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The International Entrepreneur – Is your company still an Accidental Exporter?

Accidental exporter, international entrepreneur

Joe rolled his chair over to company founder, Mary?s desk with a quizzical wrinkle in his brow?

?Can we sell our security product to someone in Romania? We just got an email basically ordering 50 software licenses from somewhere called Timisoara?, said Joe as Mary looked up from her multiple computer monitors.

Mary was just as surprised as Joe. The company had launched only a few months ago. How could someone from Romania have heard about their product, much less have decided to buy it? Their small team of developers were focused on a few potential clients in the United States.

Mary hadn?t even considered when international would enter into the company?s plans. But 50 licenses was an order that was difficult to ignore? So Mary and her company became ?Accidental Exporters? ? taking orders from foreign clients without any real understanding yet of their global markets.

 

International Clients Always Arrive Before?You Expect Them

A byproduct of the world?s Digital Revolution is that anyone anywhere can read your company website. As a consultant, I don?t travel to over 200 countries? but this article will. Businesses and consumers now have access to product options and pricing information allowing them to make more informed choices. If you have something of value like Mary?s security software product, then clients from other parts of the world will begin to make contact.

Mary and her team will likely weigh the revenue of 50 licenses against the risks of doing business with these Romanian?clients. Will the clients pay in dollars? How much interaction is needed for software implementation and service?

If like much software today the delivery is a SaaS model, then allowing access is easy. But are there any regulations related to doing business with Romania in terms of taxes, data location requirements or other restrictions? Most companies ignore compliance issues at first and focus on the money. (Tip: Always know what you?re getting into before you just move forward.)

 

Timisoara, Romania (photo courtesy of wikipedia.org)

Timisoara, Romania (photo courtesy of wikipedia.org)

 

Accidental Exporting Becomes the New Normal

Mary and her company take on the Romanian client? then soon a Canadian client? and on it goes. The company figures out ways to serve these foreign clients in the same way that they serve the domestic base ? home country language, home country currency, home country customer service hours, and home market expectations. In my experience, this directionless approach is the international growth path for about 98% of small and medium-sized?companies.

The surprising part of reactionary-based international expansion is how long this phase typically lasts ? for years and sometimes decades. Companies often seem content to continue on building their international client collection with little thought to the larger markets left untapped.

An extension of Accidental Exporting are overseas distributors who find your company through the website or a trade show; and offer to represent your product in their market. Now you have a distributor based in Australia who gets to build business for you in the APAC region for a 25% discount margin. Most companies just accept this new extension to the reactive model without any visit to the distributor?s offices or 3rd party background checks on their reputation. That?s just crazy and irresponsible.

 

What?s the Alternative to Accidental Exporting?

International expansion planning is the answer. And it needs to start almost as soon as your company initially opens its doors for business. In the start-up phase, a company needs to decide what it can and cannot handle in terms of orders from international clients. Can you convert foreign currency? Can you deliver your product compliantly using the Internet, air or ocean freight? Are there regulations for your product or industry that you should be aware of? For instance, you may decide that Canada is a market you can serve but that Germany?s laws regarding cloud data residing in servers located on German soil rule that market out for now.

Despite anecdotal evidence that startups can be ?born global?, few are actually capable of true international market entry from Day 1. Instead, internationalization works best when a company plans for overseas market entry years before the first foreign subsidiary office is opened. Incorporate international considerations into:

  • Product development ? Are there any additional product requirements to be compliant internationally (CE Marking, etc.)
  • Company talent recruitment– Are we looking for candidates who also have international and cross-cultural experience?
  • Key outside resources ? Can our accountants, attorneys, bankers and PEO providers also advise on international tax, legal issues, foreign exchange and international payroll?
  • Financial capital ? Are we budgeting for our initial global market research and first market expansions?

Preparing for that eventual international rollout will make the transition much smoother.

 

When Should We Get Serious About Internationalizing?

There is no specific milestone that marks when a company should proactively begin its international expansion. But here are some general guidelines:

  • If you have a profitable company providing value to your home market clients
  • If international clients have found you and you are able to successfully serve their needs
  • If your home market is a small one, then you will need to internationalize earlier than large home market companies
  • If you have 100+ employees (this can vary by industry, but IT companies should heed this criteria)
  • If you have earnings, loans or outside equity to fund early expansion efforts

 

My hope is that by writing about accidental exporting it will prompt business leaders to examine their own company?s approach to international markets. With luck a few more ?accidental exporters? can reach their greater?global potential.

 

Onward & upward

Becky DeStigter, The International Entrepreneur

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The International Entrepreneur – How to Help HQ Staff Become More Globally-Focused

HR, global, international business, international entrepreneur

As I walked around the tech company’s office over the, weeks I spent on site, I heard quiet complaints about international leads and clients from some of the client-facing staff.

