the following:

  1. Determine the real need to have an independent contractor.  Could this work be done by an employee instead?
  2. Draft an independent contractor agreement that makes the case for real independence. Prepare a very clear and specific agreement.  Address all possible issues and avoid having the contractor sign non-compete restrictions.  Avoid mention of bonuses or other provisions, such as  vacation, work hours and other stipulations that look like employment terms, in the independent contractor agreement.
  3. Structure the day-to-day working relationship to support the contractor’s independence. For example:
    1. Do not put the contractor in the employment list or in the payroll and keep the contractor off organization charts.
    2. Do not provide an office or company business cards and do not schedule hours.
    3. Avoid constant email with requests that are more closely to control than simply guidelines on how the company wants a final product to be delivered.
    4. Do not pay the same amount every month.
    5. Ask the contractor to invoice the company with detailed information on hours worked and project deliverables to justify payment.

Additional Tests to Assess Independent Contractor Status

This checklist is based on the one developed by the US Internal Revenue Service (IRS).  It gives valuable information that characterizes most independent contractor relationships across the globe:

  • No instructions
  • No training
  • Services do not have to be rendered personally
  • Set own work hours
  • Not a continuing relationship
  • Control their assistants
  • No interim reports
  • Paid by job
  • Time to pursue other work
  • Decide on job location
  • Order of work set
  • Work for multiple companies
  • Pay business expenses
  • Have own tools or equipment
  • Significant investment in their business
  • Offer services to general public
  • Can make entrepreneurial profit or loss
  • Cannot be fired at will
  • No compensation for non-completion

Maintaining the proper classification of employees versus contractors is very important to ensure compliance with labor law regulations.  The rules are unique to each country, and HR professionals are urged to review the specific requirements for each country as needed.

Important Note: These guidelines are intended to provide a brief overview of the independent contractor issues in foreign countries.  It is not intended as a substitute for professional legal advice and counsel.

More About Mariana

Mariana Villa da Costa

Mariana on LinkedIn

Email Mariana

Littler Mendelson

7 Comments

Posted in Global HR Expertise, International Employment Law, International Expertise

Tagged , , ,

“Think Globally, Act Locally” for Compensation Design

Posted on February 28, 2010 by | 2 comments

Author:
Warren Heaps – Birches Group LLC

A recent post by Chuck Csizmar focused on the “Easy Road to Global Compensation Success.” In his post, Chuck emphasized that taking a headquarters-country approach to managing compensation systems around the world might not be best, despite some perceived administrative advantages.

“Think Globally, Act Locally”
To steal the popular phrase used to describe environmental strategies, it’s really important to recognize that markets are different around the world, and company compensation programs should reflect a balance between global corporate philosophy and local practice and culture.  Successful companies already recognize this when deciding which products to make and sell, how to market and promote them, pricing strategies, etc.  So, it should not be surprising to find out that local reward practices differ from country to country.

Salary Scales – A Simple Example
Let’s look specifically at salary scale design to illustrate why local practice matters.  Employers use salary scales to define the range of pay that is associated with particular grades or bands within their organization.  The definition of the grading scheme should be global; there should be consistent measures of contribution used to determine job level, regardless of market, and they should reflect the corporate culture as well.  But should there be one universal salary scale across multiple countries?  I believe the answer is no.

Why?
The basic approach to designing a salary scale is defined by the span (difference between minimum and maximum) and the inter-grade differential, or IGD (increase from one grade to the next, usually measured at the midpoint).  The table that follows shows two typical salary scale designs, for the United States and Kenya:

Grade US Kenya
Span IGD Span IGD
Support (4-7) 50% 15% 400% 27%
Professional (8-10) 50% 14% 400% 27%
Manager (11-12) 50% 15% 250% 54%

You will notice several differences, including:

  • Spans in Kenya are much wider than in the US
  • Spans in the US are consistent between employee groups (although in some models there can be slight variations, usually wider for higher levels)
  • There is a much higher IGD between Professional and Manager in Kenya, than between Support and Professional; in the US, however, the IGDs are consistent

You can see the differences more dramatically when looking at a graphical representation of the scales in the two figures that follow (click the graphs to open full-sized views in a new window):

US Salary Scale Example

Kenya Salary Scale Exampe

One of the most dramatic differences is the big jump in Kenya between grades 10 and 11, and 11 and 12.  In fact, we see this pattern in many developing countries around the world.  The shape of the scale midpoints (the pink line) looks like a hockey stick, with the Managers grades (11 and 12) forming the head, while the other grades form the handle of the stick.  Contrast this to the shape of the line in the US, which illustrates a more even rate of increases across all levels.

If you dig a little deeper into the numbers, you can identify some reasons why the scale designs in these two countries differ.  For example, the market movement for salaries in the US averages around 3.5% (maybe even less last year).  In Kenya, market movement in 2009 was over 20%.

