Proper Staffing is Key to Effective Global Expansion

By Ernst Gemassmer, Chairman, Startup Professionals

Some time ago you needed to achieve success and size before venturing into international markets. However, international customers have found you through social media, US trade shows and technical papers. In order to manage international growth your company needs to be directly involved in international expansion rather than relying on distribution partners. In this article I would like to share with you recommendations for staffing, based on my personal long-term hands-on experience in this arena.

1. The head of international must be experienced in building international businesses and must operate from corporate headquarters. It is both costly and in many instances complicated to enter foreign markets. Mistakes can delay market entry, result in fines or certainly delay establishment of a local presence. Thus, it is essential to appoint a ‘head of international’ with significant hands-on experience to chart your course in the global world.

   In my own experience, a significant amount of time was spent in explaining and obtaining approval from corporate staff for the actions required in building international. In many instances recommendations involve up front costs with no guarantee of precisely when specific revenues can be achieved. It is therefore essential that the head of international reside at corporate headquarters.

2. Do not delegate selection of candidates to headhunters/search firms. Finding, selecting, and appointing the right individual to head up in country or even regional roles is critical. Mistakes can be costly. In my experience it is essential for the head of international to clearly define his needs, hire a professional to locate individuals and perform the initial screening.

   However, final selection of key international managers must be made by the head of international, in close cooperation with corporate management. Despite the costs involved, inviting the finalists to headquarters is essential.

3. Thoroughly understand the specific laws relating to hiring and termination in each country where you plan to operate. Labor laws and prevailing practices differ in most countries. If you choose to operate in a specific country, you must meet local legal requirements and prevailing practices. Again the head of international will spend a significant amount of time explaining and justifying differences to his corporate colleagues.

4. Retain the services of a local (in country) law firm specialized in labor laws. Since labor laws differ so much from country to country it is essential to obtain advice from local labor counsel. Not following this advice can and will be costly. Special attention must be paid to the construction of an offer letter. In those cases where a termination becomes necessary, you should also obtain guidance and direction from a local labor attorney.

   In my personal experience the head of our Italian operation resigned and we accepted his resignation. He then chose to sue us claiming that his supervisor, based in Germany, created a difficult work environment. Our Italian labor counsel recommended settlement, instead of going to trial. The cost to us was nine months of pay.

5. Ensure that your pay practices for foreign employees are in line with local legislation and prevailing practices. Pay practices, commission and bonus plans need to be in line with prevailing local practices. If they are not, fines and difficulties with the local tax authorities can arise.

Having successfully staffed your international operations, you can now expand your markets greatly. However, remember to think long term, plan globally but act locally.