Unmasking the Unexpected Pitfalls of Global Hiring

Companies expanding their teams internationally often encounter unexpected challenges. This article explores real-world scenarios faced by HR leaders navigating the complex landscape of international talent. Join us as we share impactful examples of global hiring gone awry, and uncover crucial lessons learned to help your business avoid becoming the next cautionary tale.

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Case Study 1 The Forged Degree and the Fake Supervisor

The integrity of a new hire often begins with their educational and professional background. But what happens when those credentials are not what they seem?

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Fiona Cher, Director of Government Affairs at Veremark, recounted a case involving a candidate who forged a national education certificate using only Microsoft Paint. This fake document was so well-made that it was passed off as realistic.

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She also shared an example from her own school, Nanyang Technological University in Singapore, where a fake certificate was almost indistinguishable from a real one. She pointed out that it is incredibly difficult to tell the difference, especially when schools themselves might change their certificate formats over time. These falsified documents are also easy and cheap to obtain, sometimes for as little as $100.

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Beyond educational lies, the risks can extend to direct deception in employment verification. There was also a case where a candidate planted a fake supervisor for a reference check. This "supervisor" was actually the candidate's best friend, given a script to make the review sound extremely believable. This was only uncovered when the HR department at the former company, being new, passed the reference check call to the actual supervisor, who confirmed she had never spoken with the background screening team.

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Case Study 2 The Sabotage Plot and Social Media Risks

Sometimes, the threats hidden in a hire go far beyond falsified documents. Anthony Smith, Chief HR Officer at Accertify, shared an experience from his time in the chemical manufacturing industry. A competitor faced a situation where one of their manufacturing employees intended to put a very dangerous substance into a large batch of chocolates, meant for global distribution.

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This was fortunately stopped because the company was conducting social media background checks. They identified a concern with the employee based on certain online postings. Anthony stressed that while people are a company's greatest assets, they can also be their greatest liabilities, underscoring the vital importance of thorough background checks, including social media screening.

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Case Study 3 Unexpected Regulatory Surprises and Unpaid Time

Navigating the ever-changing landscape of international regulations can lead to costly and unexpected surprises. Anthony offered a recent example from the United Kingdom. Employers there now have to pay for employee eye exams. If a doctor believes sight is impacted due to constantly looking at work screens, the employer is obligated to pay for their glasses. This rule, which just passed, shows how quickly compliance requirements can change.

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Allison Hall, Chief Operating Officer at Helios, provided another illustration of unforeseen compliance costs. She spoke of a company that was fined and suffered reputational damage because it failed to properly compensate employees for time spent on mandatory safety activities. Allison explained that companies often do not realize these activities are compliance requirements. As she put it, "you do not know what you do not know". This lack of awareness can lead to significant financial penalties and damage to a company's standing.

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Case Study 4 Payroll Perils and Hidden Liabilities

Payroll, often considered a back-office function, can hide significant financial exposure. Kira Rubiano, Partner at Payrollminds, recounted a common mistake where companies hire a global contractor without properly assessing employment risk.

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This can trigger permanent establishment, exposing them to local tax liabilities and back taxes for both employee and employer contributions. She gave a specific example from Honduras, where employees were not properly set up, leading to the employer owing them money for lost pension gains.

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Audits present another major challenge. Kira mentioned that while Germany has regular audits every two years, countries like Egypt like to surprise you. Egyptian authorities can show up at an office unannounced, expecting to see all payroll and employment records instantly. Failing to provide sufficient proof can lead to severe consequences, including the inability to hire or fire.

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Starting employees before they are registered for social security or healthcare also carries immense risk. Kira warned that if an unregistered employee breaks a leg while working, the company could be liable for all their healthcare costs and any claims they may raise. She also highlighted issues with bank validation, where incomplete employee bank details can delay an entire payroll file, potentially affecting many employees. Even more critically, if an employee appears on a watch list, like the U.S. Specially Designated Nationals list, it could block all outgoing bank transactions globally.

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Lessons From the Front Lines

These real-world stories underscore the profound impact of overlooking crucial details in global hiring. The financial repercussions, reputational damage, and operational disruptions can be immense.

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Anthony emphasized that payroll must be at the forefront when expanding into new markets, advising due diligence to avoid "a lot of surprises on the back end". Kira noted that payroll issues often "explode like a geyser" later in a company's scaling journey, making early alignment critical.

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By understanding these pitfalls, companies can learn to build more resilient and compliant global hiring strategies.

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Watch the On-Demand Session

Want to learn more about navigating these global hiring challenges?

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Watch the full on-demand session where our experts dive deeper into these topics and share even more actionable insights.

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