With market movement over 20%, if the spans were like the ones in the US, employees would move through the band too fast, and quickly reach the maximum.  The wider spans in Kenya also indicate there is great variation in pay levels in the market for the same positions.  The Kenyan scale also illustrates that there is a much higher level of difference between the higher paid and lower paid staff, compared to the typical US scale (note:  The US scale in this example excludes Senior Executives and CEOs).

There are many other examples of differences in how compensation is defined in a country, which elements are included, and how companies choose to adapt their rewards policy to reflect local culture and practice.  Compensation and human resources practitioners are well-advised to become knowledgeable about each market and adapt their company practices accordingly.

What experiences have you had managing compensation in different markets? Share some by adding your comments.

More About Warren

Warren Heaps

Warren on LinkedIn

Developing Markets Compensation and Benefits Group on LinkedIn

Email Warren

2 Comments

Posted in Compensation, Global HR Expertise, International Expertise

Tagged , , , ,

What Kids Say About International Assignments

Posted on February 22, 2010 by | 11 comments

Author:
Michael F. Tucker, Ph.D, CMC
Tucker International

Some years ago, Art Linkletter had a featured segment on his television show “Art Linkletter’s House Party”  called “Kids Say the Darndest Things.”  Bill Cosby hosted a later version, and there were also similar series in the U.K. and Australia.

We at Tucker International have found this to be true today when we listen to kids accompanying their parents on international assignments.  The following are some of the things we have heard from them during our intercultural training programs for them and their families.

The Turtles, the Cat, the Dog and the Orangutan
A ten-year old boy going to Indonesia insisted that he was only going to go if his two turtles, cat and dog went… unless his parents promised him a baby orangutan.

Mom’s Happy – Dad’s Happy, What About Me
A ten year old boy had this to say about the ease of the move:  “My mom’s happy; she gets a maid.  My dad’s happy; he’ll get a lot of money.  I’m the only one in our family who feels sad about going.  It will be easy for them.  They are old!”

My Mom the Grandma
A ten year old girl summed up her feelings about how long she would be away from the U.S.A.:  “When I get back, my mom will probably be a grandma.”

Boy Am I Lucky
A teenager’s view of the move:  “I hate it.  Everybody keeps telling me how lucky I am to get to live overseas.  But they don’t have to do it… I do.”

The Pilgrims and the Indians “Over There”
A seven-year old girl from the UK moving to the Southern USA was listening to the story of the first Thanksgiving.  When the part came up about the Pilgrim Fathers having the neighboring Indians for dinner on the big day, a look of horror came across her face.  The youth trainer asked what “was the matter,” and the little girl replied, “Ohhh, the Pilgrims ate the Indians for dinner!”

My House, My Pet, Am I Next?
A nine-year old boy broke into tears as he was explaining the family’s international move:  “My parents are selling my house and my dog, I think I might be next!”

We’re Not Really Moving?!!
On the first day of the pre-departure training program, (the family was departing on their assignment the following week), a twelve-year-old girl was asked how she felt about moving to Switzerland.  She said “I don’t know.  I haven’t really thought about it.  I am not sure we are really moving.”

Some of these stories illustrate the need to provide high quality intercultural training for kids.  Young people, generally ages seven and above, are very sensitive to changes associated with international relocation.  They are sometimes left out during the international assignment decision and preparation process.  It is very helpful to counsel and educate them on how to handle changes that greatly affect their lives.

Intercultural training can reduce fear and stress and create a more realistic and optimistic view about the international move.  The results are young people about to become “third culture kids” who are happier, more supportive, adjust easier and have a willingness to culturally engage themselves in the country of assignment.

The best practice followed by many successful organizations is to provide intercultural training for assignees and their families.  Many studies show that if the family fails to adjust successfully while on assignment, the likelihood of a failed assignment is high.

Does your organization include children in pre-assignment inter-cultural training?  What has been your experience with children of assignees?

More about Michael:

11 Comments

Posted in Cross Cultural Insights, Expatriates, Global HR Expertise, Global Mobility Services

Tagged , , ,

The Easy Road to Global Compensation Success?

Posted on February 18, 2010 by | 1 comment

 

Author:
Chuck Csizmar – CMC Compensation Group

How many success stories start with the phrase, “I took the easy road”?

Most companies (@85%) with global operations tend to pay their internationally-based top level executives in accordance with some form of global compensation structure – in order to level the playing field for those with multiple country responsibilities.

However, for the rest of their international population it’s not as straightforward.

The Challenge

Companies with local national employees (hourly, professional, management) face a challenge and a risk when it comes to deciding how to reward (pay) in each of their operating countries.    Do they “do as the Romans do” and follow local practice, or do they seek to create a standardized global framework in an effort to equalize pay practices?

For those developing strategies to effectively pay employees across the globe, the headache is in dealing with a diverse collection of economies, cultures and competitive pressures – some of which may be moving in different directions.  However, the strategy of recognizing country-specific differences in pay methodology often comes up hard against the interests of corporate staff administrators, who traditionally look for the easy way, the simple way, the one-size-fits all way of dealing with far-flung employee groups.  For many companies and international compensation practitioners, it is actually the administrators whom you have to overcome.

