Challenges to HR and payroll functions operating in a global environment

Historically, the HR domain comprised four main units:

• Strategic management – developing a strategy to back up the organisation’s vision and business plan;
• HR plans and employment policy – recruitment, onboarding and staff retention;
• Learning and organisation development; &
• Administration – the relationship between the employees and the organisation.

Multinationals operating in many jurisdictions face a number of HR challenges in implementing the above which include:

• Standardisation – Multinationals need to implement consistent policies regarding recruitment, hiring and compensation across different jurisdictions;
• Compliance – Each country has its own sets of laws which require local compliance;
• Culture and values – Diverse cultures, languages and customs can present a challenge to alignHR policies and procedures.

In an Israeli context, a number of specific issues that multi-nationals need to consider from an HR perspective should be borne in mind, including:

• Benefits – Israeli companies, particularly in the hi-tech industry, provide a range of benefits to employees beyond salary. These may include meals, health & gym memberships and company cars. Multinationals are often not used to the range of benefits offered, many of which are taken as a given by Israeli employees
• Pension and Education Fund – Israel has a very extensive pension and savings regime. Although the education fund is a voluntary scheme, it is expected by almost all professional staff, and at an employer contribution rate of 7.5%, is a significant additional cost for the company.
• Leave policies and practices – The leave regulations are set out in the leave Act. Minimum amount of leave days based on tenure is mandatory and many companies give additional leave on top of regulatory requirements. Leave must be included in an employee’s payslip, something that is often not adhered to when global leave systems are in place.
• Timesheets – Labour laws require that most employees complete electronic timesheets for hours worked (specific exceptions exist). This concept is foreign to most multinationals doing business in Israel, and fines can be incurred for non-compliance.
• Administration of social benefits – Israel has a complex and burdensome social benefit regime. There are often long lead times between filling in the paperwork to set up schemes and their actual registration. This can be frustrating for global accounting and payroll teams.