Why Ignoring Global Hiring Issues Is Costly

Tapping into the vast global talent pool presents exciting opportunities, promising innovation, diversity, and rapid growth. Companies expanding internationally also encounter hidden costs and unexpected pitfalls that can derail their plans.

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Getting it right involves finding the ideal person and also avoiding the costly mistakes many companies unknowingly make.

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Join us as we examine the real, often surprising, price of getting global hiring wrong.

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Common Lies on Resumes

The journey to a great global hire often begins with a resume. Yet, what if that resume is not telling the full story? Fiona Cher, Director of Government Affairs at Veremark, observed that a significant percentage of candidates, historically 40%, admit to lying on their resumes. This number is expected to climb due to increased competition in today's job market. These are not minor exaggerations either.

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Candidates might inflate their job titles, claiming to be a "Senior VP" when they were actually a "senior manager". It gets trickier when they lie about the number of people they managed, casually stating a team of 25 or 100 when it was only 5 or 10.

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Even more concerning are fabrications about employment durations. Some have lied for as long as two to three years to cover up gaps, often hiding problematic pasts. One shocking case involved a candidate concealing time served in prison, knowing criminal checks could not be done in that country for employment.

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Beyond written claims, candidates can be incredibly charming and charismatic in interviews, making it hard to spot any issues. Fiona shared a memorable 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.

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The problem extends to documents themselves. With readily available technology, including AI, falsified offer letters, graduation certificates, and payslips are becoming increasingly realistic. These fake documents can be bought for as little as $100.

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Another example involved a candidate who forged a national education certificate using only Microsoft Paint, and it was nearly indistinguishable from a real one. Even school administrators can struggle to tell the difference between real and fake documents, highlighting the immense challenge for HR professionals, especially when dealing with foreign countries where document formats vary wildly.

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The cost of a bad hiring decision is substantial. Anthony Smith, Chief HR Officer at Accertify, pointed out that 80% of a company's attrition is often due to these poor choices. Replacing an employee can cost up to 150% of their salary, considering the downtime and the time it takes for a new person to get trained and productive. Getting it right from the start is paramount.

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Compliance Blind Spots

Once a person is hired, the compliance journey has only just begun. Allison Hall, Chief Operating Officer at Helios, explained that compliance requirements are constantly changing, coming from national, provincial, state, and local laws, as well as internal organizational shifts like policy updates or promotions. Keeping track of these changes across multiple jurisdictions is an overwhelming task, requiring significant resources and constant vigilance.

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Anthony shared a recent example from the United Kingdom. Employers there now have to pay for employee eye exams, and if a doctor believes sight is impacted by work screens, the employer is obligated to pay for their glasses. This new rule illustrates how quickly landscapes can shift, and how easily a company can fall out of compliance without even knowing it.

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Failing to stay on top of these changes can lead to serious consequences. Allison provided an example of a company that faced fines and reputational damage for not properly compensating employees for time spent on mandatory safety activities.

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These were likely honest mistakes, where the company simply did not realize it was a compliance requirement. As Allison Hall put it, "you do not know what you do not know".

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The impact extends beyond financial penalties. Non-compliance can lead to mismatched records, significant fines, and retroactive work to fix data. Critically, it erodes employee trust. Companies have a relationship with their employees, and treating them in unexpected or non-compliant ways can break that trust. No company wants to be splashed on the front page for an honest mistake that looks bad.

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More Than Just Paying on Time

Payroll, often an afterthought, can quickly become a costly and painful cleanup crew. Kira Rubiano, Partner at Payrollminds, emphasized a common and dangerous error is hiring a global contractor without properly assessing their employment risk.

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Companies often assume they can hire someone as a contractor, but based on local parameters, that individual might legally be considered an employee, triggering local tax liabilities and back taxes for both employee and employer for a significant period. Kira shared an 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 are another major pain point for payroll. In countries like Germany, statutory audits happen regularly, sometimes every two years. Other countries, like Egypt, conduct surprise audits, knocking on office doors and demanding immediate access to all payroll records. Failing to provide sufficient proof can lead to severe penalties, even shutting down a company's ability to hire and fire.

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Starting employees before they are properly registered with social security or healthcare is also a significant risk. If an unregistered employee breaks a leg while working, the company could be liable for all their healthcare costs and any claims raised against them.

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Incorrect data from HR can directly impact payroll, leading to over or under-withholding of taxes and benefit deductions. Getting an employee's pay wrong is the fastest way to get their attention, and fixing these errors can be extremely difficult and time-consuming depending on the country. These issues, if not caught early, can boil up and "blow up like a geyser" later on, typically months after initial hiring, causing a "year-end nightmare" for payroll teams.

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The perils extend to bank validation. Incomplete bank details can delay payments for not just one employee, but potentially an entire payroll file. 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, causing widespread delays.

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The Cost of Doing Nothing

When discussing investments in HR infrastructure, the conversation often centers on Return on Investment (ROI). However, Kira introduced a powerful counterpoint: the Cost of Inaction (COI).

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What happens if you do not make these changes? The risks include exposure to fines, inability to scale effectively, and potential reputational damage. Presenting the COI to leadership can be a compelling argument, highlighting the significant financial and operational dangers of neglecting proper global hiring infrastructure.

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Global hiring offers immense opportunities, but it comes with a unique set of challenges. By understanding the hidden traps in background checks, anticipating the complexities of compliance, and recognizing payroll as a critical, early-stage consideration, companies can avoid costly mistakes and build a foundation for sustainable international growth. Getting it right from the start is a necessity.

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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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