The headquarters staff will ask, “What difference does it make?  Unless otherwise required by legislative action or representation, why can’t we be fair to all our employees in the same way?”  Here are a few metrics to illustrate what they wish to standardize:

  • Value (price) jobs irrespective of locale
  • The pay mix of base salary and incentives
  • Universal date for pay increases
  • Average pay increase percentages
  • Pay-for-performance vs. general adjustment increases

Why Not?

Why doesn’t one size fit all?  Why can’t you treat all employees in the same fashion – because they all belong to the same “XYZ Corporation”, right?  You should consider the following before taking out that cookie cutter.

  • Economy:  When you’re dealing with country-specific inflation rates that range from flat to 20%+, do you really want to offer the same percentage salary increases?  What if one country is in the grip of recession (US), while another remains relatively unscathed (Australia)?
  • Culture:  In some areas of the world, job and income security needs command paramount interest over pay-at-risk, so in the pay mix the base salary dominates the variable portion.  For example, while China has a very aggressive sales compensation environment, in India there is more interest in base salary and their CTC (cost-to-company) package than variable pay-at-risk compensation.
  • Competition:  Companies react to the cost of labor vs. the cost of living.  If the market they are in rewards in a certain fashion (pay mix, commission vs. bonus, quarterly vs. annual rewards, etc.), companies who provide a different approach risk lower employee engagement as well as a talent drain.
  • Representation:  National unions often dictate pay actions that could reverberate up the hierarchy as companies strive to maintain equitable treatment with their other employees.  Works Councils will have their impact as well.

On the other hand, varying your practices according to country-specific conditions could cause a degree of consternation with the back office staff and their computerized systems.  These are folks who like things neat and pretty.  In their defense though, senior management often asks for standardized metrics that may be difficult develop and compare:

  • Tabulating global statistics when definitions or methods vary
  • Identifying global trends based on diverse conditions
  • Balancing the impact of cross border movement

If you force international operating units to convert their practices to an uncommon format and methodology, the result could be more than just confusion and local administrative difficulties.  It could also mean the greater likelihood of overpayments in some quarters while paying less in others – all for the sake of sameness and common report generation. This would result in a combination of hurting employees while also hurting the business.

Remember that ease of administration is rarely an effective rationale for making good business decisions.

More About Chuck:

1 Comment

Posted in Compensation, Global HR Expertise, International Expertise, Policy Development

Tagged , , , ,

What Would You Do As A New Compensation and Benefits Manager?

Posted on February 15, 2010 by | 9 comments

Author:
Warren Heaps – Birches Group LLC

A few weeks ago on LinkedIn, Ravinder Bhan asked the following question:

“You have just joined a company with more than 15, 000 employees as a (Compensation & Benefits) manager.  What are the first three things you would do to make a lasting impact at the organization?”

As soon as I noticed this question, I was compelled to answer it.  Here is the answer I posted:

“This is truly an excellent question.  For C&B to be an effective business partner and not just another run of the mill HR function, as you state above, it requires an immersion in the business.

To that end, here are my three things:

  1. Understand the business. Talk to the business leaders, their deputies and employees. Learn what the company does. Don’t just sit in corporate and get opinions from those at HQ – go into the field and see what happens there. If it’s a manufacturer, visit a factory. Spend time with the sales force, meet some customers. And if the company is global, and you are responsible for international as well, get on a plane and follow the same steps in the key operations overseas.
  2. Take inventory. Compile information about how the company manages C&B. Hold off on judgement – instead, focus on gathering information and getting a complete picture of what are the prevailing practices. Talk to managers about what’s working and what’s not. Learn the HRIS system and do some analysis yourself. Speak with the incumbent consultants to understand their role and their perspective about the company’s practices. Find an industry group of peers and get involved, and do some benchmarking.
  3. Formulate your strategy for impact. To do this, look for opportunities to make changes that will improve efficiency and eliminate bureaucracy; programs to empower managers to manage rewards, and hold them accountable to do so; initiatives to support globalization (if applicable); develop dashboard metrics for management to measure effectiveness of C&B programs; and finally, cost-saving steps, such as multi-national pooling of insurance and strategic relationships with providers.

Of course, the above is not a one-year plan — it would take two or three years to achieve. But there would surely be a lasting impact.”

There were other answers to the question, about 15 all together.  I was flattered to be cited as the Best Answer (many of the other answers were excellent as well).  If you want to, take a look at the whole Q&A on LinkedIn. But the timing coincided with the Olympic Games, so I sort of felt this is my gold medal.  Those of you who know me, know for sure that there is no way I will ever get a real Olympic medal :-).

These days, there is so much being stated about how HR needs to “get a seat at the table” and “become an effective business partner,” I thought sharing this topic with our readers would be beneficial.  In particular, I am keen to understand what your first three things would be if you were to find yourself in the situation described above?

Would you follow the same steps that I outlined?  Why or why not?  What else would you do?  How would your actions be influenced by the culture of country where you operate?

