Entering the US market

An HR checklist for staffing and managing North American subsidiaries.
By Patrick F. Villella, General Manager, TriNet.
The US market, given its size and friendly business environment, is highly attractive to international SMEs, but there are many challenges in entering the market. Corporate HR departments can be an important resource in the overseas business building equation, but finding ways to manage costs is not easy. The twin goals of increasing productivity and minimising expenses are the way to get there. Focussing on recruitment and retention, compensation, compliance and benefits will help to ensure your success in the American market.

Recruitment and retention
One of the keys to successful recruitment and retention of employees in the US is the interview process. Developing a hiring plan that addresses all steps—from posting the job through to onboarding—will enhance your chances for success. Confirm that each applicant fills out an application for employment, verifying the truthfulness of the information provided and authorising a background check verifying education, employment, a criminal background report and a credit check on someone who will be handling money. Also, a comprehensive job description listing all of the essential requirements and duties of a job is a must under the Americans with Disabilities Act and may help protect you from claims of disability discrimination. Questions on other subjects can also run you afoul of anti-discrimination laws. So, focus your questions instead on the candidate’s ability to perform the essential functions of the job.

Compensation
Both negative and positive reinforcement will motivate people to perform. But as the saying goes, you get more with sugar than you do with spice. ‘Sugar’ can take many forms:
Implementing pay-for-performance programmes. Providing incentive pay may seem counter intuitive to an article on keeping costs in check, but in the long run, it could be your best weapon against out-of-control expenses.

Eliminating the guesswork on competitive compensation. Use compensation surveys that can help you to benchmark your company’s salaries against similar US companies’ salaries to ensure that you are paying your staff at local market rates.

Offering flexible work schedules. In a recent survey, when employees were asked if they would rather have more pay or more time off, they chose more time off.
Asking your new hires for ways to cut costs. Generally speaking, employees know their jobs better than anyone else. What they are complaining about around the water cooler could translate into lower HR costs for you.

Compliance
One of the smartest and most cost-effective strategies that you can adopt is to comply with US labour laws from the start. Compliance may sound simple enough, but employment laws—mainly state and federal—are copious and complex. They dictate nearly every aspect of the management of human capital from how you hire and fire, to how you pay and provide benefits. Compliance boils down to this: do not give the IRS or any other government agency a reason to become interested in your company.

Benefits
Like most executives, you want to know that you are not paying more than you have to, while ensuring that your employees feel motivated to perform. Offering the right benefits package can help you achieve this goal.

The standard list of benefit categories may look the same for small and large employers, but the plans, features and services offered vary widely. The standard list includes insurance coverage for medical, dental and vision care as well as short and long-term disability, life, accidental death,  dismemberment and more frequently, long-term care. In addition, most employers offer some sort of retirement plan, defined benefit—traditional pension plans—or defined contribution plans, such as a 401(K). Very small companies may consider individual retirement accounts (IRAs) designed specifically for them.

For small employers, the level of benefits is generally much lower than that provided by large employers, the level of risk to the employer is much higher and the cost per employee can be higher as well. Benefits, such as health insurance and the cost of providing those benefits, can vary widely.
You will want to choose your vendors wisely. If you are looking for health insurance, for example, choose a solid administrator. That means someone who can pay claims promptly, provide intelligent customer service, offer great discounts, and handle various financial and funding arrangements that will grow with your company. Your vendor should provide some degree of technology since keeping up with the rapid changes in technology is just not feasible for small companies. US employees expect robust benefit technology. Not only must the technology provide information, but it must also handle transactions, track claims and in the case of healthcare, provide specialised applications such as health risk assessments.

What benefits should HR offer?
Health: it is recommended that companies offer a generous benefit plan from day one—a plan that encourages employees to stay on and help grow the company over the long term. For example, offer a plan that pays at least 90% of the cost of a preferred provider (PPO) and include dental and vision plans. To help save costs, some areas should be looked at carefully including passing on costs to employees; implementing higher deductibles; encouraging employees to spend their healthcare dollars wisely; and implementing wellness programmes to encourage employees to stop smoking, lose weight and maintain a healthy blood pressure.

Dental and vision: some experts advocate not offering these plans at all, because the cost/benefit ratio is not always worth what you pay in insurance costs.
401(k) plans: offering a 401(k) plan is a no-brainer for a company on the rise. It can help employees save money on taxes and for retirement.

Life, accidental death and dismemberment insurance plans: these policies can be relatively cheap, but as a small business, you should watch how you define the base pay that these plans may depend on.
Long-term disability and long-term care plans: most small employers do not typically offer these plans, but if your competition does, you may want to comply.

Workers compensation: this is required in the US, but you still need to watch your costs.
Developing a proper HR plan prior to entering the US market will help ensure that your new American subsidiary is compliant, your budget is managed prudently and that you have created an entity more likely to attract the valued employees it will need to grow and prosper.