“That accent was so thick that I couldn?t understand her.”
“They don?t know how to follow a normal buying process.”
“I really don?t like dealing with people from _________.”
And a disturbing confession: “I put the international follow up at the bottom of my task list.”

The top leadership of this software company, including the CEO and the CHRO, lived and breathed inclusion in all forms and were planning for the company’s impending global expansion. But neither realized the pervasiveness of anti-international passive aggressive actions from on the front lines of the company.

This is not an uncommon problem as companies grow beyond their early domestic-only stage to accidental exporter. But the issue often doesn’t stop there. It continues on as companies realize the untapped potential of their overseas markets unseen because decisions are made subtly by often young, less experienced sales, marketing, client services and finance staff.

It would be simplistic to say that this is just a human resources issue. But it affects many company functions:
-It affects marketing in that new customer data is skewed away from international.
-It affects sales because potential clients are left underserved or ignored, leaving unrealized revenue.
– It affects customer service department performance ratings when international clients are left to wait longer.
– And it affects long-term financial planning where market demand is a key metric for deciding where to allocate resources.

So what can be done to ensure that your staff is ready to make the most of ALL opportunities? Here are a few ideas:

1. Expose staff to cultural differences.
While there may be some well-traveled, multicultural staff on your front-line teams, there are likely many that don’t have that background or perspective. If it can be worked into the budget, send a representative staff member to your newly opened overseas office to better understand the business style differences and to explain how the headquarters’ processes. This could mean an up-and-coming sales rep gets to visit India for a week to dig into the differences between sales in the two markets in order to find best practices from both. Your staff member will likely return with many stories about his or her experiences, as well as be able to give perspective on Indian selling. One experience by one less-traveled staff member tends to have a multiplier effect – sharing perspective with many peers and understanding that other cultures will look at the same situation in a completely different way. This approach can work well, but choose employees who would appreciate the experience and naturally share with others.

2. Incorporate Engaging Cultural Elements. Travel is the best but is not always possible, so another exposure option is to highlight a key market for a day. If India is a key market, then India’s Republic Day is January 26, Independence Day is August 15 and Gandhi Jayanthi is October 2¬† all good choices. Besides catering in Indian food for lunch and piping in Indian music, it can also be a day to highlight key Indian clients, leads, and market potential for the company. Staff pay more attention when they think something is important, particularly to leadership.

3. Train Staff on Cross-Cultural Communications.
Overall, foreign clients take more time to communicate, more time to build trust and have a higher chance of misunderstandings. So learning to interact successfully most of the time has direct payback. One of the highest ROI actions is to bring in a cross-cultural trainer to work with your staff. There are key differences and the right trainer/coach can zero in on issues staff are facing and give direct advice. This suggestion works well when international leads are growing significantly and also when a company is opening new sales offices abroad.

4. Acknowledge the Cross-Cultural Challenges.
Since many international challenges remain hidden, it is beneficial to bring up questions in department, team and/or individual performance meetings. Has anyone had a challenging interaction with an international contact for the company? What was the incident and how did the individual deal with it? What was the outcome? Is there any possible explanation for what happened?

It is natural to blame others who don’t follow our own business cultural rules. The Thai company executive may feel offended to be talking with a young person in the sales department. We may be frustrated with a Dutchman who we perceive as being rude when he interprets his comments as just being honest and open. Talking about challenges openly leaves room to troubleshoot and find best practice approaches for next time something similar happens.

When an employee stands out as the”top international seller” or often stays late to call the leads from halfway around the world, the extra effort should in some way be acknowledged and rewarded. How this is done needs to fit in with your company culture, of course.

The company’s investments in cultural exposure, training and acknowledging top international interactors – all pay off as you continue to create your global culture. This is a conscience choice to develop values that support a multi-cultural staff. International customers and global business expansion is a natural progression for most companies. International accelerates growth and exposes the company’s staff to new ideas for product and process improvement. While it may be easier to see these benefits from a strategic level, it becomes critical to bring all staff along for the ride.

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The International Entrepreneur – How to accelerate global expansion

accelerate global expansion, international entrepreneur, international business

It?s ironic. Anyone who has spent time and energy expanding their company into international markets can tell you that the process is anything but fast. Global expansions are notoriously slow, especially when compared to what American and Canadian companies are used to as their domestic time to establish a new business. Registering a new business in some American states can take 30 minutes online and US$50. In contrast, some business registrations overseas can take over 2 years and cost US$20,000+.

In North America, we build our business processes and expectations around speed. Speed to market. Speed up the sales cycle. Speed in product development. Anything that slows us down is the target of constant complaint. Ask anyone who has been through a U.S. Food and Drug Administration?s approval process.