Please tell me your thoughts by leaving a comment.  I am very anxious to read some more “Best Answers!”

More About Warren

Warren Heaps

Warren on LinkedIn

Developing Markets Compensation and Benefits Group on LinkedIn

Email Warren

9 Comments

Posted in Benefits, Compensation, Global HR Expertise, International Benefits

Tagged , , , ,

Delegation: Leadership Development in Africa – Part 2

Posted on February 10, 2010 by | 13 comments

Lex Lindeman

Dr. Paul Rono

Authors:
Lex Lindeman – HR Boosters
Dr. Paul Rono – Kenyatta University (Nairobi)


In our previous post Leadership Development in Africa – Part 1, we explored the characteristics of effective leaders and the way to develop them.  One of the important competencies of effective African leaders is delegation.  In many African public and private companies, management asks us to focus on delgation during workshops we conduct for their staff.  It seems to them that African managers, especially, need to learn to delegate more than they do already.

Delegation

The main purpose of delegation is to make organizations possible.  Just as no one person in an organization or enterprise can perform all tasks necessary for the accomplishment of group purpose; so is it impossible, as an organization grows, for one person to exercise all the authority for making decisions.

If managers delegate poorly it will cause demotivation, frustration, slow decision making and the manager will have no time for his or her subordinates. Good delegation will save time, ensure a better distribution of workload, and ultimately lead to better decisions.  And, effective delegation will help to develop, empower and motivate subordinates.

Why Managers Don’t Delegate

Some managers think that no one else can do the job the way they want it done, how they want it done and when they want it done.  They think it’s easier and more efficient to do it on their own, and they believe that they can do it better than their employees.  These assumptions are incorrect!

Managers are not sure how to do delegate correctly.  Here are some of the excuses I’ve heard over the years:

  • “My team members lack the experience.”
  • “It takes more time to explain than to do the job myself.”
  • “A mistake by a team member could be costly for my project.”
  • “My position enables me to get quicker action.”
  • “There are some things that I shouldn’t delegate to anyone.”
  • “My team members are specialists and they lack the overall knowledge that many of my decisions require.”

I came across this small quote in New African, June 2009 by Akua Djanie:

“I don’t know what it is about Africans, but we are afraid of, and shy away from, the idea of delegating someone to take our place when we are unavailable, is it because we think the person we delegate to will do a better job than us? Is it because we want to be seen as the one in charge; the one that can make or break the company, the project or the team? It is unbelievable, but from our post offices, to our small-scale businesses, and to the multinationals, it seems that everyone in Africa is scared to delegate.

Delegation shows the effectiveness of teamwork, because no matter how wonderful someone is at their job, no person is an island. And no project or company can function with only an individual. What delegation shows is that even if a particular person is unavailable, the project, team or company can still proceed because that person has put mechanisms in place to ensure the smooth running of operations. So rather than see delegation as a threat to their positions, Africans should embrace delegation as a strength. It simply does not make sense for everything to come to a standstill because one person is not available or one person is trying to do everything by him- or herself.”

But delegation is not only an issue in Africa; in institutions in the rest of the world, managers struggle with the same issues.

The Organization

Every position in a formal organization has a specified set of tasks or “position responsibilities, authorities and accountability.” Tasks should be delegated (assigned) to the lowest level in the organization at which there is sufficient competence and information for effective task performance.

The three concepts of responsibility, authority, and accountability are the major variables in the theory of delegation:

  • Authority: Superiors delegate authority – permission and encouragement to take action – but they do not delegate responsibility, which they share with their subordinates. Thus responsibility, as accepted by the one to take action exists and is shared from the point of acceptance upward, level by level, to the top of the organization.
  • Responsibility: Responsibility is an obligation owed and cannot, therefore, be delegated. No superior can escape, through delegation, responsibility for the activities of subordinates, for it is he who has delegated authority and assigned duties. Likewise, the responsibility of the subordinate to his superior for performance is absolute; once he has accepted an assignment and the power to carry it out, no superior can escape responsibility for the organization activities of his subordinates.
  • Accountability: Since authority is the discretionary right to carry out assignments and responsibility is the obligation to accomplish them, it follows, therefore, that authority should correspond to accountability. From this logical analysis emerges the principle that the accountability for actions cannot be greater than that implied by authority delegated, nor should it be less.

Advantages of Delegation
Delegation is a powerful management tool.  Some advantages of delegation include:

  • Efficiency: The more a superior is able to delegate, the more time he has for thinking, planning, etc.
  • Better Decisions: The person who is close to the scene of action should be better able to make decisions than a distant superior.
  • Initiative: Delegation encourages initiative on the part of subordinates so that the organization can use their skills more fully. Initiative in turn improves morale, because people take increased interest in their work if they are given an opportunity to use their own judgment.
  • Timeliness: Delegation improves timing of decisions, because it minimizes the necessity for sending recommendations up the chain of command to decision makers several levels above the point where the recommendations were initiated.
  • Speed: A do-it or-else order eliminates the time-consuming dillydallying of feedback. But speed may cost accuracy and morale.

