IRS steps up employment tax audits – Independent Contractors The Focus

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IRS steps up employment tax audits

Background

Companies are required to withhold income and payroll taxes for their employees, but are not required to do so for independent contractors. In addition, a business must fulfill requirements under labor laws for employees that generally would not apply to contractors. The distinction between an employee and a contractor is therefore important for the withholding of taxes and reporting of income – which are crucial for ensuring tax compliance – and for applying labor laws, such as minimum wages, work place safety or eligibility for unemployment benefits.

The principles for distinguishing between independent contractors and employees are complicated. They are based on long-standing common law, and depend on as many as 20 factors related to the relationship between the worker and the business and must be applied on a case-by-case basis. Moreover, some rules apply to all workers, while other rules exclude specific categories of workers, such as engineers, designers or programmers.

For businesses that have historically classified workers as independent contractors, a special provision (Section 530 of the Revenue Act of 1978) provides a “safe harbor” exception from the usual 20-factor test. Under this safe harbor, the IRS may not reclassify workers as employees – even prospectively or for newly hired workers.

The issue of proper classification of workers as employees or independent contractors can have severe financial consequences to the business that misclassifies its workers. Not only is the company subject to retroactive tax withholding, but also penalties and interest if the classification is incorrect. In many cases, the liability adjustment made in an employment tax audit could bankrupt the business.

Employment taxes are “trust fund taxes.” This means that officers and owners of the company have personal liability for these taxes and cannot discharge them in bankruptcy, if the business cannot pay. Thus, the IRS takes no prisoners. If employment taxes are misappropriated in any way and there is a misclassification, the owner is generally personally liable.

The potential liability for misclassification of workers is already frightening and it may become more expensive. The classification of workers is also under legislative scrutiny by Congress and the Minnesota Legislature. Although the use of independent contractors is completely legal and legitimate, some believe there has been abuse; and therefore legislative proposals are made to restrict, if not eliminate, independent contractor status.

Employment Tax Audits

The IRS conducts 60,000 employment tax audits per year. An employment tax exam audits the following Federal taxes:

  • Federal Income Tax Withholding
  • Social Security Tax (“FICA”)
  • Medicare Tax
  • Federal Unemployment Tax Act (“FUTA”)

Federal employment tax examinations determine whether or not:

  • Workers are properly classified.
  • The employment tax liability is substantially correct.
  • Whether IRS information returns and W-2 wage statements are substantially correct and have been filed.

Employment tax audits are very fact intensive and time consuming.

20-Factor Test

Historically, the IRS uses what has become known as the “20-factor” test to determine whether a worker is an independent contractor or an employee. Over the years, the IRS has attempted to simplify and refine the test. The IRS has consolidated the “20 factors” into eleven main tests and organized them into three main groups: behavioral control; financial control; and the type of relationship between the two parties.

The IRS uses three characteristics to determine the relationship between businesses and workers:

  • Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
  • Financial Control covers facts that show whether the business has a right to direct or control the financial or business aspects of the worker’s job.
  • Type of Relationship relates to how the workers and the business owner perceive their relationship.

If a business has the right to control or direct, not only what is done, but also what how it is to be done; then the workers are most likely employees.

If the business can direct or control only the result of the work – and not the means and methods accomplishing the result – then the workers are probably independent contractors.

Section 530 Relief

In certain circumstances, Section 530 can relieve businesses of employment tax liabilities resulting from worker misclassification, but the business must meet specific requirements under the law.The business must meet the following three requirements in order to receive relief under Section 530:

  • a reporting consistency,
  • a substantive consistency, and
  • a reasonable basis for treating the workers as independent contractors.

A business must meet all three tests. Making these tests means that the business will not owe employment taxes for the workers in question.

The New National Research Program Audits

In addition to its regular employment tax audits, for the next three years, 2000 companies per year will be randomly selected to provide data for the IRS’ National Research Program (“NRP”). The results of these audits will be used by the IRS to study employment tax compliance. The NRP is the first such intensive IRS employment tax audit in 25 years. The NRP exam is comprehensive in scope and more rigorous than a typical employment tax audit. IRS agents will look at related documents such as Form 1120 corporate returns and IRS 1099 forms.

