Building the Right Foundation: Why Startups Develop Accountability ‘Gaps’ — and How to Make Sure Yours Doesn’t

In the quest for new customers, access to a wider variety of talent, and better risk mitigation, more startups are expanding internationally—even at a relatively early stage in their development. But in their pursuit of those benefits, the companies sometimes overlook the importance of aligning their policies and processes with the local standards of the markets they’re entering—and that can create big problems for them. It’s a story I’ve seen play out far too many times, especially for overseas companies setting up operations in the U.S.; organizations end up trying to bolt their own regulations and culture into an environment halfway around the world with a vastly different foundation. Here are some things to consider before you open up your branch office in New York or Los Angeles: Establish a solid global framework that allows for country-specific execution. I collaborated with a company headquartered internationally that had issued stock options on their local Stock Exchange—and then attempted to apply those same local taxation laws to their U.S. employees. What they didn’t consider is that U.S. employees don’t live under the local country’s jurisdiction. This mid-sized company, with about 9,000 employees, had global roles filled by individuals who had never worked outside of their home country. Suddenly, these employees were tasked with managing a global expansion. It's important to consider the full range of issues when you’re opening up operations overseas: everything from recruiting and hiring, to onboarding and benefits, to how policies will “come to life” in a country with different regulatory requirements and cultural norms. For example, that same company's U.S. employees were required to submit expenses back to headquarters, receive computers from the same location, and have their legal documents generated by inhouse counsel versed only in local law. This approach created enormous inefficiencies and disconnects that were detrimental to the business and dramatically impacted employee engagement and retention. Most companies think that when they expand to another country, they are merely establishing a division. They often do not consider the necessary connectivity back to the headquarters. Employees based around the world need to function as if they were in their home country, yet they encounter vastly different operational realities. Seemingly simple things like how you collect new employee data require compliance with U.S. and home country data-privacy laws, which can differ dramatically. All of these issues create a spiderweb of challenges that need careful planning and execution. Make sure you fully understand the legal, financial, IT, and HR implications of operating in the U.S. One key lesson is the coordination of these general and administrative (or G&A) functions. It is not enough to hire a local HR team; the entire G&A structure must be aligned with U.S. standards. For example, an offer letter drafted by an attorney in another country might not comply with U.S. labor laws, leading to potential legal issues. Another example I encountered involved where to situs benefits for an Asia-based company. The company had to navigate varying state benefit laws in the U.S. While they initially tied their benefits to the state of Delaware, where they were incorporated, they later had to switch to California, realizing that was the appropriate state, as the bulk of their employees were based there. This process was complicated by the fact that the Asian team wasn’t up to speed on the complexities of U.S. healthcare benefits, leading to delays and confusion. Finally, don’t forget: Culture eats everything else for breakfast. The way that teams approach performance management, time off, and employee relations – among other thorny issues -- can vary dramatically among countries. A company that does not adapt its practices to the local culture and embrace their nuances may place their long-term success within that market at risk, unnecessarily, and face employee dissatisfaction and high turnover. ° ° ° Instantaneous communications allow organizations to operate on a global landscape like never before. But be sure you know what you’re getting into. Companies entering the U.S. – or any foreign market – should take precautions to adopt an integrated and aligned global framework that allows the flexibility needed to execute according to the laws and customs of the country they’re entering. With thorough planning, some local expertise, and a heaping of agility, your organization will be better prepared to ensure a smooth and successful expansion into new markets like the U.S.

I’ve written about how start-ups have to create a proper foundation in the early days—just like a new home needs a good basic structure to ensure that it doesn’t collapse when you add a second floor, and the electricity still functions when you redo the living room. For a company, this foundation helps it create the constants that employees, customers, and partners can rely on amid the usual ups and downs that all companies go through. In my mind there are three key pillars for this foundation, none of which can be neglected: compliance, employee well-being, and accountability. In this part of the series, I want to explain why employee well-being is so critical. (To read parts one and two of the series, go here .) Defining What It Means for Your Organization I believe that to a large extent the future of the workplace hinges on employee well-being, especially as remote working environments continue to blur the porous line between work and the rest of our lives. Companies that neglect well-being run the risk of increasing burnout and turnover and reducing productivity and engagement—all of which can severely hinder the growth of a startup. On the flipside, I’ve seen firsthand how early-stage companies that get it right are talent magnets. They create an environment where employees feel valued and are aligned and working hard to achieve the business vision. As fast as many start-ups are moving to keep their momentum going, it’s vital for their leaders to carefully think through what employee well-being means for them. It's not just a matter of offering benefits; it's about defining a stance on the various dimensions of how you’ll approach your employees’ overall health, happiness, and satisfaction with work. This should include physical, mental, financial, and even spiritual considerations. What dimensions do you include in your definition of well-being? What do your employees value and expect? What programs and policies help ensure it? And what trade-offs are you willing to make in other areas of the business to make it a reality? From my conversations, I know CEOs and leadership teams can struggle on how to even begin answering these questions. In response I’ve offered a relatively simple framework, with a few questions for each, to get the conversations started. Rich dialogue usually spiders out from here. Getting Started Purpose ( Emotional ): Many start-ups I’ve worked with do not take the time to define their Vision and Values and miss out on the power that clarifying their “why and how” can bring to an organization. Employees seek out and stay with organizations that connect to their hearts and minds – sharing what’s in yours will allow that to happen. 1. Why does the company exist? 2. What is its passion? 3. What characteristics and behaviors will each employee exemplify? Health ( Physical, Mental ): Setting the direction of your benefits offering should be a top priority for companies that wish to remain attractive to current and potential future employees. Most employees do not worry about or even understand their coverage, but need peace of mind knowing that it’s there when they need it most. Getting the programs AND messaging right is key here. 1. What do we want our benefits to “say” about how we treat our employees? 2. Do we have the right broker partner to help us maximize our programs while optimizing our budget? 3. How will we educate our employees to keep them healthy and happy? Pay ( Financial ): Good, fair pay is a cornerstone of your well-being strategy and a non-negotiable. Competitive packages attract and keep talent, provide employees the means to care for themselves and their families, and are often viewed as a measure of equity. Spending time here will help create an environment where employees feel valued, respected, and motivated. 1. What benchmarking methods are you using to ensure competitiveness in your talent market? 2. How transparent do you plan to be on company matters? How openly will you share and communicate your decisions about pay equity, for example? Moving Forward Once you have answered these foundational questions, then you can design the policies and launch the programs to make those broad strokes a reality. At a time when talent is more mobile than ever, having clarity about the well-being of your startup's team is a strategic move that fosters a positive work environment and fuels long-term success. In my next post, I’ll take a look at the final critical piece of foundation-building: accountability.