Barriers to Delegate

Many managers will find a ‘good’ reason not to delegate; here are some pretexts which can be found in any work environment:

  • The need to be needed: A superior who has an intense desire to make or keep subordinates dependent will find it difficult to give sincere recognition for job achievement by them.
  • Fear of losing control: When superiors delegate, they run a risk of the subordinates not doing the job well, and losing control of the performance for which he is accountable.
  • Fear of surrendering authority: Whenever you delegate, you surrender some element of authority (but not of responsibility!) This is inevitable. By effective delegation, however, you get the benefits of adequate time to do YOUR job really well.
  • Perfectionism: Just as you have to develop staff to do jobs quickly without your involvement, you will have to let people make mistakes, and help them to correct them. Most people will, with time, learn to do jobs properly.
  • The Desire for Reward: Many managers enjoy the rewards and self-fulfillment associated with achievement of doing work.  Delegating to subordinates necessarily means that the subordinates will get the reward.
  • Fear of Competition: Other managers are afraid that if they assign work, and their subordinates develop, they will someday outperform them, overtake the manager in the hierarchy of the company.
  • It’s a Effort: Delegation takes time. In the early stages, managers need to invest time in training their people to take over tasks. When coaching and checking are taken into account, it may even initially take longer to achieve the desired outputs. In time however, with the right people, your coaching investment will pay back handsomely.

It is common for people who are newly promoted to managerial positions to have difficulties delegating. Often they were promoted because they were good at what they were doing. This brings the temptation to continue trying to do their previous job, rather than acting as a manager, and focus on developing their new subordinates.

How to Overcome Weak Delegation

Here are ten tips for you to help you to delegate more easily:

  1. Define assignments in the light of expected results.
  2. Select the right person to which to delegate.
  3. Open up the lines of communication with your subordinates for consultation and counseling.
  4. Establish proper controls for proper use of authority.
  5. Reward effective delegation and successful assumption of authority.
  6. Be willing to give other people’s ideas a chance (never say: “Yes but….” This means NO!)
  7. Be willing to release the right to make decisions (we call this empowerment).
  8. Allow others to perform even though they make mistakes.
  9. Trust your delegated junior. Delegation implies a trustful attitude between the two.
  10. Establish and use broad controls. Responsibility is not delegated, hence the need for you to establish a means of feedback to assure yourself that the authority delegated is being used in support of the organizational objectives.

Conclusion: Weak Delegation in Africa?

As I said earlier, delegation is a global problem. But a very positive aspect is that Africans are very keen to learn and to try things out. This attitude toward change allows Africans to learn to adopt delegation faster and easier. Studies in Africa show that Africans are ready to accept delegation of duties more easily than in the western world. Many managers in Africa learn easily to delegate and delegation is readily accepted, respected and honored. Demonstrate how how important the jobs, the expectations, the goals and tasks are, and the African is keen to accept.

Mike Boon (2007) stated that accountability is one of the key area that must be stressed when delegating tasks to an African manager:

“Through this accountability, they become leaders and others will follow them.” When a manager or leader encourages accountability through delegation, the result will be growth and progression.”

More About the Authors

More About Lex:

More About Paul:
Dr. Rono is a lecturer at Kenyatta University in Nairobi.  He is an authority on leadership development, and has published various articles related to leadership development in Africa with a progressive yet adoptable and realistic view.  Watch for his new website coming soon!

13 Comments

Posted in Africa, General, Global HR Expertise, Leadership Development, Talent Management, Training

Tagged , , , , ,

Three Rules for Compensation Surveys in Smaller Developing Markets

Posted on February 2, 2010 by | 6 comments

Author:
Warren Heaps – Birches Group LLC

Almost every day, I hear from a client or prospect looking for reliable market data in some small developing market, usually located in a part of the world that the big consultants have not yet discovered.  After all, our company focuses on those places!

One of the most common discussion points is about the difficulty the client is having in finding a survey which meets their needs in these markets.  You see, most clients have a very “developed world” view of what makes a good survey. But in smaller markets, you need to look at surveys through a different lens.

What Makes A Good Survey?
The exchange is typically something like this:

Client asks, “Do you have a survey for Gabon, in West Africa?”

I say, “Yes, we have a survey there, and for all of the countries in Africa.”

“Wow,” says the client, “that’s impressive.   How many bio-tech companies are in your survey?”

“Bio-tech?  None, I’m afraid.  We have a pharma company, but their office is very small.  Are there even any bio-techs in Gabon?”

“Well we are looking to open an office there, so we need to be competitive in our sector.  Do you know any other surveys I could look at?”

And so it goes.  This client, like many others, is looking for a survey in Gabon, a relatively small market, with the same parameters as they would apply in Germany.  Sector based surveys are very popular in developed countries, but in many small, developing markets, sector surveys just don’t work.

Rule #1 – Think Outside Your Sector

Why?  Simple.  The sector just isn’t big enough.  There might only be two or three similar companies, or like in our Gabon example, none at all.  To get a good sector survey together you would need at least eight to ten companies with a workforce of at least 20 to 25 staff.  But sometimes that’s not even enough.

