News Coverage

How global HR software can change the way you manage international employees

10/20/2015
Peter Troost, CTO at Radius, in Strategic HR Review

When you look at the landscape of companies managing across country borders, they roughly fall into two categories: those with many employees and the resources to hire local HR expertise and to deploy localized HRIS systems; and those with few employees per country who may be expanding overseas for the first time and learning as they go.

Unfortunately, there is a large gap between the established multinational and the “first time operator” in terms of knowledge, processes, support resources and systems. Companies with only a couple foreign employees often feel they can fly under the radar and operate in a non-compliant fashion while they get established, and that may be true. The risk, however, lies in the fact that if the expansion is successful, the employment growth almost always outpaces the development of supporting systems and processes and can create a real employment liability for the company that can result in substantial fines and sanctions. Most countries around the world that are targets for international expansion have rigid requirements for how employees must be treated, benefits that must be offered, government filings that must be made, and rights that the employees have. If employees are onboarded or offboarded without regard for these rules, particularly over a long period of time, the resulting penalties and potentially lawsuits can take a long time to unravel and consume significant resources. The greatest risk is that the headquarters HR professionals often don’t know what they don’t know until they are caught running afoul of local requirements.

Global HR Software can be very helpful in trying to navigate this landscape. There is an important distinction to be drawn, however, between US HR software that allows you to store foreign employees and true global HR software. What are the important differences?

Localized compliance: A true global HR package will embody localized knowledge of compliance requirements. An example would be a pre-configured onboarding checklist with details on the pre-employment documents that are required on a country-by-country basis. Another example would be rules and notifications related to employment thresholds. In the UK, all employers must offer a pension to their employees, and must make contributions to the pension. The date by which the pension plan needs to be in place is a function of how many employees you have and can be determined based on your PAYE reference number. A good localized HR system will make you aware of these types of requirements and help guide you into compliance.

Training tracking: Many jurisdictions require that employees attend training on topics such as data protection and data privacy, anti-money laundering and anti-bribery. A localized global HR package will include awareness of these training requirements, and will provide a means to track when employees have completed the required training.

Leave management: Countries have different requirements surrounding paid time off, including maternity and paternity leaves. Localized HR software will have time off policies pre-configured to assist you with operating in compliance with local requirements.

Language support: One of the most important constituents for a global HR system is the in-country employee. An employee site should be a mandatory requirement with support for rendering the user interface in a broad range of languages. In Japan, for instance, it is common to collect information in English plus two Japanese character sets.

Currency support: Currency support, more commonly associated with payroll and accounting systems, is an important factor in global HR when it comes to reporting. It’s very useful to be able to convert salary or variable compensation history into headquarters currency to do analysis or to do comparisons across different countries.

Although these features are extremely useful the day they are implemented, another challenge is to keep them current. International employment law changes frequently, and a system that is out of date can be worse than having no system at all. For this reason, organizations may wish to consider a software-as-a-service solution versus one that is run on-premises. By being able to administer the system in one place for multiple customers, it’s much easier for the provider to keep the rules current. Obviously, when considering an SaaS solution, it’s important to understand where the employees’ personal data will be hosted and to ensure that it is handled in a manner consistent with local data protection law. Several EU countries have a requirement that data be hosted in the EU unless employees have specifically granted consent. US-based providers should be Safe Harbor certified and should undertake regular SOC2 Type 2 audits to ensure that they are handling personal data responsibly.

Finally, it can be useful to procure a global HR “solution” as a bundle containing both software and services. Exceptions tend to be the rule in international employment, and it can be very helpful to have an expert to lead the way when challenging situations arise. A reputable service provider can fill the gaps where HR software may be lacking, and can ensure that interpretations are done correctly.

Expanding and operating overseas can be an exciting and rewarding experience. Care should be taken not to try to “cut and paste” the headquarters-based processes and systems into each foreign country as trouble will be inevitable. A good Global HR Software system or solution bundle including services can go a long way to bridging local requirements, satisfying employee concerns, and providing a smooth and worry-free operating environment outside of the headquarters’ country.

As published in Strategic HR Review, October 2015.