Despite frustrations, there are many compelling reasons why a company would still choose to expand internationally. There are new markets and customers overseas. The market may be global and market share requires doing business internationally. Global markets may balance out seasonal or economic cycles to keep the company?s revenue and growth on a steadier path. There may be strategic advantages for global talent, cost savings or a whole host of other reasons to go global.

?

REALITY CHECK: No matter how compelling the reasons to keep expanding into new global markets, you still need to expend the necessary time and resources to bring success. If you can?t commit to at least 2 years? worth of work to get a new market off the ground, then I recommend that you don?t take your company global.

 

Here?s my advice for speeding up the international expansion process:

  1. Consistent Commitment. Nothing (and I mean nothing) will slow down your company?s global expansion more than the mixed messages of wavering leadership and financial support.
    This happened earlier this month to an international expansion director in the southwest United States. He had made all of the arrangements to meet with potential Middle East partners on a crucial trip. His company?s Board of Directors froze all travel and other international expenses for a short-term gain. ?Now when this director can finally return to this high-potential market, he won?t find the same level of welcome or interest in doing business.
  1. Travel to Your Markets. If you truly want to expand quickly, then put your company leaders and expansion staff on planes to your chosen target markets. Face to face meetings with potential partners, clients and other influential stakeholders in country dramatically speed up the time taken to form these key relationships.
  2. Consider Strategic Partnerships or Mergers & Acquisitions. While partnerships and M&A take substantial time up front to establish the relationship and agreement terms, they can expedite market entry where they already have established client base. So for instance, let?s say my company wanted to enter the Thai market. I don?t speak Thai or know this culture which is quite different from my own. But if there were a compatible partner company, I could reach potential Thai customers by piggybacking on the partner?s products or services as a point of entry. I could learn from my Thai partner about the market and the best ways to sell my offering.
    On the M&A side, buying or merging with a company in a key market means that you buy their assets and also their internal processes and market knowledge. This, of course, is also dependent on keeping existing staff happy post-M&A so that the knowledge stays with the company. Obviously M&A requires support from your current and future financial resources.
  1. Laser Focus Normally Beats the Shotgun Approach to Market Entry. Many companies take the reactionary approach to international markets ? they wait for foreign clients to find the company online and approach them with business. I am not saying that this is necessarily a bad starting point, but at some stage serving customers in 13 countries is less efficient than focusing on the 3 best markets and doing it at higher revenue and profit margins.
  2. Practice Agile Processes in Your International Expansion. Instead of starting and stopping every time there is a new challenge in a global market, I recommend using an agile process. Agile is a leading approach in software development where changes are made to code frequently to constantly improve the quality of the product. Marketing adopted agile because it allows for incremental performance evaluations and changes instead of annual reviews. I think this applies just as well to global expansion, where incremental changes can vastly improve results and speed up the process rather than waiting for a review from a large country roll-out.

While international expansion is an investment for companies with a longer investment time frame, there are definitely steps that can speed up the process. Consistency in support is a required foundation. Armchair expansion is much slower than sending staff into the field to meet and develop relationships with key in-country contacts. Focusing on key markets and partners is faster than waiting to see what drops in your lap. And always be ready to make changes based on the new insights you pick up during the new market entry.

I wish you all the best of success in all of your markets.

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The International Entrepreneur ? The Globalization of American High Tech

international trade, information technology, globalization, international entrepreneur

This week I wrapped up a 3-week project researching American IT companies that expanded into international markets. Normally my clients hire me to focus on markets outside the U.S., so it was interesting to study?the industry I serve.

Honestly, I thought I knew all about the American IT industry. I have spent the better part of the last 22 years working for American IT companies as an employee and contractor. What?I learned about my home market and industry surprised me and I wanted to share it with my readers.

 

Market Insights from Studying American IT Firms

I identified?200 American IT companies that had?less than 1,000 employees worldwide and were actively internationalizing into new foreign markets. Most of the companies picked for my study were recruiting staff both in the U.S. and in overseas offices. I did not choose any companies that were clearly locked in?a 2-country model for outsourcing or similar purposes, with no plans for global domination. I did not target specific states or metro areas. I understand that this is not a study with full academic rigor, but still it was hard to ignore the trends.

Here?s what I discovered:

  1. Not all American IT industry clusters are producing internationalizing companies. Almost HALF of the internationalizing IT companies were based in 2 metro areas: Silicon Valley/Bay Area (68) and Boston (26).
    Then came Tier 2 Clusters of internationalizing tech companies: Los Angeles/San Diego (18), New York City (16), Seattle (8), and Chicago (6).
    What was just as interesting were?the metro areas considered to be strong in IT companies that are disproportionately low in internationalization: Denver/Boulder, Phoenix, Portland (Oregon), Philadelphia, North Carolina, Twin Cities and Washington DC.
    Two notable additional bright spots were Manchester, NH and Salt Lake City, UT both coming in with 4 internationalizing IT companies apiece. Here is a map showing where the U.S. high-tech markets are. Clearly the internationalizing clusters are a subset of the whole.

