In my role as the firm’s HR Consultant, I have the privilege of working with some of our firms’ international clients. The basic profile of these clients is: a small subsidiary of a larger parent company based in the home country. One very common theme that I find in these clients is that they pay very little attention to human resources policy and/or structure within their organizations. While they are very focused on building their business, they are often putting themselves at great risk by ignoring basic HR practices and structure. Foreign entities are often just not aware of how litigious we are in this country and that basic human resources structure is absolutely necessary to function correctly when doing business here. This is a recipe for unnecessary risk.
It usually starts with an employee handbook that is several years out of date. The manual has policies and procedures that are no longer in place and offers benefits that are dated and/or non-existent. For example, there might be a progressive discipline policy in the handbook, yet none of the current management knows it’s in there or that it even exists. They are certainly not following it during the course of whatever discipline they might be enforcing and this, of course, puts their company at risk.
Another area of risk that I have noted is in the classification of employees as whether exempt or non-exempt and the payment of overtime. This can be complicated for even savvy domestic companies, let alone a foreign entity. I have seen examples of companies that classify two people, doing the exact same job as hourly and salary. Others don’t know the overtime rules or ignore them.
In every case, I have found that the employer just doesn’t know the law, how to write policy, or how to implement policies. Often they are just following the course laid down by the parent company and are powerless to question. Many are not given a budget to deal with the matter since it doesn’t directly contribute to growing the business. All of it equals a recipe for disaster. Foreign entities looking to do business in the United States need to pay attention to the bigger picture when setting up shop over here. They need to understand that setting up a proper infrastructure that addresses HR risk will allow them to focus on growing their core business.
Are you a foreign company with a U.S. subsidiary that needs HR help or advice? I’d be happy to help. Please email me at: email@example.com