I remember reviewing a survey once in a Central American country when I was a corporate compensation executive.  I was excited that the survey included 12 consumer goods companies (including my former employer).  We thought that with 12 companies, there would be enough data for some robust statistics.  It turns out there wasn’t.   Only 4 of the employers in the survey had a large presence in the country; the rest had small sales offices, and some had less than 10 staff in total.  Our company had staff over 150, including a regional headquarters and a factory.

So you see, a sector-based survey with 12 employers yielded good data for only a handful of positions.  My company, along with the others that had larger operations, were unable to use most of the sector data due to lack of matches.

Okay, so now you’re just looking for a survey – any survey.  Which employers make the most sense in order to get the market intelligence you need to make the right pay decisions?

Rule #2 – Look at the Leaders

Leading employers in all sectors usually have a full range of positions, from support to professional to executive.  These employers also have a strong employer brand, making them the preferred employers in the market.  The best talent naturally gravitate to these companies, as they are the ones reputed to be the best places to work.  More often than not, the leaders are multi-national companies or international organizations.

The multi-nationals are known to have disciplined approaches to reward, governed by global principles set down from headquarters.  They view compensation and benefits in a strategic way, and know the importance of using market data to determine rates of pay and benefits.

International organizations include employers such as the World Bank, various Embassies, the United Nations, the European Union, and so on.  These organizations are usually well-established in smaller developing markets, and attract the top echelon of the workforce.  Surprised?  One of the reasons is that many international organizations have very competitive pay programs which are benchmarked not only against each other, but with the private sector as well.

Together, a combination of leading private sector employers and leading international organizations captures the top of the market in many small countries.  So it’s a good place to start.

But wait a second.  You’re thinking “How will I compare my mobile telecom company to the World Bank?  They are not comparable to my company!”

Rule #3 – Use Cross-Occupational Job Matching

First of all, there are common occupations in all employers that are easily comparable.  For example, positions from accounting, finance, human resources, procurement and IT; plus secretaries, administrative assistants and less skilled support roles common in developing countries, such as drivers, security guards and messengers.

For professional and managerial positions, the real challenge is finding enough matches for a particular occupation to be able to report the data separately.  In order to ensure that there is data available for each professional level in our surveys, we often double-match positions to both a specific occupational benchmark (e.g., Brand Manager) as well as a generic professional position (e.g., Working Level Professional).  In case there are insufficient matches for Brand Manager, we can still report the aggregated data for all positions matched to Working Level Professional.  In this way, clients are assured to get a comprehensive picture of the market, even if the specific occupational matches fall short in the survey.

Is this good enough?  How many organizations use a different salary structure for each occupational group?  There are some, but not too many.   Using cross-occupational data is not really such a stretch, is it?

In Summary
There are other factors to consider when evaluating a compensation survey in small developing countries, but these three rules will help get you started. I will write another post in the future discussing some of the other challenges. In the meantime, please share your experiences working with surveys in these countries.

More About Warren

Warren Heaps

Warren on LinkedIn

Developing Markets Compensation and Benefits Group on LinkedIn

Email Warren

6 Comments

Posted in Africa, Compensation, Developing Markets, Global HR Expertise, International Benefits, International Expertise

Tagged , , , , , , ,

International Employment Law “Quick Facts”: Canada

Posted on February 1, 2010 by | 1 comment

Author:
Mariana Villa da Costa – Littler Mendelson

Hello Readers! The first edition of our “International Employment Law Quick Facts” was a success! Many readers commented on the article and asked me to prepare profiles for other countries.  Again, please feel free to add a comment, or send me a note to let me know what you think about this post.  We will try to publish additional installments in this series based on what you request, so keep checking back!

Q. What are the definitions of employee, employer and independent contractor?

A. Before going into our definitions it is important to note that in Canada, the employment practices of most employers are provincially regulated, whereas federal jurisdiction is limited to employers that deal with national infrastructure, for example, banking, railways, and airlines.  Since each jurisdiction in Canada has specific legislation, it is important to become familiar with the local specifics before engaging in any labor and employment matters.

In Canada, the statutes that confer rights and obligations to employees and employers usually contain definitions. The Ontario Employment Standards Act has a good definition of Employees:

  • a person, including an officer of a corporation, who performs work for an employer for payment (wages);
  • a person who supplies services to an employer for wages;
  • a person who receives training from a person who is an employer, and
  • a person who works from home  for an employer.

Employer, on the other hand, is an owner, proprietor, manager, superintendent, receiver or trustee of an activity, business, work, trade, occupation, profession, project or undertaking who has control or direction of, or is directly or indirectly responsible for, the employment of a person on it.

Although there is no precise definition of the term “independent contractor” the idea is always of direction and control.  An employer is entitled to direct and control how and when the work is performed.  An independent contractor is left to determine how to perform the services for the client; the firm that retains the independent contractor  can only specify the product and result of the independent contractor’s work.

