Key considerations when recruiting for an overseas position
Whether you’re hiring your first overseas position or just expanding into a new international market, getting the right person to spearhead your efforts can make or break your success. And getting it wrong can have serious knock-on effects that may be very difficult and costly to untangle. We know from experience, with our own staff having been based in more than 20 countries on behalf of various companies and having been involved in recruiting hundreds of employees for international roles. We’ve experienced first-hand what works and what doesn’t. And we’ve witnessed the successes as well as the failures – everything from the expat who lasted less than a week in his assignment, during which time he felt too scared to leave his hotel except to visit the U.S. Embassy; to the local hire who collected a healthy salary from his U.S. employer for over a year while working full-time for another company and then used local law to make it very costly for his U.S. employer to terminate him. And in nearly every instance when things went wrong, it was simply a failure to grasp the basics from the start. So, with that in mind, the following are a few of the questions you need to consider to be successful.
Expat or local?
The first thing you need to decide is whether you would prefer to send someone into the market from your home country (i.e., an ‘expat’), often recruited from within the company, or to hire somebody locally in the market where the job will be based. Although there is really no right or wrong answer to this, as it very much depends on your company’s specific circumstances, there are a number of important issues you should consider:
What’s most important for the role? – Is it more beneficial to have someone with local market knowledge and relationships or someone who already knows your company and your products or services? While both can be gained over time, it’s important to weigh which is the most critical to be able to hit the ground running?
Does the role require specialist skills or a particular technical background? Often companies expand into a new market because of a perceived ‘market gap’ – that gap could also include the very skills or technical background that would make a local hire challenging to find.
What is the market perception of a local hire versus an expat representing your company? In some cultures, customers may be wary of ‘outsiders’ and prefer to deal with a fellow citizen as an intermediary. In others, they may perceive the company is making more of a commitment to the market by posting an expat locally and feel they are talking more ‘directly’ to the headquarters.
What responsibilities and authority does the role include? Depending on the activities being carried out and the local laws, you may need to entrust this person with a limited power of attorney to sign registration documents or other local legal documents on behalf of the company as well as giving them authority over a local bank account. This is often a compelling reason for companies to favor sending an existing employee who is ‘known and trusted’ to get them established in a new market.
What are the local employment laws and regulations? Some markets have very onerous laws around employee severance processes and payouts as well as employer taxes and contributions for pensions, healthcare and other items which may not apply to expats to the same extent. Conversely, some markets have laws that stipulate certain jobs or sectors must be filled by locals or have laws restricting the activities of expat staff, particularly when it comes to working with local government agencies. Understanding these laws and regulations ahead of time is critical to good planning.
What are the total costs involved? In addition to the costs associated with local employment laws and regulations, there are other costs to consider. In some markets, wages for local hires may be considerably less than those of an expat employee. Plus, expat compensation packages often include other benefits such as local housing costs, company provided vehicle, private tuition fees for children, flights home for the whole family once or twice a year. And while it may be tempting to try to cut the overall budget by sending a more junior expat employee, you should consider that the wage component of an expat package can often be the smaller part and so it could well be a false economy.
Set realistic expectations
Whether hiring locally or recruiting an expat, it’s important to be open and honest about the realities of the position, the market and what the candidates can expect in terms of support from the company. It can be a lengthy process to find the right candidate, not to mention the time and money spent getting a local hire properly onboarded or an expat fully settled in their new market, so you don’t want to have to go through it all again in six months’ time (or less!), because your candidate didn’t fully understand what they were getting into.
With expats, it’s essential that they get to know as much about the market they will be living and working in before they commit. While there are some great online resources for expats that cover most markets, nothing beats the hands-on experience of a market visit. If considering an internal candidate, you have the added benefit of letting them ‘test the waters’ by giving them a trial period in which they start to perform the role remotely for a few months, with one or more visits to the market to meet with potential customers or partners. The company benefits from having some preliminary business meetings and customer visits conducted, as well as testing out how the candidate functions in the new environment. And the employee can benefit from easing into their new role while getting to know the market at a more manageable pace. And both parties benefit from not fully committing to a costly move and set up process in country until they both have a sense that it’s a good fit.
If hiring locally, it’s important to give the candidate as much exposure as you can to the culture of the company and the personnel, they will be working with through multiple video interviews will employees they will likely be interacting with in the job. And while you can’t realistically fly every candidate over for an interview, it may well be worth the cost to have your preferred candidate visit your company before making the final selection. Not only will they have an opportunity to fully immerse themselves in the company culture and meet more of the staff, but you will have the chance to see how they handle themselves outside of the confines of an interview setting – at lunches and dinners, interacting around the office etc.
Make a commitment to their success
Regardless of whether you’re hiring locally or recruiting an expat for the position, it’s critical that you make a real commitment to supporting them. A key component of any international recruitment should be a candid discussion around what the candidate will need to get set up and be successful and what resources the company has (and does not have) available to support them.
For expats, this will probably involve a lot of help getting settled in a new environment. Starting a new job and moving are commonly cited as two of the top 5 stressors in life and you’re asking an employee to do both at the same time, so the more you can take the stress out of one or both of these items, the more likely you will free them up to focus on the job you need them to do. Spending that little extra to provide them with the right resources to get them settled will makes things much smoother all around, will demonstrate your commitment to their success and will be money well spent. Pay for the extra packing and unpacking service with the moving company; provide them with resources for finding accommodation; get them the advice and support for sorting out their tax and other financial issues that are complicated by the overseas assignment. And don’t forget their family - your commitment needs to extend not just to the employee, but also to their spouse and any children involved. A failure of the family to adjust to the move is one of most overlooked issues and often the biggest reason for an expat assignment to end early.
Equally, a local hire will need help to get to know the company culture, the products or services they are representing and, above all, the people they need to work with and rely on to be successful. Again, the investment up front will pay huge dividends down the road in terms of demonstrating your commitment to them as well as making them feel less like they are out on an ‘island’ by themselves. Spend the money for them to visit the headquarters several times during their onboarding period. The first visit is often overwhelming and so it’s important to follow that up with subsequent visits once they have settled into the role a little and have a better idea of what they really need to learn and who they need to get to know back at the headquarters. Above all, make sure to make the most of your money and their time by having a well thought through program of training as well as opportunities to mix socially with other employees. They won’t get what they need by just sitting in the office for a week and having a few introductory meetings with members of the executive team.
And finally, to really be effective in committing to the success of your overseas employees, it is essential that their line manager is familiar with the environment that they will be working in and visits them in country during their first few months. Not only is this an opportunity for their manager to measure their progress and check they are meeting expectations, but it’s also the only way the manager can get a real perspective on any challenges they are encountering in order to provide the support needed and be an internal advocate for them to the rest of the company.