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So you want to expand abroad? Here’s the top 5 tips you need to know.

Nov 16, 2017 11:25:34 AM / by Lauren Declue

Growing your company internationally is an exciting opportunity. It enables your company to expand abroad into new markets and access resources which may not be available in the home country. At the same time it can be daunting to navigate through the process of establishing operations in another country where there are different work practices, cultural norms, languages and regulations.

Get your FREE flyer with critical expand abroad tips for employment in Mexico (extract from our complete Employment Terms and Conditions report). 

With globalization showing no signs of abating, companies of all sizes continue to grow by entering new markets. Whether it is the first time, or the tenth time an organization is establishing an office abroad, there are a number of key factors to consider:

1. Clearly defined business objectives and timeline

Have a clearly defined business strategy and timeline when expanding abroad and entering a new market. The business objective for international expansion can range from establishing a small sales office in order to reach potential new clients, building a production facility to manufacture goods more efficiently, or creating a professional service office closer to clients. Your business objectives will determine the type of talent that is necessary, the location and size of the office, as well as the investment and resources required from the head office. It is also important to consider the timeline for implementing the business objectives, hiring talent and filing the necessary legal and financial documentation, which can vary significantly from country to country.

2. Hire the right talent

Finding the right talent is crucial to the success of any operation when you expand abroad. There may be talent within the company that can support establishing an office abroad. It is important to consider the total rewards package offered to an employee that goes internationally to open an office. Will the employee be sent over on an expat plan, what relocation support will be provided, and how long will the employee be abroad? These points should be clearly outlined at the start of the process to avoid the company and employee having different expectations, as well as to ensure legal and tax requirements are met. Expanding your company abroad will also require attracting and retaining local talent. Therefore, it is necessary to understand the local HR market practices for the positions you will be hiring. This includes knowing where to recruit the right talent, what competitive salary offerings are, and how long the recruiting process will take. Willis Towers Watson has detailed benchmarking and market data on total rewards optimization and in-country recruiters can also provide insights on local market practice. 

3. Understand in-country benefits

Local employment legislation, as well as the employee benefits environment, differ in each country. There are distinct features on statutory, mandatory and voluntary employee benefits. In some countries, health coverage is provided by state-funded payroll deductions while in other countries employers provide health coverage through private insurers. It is important to clearly define your company’s global benefits strategy, as this will set the precedent for other markets you may also enter. A typical question you should ask would be: is the company’s strategy to offer the minimum statutory requirement in each country, provide benefits at the median percentile in the market, or offer a certain level of benefit for all employees globally? In developing a company’s global benefits strategy, it is also necessary to understand how local market practices vary from you home country. Local market practice depends on the country, as well as the industry and employee category.  This includes the type of benefits offered, plan design, benefit level, eligible dependents and tax efficiencies. For example in India, it is common for a health plan to cover both the employee’s child and parents. Benchmark data and country benefit profiles are helpful tools to design employee benefit plans that are in line with the company’s global benefits strategy and meet local employment legislation. 

4. Financial, legal and insurance support

Ensure the company has the appropriate financial, legal and insurance guidance for tax law, international transaction and required legal documentation to form a business. Similar to local benefit practices, the financial, legal and insurance requirements of establishing a business vary based on the country. In one country a business can be set-up in a relatively short timeframe while in another country it can require a joint-venture and detailed documentation. It is important to have the right advice to navigate the often complex framework of establishing an office abroad. The World Bank funded Doing Business Report can be a useful resource as it indexes 190 economies on the ease of doing business based on the regulatory environment. 

5. Awareness of the local cultural difference

One cannot underestimate the importance of cultural awareness when expanding abroad. The language, style of communication, etiquette and behavior play a significant role in how a company is perceived in the host country. Being culturally sensitive to local norms and practices can go a long way in assisting in the transition process. There are numerous books and articles on the topic of cultural awareness that can offer guidance on cultural norms of a specific country.

Get flyer with employment tips for Mexico 

As with any new business venture, there will be challenges encountered along the way, especially in a foreign country.  However, within any great challenge lies great opportunity. Willis Towers Watson is here to support your company along the way with its expertise in Total Reward Optimization, Global Benefits Management and Corporate Risk with a global presence in over 140 countries. 

 

Lauren DeClue.png

Lauren DeClue is a Consultant in the Global Services and Solutions (GSS) Group based in New York. She has five years of experience working in international benefits. Prior to this, she worked at a US consulting and brokerage firm specializing in domestic employee benefits. Lauren focuses on servicing multinational clients on a variety of projects including global benefits management, multinational pooling and captive solutions. Lauren has a Master of Business Administration from Università Bocconi and a Bachelor of Arts degree from the College of the Holy Cross. She enjoys learning about different cultures and has traveled to over 45 countries. 

 

Lauren Declue

Written by Lauren Declue