Remote revolution: 3 challenges companies face when managing a distributed workforce

Picture this: An entrepreneur in Singapore finalizes product design with a developer in India, while a designer in Indonesia synchronizes campaign efforts with a marketing strategist in the Philippines.

There was a time when this team setup seemed unlikely. Today, however, having a globally distributed workforce - in which employees aren’t bound to physical offices - offers many benefits to employers.

"Globalization has spurred companies to seek talent beyond their immediate geographical boundaries," says Jonathan Goldsmith, vice president and general manager of Global Payroll at Remote . The company aims to eliminate barriers to international hiring and enable businesses and remote talent to collaborate regardless of their location. Remote’s Global Payroll capabilities can be accessed alongside its other products and services.??

“Having a flexible work model has also become a key deciding factor for many workers, especially for the newer generation,” he adds. “In our report - which we wrote based on a survey involving over 1,000 decision makers and employees - 42% of Gen Z respondents would leave their job for a remote work opportunity.”

Easier said than done?

Despite the benefits, managing distributed teams is easier said than done. Companies have to grapple with a plethora of challenges - and the finance side of the equation, in particular, has proven to be a challenging hurdle - especially for companies that have just transitioned to the distributed workforce model.

This is “due to its complexity and resource-intensive nature,” says Goldsmith. “Employers often need extensive training and time investment to understand and effectively implement new processes related to finance.”

To better understand the challenges that come with distributed workforces, here are three of the biggest finance-related hurdles companies face and how to tackle them.

1. Tackling compensation

Addressing fair compensation in distributed workforces poses a multifaceted challenge.

With distributed teams spanning multiple jurisdictions, companies must navigate a maze of legal requirements and employment regulations.?

The first thing to do is to determine if remote workers are classified as employees or contractors - and this can be confusing.

For instance, people in France can work under a permanent contract or a fixed-term contract. They can also be recruited for temporary work through agencies. In the UK, rights vary between employees, workers, and self-employed individuals.

“The distinctions - which can be complex and difficult to understand - lie in the specific employment rights, benefits, and regulatory frameworks associated with each status in their respective countries,” explains Goldsmith.?

Aside from legal compliance regarding employment status, disparities in living costs, taxes, and mandatory government contributions factor prominently in the pay equation. Compensation packages need to reflect not only market rates and industry standards, but also the economic realities of each location a company hires in.

“Issues related to compensation and benefits are really frustrating for employees,” he shares.?

Balancing these considerations while maintaining equity and fairness poses a significant challenge, and having the right talent with the necessary knowledge and expertise is therefore crucial to manage international payroll efficiently.?

“If there is a lack in any of these areas, outsourcing global payroll may prove to be the wisest choice,” says Goldsmith.?

2. Managing cultural nuances

Navigating cultural differences in distributed workforces is no easy task. It also influences how and what a company pays its employees.

“Some countries mandate a thirteenth-month pay and the general assumption is that it’s disbursed at the end of the year, but this varies across different countries,” notes Goldsmith.

Workers in Muslim-majority Indonesia, for example, typically receive a yearly bonus known as THR (Tunjangan Hari Raya or Hari Raya Allowance) , which is generally considered a thirteenth-month salary and is paid at least a week before Eid al-Fitr starts. For non-Muslim employees, the bonus can be paid before their respective major religious holidays, such as Christmas.?

Reconciling varying public holidays and paid time-off regulations across different countries can also be tedious. With team members dispersed across time zones and jurisdictions, coordinating schedules and ensuring equitable treatment can be a logistical nightmare.

Consider parental leave: Different countries, even if they’re under a regional organization like the European Union (EU), will have unique regulations on the leave mothers and fathers will receive.

“Sometimes, there’s even a difference between pregnancy and maternity leave, as is the case in Estonia,” shares Goldsmith. “So if you’re managing distributed teams, you need to be aware of all these intricacies or your planning may fall by the wayside.”

3. Safeguarding data

Data protection and management can be particularly difficult for distributed workforces due to the increasingly stringent enforcement of global data protection laws around the world , which can vary significantly across different jurisdictions.

“Companies in the EU are subject to very specific requirements under the General Data Protection Regulation, but if you look at the US, it’s vastly different," says Goldsmith. “There’s no principal federal data protection regulator, but several federal regulatory agencies enforce data protection laws for specific actors or sectors, such as financial institutions and the healthcare industry.”

On top of that, the distributed nature of remote work amplifies the challenge of data security. With employees spread across geographical locations and accessing sensitive information from various devices and networks, the risk of data breaches increases significantly .

Finance teams are particularly vulnerable as they typically have access to a wealth of sensitive information on a company’s employees and financial status. If the firm turns to fintech services to streamline operations, it needs to implement robust security protocols to protect data at every touchpoint.?

This poses a logistical challenge as companies must not only establish policies and procedures for data protection, but also educate employees about cybersecurity best practices.

"Managing these challenges demands significant resources, expertise, and proactive measures to mitigate risks and ensure smooth operations for distributed teams," adds Goldsmith.

Businesses that don’t have the resources to manage this on their own can turn to tools like Remote’s Global Payroll . Accessible via Remote’s platform, it’s integrated with the company’s additional capabilities for hiring, managing, and paying a global workforce. Employers can enjoy a simple user experience while leveraging the benefits of having all employee data kept securely in one place.

“Companies with distributed teams often use a patchwork of local payroll partners, or expensive multicountry payroll providers that don't offer a comprehensive solution,” says Goldsmith. “We want to give companies the confidence of payroll accuracy, speed, compliance, and a great employee experience, wherever their teams are based.”?

To a distributed future?

From Goldsmith’s perspective, distributed workforces are going to become increasingly commonplace on the road ahead.?

“The demand for greater and more diverse talents will rise, pushing companies to tap into the global talent pool,” he shares.?

He emphasizes that as businesses go increasingly global and start hiring from all around the world, the finance piece of the equation is a crucial one.?

“It is something that companies must get right from the start,” Goldsmith says. “Issues related to compensation and benefits can hurt morale, loyalty to the company, and retention rates, all of which impact businesses negatively in the long run.”

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Remote’s mission is to create opportunity everywhere, empowering employers to find and hire the best talent, and enabling individuals to build financial and personal freedom.

Learn more about Remote’s Global Payroll product on its website .

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This content was produced by Tech in Asia Studios, which connects brands with Asia's tech community. Learn more about partnering with Tech in Asia Studios.