In addition to reviewing payroll taxes, the NRP program will examine:

  • Worker Classification. Independent contractor and worker classification issues, including executives rehired as consultants, dual status employees, and employee leasing arrangements;
  • Fringe Benefits and Employee Expense Reimbursement Plans. Fringe benefits, including the usual “planes, trains, and automobiles”, as well as other expense reimbursement arrangements. For example, credit cards, cell phones, use of personal digital assistance (PDAs) provided by employers, and other noncash benefits;
  • Officer Compensation. Executive compensation and fringe benefits issues, such as use of corporate aircraft, executive retirement contracts, golden parachutes, stock options, and other compensatory issues of executives; and
  • Non filers. Determine if the independent contractor has reported his Form 1099 income on his tax return.
  • The NRP has two major goals:

To secure statistically valid information for computing the amount of the employment “tax gap” and

To determine the salient compliance characteristics of businesses so the IRS can focus future employment tax audits on the most noncompliant employment tax areas.

Why the Scrutiny on Independent Contractors?

Simply put, narrowing the tax gap is the key motivation behind proposals to crack-down on misclassification of employees as independent contractors. Businesses must withhold income taxes, withhold and pay social security and Medicare taxes, and pay unemployment taxes on wages paid to employees. By contrast, businesses do not have to withhold or pay any taxes on payments to independent contractors. Employers are more likely to withhold and submit taxes than independent contractors are to voluntarily pay their liabilities. The latest IRS study on the subject found that 15% of employers misclassified 3.4 million workers as independent contractors, causing an estimated total tax loss of $2.7 billion in inflation-adjusted 2006 dollars.

The same IRS study also found that workers misclassified as independent contractors for whom employers did not report compensation on Form 1099-MISC reported only 29% of their compensation on their tax returns. Left unsaid in the report, but clearly implied, is that independent contractors organized as corporations did not report their compensation. This will be cured under the recently enacted Health Care law of 2010 that requires the issuing and filing of Form 1099 to an independent contractor organized as a corporation.

Steps Businesses Should Take to Avoid Worker Classification Problems

Given these potential risks, the overriding lesson to learn from the recent IRS audit focus, is that it is increasingly dangerous to misclassify an employee as an independent contractor to avoid paying taxes, health benefits, overtime liability, and other costs. With increased scrutiny from both the State and Federal levels, employees should audit their independent contractor agreements to ensure that they will withstand inspection. This is an area in which a little prevention can be better than the cure.

  • Review all worker-written contracts to clarify worker status;
  • Follow the “common law” tests carefully;
  • Obtain a Form W-9 from the worker, pay by check, and issue a Form 1099-MISC;
  • If an individual is really an employee, do not try to classify the person as an independent contractor;
  • Ensure and preserve Section 530 relief and eligibility;
  • Watch for “Form SS-8” IRS request, payroll audit questions, or other signs of any IRS worker classification audit;
  • Once the proper employment status is determined, do not flip flop and change the status in an inconsistent fashion. Maintain consistent treatment to the extent possible;
  • Monitor IRS changes in its worker “Classification Settlement Program” (“CSP”) and announcements on its ongoing study of employee/independent contractor issues;
  • Lobby for legislative changes to clarify status of independent contractors; and
  • If you have questions, immediately seek the assistance of counsel.

Action Point

In light of the above, businesses need to be careful in documenting how they treat their workers and what type of compensation is being paid to them. Businesses need to be very careful and should review their employment practices so that, if the IRS does commence an audit, they will be in the best position to defend themselves, under the “common law” test or other legislative exceptions to employment status. By understanding the issues and undertaking internal compliance reviews, employers may be able to satisfy the relief provisions available in Section 530 for worker classification issues or the “reasonable belief” standard for payroll tax, worker compensation, and fringe benefit issues.

