Moving Away from Entities: The Road to Efficient Global People Management 

Why companies are increasingly looking to partner with EOR’s to maintain international presence 

Is your company facing entity burnout? 

For a long time, entities were the best way a company could expand internationally. They helped companies diversify their markets and customer bases, widen the potential hiring pool, and optimize for tax needs in each country. But the recent global hiring crunch – with 75% of the companies that were polled globally by Manpower Group reporting hiring challenges – has created an added motivation to hire the very best candidates, wherever they are. 

However, in the process of expanding quickly and hiring top talent, many companies end up having to manage a complex network of entities that don’t always align with core strategy, risking poor compliance practices and falling employee satisfaction rates.  

The Chartered Governance Institute of UK & Ireland outlined a checklist to help corporations operate across multiple entities. These included establishing and resourcing a specified governance team, maintaining a degree of flexibility depending on local needs, and centralizing core legal documents. However, this only underlines the complexity and costs involved.  

Too many entities can mire your company in so many complications that they might end up restricting the global expansion they were created for in the first place.  

Juggling Multiple Entities Come With Varied, Unexpected Challenges

Not only is sustaining dozens of entities with a handful of employees inefficient, but they can create expensive hurdles that become big issues if left unchecked. Such issues include: 

• High operational costs: Managing multiple entities is very resource-intensive, requiring additional HR staff in both central offices and the entities in order to manage the range of constantly changing labor requirements. 

• Complex, high risk compliance: Managing a network of entities comes with higher risks than ever before due to ever evolving security, privacy, and labor laws in countries around the world. Your company will be responsible for the consequences, both financially and reputationally, of breaches incurred by any of your legal entities. While fines can be recuperated, damages to brand reputation are often permanent.  

• Low financial transparency and cash flow unpredictability: Different financial calendars, VAT environments, and accounting departments: diverse entities will typically have equally diverse financial structures. Beyond being a big headache for your accounting teams, this will lead to a lack of transparency and cash flow unpredictability.  

• Language and cultural differences: In addition to requiring diverse language support across regions, expect differing expectations around HR practices, including number of holidays and variation in payroll frequency. The local entity will have to accommodate this for its employees – and managing this centrally can be very tricky.  

• Hybrid working challenges: 42% of the HR professionals polled by Mercer highlighted the rise of alternative or flexible working models as one of the key geopolitical forces impacting three-year plans. Having consistent and locally compliant practices across all international entities in a way that meets employees’ expectations around hybrid work can become a big hurdle. 

• Uneven employee experience: The cost of providing benefits that align with employee expectations will vary significantly by region. If not carefully managed, this can lead to a mix of perks, compensation, and other benefits across different entities. Improving employee experience for retention was cited as the number one concern internationally for HR leaders, but the more unevenly this is managed, the more employees might feel undermined in their region. This may mean both higher churn for employees and the HR staff tasked with trying to manage them.  

Why Companies Are Working With Seeking Out Employers of Record (EOR) Instead

Let’s consider a global software company, based in North America, that develops cutting-edge solutions for various industries. Their steady growth over the last decade, driven by both organic expansion and strategic acquisitions, required establishing entities in key markets to hire specialized roles. This led to entities in over forty countries with small teams in each.

While these entities facilitated their expansion, they also brought a growing number of issues. With entities founded at different times, their central HR team had to spend hundreds of extra hours each year aligning expectations, payroll cycles, and benefits. Managing these teams became increasingly complex, with compliance risk greatly affected.

Most concerning of all was the growing inefficiency of its global operations, with high costs straining company resources. And with it, mounting pressure to tackle this overgrown organizational structure.  

As significant as such risks and inefficiencies are, they don’t need to be permanent. The rise in Employer of Record (EOR) organizations points to a more efficient, globally-minded solution to these issues.  

A Direct EOR has fully owned and operated entities established in each market and can serve as the legal employer in those markets. That means it hires its client’s talent in a target country under its local business entity, taking on the legal risk.  

As the legal employer, a Direct EOR is responsible for:  

• Visa, immigration and work permit management.  

• Country-compliant payroll and taxes.  

• Local labor law compliance and HR requirements.  

Thanks to their economies of scale in managing multiple clients’ employees and their specialist HR experience, EOR’s can provide very competitive benefit packages regardless of the region. Dedicated HR support for each country, support in local languages, and sensitivity to cultural norms create a frictionless employee experience. This both improves retention and provides a more attractive package to top talent.  

That’s why so many companies are now using EOR’s instead of their own entities – with the global EOR market projected to reach US$ 6,602.64 million by 2028.  

By shutting down its entities in favor of those managed by its Direct EOR partner, our North American company was able to move existing employees over to the EOR, allowing them to both cut costs and reduce compliance risk.   

Partnering with Atlas: Global Presence without the Headache 

Considering transforming your business? Atlas is uniquely positioned to help you meet the rapidly changing demands in the world of work.  

Our global reach across more than 160 countries and 90 languages allows you to hire the best talent without the administrative friction that comes with managing multiple entities. This can save you up to 85% of the cost of setting up a local entity in a new country as you expand, allowing you to pinpoint and hire key candidates without requiring an entity in their country.  

Our competitive packages and dedicated in-country team allow for efficient borderless hiring and ensure great employee satisfaction and retention. This includes Atlas Learning, with worksite employees getting access to the full catalog of more than 9,000 courses, professional certificates, and degrees from Coursera, allowing your team to continue to develop and retrain as your business needs shift.  

Ultimately, working with an EOR doesn’t need to mean relinquishing control. In fact, Atlas’ platform offers a broad scope that’s also detailed, providing the latest, most accurate insights into local employment, labor, and tax law of each region, allowing you to strategize and pivot quickly. 

Don’t let the hurdles of entity management get in the way of your global ambitions. By alleviating the administrative headaches around hiring, operations, and compliance, we allow you to focus on the innovations that sets you apart from your competitors.