In recent months several of my US-based clients faced challenges overseas regarding high employee separations coupled with difficulty in recruiting qualified staff.   These companies were at a loss to understand the cause of their problems, as each felt that they were already providing a more generous reward package for employees then was normal practice in the US.

A quick study revealed that the clients’ international employees were indeed receiving a great deal more than their American counterparts.  However, in many areas they were in fact being given no more than the minimum benefit provisions mandated by statutory requirement.  They were receiving only what the company was compelled to grant.  How do you attract, motivate and retain quality staff when the message of your actions is that you are only willing to offer what government regulations say you must?

One client bemoaned having to grant four weeks of vacation upon hire, because it was the law, only to find out later that common practice indicated five or more weeks were the norm.   To employees and candidates they offered no more than what they were required.  By ignoring competitive practice they were now paying the price by struggling to build and keep a quality staff.  They had earned a reputation in the local market as a “minimalist employer.”

When American companies first establish operations overseas Human Resources faces a number of challenges that they are unaccustomed to dealing with at home.  Every country is a separate and unique entity, with differences in HR policies, practices, and statutory requirements, each of which must be acknowledged and addressed in order to develop and maintain a successful operation.  On top of that are the vagaries of the competitive marketplace, where the same job is paid differently from Rome to Oslo to Buenos Aires – usually coupled with differing social charges and benefit coverage.

Choosing to operate under the guidance of U.S employment law and US-based corporate practices is a failed strategy.  Maintaining such a US focus (usually for ease of administration) will bring you grief; grief from your employees, from those you hope to hire, and most of all from local governments whose laws you have ignored or bypassed.

Think how you would feel if elements of your own reward package, policies or procedures were based on European or Asian common practice.   Wouldn’t go over well, would it?

If you decide that your business strategy requires you to maintain a staff presence in a particular country, then I would advise you to treat that operation the way you would its US counterpart; provide competitive terms and conditions that will attract and retain the right caliber of employee in that country – and ignore how their packages might compare with US or other country counterparts.  If you are not willing to make that commitment, from an HR perspective you would be better off not to engage employees in that country.

Have you ever walked out of a store because of poor customer service?  Or felt frustrated because the company representative at the other end of the phone did not seem to care?  Or after enduring a bad experience with an employee at a particular establishment you said “never again”?

Customers react first and foremost to the employee they are dealing with, the one they are facing, whether the transaction is financially significant or not.  To the customer, that employee “is” your company, and these buy / not buy decision-makers will consider the treatment they receive a reflection of your company, for good or ill.

It is worth noting that the person who just caused you to take your business elsewhere is likely one of the lowest paid employees in that organization.   Does that reward / impact relationship make sense to you?  It would seem that the organization does not recognize / reward (value) the impact that their employees can have on customer relations.

Does your company acknowledge and measure the value and impact that these employees can have?  Or is this skill set a compensable factor at all?  Have you ever checked?

Many companies have long ignored the importance of the customer-facing job (non-direct sales) in determining a position’s value to their organization.  They consider education (what you know), experience (how long you have been doing something) and competitive survey data (what others are paid for a certain set of skills) in setting their pay scales.  The fact that the position also has the power of gaining or losing customers is often lost on them as “just part of the job description.”

Some job evaluation systems may give a nod for those facing customers on a regular basis, but such recognition is not often viewed as a critical factor – nor does it help determine where in the salary range the incumbent is paid.

Oftentimes it is the lower paid employee or the position with the least amount of “cachet” that presents the jobholder with the opportunity to influence customer action and reaction.  As an example, the employees most commonly approached by guests at Walt Disney World are the Custodial workers.

Is it not surprising then that these employees can have as great an impact on customer good will and retention as your executives?  Studies have also shown that having a pleasant experience when dealing with a company often outweighs price considerations and marketing glitz.

However that does not mean that you have to pay more to these employees than the marketplace suggests, but it is in your best interest to ensure that they are fairly treated:

• Ensure that actual pay centers on the middle of the range or higher.  Do not risk minimum pay scale workers interacting with your customers.
• Hire well into the salary range.  This is not a time to be cheap.  That dollar you saved today could cause you to lose a great deal more later on.   It pays to remember that it costs a great deal more to gain a new customer than to retain an existing one.
• Modify your performance appraisal process to recognize the customer facing role; attitude is just as critical here as know-how and experience.  Your customers place great value on the smile and pleasant demeanor they receive from your employees.
• Develop a point of pride for these workers, coupled with fair and competitive pay, to encourage that the right caliber of employee applies for these positions.
• Avoid structuring these as “dead end” jobs.   Offer upward opportunities for higher performing employees.
• Listen to them; they are talking to your customers and their suggestions for process improvements – even new products and services – should be considered.

How do you know whether your company is vulnerable?  1) Ensure that these positions are regularly surveyed for competitive pay practices, and then 2) Create a report segmenting the actual pay of your customer-facing employees to determine the average compa-ratio and spotlight the presence of low paid workers.   Then you will know how well you are paying those closest to your customers.

Now we should have a final word about direct sales, which is perhaps the ultimate customer-facing job.   Be careful that your training and recognition programs remember to acknowledge the importance of the customer-facing relationship – beyond an immediate financial impact.  Rewards should not be all about short term results.  A customer made unhappy by your sales rep can decide to; 1) not place an order, 2) limit their order and split their requirements with another vendor, and / or 3) spread a negative comment to their professional associates that reflects poorly on your company.

Each unfortunate scenario reinforces the financial and long term impact of the individual employee.

Such would be a hard lesson indeed.