Key Takeaways
1. A country manager is responsible for your business operations in another jurisdiction. Where a company operates in multiple countries, it may have a country manager assigned to each location.
2. Alternatives to hiring a country manager include commissionaire arrangements, contracting and global PEO. Each options comes with some limitations compared to hiring a country manager directly.
3. When hiring a country manager, we recommend that you carefully consider your overall international expansion strategy, and partnering with expansion specialists in the country you are moving into.
Hiring the right country manager is crucial to a successful international expansion: The country manager has overall responsibility for the expansion of an international business in a particular location. Here we provide 6 key tips for hiring a country manager, and look at the main alternatives to doing so.
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What Is a Country Manager?
A country manager is an employee that has overall responsibility for an expanding company’s operations in a foreign country. Their responsibilities can differ, depending on the type of expansion in question, but often include:
- People management
- Leading country-specific strategy
- Liaising with, and implementing, the decisions of the broader company leadership
- Recruitment in that country
- Hiring and payroll in that country
- Budgeting, planning and reporting
- Ensuring compliance with local tax, employment and business regulations.
To find our more about the process of hiring managers generally, check out How to Hire a Manager.
When Do I Need to Hire a Country Manager?
It is recommended that a company appoint a country manager whenever it plans a substantial operation in an overseas location. This could mean actually trading and entering into contracts in another location, or it could mean simply basing staff there, or outsourcing to that overseas location. Having a country manager does not imply any specific legal or business structure: A country manager could be the managing director of a subsidiary company, or in charge of a branch of the parent company, for example (read about the difference between the two at Branch versus Subsidiary: What Is the Best Option for Your International Expansion?).
The advantages of consciously hiring a country manager are somewhat obvious — someone needs to steer the ship. But are there viable alternatives to directly hiring a country manager, and when might they be appropriate?
- Intra-group transfers
- Where there is an established legal presence in the country of expansion, a business might consider transferring an employee from ‘head office’ to this location. That individual could become in charge of the overseas operation, removing the need to hire a separate individual as the country manager.
- In transferring staff in this way, businesses may consider whether a ‘tri-partite agreement‘ (signed by the head office, the overseas subsidiary and the employee) might be appropriate. In some cases, it may even be possible to keep paying the individual in their ‘home country’ through a ‘shadow payroll‘ arrangement.
- The major downside of transferring an existing staff member, rather than hiring a new person into the role of country manager is a lack of understanding of the overseas market. Often, a transferred staff member will simply not have the necessary local knowledge to fulfil the role adequately.
- Commissionaire arrangements
- In a commissionaire arrangement, an individual (the commissionaire) directly sells goods or services to customers. But they themselves have a contract with a client company, under whose ‘account’ they sell the goods. A commissionaire could, in some cases, replace a country manager in a foreign location.
- This arrangement, common in ‘civil law’ jurisdictions (such as Germany and France) has similarities with agency arrangements that exist in common law jurisdictions (such as the United States, England and Wales and Australia). However, the crucial difference is that in a commissionaire arrangement, no legal relationship is created between the customer and the client company. This means that the customer cannot generally sue the client company.
- The advantages of this arrangement include minimising legal liability and keeping costs strictly managed.
- The disadvantages include:
- A risk of permanent establishment (that is, a taxable, fixed, presence of the international company)
- Lack of control (the commissionaire is not part of the client company)
- Limited scope for action. The commissionaire cannot carry out any tasks that need to be carried out under the name of the company.
- International contractors
- International contractors can carry out some tasks overseas at the direction of a client company.
- The perceived advantages of using international contractors or freelancers based overseas include compliance and payroll savings: There is no need to meet the extensive employment compliance and tax withholding obligations of an employer in that country.
- Disadvantages that apply to engaging international contractors are the same as commissionaire arrangements: International contractors cannot carry out a lot of actions in the name of the company. There are also some compliance risks, such as permanent establishment.
- Read more about international contractor arrangements at What Are the Advantages and Disadvantages of Using International Contractors?
- Global PEO
- Instead of engaging a country manager, a company can contract with a global Professional Employer Organization (global PEO), to directly hire employees in a desired country. The global PEO takes care of all recruitment, payroll and employment compliance tasks on behalf of the client company.
- This has efficiency, compliance and cost benefits for international companies. And unlike commissionaire or contractor arrangements, the global PEO can itself hire a country manager who will take charge of operations in that location. While the country manager will be a formal employee of the global PEO, they will work at the day-to-day direction of the client company.
- A global PEO is a useful alternative to directly hiring a country manager in many cases. It may not be the right move, however, where the business intends to carry out substantial trading in the country in question and needs to enter into contracts there in the name of the company.
- Find out more about global PEO and PEO services more generally at What Are PEO Services?
Six Tips for Hiring a Country Manager
Where a business has decided to hire a country manager, we recommend the following steps:
- International expansion strategy
- Hiring a country manager needs to be considered in line with a broader international expansion strategy. The business needs to decide, as a whole, which countries should be expanded into, and what the role of the country manager would be. For example, if expanding into multiple countries in an area, it may make sense to appoint a manager for the region (e.g. Asia-Pacific) instead of, or in addition to, a country manager.
- Consider the appropriate legal or business structure for the expansion
- The role of the country manager will depend somewhat on the business structure used for the expansion. For example, where a subsidiary is set up overseas, the country manager may effectively become the ‘CEO’ of this distinct company. Depending on the ownership structure, this will place considerable power and control in the hands of the country manager.
- By contrast, if the overseas location is set up as a branch office, the country manager will be under the direct control of the international (parent) company.
- Consider employment market conditions in the country of expansion
- A hiring manager will need to be provided with a competitive salary and benefits package, relative to the job market of the country that they are being hired in. Note, in many cases a competitive compensation package will mean providing more than the minimum benefit entitlements.
- Consider the employment and tax compliance environment of the country of expansion
- Income and payroll tax withholding, and compulsory social contributions and insurances, differ substantially depending on the country.
- It is essential that all employers consider what their obligations are in the country of expansion.
- Define the role with reference to the expansion strategy
- The role of the hiring manager should be carefully prescribed according to the expansion strategy of the organization. For example, if only one product is being sold in the new country, then the organization may seek to hire someone who specializes in that product.
- The organization also needs to consider how that individual will connect to the broader management team of the company. Will they be part of the international executive?
- Use an international recruitment and hiring partner
- An international expansion specialist firm will be able to advise you on the best approach to hiring a country manager. Also, as recruitment specialists in local labor markets, they will likely be in a better position than your company to source the right candidate(s) for country manager.
Frequently asked questions
The country manager has overall responsibility for a company’s operations in an overseas location. They may not have the title ‘country manager’ and instead may be referred to by terms like ‘[Region] Managing Director’ or ‘[Region] Manager’.
When interviewing a country manager, some useful questions to ask may include:
- Do you have experience employing staff in the target market?
- Are you comfortable with regular/semi-regular international travel?
- Do you have any ideas for increasing our productivity in the target market?
- How will you build and maintain relationships with the international team?
Hire a country manager with a local partner
In most cases, where you are interested in international expansion, you will need to consider hiring a country manager. It is possible to do this directly, or via the medium of a global PEO.
No matter what mechanism is used for hiring a country manager, it is worthwhile considering the business and compliance constraints of the target market, how a country manager role fits in with broader strategy, and whether you could benefit from local assistance in hiring the country manager.
For support in hiring a country manager and other aspects of your overseas expansion get in touch with Horizons.