RFP Blunders: Helpful Tidbits for Suppliers and Buyers

As a supplier the average cost to respond to an RFP / tender process can exceed $15,000.  This is no different than the cost of resources to a buying corporation.  The reality is an RFP is an expensive investment of time and resources, so the outcomes should reflect the commitment invested at the onset of the process. Having sat in the seat as a buyer and a supplier and now as an advisory consultant, WOW there are simple things that can be fixed to make this effort more successful.

Here are some quick tips for both suppliers and buyers to improve the experience.

Buyers:

1.  Take the time to define your requirements: All too often this step of the process is missed or glossed over and the RFP does not capture the right level of detail that will be required to make an informed decision.     Action:  Define your program objectives, desired outcomes and aligned questions of suppliers that will help accomplish those goals.

2. Templates are a starting point: Templates are a tool so you do not have to stare at a blank sheet of paper and create something from nothing.  The importance of a template is the framework of the document and the types of questions asked.  The key is, to leverage this framework and align the questions to the requirements identified at the onset of the process.

3. Communicate data so suppliers can provide the right solution: All too often there is a “fear”  or “discomfort” associated with communicating data and metrics as part of the RFP due to a variety of reasons.  The more data you can provide, the better a supplier can respond to the question based upon the information you are able to provide.

4. Adequate time to review the RFP: The average RFP question takes about 4 – 6 minutes per question, to review.  Multiple the time it takes to review each question, by the total number of RFP questions, this will provide insight on how much time it will take to review and score the RFP.  This total does not include the data analysis required to score and rate the pricing section of an RFP.

5. Contract language: As part of a tender preparation, we recommend providing the supplier with a copy of your contract terms and conditions.  Getting your legal partners involved early will expedite the contract negotiations later in the process.

Suppliers:

1.  Incumbent: If you are an incumbent, align your responses to how you are delivering services today. Letting the dedicated RFP team write your responses with no alignment to services currently being provided will make for an unhappy buyer.

2. Answer the questions: Sounds simple but seemingly it is not.  Answer the question.

3.  Address how the question and your answer will benefit the buyer: Okay so you have answered the question, but the buyer wants to know “how does that impact me?”.  Make it relevant.

4.  Don’t leave blanks: Not answering the question, especially leaving blanks adds time to the process. If the buyer is under a tight timeline you may be ruled out of the process quickly.

5.  Demonstrate operational expertise: If you are an incumbent, be prepared to address how you have remained client focused and have improved the performance of the account?  If you are new, what type of data can you provide to prove not only capability but results?

There are always many points of view around RFP’s and the related success rates. However sometime simple tweaks can make all the difference.

Tracey Friend
traceymfriend@yahoo.com

Rebuilding Recruiting: Cost, Compliance, Process and Botox

2010 poses interesting cross roads in Talent Acquisition for many companies.  With the onset of changes from the IRS, DOL and new case law being defined about fair employment practices, COMPLIANCE AND COST MANAGEMENT have become driving forces over building good infrastructure.  These challenges have been compounded by the increase in focus around contingent labor as part of a total strategy, rebuilding talent  programs to support the ever changing needs, limited budgets, decision making capabilities and finally supporting ongoing mergers and acquisitions. In speaking with many Talent Management Leaders, it is not about doing “what is right” it is about “botox” and deploying solutions that can decrease cost and manage compliance. A leader in this space must focus on blocking and tackling and deploying solutions that leverage the resources they currently have in a way an organization is ready to have them perform.  The reality is, the READINESS and EXPECTATIONS, may not align with the RIGHT set of solutions.

This insight is as a result  of my activities over the last few months that have focused on audits, vendor selection, process documentation and technology implementations.  The themes for this have been “help me save money, make my life easier and keep me compliant”.  However while the themes are alive, the work expectations of a Talent Acquisition / Management leader have increased exponentially as they must execute strategically, tactically as well as block and tackle.  The internal struggle becomes do I check the box or do I do it right?   OR as I say do you do Botox or a full facelift?

