Secrets of a Chief People Officer: Navigating Rapid Expansion - The Role of Employer of Record (EOR) Services in Scaling Up

It’s an exciting time when companies get investment and go into scale-up mode—the pace, ambition, and engagement with all sorts of stakeholders. I personally enjoy that scale-up phase; however, doing this quickly, especially in new markets without existing entities, can be a bit overwhelming.

New roles flood the HR team, usually with questions about onboarding design, maintaining company culture, and quickly getting team members to full productivity. All good questions, and things that the leader in HR will have been thinking about. Generally speaking, these new roles are in go-to-market or technology, and therefore, from both a market perspective and a skills need, we find ourselves recruiting across all time zones. This adds complexities to those questions already mentioned, but also raises the issue of “how do we contract the individual?”

Certainly, over the last decade, there has been a huge amount of advancement in services that support companies employing people right across our globe. I’ve found that using Employer of Record (EOR) services is a game changer, and I've been lucky enough to have been working with organisations that have needed to use this model. I am aware that that many in our profession do not know what EORs are and when it makes sense for a business to use these services. It comes up a lot with clients that I mentor, generally in the tech scale up phase, and so I thought it would be helpful to share a few pointers in my blog.

What’s an EOR?

In a nutshell, an Employer of Record (EOR) is a third-party organisation that legally employs your team member in the country where the employee is based. So, on paper, they are the employer in that location and therefore will handle employment contracts, payroll, taxes, and benefits, ensuring you’re compliant with local laws. However, the beauty of it is that the team member then works for you and, provided you get the integration and remote working right, they will feel like your employee.

Typically, you will still work with your own Talent Acquisition/Recruitment partner to find candidates, and then you will engage your own EOR. Make sure you are clear with the Recruitment Partner and all the candidates that you will be using an EOR model. The last thing you want is to find the right candidate and then they are put off because they won’t be employed directly by the company. If this happens, dig deeper into why this is the case. For many it is because they want to use your brand on their LinkedIN profile, which they can still do. Good Recruitment Partners will be able to support you navigate this potential blocker.

Why Use an EOR?

1. Quick Market Entry: EORs enable you to start operations in new markets within weeks, not months, as there's no need to set up a local entity.
2. Compliance: They handle local labour laws, tax regulations, and employment standards, reducing your legal risks. That’s not to say you shouldn’t be doing your due diligence here and making sure you know what’s what in a location (I’ll come to this below).
3. Cost-Effective: Avoid the high costs and time involved in establishing a local entity. EORs offer a more affordable solution. But, a word of caution! Depending on the location, there will be a tipping point where it will make sense for a company to consider whether it is better to establish an entity there.

Choosing the Right EOR Partner

In my experience scaling businesses, partnering with reliable EOR providers has been essential. They handle compliance, payroll, and benefits, allowing us to concentrate on core activities. You can certainly see the standout EOR providers from their tech-driven approach and stellar support, which helps to make a company’s expansion seamless.

As I’ve used a few in my time, here’s what I now look for:

• Local Expertise: This is an obvious one. Ensure the EOR has deep knowledge and experience in your target market. Find out whether they have people on the ground in that location and where they are getting their local knowledge from (in-house or external advisor). Their local insights are crucial for smooth operations, both from an employment perspective and a commercial perspective. If you have tax and risk consultants in your company (internal or external), it is essential that you bring them along this journey too. It can hold up the process if you are at the point of contract with an EOR, or indeed a candidate you want to employ. This is because they will be concerned about whether you will be creating a permanent establishment risk and will no doubt have lots of questions on this.

• Technology and Automation: This is perhaps the biggest advancement in the last 3 years for many EOR service providers. Indeed, many will sell their services first based on their platform enablement now. Those who use tech to streamline HR processes can enhance accuracy and efficiency, especially for those in HR operations who are having to manage the data. Being able to see all your employees in one space, their documents, payroll details, etc., makes for a much easier life for the HR team. Check the onboarding experience for the employee too. Whilst companies will have their own systems and onboarding processes, any EOR employee will have to do an EOR onboarding, submitting documents and other information. Having the ability to see what they experience when they are onboarded, and also get access to the information means you’re not duplicating effort when it comes to your own internal onboarding needs.

• Service Quality: The human touch is vital, in my opinion. A good EOR should offer excellent support and communication, helping you navigate any challenges. For me personally, I found having one single account manager who liaises with each country when I had a query was helpful. From an employee perspective, for them to have access to someone in their location was also very helpful, particularly speaking to someone in their own language when it came to administration (which can be very arduous depending on the country).

• Reputation and Reliability: Choose a provider with a solid track record and positive client reviews. When you are doing your due diligence here, remember that there are a lot of EORs that have popped up in the last few years, and so this could be something that puts you off. Go in with eyes open that they may still have teething problems with getting their processes in place. I remember spending ages once trying to solve an issue for an employee in Italy where the EOR had just gone into that country and hadn’t quite got the payroll working as slick as it should be. But, between me and a great account manager, we managed to solve it. I’m not going to name names, but this company is now one of the ‘go-to’ EORs globally.

• Customisation: Ensure the EOR can tailor their services to meet your specific needs and grow with you. Items that I have asked to be tailored have included additional confidentiality and intellectual property clauses (particularly important in the tech space, for example). I have also talked to EORs around annual leave and sickness reporting feed-in data as the location has grown (remembering that the company’s HR system is most likely to store this for calendar management but must feed into the data that the EOR holds for compliance in a location). You may also want to speak to them about enhancing benefits, as you look to attract certain skills in a location. EORs will have the basics covered, but you may find that a different level of (say) wellbeing benefit is needed if an organisation places importance on offering employees enhanced wellbeing benefits. Remember that these employees will see and feel your company culture, so if you’re providing ‘platinum’ level benefits in your other locations, but the basic minimum in your EOR locations, they will know about it!

• Flexibility in Hiring: Check how quickly the EOR can onboard people. Given the pace at which you will likely be hiring, when a candidate is available, you want them starting ASAP. A point to make here on hiring: Many Recruitment Partners now have established relationships with EORs in a region, which are good to look at from an ease of service. What I would say here is that if you are looking to engage people in a number of countries, having multiple EORs to work with can be time-consuming (multiple systems, multiple processes, etc).

Conclusion

Expanding into new markets is challenging, but the right EOR partner makes it much easier. By leveraging EOR services, you can quickly and compliantly enter new markets, hire the right talent, and focus on growing your business. Whether you’re a startup or an established company, using an EOR can help you achieve your global growth goals with confidence and efficiency. Remember, choosing the right partner is key—look for expertise, technology, service quality, reputation, and the ability to customise to your needs. With the right EOR, your international expansion can be seamless and successful.

Important: This blog is me sharing my own personal thoughts and reflections and should not be considered to be advice