Strengthening the foundations for robust transatlantic workforce alliances in the year 2025 through five key strategies
In the ever-evolving business landscape, expanding into new territories can be a daunting task. Dee Coakley, the co-founder and CEO of Boundless, a global Employer of Record, has first-hand experience in this area. Coakley also serves as the CEO of RevelX, a company that plays a significant role in supporting the international expansion of companies through strategic innovation and market entry consulting.
One of the key challenges businesses face when expanding is the cost of hiring. An analysis of employment costs in the U.S. and Europe showed that hiring a mid-level software developer in London costs 48% less than in Seattle. However, expanding into new territories triggers tax obligations and employment responsibilities, making it crucial to choose the right path for international hiring.
There are two main paths: setting up your own legal entities or partnering with an EOR (Employer of Record) service. The former gives complete control but demands a significant investment of time and money. On the other hand, EOR partnerships offer quick hiring and reduced complexity, with the added benefit of peace of mind compliance. However, they do sacrifice some control.
The decision between these two approaches depends on various factors, including the expansion timeline, commitment level, and operational complexity tolerance. A pragmatic approach is to harmonize opportunities, ensuring equal access to career development, promotion consideration, and locally competitive compensation. This approach respects the different approaches in different markets while ensuring no team falls behind.
Cultural integration is another crucial aspect of international expansion. Practices that work in one country may not work in another. For example, subtle differences in communication styles, meeting management, decision-making, and feedback delivery can cause culture clashes. Successful global companies approach expansion like product development, iterating and scaling based on their learnings, and turning cultural differences into competitive advantages.
Transparency in explaining the "why" behind the structure also helps build trust. Governments are aggressively pursuing misclassified workers, which could lead to penalties. Therefore, it's essential to research local labor laws before making the first hire, especially when considering the independent contractor route.
Lastly, companies hiring multinational teams face a dilemma regarding pay equity between different markets. In some U.S. cities, developers take home more than double the net pay of their European peers. This discrepancy can lead to dissatisfaction and potential turnover. Instead of forcing one approach globally, create frameworks that respect these different approaches while ensuring fairness and no team feels left behind.
In conclusion, navigating international expansion requires a strategic and thoughtful approach. By understanding the challenges, choosing the right path, and embracing cultural differences, businesses can turn international expansion into an opportunity for growth and success.