While I am not sure this article will solve this problem,  this article will provide some benchmarks of how peers are successfully deploying solutions and working within these constraints.

Benchmarks:  What are some of your peers doing?

Technology

Company Description: Two large organizations, recent spinoff’s, no technology, variable hiring practices.

Limitations: Limited resources, budget for external consultants, executive appetite for doing the required pre-work and post implementation change management.

Botox Actions: Develop generic processes, hiring manager self service is a big decision, no integrations, career site facelift (simple), simple approval processes, job board memberships, basic on-boarding and compliance documentation.

Gaps: Internal mobility (process and policy),  Search firm management process and practices, ERP integrations, integrated background and screening vendors and thorough requirements development associated with college, internal, volume, professional and executive hiring practices.  Change management and user acceptance programs post implementation.

Compliance

Focus: Contingent and Direct Hiring Practices.

Company Description: 5 Companies, 2 Global, variable hiring practices.

Limitations: Technology, policy adherence, corporate cultures, competing priorities and resources.

Botox Actions: Contingent Workforce Audits,  Direct Hire Audits, Process Documentation, Recruitment Operations Guide Creation.  Legal defensive support vs. pro-active policy adherence.

Gaps:  (Contingent): The ability to execute with speed.   (Direct):  Resources, change management, centralized policy administration, operational management resources dedicated to HR compliance.

Recruitment Delivery

Focus: Direct Hiring Practices.

Limitations: Process optimization, sourcing tools, assessment tools, on-boarding systems and practices, transactional service delivery (order taking focus).

Botox Actions: Increase in temporary hiring, adding of contract recruiters, investigation of RPO with longer decision cycles, basic branding and recruitment advertising support for web, social media execution w/o aligned strategy,  refined job postings and communications.

Gaps: Process development / optimization, vendor management practices, recruitment marketing strategy and metrics, workforce planning, consultative / high value recruitment delivery practices, alignment to the business, training and recruiter development.

Procuring External Solutions  (RPO, MSP, Research, Project Recruitment, Consulting)

Focus: Direct and contingent hiring practices.

Limitations: Spend and long term commitment to a solution.

Botox Actions: Business case development, increased supplier presentations, competitive pricing, longer decision making cycles, increase in  internal stakeholder management and contracts that assume less liability as a buyer of services.

Gaps: Budgets with decision making ability to spend.

Unexpected Distractions

As filling requisitions remains a focus, compliance and litigation can distract the progress of an HR / Talent Management and Contingent Workforce Management organization.  Below are a few snippets from www.lexology.com, that are real issues causing a distraction in policies, practices and HR’s focus.

Legal Snippets

In Velez v. Novartis Pharmaceuticals, a jury awarded over $250 Million to a class of female sales employees who claimed that they were paid less than their male counterparts. Statistical analysis was used in an effort to show that females systematically received lower performance ratings than men in comparable jobs.

Social networking sites (e.g., FacebookMySpaceLinkedInTwitter, etc.) are fast becoming a popular tool for employers seeking information about job applicants. It has been reported that the number of employers currently using social media during the recruitment and hiring process has more than doubled in the past two years. According to the same source, 45 percent of employers currently use social networking sites to screen potential job candidates and 35 percent of those employers have rejected an applicant because of information they discovered, such as inappropriate pictures, information regarding alcohol or drug use, and postings in which the applicant “bad-mouthed” a former employer, bragged about prior acts of misconduct or made discriminatory remarks.

The U.S. Supreme Court has issued a ruling that may create additional liability for employers whose policies have a disparate impact upon minorities. On May 24, 2010, in Lewis v. City of Chicago, 560 U.S. _____ (2010), the Court held that a disparate impact discrimination claim may arise not only from the adoption of an employer policy which has a disparate impact upon individuals in a protected class, but also in all future implementations of the practice covered by the policy. With recent studies exposing the potential disparate impact of common employer policies, such as using social media for background checks and recruiting, this case may have a far-reaching effect.

