September 19, 2022
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✨ NEW: Have multiple entities? Manage payroll for every country in one place
Flexibility, creativity, innovation and speed are some of the most important factors that distinguish successful startup businesses from those quickly disappearing after making their market entrance. The key to succeeding in these four areas is having the right talent.
Yet finding and winning talented employees isn’t always easy for startups. The competition for the best talent is fierce and they compete against big corporations that have been in the game for much longer and have more resources at their disposal.
In times of skilled labor shortages, employee attrition and an increasingly brutal war for talent, startups have no choice but to expand the geographic reach of their recruitment strategy and look for talent abroad. Remote hiring opens up vast possibilities for startups and scaleups alike, but it also comes with new challenges.
Here you read what the benefits and challenges of remote hiring for startups are, and how you can speed up and simplify the process with a global hiring solution.
Hiring a remote workforce comes with many benefits for companies. Here is a list of the most important advantages businesses can gain from hiring remotely.
Expanding the geographic reach of their hiring and recruiting strategy gives businesses access to a vast talent pool. Instead of having to choose between a handful of medium qualified candidates available in the area around their headquarters, companies that hire talent remotely can find the perfect match for their open positions. It also means facing less competition and solves local talent shortages.
Hiring employees who will be working from home or from anywhere else that isn’t the office saves businesses a lot of money in overhead costs. Overhead costs typically include costs for real estate, utilities (electricity, water, internet), office cleaning services, insurance and office supplies.
With a remote workforce, all these costs are cut, leaving the business with a big plus at the bottom line. Not to forget that hiring remotely allows companies to recruit highly talented workers in countries where employer costs are lower.
For a full rundown of the financial benefits of remote work for businesses, check out our article Can a company save money with remote work?.
Many studies have found remote workers to be more productive and happier with their jobs than their in-office peers. Pursuing a remote hiring strategy means actively working towards higher productivity rates and greater employee satisfaction, which will increase business revenue and reduce turnover rates in the long run.
Although the correlation between remote work and work-life balance is disputed, there are many remote employees who claim that working remotely has improved their work-life balance. Since a healthy balance between work and one’s private life is crucial for preventing burnout, this is yet another way how hiring remotely can save companies money - over $500 billion dollars a year for the whole of the United States to be exact. What’s more, with employees being less stressed and more engaged, the absenteeism rate is likely to drop, which means less interruptions in the workflow.
Looking for ways to make your employees’ wor-life balance even greater? Here you read how to improve work-life balance in remote teams.k
Remote hiring not only gives businesses access to an indefinite talent pool, but it also allows them to add a valuable perk to their existing employee benefits packages. Remote work is a popular employee benefit, with 74% percent of employees saying that they would quit their current job if their employer didn’t offer flexible work options. The same report found that for 57% of knowledge workers, the option to work remotely was the best perk an employer could offer.
The benefits of hiring remote employees listed in the previous section apply to all types of businesses. However, they are particularly important for startups. Remote hiring is the go-to option for startup companies because it allows them to:
Speed of decision, speed of delivery… Speed is crucial for any startup business. In a fast-paced business environment, startups that fail to act and react fast enough will stay behind. This need to move fast also applies to hiring new talent.
Hiring plans in startups are typically ambitious and open positions need to be filled as fast as possible. With an unlimited talent pool at their hands, startups will find it easier to hit their hiring targets and find the talent they need in record time.
Even though it might seem like they have all the resources in the world at their disposal after completing another funding round, startups usually find that funds are used up pretty quickly, since there are so many different parts of the business that need improvement.
Successful startups know that every penny counts and that it is crucial to use available funds in the best possible way. Hiring remotely means saving on unnecessary expenses and investing the money in areas where it can make a real impact, such as employee training and talent retention.
Markets are very volatile, even more so in times of economic uncertainty. For organizations like startups that don’t have the necessary capital and structures like established enterprises do, flexibility is key.
Startups must be flexible to quickly take advantage of business opportunities that present themselves, be it in their domestic market or in a foreign market. Therefore, they must be able to access flexible talent wherever and whenever they need it.
Hiring remotely allows startups to build a multicultural global team. Bringing people from different cultural backgrounds together creates diversity and the exchange of different ideas and perspectives enhances creativity, which leads to new and innovative ideas.
Creativity and innovation are the backbone of successful startups, since offering creative solutions and innovative products is the only way for an emerging business to survive and thrive.
Every business needs great talent, but startups do so even more. Emerging businesses that want to be more than just another star in a sky full of startups need the very best talent to help them win market shares and compete against established enterprises.
Taking a global approach to hiring and recruiting means being able to reach talented workers all over the world and actually standing a chance of winning them - instead of seeing them being snatched away by big corporations.