  2. Internationalization seems to take place between 100 and 200 employee counts across a wide variety of IT markets. This includes companies doing everything from developing gaming platforms to offering SaaS business processes to security networks to storage technologies. There are 2 noteworthy exceptions: healthcare IT and B2G (business-to-government) industries. After reviewing dozens of both types of companies, neither internationalize until much later in their product cycles. It?s a shame, really, since both government and healthcare technologies are bought and sold all over the world.
  3. IT services offshoring companies rarely made the list of 200 companies even though their entire business model is based on globalization. The truth is that these companies may have Indian or Mexican operations, but they don?t sell into any market except the U.S. Opportunities are being missed.
  4. There is no standard international expansion market pattern. Companies literally had a patchwork of offices and operations around the world. While there are definitely popular overseas office locations: London, Singapore, Toronto, Sydney, Amsterdam; companies seem to be weighing options in various markets instead of following a predetermined step-by-step rollout. In my option, that?s proactive and positive.

What is internationalization?

For quick reference, here?s my practical definition of company internationalization:

  • A company that is PROACTIVELY entering new foreign markets to sell products and services. This also applies to the supply management side ? sourcing materials and services from around the world.
  • A company that is actively engaged in understanding the market potential in various parts of the world.
  • While many companies begin their international expansion using in-country local representatives or distributors, I think true internationalization is when companies begin to expand directly to new markets with new offices and hiring in-country staff.

Why is internationalization important?

Globalization is a defining force of our time. Its momentum rides right along with the other primary drivers ? technology and entrepreneurship ? as changes that will affect our grandchildren?s grandchildren.

For companies, internationalization is a game changer. It means:

  • Having the choice to expand?into international markets (?internationalize?) at much earlier stage than ever before.
  • Increasing?your overall market size by somewhere between 100-500%.
  • Learning industry advances and operational efficiencies in one market that can be applied to the rest of the company?s markets (called “arbitrage”).
  • Access to investment funds and other resources not necessarily available in your home market.
  • Country portfolio risk reduction ? not all markets go through downturns and upturns at the same time. Multiple markets balance?out the risks.
  • Access to the global talent pool to help drive smarter decision making and better leadership and management.

As I often discuss with?IT company leaders, internationalization is like your planet developing “warp drive technology” on the TV/movie series ?Star Trek?. Pre-warp-drive planets have a single planet view of what is possible. But once the planet?s scientists and engineers develop this high-speed capacity for travel, Star Trek sends an envoy to meet your leaders and welcome you into the larger intergalactic realm. Internationalization in a similar way opens up the business environment to the other 95% of our planet?s population.

So if you are an IT company leader or someone invested in a local IT cluster?s success, what does all of this mean for you?

  • It means that clusters like Silicon Valley and Boston have investors/VCs who expect internationalization as a company?s ?Warp Drive? when they reach their growth stage. These industry clusters cultivate available resources to help make that happen. This can be developed in other markets as well.
  • It means that if your company has a headcount of 200+ and you don?t yet have international operations in at least 2 foreign markets, you may be late to internationalization and should actively be researching the advantages and risks involved. To expedite this, hire outside international business expansion consultants.
  • It means there is no one best way to expand internationally. Use your own competitive advantages and market research to optimize this process.

Now, in the immortal words of Star Trek?s Mr. Spock: Live long and prosper!

Becky DeStigter, The International Entrepreneur

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The International Entrepreneur ? Balancing Internal and External Global Marketing Resources

marketing resources, global marketing, international entrepreneur

Susan rubbed her forehead trying to push back the headache that was forming. She was the Chief Marketing Officer for a Boston-based globally-expanding software company. Susan had always been praised for her ability to hire and manage outside marketing specialists and deliver excellent marketing metrics. But now she needed resources like German social media experts and Thai copywriters. The marketing ROI, lead generation numbers and other metrics she had worked to hard to build domestically had all turned sour in the global mix. Susan worried that she might lose her job if she didn?t turn things around quickly in the new global expansion. How could she turn things around?

 

First, take a deep breath? and assess the situation

It?s easy to get caught up in the tactical marketing execution and miss the bigger picture. With this in mind, it?s time to take an assessment of the resources and skills currently available from existing staff and current contractors and match them up against the expectations of your operation.