Employers should remember that disparate impact claims may arise not only from the introduction of a policy such as a social media background check policy which results in a disparate impact or discrimination, but also each hiring decision which results from implementation of that policy. In light of this ruling, employers may want to consider these practical pointers:

  1. Examine your hiring, screening and promotion policies, including your social media background check and recruiting policies, to ensure they do not result in inequalities on the basis of protected classes, e.g., race, color, religion, sex, or national origin;
  2. If your policies do result in such inequalities, ensure that you have documentation which establishes the business necessity of the policies; or
  3. Reexamine your policies and implement new ones which do not result in disparate impact or discrimination, and ensure that social media is not the sole source for recruitment and background checks.

Summary

Many organizations are rebuilding and having to work within the parameters that are acceptable within their organization today.  This should not stop good work it just makes the journey towards excellence bumpier and a longer road to travel. To all of those smart people I have and continue to work with – I appreciate that they continue to do great things – just baby steps instead of one giant step for mankind.  I would be happy to discuss these details in further, should you be interested, contact my at traceymfriend@yahoo.com

If I outsource my recruiting to a RPO does my job go away?

As I sat down to write this blog post, I struggled with the direction to take this discussion.  Part  of me says “What do you think?”  – The other side says – let me provide you with a set of questions that can help you think about this answer.

First – I would like to know what is your thoughts?  So please respond to this post.

There are  4  situations how an RPO can be utilized. An RPO can take on all of the recruiting, part of the recruitment process, a project or a segment within the recruiting process.

In recent conversations with Talent Acquisition Leaders, they are seeking an RPO to leverage and scale their recruiting function today.  What is driving this mindset is, a reduction in recruitment due to the economy, restructuring of all Talent Management, program and operational needs that compete with filling positions and the need to do something, better, faster, cheaper.   While this is only a subset of conversations, this thought process is not the only one in play today.

How do you understand how an RPO may be utilized inside your organization?

The first step is to really understand what gaps exists today and why? Is there a global expansion?  Is there a division that has had an unexpected peak in hiring?  What is the voice of the customer revealing?

The real questions are: Does the leadership see the Talent function as transactional or as a business process?  Let me explain further.  Does your organization expect you to have strategic discussions with the manager about the business and how this role will make an impact?  Do they expect you to get the job description and fill the position?  Now based upon the environment you are in today, do the business expectations align with what you are currently delivering?

Secondly: Does your organization understand the impact compensation, benefits, training,  employment brand, retention, diversity has on the acquisition of talent?  OR does the organization see this as separate?

Third: If expectations are not aligned with delivery, than ask: How does my organization make decisions when these gaps exist?  Would they support a solution that allows the internal organization to fix it? Would they seek to just replace it?

Fourth: If the HR infrastructure is seen as separate from impacting talent acquisition, could leadership seek a group who they would perceive as doing it better?

If yes to seeing an outside organization having the ability to do it better, than RPO may be seen as a replacement, and the work you may need to do is provide data and analysis to demonstrate the WHY and HOW these factors impact recruiting and what role you can play once an RPO is in place.

If your organization respects Talent Management, than use this opportunity to understand and define your processes.  Understand where are the program gaps? Finally once an RPO is in place, what activities do you need to execute to better align with the business or improve the effectiveness of the entire program?

There are many other scenarios that drive the decision making around how an RPO is utilized. Recruitment process assessments, voice of customer surveys are two good activities to understand how better to leverage this type of outsourced set of solutions.

Again, what are your thoughts?

Corporate Culture Impact on RPO and Recruitment Services Vendor Management

Over the last month I have been conducting recruitment process assessments and benchmarking my findings with others. There seems to be a theme coming from the voice of the hiring manager (customer) exercises: “We expect good process, now please understand our business.  When you don’t understand our business, the candidates you present just don’t fit.”

The theme from the HR / Recruiting organization is: We are rebuilding our processes, transitioning new organizations due to M&A, doing more with less and are in need of a short term plan to stop the chaos and simultaneously build a longer term strategy.

