The difficulty of recruiting and retaining good employees is a hurdle all organizations have to overcome. A lack of qualified candidates, labor market changes, and competition from other businesses often lead to talent wars. Offering higher wages and enhanced benefits to attract applicants isn't always something small businesses can do. As a result, small business owners might find it even more difficult to compete for labor in tight markets.

But just like larger corporations, small businesses aren't necessarily limited to recruiting local workers. Retaining a portion of your workforce in other countries is a viable option when there's a shortage of domestic candidates. Tapping into global markets can help a small business overcome its hiring woes and remove barriers to growth. Here is how your company can legally recruit workers from around the globe.

Use a Professional Employment Organization

Professional employment organizations (PEOs) assist organizations with managing the HR side of hiring and retaining international talent. PEOs typically handle payroll, benefits administration, and onboarding tasks for businesses that hire employees in global markets. Some PEOs can serve as an employer of record (EOR), which allows you to retain international employees without setting up local entities.

Small businesses often find it impractical to establish legal entities in other countries for only a few employees. The process can be expensive, take several months to accomplish, and involve retaining local lawyers. Setting up a local entity also locks you into hiring from one country rather than keeping your options open. EORs handle legal compliance for your business, allowing you to hire employees from any country in which they are established.

The EOR becomes the legal employer, but your business still maintains oversight for hiring decisions and work assignments. An EOR also takes care of payroll, benefits, and onboarding. While all EORs work as PEOs, some professional employment organizations do not serve as legal employers. PEOs not providing EOR services are a better match for businesses with established local entities.

Rely on Global Trade Partnerships

Small businesses make up the majority of U.S. export activity. Indirect exporting is a low-risk strategy for expanding into international markets, but it still involves forming global trade partnerships. To bring international talent on board, some small businesses find it worthwhile to use existing, local trade relationships.

Similar to an EOR services, the local trade or business partner serves as the legal employer. On paper, the partner brings the new employee under their wing. The partner is in charge of payroll, benefits, and ensuring compliance with the country's labor laws. However, this type of arrangement can become confusing to everyone involved.

First, the employee might be unsure of whom they report to and what role they play in your organization. The lines between management responsibilities and whom the employee is committed to can become blurred. However, using existing global trade relationships can be a good short-term hiring solution if you want to test the waters.

Tap Into Freelance Talent

Hiring independent contractors instead of full-time employees gives your business access to international talent without having to establish legal entities. Working with freelancers also lets your small business test potential global expansion. 

Independent contractors can provide your company with local market insights and help overcome obstacles to successful market development. And you can always hire freelancers as permanent employees at a later stage.

But the decision to hire and retain international contractors is not one to take lightly. Labor laws in some countries only permit it under certain circumstances and according to specific conditions. Other nations may not allow foreign businesses to hire local workers as freelancers at all.

Before your small business taps into the contractor talent pool, you'll want to triple-check the country's regulations and guidelines. Canada, for instance, uses several indicators to distinguish employees from contractors. For example, if the organization that pays the person makes decisions about the work the individual performs, the worker is an employee. But if the person doing the work can decide to accept or decline assignments, they're an independent contractor.  

Outsource a Department or Role

If your business has trouble finding local talent for a department or position, you can try outsourcing. Business process outsourcing (BPO) companies sometimes have an easier time finding workers to fill functional roles in global labor markets. Employment and economic conditions in those areas may be more favorable or less competitive for certain positions.

By partnering with a BPO, your business will gain the specialized knowledge that the organization has. However, the other company maintains control over recruiting and retention strategies. A BPO remains the employer of the workers that carry out your organization's functions and responsibilities. Typically, you can place certain stipulations into the contract or agreement your company signs with the BPO.

For customer service roles, your business can ask the other organization to maintain specific quality standards. These can include thresholds for first-call resolution, scripts or conversation workflows for various issues, and call handle times. You'll need to share proprietary materials related to the role(s), but a BPO will usually handle distribution and employee training.

Conclusion

When local talent is scarce and positions remain open for months, meeting day-to-day obligations and focusing on growth seem impossible. The thought of hiring global employees might seem like both a sensible and an intimidating solution. However, the size of your business shouldn't hold you back from considering an international workforce.

There are legal and practical ways for small businesses to expand their hiring options, including EOR services. By using methods that establish and rely on global partnerships, your business can acquire and retain the staff it needs. You'll be able to refocus your efforts on developing the company and remaining competitive in ever-changing markets.