Q. Is it necessary to have written employment contracts in Canada?

A. In Canada there is no need to have a written employment contract.  A contract of employment will exist if it was agreed, either orally or in writing. However, written contracts are not customary, unless it is for executive positions, or if employees are hired for a fixed term or task.

The main reason for having a contract for executives is to clarify and address the severance package.  On the other hand, the need to have them in place for employees hired for a fixed term or task is to avoid the statutory obligation to give notice of termination.

Q. Are there any specific rules in regards to the duration of employment contracts?

A. In Canada, if there is no specified term, the contract will be presumed to be for an indefinite term. However, parties to an employment relationship can agree on employment for a fixed term.  In this case, the employer will not have to dismiss the employee and give reasonable notice.

It is important to note that if the fixed term of a contract expires and the employee continues to work without entering into a new fixed term agreement, it is understood that the contract becomes for an indefinite term.

Q. Are there any rules in regards to discrimination in employment?

A. Canada has very serious regulations in terms of human rights and discrimination; this is prohibited in various grounds.

The Canadian Charter of Rights and Freedoms sets a constitutional standard that all governments must follow — federal and provincial. The Charter states that every individual is equal before and under the law and has the right to equal protection. However, this Charter cannot be directly used by an employee against the employer; in those cases, the individual must rely on human rights statutes to challenge discrimination on employment terms and decisions.

The Ontario Human Rights Code is an example which defines that discrimination is prohibited in the areas of employment, accommodations, services, facilities and signage. It protects employees from discrimination on the grounds of race, place of origin, ancestry, race, ethnic origin, citizenship, creed, gender, sexual orientation, age, marital and family status, disability, and also addresses sexual harassment.

Q. What are the rules regarding working hours?

A. Different employment statutes in Canada define the work day and work week.  In most provinces, the standard work day is eight hours, but the standard work week varies in different provinces – the low is 40 hours per week, for example in British Columbia, and the high is 48 hours per week (Ontario) .

It is also important to note that most employees who perform supervisory and management functions are excluded from standard hours regulations.

Q. Are there any minimum wage requirements in Canada?

A. In Canada, an employer is obligated to pay employees wages of at least the minimum established in the jurisdiction of employment. In some cases and in some jurisdictions, employers do not need to pay minimum wage, for example, students who work in Ontario.

Q. What are the rules regarding the termination of employment?

A. In Canada the employment relationship can only be terminated for:

(i) Just Cause – When the employee engages in serious misconduct, e.g., disobedience, unlawful or dishonest conduct, violence, subordination, etc.  In this case, the employee is not entitled to any compensation beyond salary up to the day of termination.

(ii) Without Cause – Employer does not need any motive to terminate employee, however, reasonable notice or pay in lieu of notice must be provided.

Q. What should an employer know about benefits and social security in Canada?

A. Canada has an extensive social security system covering pensions and social welfare benefits, which provide coverage for almost the whole population.  Responsibility for the planning, management and delivery of social security programs is shared between the federal and provincial governments.

The universal pension system is state-funded, while employees, employers and the self-employed must contribute to the earnings related pension scheme and the employment-related benefits scheme, which covers sickness and maternity pay, unemployment benefits and other welfare assistance.

The only benefits that employers need to provide to employees are those related to the mandatory statutory social security programs, such as:

  • The Canada Pension Plan (CPP) for residents outside the province of Quebec and the Quebec Pension Plan for the residents. The CPP is a national social security program mandatory for all employers.
  • Federal employment insurance – a mandatory contribution that fund income frpm loss of employment, maternity, parental and sickness benefits.
  • Provincial worker’s compensation regimes – maintained in each province –  provide benefits in case of workplace injuries.
  • Provincial health and hospital insurance plans – provide for basic medical assistance and essential hospital care.

In Summary

I hope this quick summary can be used as a road map for employers doing business in Canada.  Please post your questions and comments.

Important Note:  This posting is intended to provide a brief overview of employment law in Canada.  It is not intended as a substitute for professional legal advice and counsel.

More About Mariana

Mariana Villa da Costa

Mariana on LinkedIn

Email Mariana

Littler Mendelson

1 Comment

Posted in Global HR Expertise, International Employment Law, International Expertise

Tagged , , , ,

Tips For A Successful International Relocation

Posted on January 27, 2010 by | 6 comments

Author:
Matthew Shore – Move One Relocations

[Editor’s Note:  We are pleased to welcome Matthew Shore as a Guest Author.  Matthew is Communications and Marketing Manager for Move One, a leading global relocation, moving and logistics firm serving Eastern Europe, Asia, Middle East and Africa.  He is an expat himself living in Budapest, Hungary, with his wife.]

It’s no secret that the stresses of international relocation on employees and their families can take their toll. The magnitude of its effects can be on par with divorce or a death in the family. Delivering the right support for employees and their families during the first critical months after their move may mean the difference between the success or failure of an assignment.