Global markets can confound even seasoned marketing leaders. We all know our home market best. But once we move into another country, the legal, linguistic and cultural rules shift. The Canadian market may have responded well to your company?s inbound marketing campaigns, but the Colombian market may need a more direct contacts. And giving what seem like clear communications make take on a completely different outcome in India compared with Denmark.

Susan from Boston assesses that she has too many disparate resources that she directly manages. She is needing to navigate many unfamiliar business cultures. And she?s not sure what marketing messaging and channels work in which markets. Her CEO is expecting her to deliver the same 5-fold ROI on marketing expenditures that she delivered in the U.S. market and his patience is wearing thin. Susan needs to do something different.

 

Planning for international success

I always recommend starting with a Gap Analysis. Assess where your marketing organization is at today and where it needs to be both today (short-term) and at some point out in the future (long-term). What capabilities would you need for both short-term and long-term success? Assess marketing functional capabilities, but also cross-cultural communication skills.

Internal and external resource balancing act

Today?s marketing leaders have extensive outsourcing options. In fact, more than one company has outsourced their entire department to a marketing agency. That?s extreme, but in certain situations, it could make sense. Here are guidelines for the majority:

Leadership and oversight should stay in house.

Marketing is normally part of the company?s value chain should be managed by the CMO/VP and their staff. This allows for internal brand management and control. Most importantly, the marketing department remains responsible for all marketing results.

Specialty projects and functions requiring rare skills should be outsourced.

I don?t speak Thai or understand the nuances of Thai culture. To create an effective marketing campaign in Thailand, I would need to engage a local marketing agency. This is not only true for culture and language-specific projects, but other skills that are well outside of your marketing department?s current core competencies. They could be technical, creative, analytical or any area where there is currently more need than internal staff skills.

And then there?s the gray area in between

There are always functions that could be either hired or trained into the marketing department staff OR outsourced to an outside firm. Generally, most marketing leaders I know estimate the value of the output compared with the cost. Is it more expensive to outsource or spend internal staff hours on the website rebuild? Additionally, how easy are each resource to manage? Which is most reliable? Do we have enough marketing budget to pay for a new employee or pay an outside resource?

 

Susan from Boston?s Dilemma

When we met Susan the software company CMO, she was challenged with her company?s global expansion. This isn?t unusual. Susan needs to start by realigning expectations of new market learning curves internally with her CEO and other stakeholders. Susan and her staff will need time to figure out the most effective marketing messages and channel mix. This needs to be communicated to realign expectations. I?d also recommend reporting metrics by country to show that the domestic numbers are still strong and any improvements by country over time.

If the expansion involves several simultaneous market entries (which seems to be the case), then Susan may need to reorganize oversight responsibilities. The 2 most common structures are to organize by functional marketing areas (design, content, social media, events, etc.) or by country/region.

Susan?s marketing department may be too small for this aggressive of a global expansion. She may need more project management and functional skills to lead efforts in different parts of the world simultaneously. This will help the company continue global growth and success.

 

I hope this article helps you as your company continues to growth and balance resources. With so many choices, it leaves many CMOs to wonder how to best manage and execute their global marketing budget. Overseas markets require creative solutions, and no matter what some marketing agency tries to tell you ? there is no ?one size fits all? solution. Above all else, do what is right for your situation.

Becky DeStigter, The International Entrepreneur

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The International Entrepreneur ? Interview with Safeguard World International?s CEO, Bjorn Reynolds

Bjorn Reynolds, Safeguard World International, GEO, global HR, This week I have?the pleasure to interview company founder and international entrepreneur, Bjorn Reynolds. Bjorn started his international payroll and HR management company in the UK. Now the company has grown to serve 165 countries.

?

The International Entrepreneur (TIE)- Bjorn, since many may not know about Global Employment Outsourcing as a fast track to foreign market entry, can you describe how it works??

Bjorn Reynolds (BR)- GEO allows our clients to outsource their international employment responsibilities. From local employment contracts, to paying the actual employee and managing the statutory payroll deductions and managing and providing guidance on any HR issues ? all managed through our network of carefully vetted and in-house partners in over 165 countries. What this means for the end client is that they can outsource the entire employment responsibility and process to SafeGuard, all without having to register a local entity and navigate the bureaucratic headaches that such a process typically brings.

 

TIE – As the originator of the GEO employment model, can you tell us how you and your team at Safeguard World International found this market need and innovated the GEO solution?

BR – Our identification of the GEO market was primarily two fold:

1)??????We observed a demand from our clients for contingent labour that they could deploy on their medium and short term projects. Historically multinationals have turned to Independent Contractors, particularly in countries where they do not have an entity established, agreements of which frequently fell foul of employment law due to unfamiliarity with local rules and regulations. We devised the service to help our clients hire individuals on a temporary basis and in a compliant manner, removing them from any potential risks and fines associated with the utilization of IC?s.

