6 Ways to Manage Benefits and Compensation for International Employees

International business models proved to be a viable option for organizations looking to expand their wits and escape the aggressive competition that exists in the local market. While it paves the way for a larger customer pool, organizations can exploit the window of opportunity to attract and retain diverse talents, including those seeking international remote jobs. Platforms like RemoteWokr offer a wide range of opportunities for individuals looking to work remotely across borders. 

However, variations in laws and regulations governing local employment in each country still pose major concerns for organizations when formulating strategies for global expansion.

Factors to consider when dealing with international benefits and compensation 

The main purpose of introducing international benefits and compensation perks is to serve as a driver for employee engagement and motivation. However, modifying your compensation plans to suit the specific needs of international employees is somewhat demanding. Here are some factors to take into account;

1. Compliance with international payroll

Abiding by international payroll systems is nothing short of nerve-wracking, however, investing in a shadow payroll can help in alleviating the burden. How does this work? 

International payroll comes with the extra burden of complying with local labor laws and regulations while ensuring global employees are paid duly and timely. 

Rather than overburdening your HR team with that extra bit of stress, shadow payroll serves as a form of protection against levies and penalties that result from non-compliance while employees remain on your country’s payroll.  

2. Country-definite tax legislations 

Tax laws aren’t fixed and for that reason, they vary from one country to another. The implication of that is that organizations with an international workforce must familiarize themselves with the tax laws in the countries where they have employees, particularly if their operations are transboundary based.    

For instance, let’s say you decide to set up an international workforce in a country that has double taxation agreements with others. Treaties like this only permit one-time taxation on an employee’s income. 

Be that as it may, these treaties only exist in some countries while others draw no distinctions about the kind of employees to offer them to. 

3. Variations in currency exchange rates 

Perhaps the most worrisome factor to take into consideration! When managing an international workforce, you must have your facts and figures correct on how unequal and fluctuating exchange rates affect employee income. 

Although most organizations have a standard payment policy that determines how, when, and where employees get their payment irrespective of where they work, the adoption of international employees may demand you make some adjustments. 

Paying employees with foreign currencies can either be for or against you. The unstable currency exchange rates often create confusion for international employees especially those with greater home currency values and it appears that they’ve been marginalized and cheated. 

4. Culture-specific benefits 

During the process of recruitment, you’re required to conduct background checks to develop insights about the most prominent benefits in your prospect’s country and how they align with the local culture.

For instance, let’s say your employee hails from a country where healthcare services are made accessible and almost free to everyone. Providing an exclusive healthcare package to incentivize employee success and innovations may not be a good idea. 

As an employer or hiring manager, the absence of a local HR team for international employees sets you up for an extra bit of work on having to analyze the scenario and offer relevant solutions accordingly. 

How to develop international benefits and compensations that are competitive and compliant

To successfully attract top foreign talents, you need to go all out and exploit every ounce of opportunity that you have, one of which is setting up a compensation and benefits plan. Let’s help you get started,

1. Study the laws and customs of your target country

Expanding your tentacles into the foreign market is quite advantageous however, taking your time to understand the laws and culture of that country lets you make better and more informed decisions concerning salaries and benefits. 

Employee benefits vary from one country to another, so in a bid to save yourself from future surprises, it’s important that you find answers to a number of questions before offering your standard benefits package to global employees. 

Do they have public health care coverage? If yes, what does it cover? What’s their minimum wage? Are there laws set aside for extra work hours payment? How many vacations do employees get to have annually? How effective are these laws? Active or passive? and more. 

2. Upskill and bring your team up to speed

Experience speaks volumes when it comes to managing benefits and compensation for international employees but what if you find yourself with an inexperienced HR team? Well, this could serve as a one-time opportunity to educate and bring your team up to speed.

To get started, your HR team should get themselves updated with the know-how of setting up benefits in each target country. That means understanding the cost involved and the amount levied by the government. 

What’s more, the HR team should get themselves acquainted with the details of international compensation as this can facilitate the decision-making process when recruiting new employees or reaching an agreement with already existing employees.   

Finally, they should be quick to update new employees and those who have been relocated to other countries about the policies governing international benefits and compensations. 

3. Create a clear budget

Now that you have a clear-cut objective, it’s about time you develop a budget for benefits and compensation costs as well as other levies that may be issued by governmental organizations across the globe. 

After mapping out a series of guidelines to aid the process, carefully analyze each of your target countries and prepare a clear budget that shows how much will be expended in settling employees’ wages and benefits. This could be calculated on a monthly or quarterly basis depending on your business needs and employee agreements. 

Finally, ensure your employees are well paid by setting competitive salaries with other rival organizations in their countries. 

4. Define all terms when making a contract

When coming to terms with your employees, it’s essential that you maintain transparency at all levels of your contract agreement. Ensure you use clear and explicit words to explain what their benefits and compensations mean. 

By so doing, you can extirpate every teeny-weeny bit of ambiguities therein and let employees grasp the full details of key terms such as vacationing periods, sick leaves, extra shift payments and what have you.

With that in place, you can eliminate the problems that ensue from improper clarification of terms when it’s time for employee reviews and payment upgrades based on performance and other criteria. 

5. Do it yourself or hire a professional 

By now, you’ve probably reached a conclusion on the kind of infrastructure to use for managing international benefits and compensation. If not, you must come up with one!

Although most business owners will readily take on the responsibility, the technicalities of international payroll systems often leave them no choice but to employ the expertise of a professional to navigate the seemingly difficult process. 

However, if you decide to do it yourself, ensure you have a comprehensive picture of your organizational structure and how your employees are assigned to their specific departments

In addition, you must be familiar with the employment laws of various countries and how they affect your organizational activities to ensure maximum compliance. 

6. Go beyond the minimum statutory requirements 

There’s no point in holding back when you can exploit the global compensation and benefits package to entice more talent. Instead of sticking with the minimum statutory requirements, you can decide to up your game and offer first-class benefits that give you a competitive edge. No one will penalize your business for that!

Direct your attention to the bigwigs in your industry and carefully investigate the international benefits and compensation they offer in the local market. Once you have gotten your facts and figures right, leverage every detail of your analysis to stand tall in the competition

Establish a standardized global benefits and compensation framework 

It’s quite evident from the piece that the process of creating international benefits and compensation framework isn’t hassle-free considering a number of factors involved. These reasons prompted many business owners to give up their dreams of going global and rather stick to their local marketing landscape.

However, you have gained six beautiful insights on how to manage benefits and compensation for your global workforce. It’s all up to you now to leverage this piece and take your business to the height you’ve always yearned for. Thanks for reading!

  • Resources

  • About the Curator

    Abelino Silva. Seeker of the truth. Purveyor of facts. Mongrel to the deceitful. All that, and mostly a blogger who enjoys acknowledging others that publish great content. Say hello 🙂

    • Sidebar Mail