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The basic problem faced by startups in many different areas is the lack of standardized processes and, very often, resources. As the business is only just taking off, the necessary processes for hiring and onboarding employees still need to be developed, the necessary knowledge acquired and the missing resources brought in. On top of that, there are specific challenges that come with remote hiring.
Many countries require businesses to set up a legal entity (i.e. branch, representative office or subsidiary) before they can hire employees. For startups looking to hire talent abroad, this is very inconvenient, since incorporation is a very slow and expensive process. In other words: Establishing legal entities slows down growth and uses up money that could better be spent elsewhere.
Interested in knowing exactly how long it takes to incorporate abroad and what costs to expect in the process? We’ll tell you in our blog post Cost & time required to set up a foreign legal entity.
What’s more, the myriad of regulations and requirements linked to creating a legal presence in a foreign country expose startups to various compliance risks. The compliance issues companies face when growing globally range from timely and correct tax and social security reporting to data protection to corporate taxation. Safely navigating all the potential compliance pitfalls requires a lot of resources and expertise in the legal department, which startups often don’t have.
Dealing with different labor laws
There’s certainly more than one startup out there where the necessary knowledge of labor laws and employment regulations is missing. Now imagine what it’s like for an emerging business, which is already struggling to cope with the legal burden of hiring employees in one country, to suddenly have to navigate the different employment laws of several countries. Again, this creates a significant compliance risk if statutory benefits or employment regulations on working hours, overtime or minimum remuneration aren’t met.
With the necessary knowledge, funds and dedication, businesses can hire remote employees in almost any country. However, this doesn’t mean that all the countries where it is legally possible to hire remotely are automatically a good choice. Some countries are notorious for making it incredibly difficult for foreign businesses to hire employees within the boundaries of their jurisdiction, while others are very popular with international organizations because hiring and employing workers there is very easy.
Big enterprises that have been in the market for many years usually know where hiring remote teams is easy - and where not. Startups, on the other hand, don’t have this knowledge and might end up wasting time and resources trying to hire someone in a jurisdiction where it is almost impossible.
Remote hiring requires a different approach than hiring employees to join an in-office team. Here are some best practices startups should follow.
Let’s face it, remote work isn’t for everyone. While some employees flourish in a remote working environment and perform better when they have more freedom and flexibility, others need the structure and “pressure” of an office environment to work efficiently.
Therefore, you should be sure that whoever you are planning to hire is suited for remote work. For instance, you could ask potential candidates what their experience with remote work is, how they organize their workload and how they would deal with challenges if they arose.
Need more input on how to find out if a candidate is remote ready? Check out this blog post.
A negative onboarding experience makes it twice more likely for employees to look for another job - as found by a 2021 study from Zapier. So making sure the onboarding runs smoothly is a top priority.
Hiring and onboarding works differently in remote teams. Not being able to meet new employees at the office for the job interview and their first day of work means you need to have the most important information ready for them in the form of an employee handbook and provide them with all the documentation they need to settle into their role smoothly. The remote onboarding process as well as all the documents should be ready by the time you hire the first remote team member.
Not sure where to start? Here you can find the ultimate new employees onboarding checklist.
Business plans and financial forecasts need to be precise and the same applies to your remote hiring strategy and the expectations you have with regard to your remote team. Being clear about what’s expected from remote team members is crucial for remote work success.
Communicating these expectations openly - already during the hiring and onboarding process - makes it easier for workers to live up to the expectations and forms a solid basis for holding people accountable.
Expanding the geographic reach of your talent search alone isn’t enough to guarantee remote work success. To fully leverage the benefits of working with a remote team, you need to make remote your leading principle and follow a remote-first approach. This means prioritizing flexibility on all levels and making remote the default set-up across all departments and processes.
Wondering what the difference is between remote-first and remote-friendly? Find out in this blog post.
Instead of wasting tons of money on setting up subsidiaries all over the globe just to be able to hire the best available talent and exposing themselves to various compliance risks, startups should opt for a faster, easier and less expensive solution.
An Employer of Record (EOR) is a global employment solution which allows companies to hire full-time talent anywhere in the world without setting up a legal entity in the respective country. As the employee’s legal employer, the EOR handles all the administrative tasks and legal obligations linked to the employment relationship and ensures full compliance with local labor laws and payroll regulations. Meanwhile, the client business remains in full control of the employee’s daily activities and workload.
Finding the right EOR provider for each country can, however, be quite time consuming and challenging. That’s why Lano has developed a global hiring solution that gives startups looking to hire remotely access to a global network of experienced Employer of Record providers.
With our EOR partners, you can hire remote employees in over 150 countries worldwide in record time and at low costs. Plus, we provide you with a smart, easy-to-use platform to manage your entire global team.
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