2)??????Clients were encountering difficulties going global and expanding their business into new countries. Expansion into new territories if often a daunting and complex task ? setting up bank accounts, registering entities with the local authorities and navigating local rules, regulations and cultures is a considerable undertaking for any organisation, no matter their size and amount of available resource.

 

 

TIE – ?What is the biggest challenge you currently hear from companies expanding their global talent teams?

BR – The biggest challenges that we continually hear pertain around ?how to? and navigating the local rules and complexities that are frequently encountered when expanding into a new country for the first time ? even for large multinationals. From an appreciation and understanding of cultural, time zone and language barriers to understanding what needs to be provided to employees both from a statutory and customary perspective in order to attract and retain the best talent. Coupled with the daunting prospect of completing all the necessary registrations and tax remittances, companies are often deterred from following through on their intentions to expand into a new country.

 

TIE – As a leader in your field, can you give any advice to companies who are planning their first international expansion?

BR – Many organisations often feel like expanding internationally is out of reach ? they don?t have the resources or expertise in order to grow their business on the international stage. This simply isn?t true. While it?s certainly worth noting that international expansion should be a carefully considered and evaluated decision, especially when exploring the time it would take to expand and register your business in a new country, by partnering with the right expert, such as SafeGuard, SME?s and startups should no longer fear taking their business into new territories. With GEO the world becomes truly borderless and I love helping companies not only make their first foray into foreign markets, but also reap the benefits that international expansion can bring to an organisation.

 

About Bjorn Reynolds

Bjorn is the Founder and Chief Guardian of SafeGuard World International. A recognised industry leader and strategist for the global payroll markets, Bjorn?s passion for payroll is the driving force behind SGWI?s vision, strategy and culture, instilling his enthusiasm for Service Excellence and success throughout the organisation. His?entrepreneurship led SGWI to a prominent?position in the U.K. Sunday Times ?Virgin Fast Track 100? and he has been personally recognized in the ?Payroll Top 50? by?Payroll Magazine?and?as a ?Game Changer? by?WorkforceMagazine. During his early career, Bjorn worked for HFC Bank (part?of the Global HSBC Group) where he was quickly promoted to branch?manager after one year in post ? the youngest ever Branch manager at HFC?in its history.??He later?ran marketing and channel functions within the HR and payroll space for one of the top three global payroll and HR service providers.

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The International Entrepreneur ? Keeping Your Global Project Staff Locally Compliant

global HR, international compliance, international trade, GEO

Tim was a chemical engineer just starting his career. ?He was working for a beverage additive company in Milwaukee, USA. Having already studied abroad for a year at the Instituto Tecnol?gico y de Estudios Superiores de Monterrey (M?xico), Tim was open to the idea of moving to east Germany when his company proposed it. He and his four engineer colleagues went to investigate setting up a production facility near Dresden. Why Dresden? The German government was providing incentives to foreign companies to invest in the former East Germany to build up the economy.

Tim was excited about this opportunity to help his company expand internationally, but one thing kept nagging in the back of his mind. The company hadn?t done any paperwork to get Tim and his colleagues work visas for Germany. Even as a novice to the work world, the lack of proper documentation was a clear risk to Tim as a project engineer. Tim brought it up to management and to the HR department. ?We?re working on it? ? was the response.

Tim stayed in Germany for six months helping the team to evaluate facility options. But the company still didn?t seem to care about the glaring compliance issue. Tim decided it was time to move on to another job at a company where he wouldn?t be put in this type of compromised position.

Later that year, the German authorities confronted the American team, asking to see work visas and other registration paperwork. The company was issued hefty fines. A few of the staff?had returned to the U.S., but the German government caught up with the last two engineers as they were leaving. They were initially detained and individually fined and required to leave Germany.

 

Why would a company not issue work visas to staff working overseas?

This beverage additive company was obviously negligent of their duties under local laws as well as to their employees. But up until a few years ago, companies had to form an in-country subsidiary to legally employ workers in Germany or any other country for that matter. That involves registration processes, a series of fees, legal work, and who-knows-what-else. It can be a time-consuming process that also locks a company in to doing business in that market until the entity is dissolved (which also costs time and money).

The Milwaukee company was not sure if the Dresden project was going to even be successful. It turns out that it wasn?t. ?So they took a chance with their employees to avoid registration. But it was a big risk not only for the company, but for those employees as well. This was in Germany ? a country of clear-cut rules. What if this had been Bolivia or Egypt where government application of rules is not so consistent?

