Over the past decade, two symbiotic employment trends have transformed how business is carried out, highlights Dee Coakley.
The mass migration to remote working has opened up vast new global employment possibilities for individuals and companies everywhere.
And we have seen the emergence of globally minded, location-indifferent business leaders intent on building companies that are effectively day-one multinationals.
Andreessen Horowitz calls these companies – which can be based anywhere, hire anywhere, and sell anywhere – ‘default global’.
And with four out of five business leaders now offering greater location flexibility to recruits, it seems increasingly likely that default global will become the default business model for the next decade and beyond.
Into the unknown
Default global has the potential to transform the way millions – potentially billions – of people live and work.
However, implementing it is much more straightforward in theory than in practice.
There is no set template for what these fledgling multinationals should look like – where they will employ people, how they will employ them, whether they will open offices or be content with everyone being fully-remote, or how they will remunerate similar roles in different locations.
As a long-term business model, default global is uncharted territory. And it is already exposing employers to a raft of HR and employment challenges. The world is simply not set up to employ and run fully dispersed international teams with ease.
Every new hire adds to the complexity
Employing people overseas is complex and time-consuming. Every government has its own approach; every market has its own customs, preferences, and obligations. There is no consistency.
And things get even more confusing when it comes to harmonising pay and benefits.
How do employers define a compensation strategy for employees living in Denmark – where employment taxes are 1.25 percent – while employees in France carry an employer cost of around 50 percent? How do they resolve radically different statutory entitlements and cultural expectations, like the fact that workers in the UK expect bike to work schemes, or that people in Portugal are entitled to 40 hours of education each year?
Add to this the multiple payroll, data management and compliance challenges involved in actively managing the default global workforce on a daily basis, and the scale of the problem starts to become clear.
From an HR perspective, default global is hugely demanding, and requires specialist, ongoing local knowledge of every single market where people are being employed.
The vast majority of companies don’t have the infrastructure, tools, or expertise to manage this complexity and make default global work. So how can we prevent HR from becoming an insurmountable barrier to adoption?
HR technology needs to evolve
Over the past few years there has been no shortage of innovation in the four core areas of HR and People Operations technology – employment, payroll, benefits and information systems.
While most of these have had the biggest organisational impact on a local level, global-first technology has also begun to evolve.
Some payroll providers offer the ability to run multi country payroll operations. Employer of Record platforms have made compliant overseas employment possible without the need to set up a local entity. HR management systems are commonplace to track team members’ time, attendance, and annual leave – and since mostly acting as data repositories, are less prone to become irrelevant as a company crosses borders. And though the technology is still in its infancy, global benefits providers too are starting to gain traction.
But there is still a problem: the bulk of these innovations have occurred in isolation from each other.
Today’s HR tech does not provide a fully integrated solution to support the needs of default global companies, because no one seriously anticipated that a world of truly borderless, remote-first companies could be a near-term reality. Not until the pandemic, that is.
The tech industry needs to play catch up. But we must also remember that tech is only a partial solution to global HR challenges. Local expertise is equally essential, and this is difficult to scale.
What is missing is a more fundamental solution – an HR Operating System that can handle the multi-layered complexity involved in employing, managing, and remunerating global teams.
Combining data and action
The idea of an HR Operating System is to bring together a full suite of HR and people management tools in a single interface, allowing business leaders to run cross-border people ops effectively – from employment to payroll, to managing cross-border HR data.
An HROS can give employers the ability to combine data and information – reporting on all ongoing HR processes – with action, letting them proactively operate their teams, make employment changes or address HR issues, regardless of where in the world the action is needed.
Why an ‘Operating System’ rather than just another platform?
Because there’s no template for default global. Default global companies need HR technology that works in every market they work, even though their in-country needs may differ radically depending on their unique circumstances. They may need Employer of Record functionality in a handful of overseas markets, payroll and benefits everywhere, and time-tracking only in countries where they have a legal obligation to provide it. Currently managing the tech stack alone is unsurmountable.
In short, default global requires a new category of technology solution – one that will transform the operational agility of fast-growth companies everywhere. Building an HR OS won’t be easy, but it’s the essential next step in the evolution of HR technology.
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Dee Coakley is Co-Founder and CEO of Boundless.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
- Amelia Brand
- Amelia Brand
- Amelia Brand
- Amelia Brand