The business wants alignment now; the HR organization is building and responding.  There is a natural gap between wants and what can be delivered, possibly resulting in frustration, work around behavior and greater escalation management. We have entered the perfect storm.  As part of the perfect storm the increase in need for Managed Services Programs and Recruitment Process Outsourcing solutions are seen as a mechanism to solve part of the need.  Yet if your organization is in the midst of this storm below are some good recommended vendor management practices when putting short and long term solutions in place.

Corporations

1.  Prior to engaging a vendor identify: Culture, policies and conduct a voice of the customer.  Key outcomes are answers that address:  What will the provider need to know in order to be successful? What will I need to closely manage, so both parties are successful?

Leveraging these findings, create a vendor management strategy to include:

1.  Mission and Vision of Recruiting

2. How do vendors fit into this overall strategy? Short term and Long term?

3.  What changes exist within the organization around stakeholders, expectations, business
needs that an outsourced provider and a vendor management group will need to know?

4.  How can this break and with whom?  What is the impact if it breaks and what will you need
to do to mitigate major issues?

5.  What are the business triggers that can change the needs or services requested of the RPO
and MSP?  What role does the vendor management or HR leadership team need to monitor
to effectively collaborate with all stakeholders on the right solutions and expectations?

Vendor Management Framework

Based upon your answers the framework components will include:

1. Vendor  Utilization Policy,  Contracts T&C’s,  Approval Policy and SOP,  Search Firm Contracts, On boarding / Management / Off-boarding Vendors, Contract Negotiations, Candidate experience model,  Adding a vendor, vendor payment authorizations, vendor dispute resolution, tools, training, communications and preferred vendor registry.

2. Management reporting and presentation to stakeholder community with an associated RASIC chart.

MSP and RPO Providers:

As part of the solutioning effort, seek to understand culture, expectations and review policies.

Understand the business and educate your service delivery team. Transactional processing may not be enough.

If you have recruiters responsible for higher complexity roles, make sure they understand how those positions fit into the business or objectives being addressed. They need to manage the hiring managers not be subservient.

Dig deep on stakeholder management and a “one size” fits all report may not be enough.

Additional Observations

I thought it was worth mentioning other observations that would impact how vendors are managed when delivering people driven solutions.

When the culture is such that there is a huge disconnect between the business and the HR group, the permanent hiring team needs to work harder to fill positions. Time to fill or the cycles to fill requisitions tend to be longer.  There is a greater utilization of temporaries and search firms.  These sets of disparate activities create additional frustrations around candidate quality, retention and succession planning.

The perceived focus for many HR organizations and service providers is to follow the process versus understanding how the business runs and delivering services with the process as the skeleton and the services customized to meet the needs.

If full-time compensation is not competitive in core business areas, there may be an increase in  temporary labor and / or  time to fill or quality of hire is impacted.

If the corporate brand is in flux, and information found on Glassdoor.com is questionable people may see a job with the company as a stepping stone versus a destination.  The impact is turnover, commitment and whether a strong candidate is willing to work full time versus temporary.

Summary

Vendor management of outsourcing providers is more than just giving them work to deliver and managing Service Level Agreements.  It involves understanding the environment, how a vendor can be successful and a vendor management framework that supports the business needs.  Like everything else, good process is expected; it is the stakeholder and program management of this function that makes this a success.

Global Talent Acquisition Strategy: Leveraging an RPO for both a Long and Short Term Strategy

International recruiting requirements have just been dumped on your lap.  There is a burning platform to do something, however internally, you are not globally aligned.  There are three solutions:

1. Solve the problem transactionally and farm it out to an in country agency.

2. Invest some up front time conducting a current state analysis and determining the best outsourced strategy country by country.

3. Invest some up front time conducting a current state analysis and determine if a short / long term outsourced strategy is needed to “put butts in seats” while infrastructure is built to bring select or all countries back in house.