 

GEO can keep your global project staff compliant

Now companies don?t have to register a foreign entity to send their project engineers and other staff to work overseas. They also don?t need to know the exact local employment laws either. A few years ago a new service was born ? GEO (Global Employment Outsourcing). In this service,?the GEO company hires your employees in the foreign country where they?ll be working and assigns them back to your company. The GEO company is the Employer of Record, providing payroll services. The employees are paid in the local currency and your company pays in one of the major world currencies like US dollars, British pounds or Euros. The GEO makes all the proper payments to local government for any social costs and stays fully compliant with local requirements.

The?cost of GEO is typically far less than country subsidiary registration and eventual country exit. It?s ideal for implementation projects and researching a new potential foreign market. GEO was pioneered by Safeguard World International, and has spawned a new industry.

 

Final word to internationally deployed project staff

If you don?t already know, be sure to check your employment compliance. All countries have rules related to how much time someone can stay in country working without applying and receiving the right work permits. Most companies do not yet know about the GEO compliance/payroll option, I encourage you to share that with your employer if you suspect a compliance issue.

Tim, the young chemical engineer, did the right thing. He told his superiors and HR department. In the long run, it?s not worth working for a company that would put you at financial and legal risk in a foreign country.

 

As a footnote, today Tim is a successful Vice President of Marketing and Sales for a growing US Midwest engineering firm. He travels extensively for work around the world.

 

Becky DeStigter, The International Entrepreneur

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The International Entrepreneur ? The Growing War for Global Talent

global talent, global HR, international trade

I see it expanding every day?

  • Engineering teams sent to implement a project on the other side of the world.
  • A medical student from a developing country applying for residency after graduation to ensure a higher quality of life for herself and her family.
  • A multinational company offering a rising star employee the chance for an overseas assignment to gain key experience
  • Governments trying to either slow their ?brain drain? effect or recruit talented foreign workers

Never before in the history of the world have so many people decided to live and work outside of their country of origin. This means that talented professionals can move to where the best jobs are. But at the same time, there?s a trend to search the world for the best talent and then employ locally ? essentially moving the job to the talent. A quick view of heavy-hitting multinational, IBM?s career website shows this in full view. IBM and many of its peers are opening up to the wider talent pool by offering extraordinary numbers of remote-based positions.

It?s challenging to get worldwide numbers on immigration. But here?s an example: In the U.S. alone, immigration has reached 41.3 million people representing over 13% of U.S. residents. [source]? On a global level, the Economist reports the highest countries in 2014 losing talent aka the ?Brain Drain? to immigration were:

1) Myanmar

2) Bulgaria, Serbia & Venezuela

5) Moldova & Yemen

7) Burundi

8) Croatia

9) Haiti & Kyrgyzstan

11) Algeria, Lebanon, Mauritania & Ukraine

15) Chad & Slovakia

 

Those doing best at keeping their talent home?

1) Switzerland & Qatar

3) United States

4) Finland & Norway

6) UAE

7) Hong Kong

8) Singapore

9) Germany & Malaysia

11) Luxembourg & United Kingdom

13) Canada, Chile, Costa Rica, Netherlands and Sweden

 

All of this comes back to one basic question:

 

How do we come out on the winning side of this war for global talent?

 

I?m going to break it down to three levels: country, company and individual.

 

For countries?

Examples to follow: ? If you want to win the war for global talent, first focus on your own citizenry. What will they need to compete with the world?s best minds? They?ll need a strong education foundation.

They?ll also need infrastructure like broadband, transportation and other foundations upon which to build new companies as entrepreneurs. Speaking of which, the 24 highest-rated countries for entrepreneurial activity ? none of them are on the brain drain list. That?s no coincidence, especially some of their neighboring countries are hemorrhaging talent. Cultivating entrepreneurship can engage many smart homegrown talent. For the record, the U.S. doesn?t crack the top entrepreneurial activity list either.

Examples to avoid: ??? One of the worst mistakes to make is restricting smart, talented people from immigrating to your country. The United States, for instance, is a university destination for thousands of bright talent from around the globe. But instead of trying to engage those graduates to stay on and take jobs (or create startups) in our country, we often promote their return to their home countries. Australia and Canada are not making that mistake.

 

For companies?

Examples to follow: In the past few years smaller, agile companies can access talent from anywhere just like their larger competitors. Free communication and low-cost collaboration tools make virtual teams a common fixture in business.

Now SMEs can take it a step further and hire employees regardless of national boundaries. There is a new service called GEO ? Global Employment Outsourcing that allows a service provider to be a company?s Employer of Record in country. This means that you pay to have your employee hired in Finland and that employee is paid in local currency, complies with all local employment laws and practices, and is billed back to you. It?s a game changer because it doesn?t require having a local subsidiary set up in Finland.