Focus on the Family
It is often the family of the assignee that experiences the most difficulty when relocating internationally.  For example an accompanying spouse who has left his or her friends, family and other support networks to relocate can experience profound feelings of loss and displacement that can persist for long after arrival in the new location.  Providing new expats with the means to become self-sufficient and thrive in their new environment is therefore vital for the success of an assignment.

Best Practices to Support Your Assignees
It’s normal and predictable for assignees and families to experience culture shock and other challenges when taking a new assignment.  Targeted support for families on the ground at their new location helps to reduce their anxiety, speed up their sense of regaining control, and ensures a productive assignment.  It is also good practice to offer support with the aim to keep morale high by offering services that address the full range of all family members’ needs, from orientation and cross-cultural training, to recreation, social integration, security and education, as well as employment options for the traveling spouse.  This support falls under eight categories:

  • Welcoming and orientation. Provide a point of contact for the newly arrived family.  Offer information, contacts, destination resources, and welcome events. It is also beneficial to arrange repatriation workshops for departing families.
  • Employment liaison. Finding purposeful work for spouses can be key to successful adjustment, and the provision of multiple employment resources should be made available.  Maintaining contacts in the local economy, providing aid in exploring alternatives such as home-based business, and assistance in applying for functional training are all good practice, and help the non-working partner get the best out of life while overseas. In today’s economy, virtual assistants are an increasingly widespread option for professionals as well as administrative work in companies small and large.
  • Education liaison. Most relocation companies provides information and contacts for local schools, but offering managed support programs for youths and childcare resources is also beneficial.
  • Information and resource management. Making resources such as internet and intranet access is helpful in the interim period until home access is established, as well as literature and events in the local culture.
  • Guidance and referral. Offering EAP services such as confidential counseling, as well as resources and referrals for such issues as divorce, spouse/child abuse, adoption, death, and mental health concerns.  Be sure to use an EAP that is sensitive to cross-cultural issues, and is familiar with international assignments.
  • Community liaison. Cultivate relationships with community and social organizations and local resources that can benefit expatriates.
  • Events and cultural programming. Cultural events as well as informative programs and workshops on host-country culture help families to orient and adjust to the new culture.
  • Crisis management and security liaison. Relaying security information to the community. This includes ensuring crisis preparedness, emergency evacuation information through alerts and seminars, as well as rebuilding the community after a crisis.

Tools such as our city guides, and our online magazine for expats in Budapest can go a long way to address some of these points, reassuring the new assignee and their family that life in the new destination isn’t going to be a total departure from their old life, and that they can and will ‘fit in’ with their new environment.

For me there is a personal angle, too.  I moved to Budapest when my wife was offered an assignment here.  I can assure you from my own experience, taking the time to ensure that expat families are made aware of the social options in their new city helps a great deal.  For example, Move One recognizes that for non-working spouses of assignees – more-often-than-not female – finding a circle of friends quickly can make a world of difference.  This is why we make a point of supporting local expat groups and schools with sponsorship and practical assistance as part of a commitment to the local expatriate communities where we operate.  Of course, there is added value for us, in terms of brand awareness, to be visible in the local community, but we recognize the importance of supporting these organizations for the greater good of our clients.

There are many new online resources to help families with their moves as well.  Are there any steps you have implemented for your assignees that have been particularly effective in helping them adjust?  Please share them in the comments!

More About Matthew

Matthew on LinkedIn

Move One website

Move One Blog

6 Comments

Posted in Expatriates, Global HR Expertise, Global Mobility Services, Relocation

Tagged , , , , ,

Help the Victims of the Haiti Earthquake

Posted on January 26, 2010 by | 3 comments

Author:
Warren Heaps – Birches Group LLC

As some of you may know, the International HR Forum is now participating in a blogging initiative known as the HR Carnival.  Every other week, a different HR blogger “hosts” the Carnival, which is a compendium of recent posts from some of the best written and most widely read blogs devoted to human resources topics.

For the next HR Carnival, which will be published on January 27 by Mike Vandervort at the Human Race Horses Blog, all of the bloggers are contributing posts which spotlight charities helping the relief efforts in Haiti.  The hope is that our readers will be inspired to contribute to one or more of the featured organizations.

The editors of the International HR Forum have selected CHF International for our profile.  CHF International is not as well known as some of the organizations making the headlines in the general media recently, but the organization has been working in Haiti since 2006 on one of the largest infrastructure rehabilitation and job creation projects in the country.  They have also been undertaking repairs in connection with the 2008 tropical storm season, which devastated the northern part of the country.

CHF staff include many experts in construction and infrastructure, and will be supplemented by an emergency response team which is already on the ground.  Their expertise is best described by this quote from their website:

“… some of CHF’s areas of greatest expertise (include activities) such as building ‘transitional shelters’; temporary homes that meet international standards where a family can live during the recovery period; helping to generate livelihoods, by employing people in the clean up of their community; and aiding reconstruction efforts by creating earthquake resistant buildings.”

We urge you to consider a donation to CHF International, or to the charity of your choice, to help the victims of this terrible tragedy in Haiti.

Thank you.

3 Comments

Posted in General