Each of these options generate the desired results which is “butts in seats”, however one is:

1. Transactional, identify providers to fill the positions both in a temporary or full-time capacity.

2. One is to fully outsource and own the responsibility to provide stellar program management
and overarching strategy.

3. Provide stellar program management while outsourcing as a phase 1 and build the
operational infrastructure internally to better acquire, grow and retain talent around the
world, leveraging RPO where it makes operational sense.

Different objectives, different solutions!  As an advisor and consultant in this space, this article will provides tidbits of insights into each option to reduce risks and succeed in whichever direction you may choose.

Starting Point

Whatever choice you make here are a few pre-work items that I recommend.

1. Identify country based stakeholders and the roles they fulfill

2. Create a common dictionary of terms – (believe me, things get defined differently country by
country)

3. Identify country based policies

4. Understand the country based laws and its impact on the hiring process

5. Works council requirements

6. Where is temporary to perm more the “norm” vs. direct full time hiring.

7. What suppliers do you use today and in what capacity? Do you use an MSP to help with
the countries where temp to perm might be the best solution?

8. What technology and data exists to understand source, cost, what makes up that cost,
number of employee’s, number of hires and current state practices.

9. Compliance, data security and physical security requirements

10. Over communicate and be thoughtful about meeting planning based upon geographic
requirements.

11. Take time to listen

12.  What is the Global company framework, business objectives and culture?

13.  The most important: VOICE OF THE CUSTOMER

For the sake of not over engineering, this is good information for you as a HR or Recruitment leader to know so whatever decision you make is successful and deploy the best short and long term solution.

Next Steps

Based upon the outcome of your findings, this will help bring visibility to organizational roadblocks, opportunities, areas of cost savings, as well as help you articulate the details that any outsourced provider may need to be successful.

Framework for a Decision and a Direction to Move In

1. Overall Global Business Strategy and People Initiatives

2. Discovery – (Described above)

1. Technology

2. Process and Policy

3. Current State Assessment

4. Organization

5. Help Desk

6. Vendors

7. Technology

3. Build:  Transition Strategy and Structure

This stage may be a just do it or it may be a stepping stone to something bigger.  Discussions  will include:

1. Technology

2. Process and Policy

3. Organization

4. Master Vendor Program / Managed Services Program

5. Vendor and Sourcing Operations

6. Change Management Plan

7. Risks

8. Communication Plan

The details in each category will be contingent upon the finding and the solution that has been designed.

Transform:  Future State

Not all solutions are stagnant.  In fact it may be a stepping stone strategy that is  aligned to the business and overarching HR agenda.  The outcome can be as strategic as one common infrastructure to acquire, manage and grow talent around the Globe or it can focus on Program Management, Employment Branding, Career Site Optimization and Metrics.  Frankly the outcome of this phase will align to what messages, practices and outcomes the business wishes to achieve in the next 18 – 36 months.

Summary

I wish it was easy to say that Global is easy. In fact I personally keep a log that is now 6 years old of lessons learned by category, because there is always something new.  The reality is, there are so many solutions to solving the “I just got dropped in my lap global recruiting and need to fill xx positions” that no article can articulate what is best for your organization.  However what I can say is Recruitment Process Outsourcing  can be part of a short and/or long term strategy.  It is a way to create a consistent candidate experience and provide a level of visibility into the true current state practices, so the internal organization can determine the best long term strategy while meeting the organizational needs immediately. Additionally, many of the RPO’s have process experts that can help with the transition and transformation stages of the process, minimizing the need for MORE additional resources within your organization.

Some good resources to begin to understand Global dynamics by country is:

CIA Factbook:  https://www.cia.gov/library/publications/the-world-factbook/index.html

Staffing Industry Analysts:  www.staffingindustry.com

SHRM    www.shrm.org

Workforce Magazine   www.worforce.com

Linkedin Groups – Global Recruiting

Tracey Friend,  MSP / RPO Consultant with Brightfield Strategies – She helps companies design, select and deploy the best solutions.  tfriend@brightfieldstrategies.com