Examples to avoid: Those company leaders who assume that the best talent is locally grown will lose the global talent war. Xenophobia and closed market options tend to lead to a more limited geographic market too.

 

For individuals?

Examples to follow: To be a part of the global talent pool, you just need to keep options open. Nowadays you can search job listing sites for remote-based positions and jobs on the other side of the world. Jobs that directly involve trade and global markets tend to on average 10% more than jobs that are domestic only. And experience with international roles can pave the way to career advancement. We live in exciting times and you can be a part of it (if you?re not already).

Examples to avoid: If you want to work on the sidelines of the war for global talent, don?t update your skills to match what international employers need. Don?t network and for gosh sakes don?t learn any cross-cultural skills or languages.

 

We live in times of great global changes. Countries, companies and individual workers all have choices to embrace the shifts in world economic dynamics or resist them. I hope you?ll choose to see this as a tremendous opportunity for all!

For more Tips and Tools on International Business, join the International Trade Tribe.

The International Entrepreneur ? International Business Lessons from Mark Zuckerberg

Like most professionals in technology fields, I?m a bit fascinated by Mark Zuckerberg. Really, who could have predicted the meteoric rise of Facebook twelve years ago when it was just started? He?s not one to build the same wisdom-drenched following like Richard Branson or Guy Kawasaki.?But the day he put his newly acquired Mandarin Chinese on display at Tsinghua University in Beijing, he had my full attention.

China doesn?t even allow Facebook access for its citizens. And here was one of the titans of American technology industries not only speaking Chinese, but using all of the Chinese cultural savviness of a well-coached leader. As I watched this video for the first time, I thought of three things:

  1. I had clearly underestimated Mark Zuckerberg as a world-class business leader.
  2. Facebook would eventually enter the Chinese market, breaking down communication barriers on its way.
  3. I needed to double up my efforts to master Mandarin Chinese.

Impressive as this interview may be, China still doesn?t open its doors wide to Facebook or other social media platforms that aren?t easily censored. It?s a political issue and one that is difficult for most Westerners to understand. Why would Chinese citizens allow this censorship to continue? Why would they allow themselves to be ruled by a small group of unelected party officials? There are several reasons, but the main one is rooted in Chinese culture: harmony. But I digress away from our topic.

Speaking of difficult to understand? just this past week, Mark Zuckerberg was speaking at the Mobile World Congress and he told about Facebook?s recent ruling in India?s courts. Facebook wanted to offer free Internet to Indian citizens. But the courts saw it differently. Facebook was not allowed to charge different pricing for services, even if one of those prices was nothing. The Indians felt that there was a price ? preferential access to Facebook and their partners? sites. It became a net neutrality issue.

Mark Zuckerberg, India, International Trade,

Image Source: Justin Sullivan/Getty Images/Business Insider

If you?ve ever read my blog before, you know that I give what I hope is helpful advice to small and medium-sized companies expanding into global markets. My focus is on providing tips and tools to help companies avoid the most common and costly mistakes. Facebook is by anyone?s definition a massive company with extensive financial resources beyond 99% of all companies.

Here are the International Business Lessons for the rest of us:

  1. ?Every Country is Different?. That?s actually Mr. Zuckerberg?s exact quote about the Indian court ruling. That may sound incredibly obvious, but every week I talk with at least one company leader who finds this basic fact incredulous. Recently a sales VP I talked with couldn?t imagine that?since?various countries negotiate differently that he should raise his prices in markets where locals would expect to negotiate a larger price discount. International business is a pattern of learn, adapt and move forward.
  2. When it?s important, take the long view. Facebook will never give up trying to access the Chinese market. That said, they will also never hopefully give up their stance on freedom from censorship.
  3. Creative problem solving is a core international business skill. If at first you don?t succeed, it?s time to stop, regroup, figure out what went wrong, and then figure out another way. That?s what Facebook is doing in India and in China. That?s what successful companies of all sizes do to win new global customers and grow to their full potential in world markets.
  4. Cultural understanding matters. In the video of Mr. Zuckerberg?s interview, the reaction is clear ? his Chinese audience is both surprised and delighted. I?m sure he would have had a great interview had he delivered it in English. They would have even appreciated his answers had he not been coached in Chinese cultural etiquette. But in one interview, he captured a nation?s attention for all the right reasons. This goodwill will shorten the time it takes to enter this market.?Few of us have time to learn Mandarin. But we can learn a few basic phrases in any language. We can either research or hire a coach to show our cultural respect to our future customers.

I look forward to seeing what Mark Zuckerberg and his Facebook team do next to continue to influence culture and technology. And I look forward to the continuing evolution of international markets for the rest of us. Onward & upward.

For more Tips and Tools on International Business, you can join the International Trade Tribe.

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