Many tech scaleup companies believe the first step of their US expansion journey is making their first hire in the US market. What most companies expanding to the US do not realize is just how competitive it is to hire top talent in the US market. If your company wants to compete for top talent, it had better be prepared to answer the detailed questions a potential employee may ask during the interview process. Being “talent ready” to hire in the US market requires extensive pre-planning, research, and decision making. There are also several related dependency steps in the US expansion process your company will need to complete before even beginning the hiring process. Once you are ready to hire in the US, here are the steps your company will need to take to be talent ready to hire in the US market.
Job Descriptions – Create US specific job descriptions that include the job title and detailed description of the role, the key responsibilities and objectives, qualifications, and skills, plus work experience and education requirements. Also be sure to include a brief overview of the company, the location of the hire (or if remote is ok), and an overview of the company benefits package. The job description will also serve as the central document for marketing and posting the position online.
Offer Letters (not contracts) – Create employment offer letters that include the basic job title, start date, compensation, benefits, location, and reporting structure. In the US there is a doctrine known as “at will employment” that allows employers to terminate employees at any time and allows employees to leave their job at any time. Employment contracts with defined periods of time that are common in other parts of the world but are not common in the US. In the US it is also best practice to include confidentiality, non-disclosure, and/or intellectual property assignment provisions or side agreements with the offer letter. Additionally, most offer letters include contingencies (background check for example), an offer expiration date and an acceptance section for the candidate to sign and return indicating their acceptance of terms.
Compensation Models – In terms of recruitment and hiring in the US, compensation can significantly vary across different US geographies even for the same position. From a planning perspective, if your company mandates a hybrid or in-office work model, starting a site selection process for your US headquarters is imperative before diving into salary research for the desired positions. Alternatively, if a fully remote team is in the plan, compensation will be based on the market rates prevalent in the geographical locations where team members live. This approach ensures that salary structures align with both the company's operational needs and the regional realities of your diverse workforce. If your company includes bonus payments as part of the compensation model, you will need to clearly define and communicate how the bonuses are calculated and when they are paid.
When it comes to sales commissions, it is crucial to establish precise parameters for calculation and disbursement. Clearly outline the trigger events for commission payments—whether it is upon contract signing, shipment, or invoice payment collection. Additionally, decide on the frequency of recurring revenue payouts, considering options such as monthly disbursements or an annualized basis.
Employer Stock Option Plans (ESOP) – Employees in the US tech industry often expect stock options as part of their compensation package and are savvy in their understanding of these programs. A robust ESOP should cover the number of shares outstanding, the price per share, vesting schedule, and the most recent 409 A valuation of the company. US employees may also want to know how their ESOP grants are calculated. Having a well-defined ESOP shares calculation methodology is a best practice in the US tech community. Venture capitalist Fred Wilson from Union Square Ventures published this blog post on a method for calculating ESOP share grants that became a standard for venture backed tech companies in the US. The salary data in Fred’s original model is quite dated but the overall method still works well. Please note: ESOP share grants to US employees should be from the parent company, not the US subsidiary company.
Health Insurance – Employers offering and contributing to health insurance is common since healthcare is not widely provided by the US government. Due to the rising cost of healthcare, candidates rate employer health insurance contribution as a deciding factor when researching and deciding on their new position. Candidates will want to know which health insurance providers and plans are available, plus understand ancillary benefits such as dental, vision, mental health, and health savings accounts. Most importantly potential employees will want to know how much the company will contribute towards their health insurance costs. Common employer health insurance contribution strategies include: 50% of the employee only premiums, 100% of the employee only premiums, 50% of all plan premiums, and the most sought after 100% of all plan premiums. Of course, before you can gather health insurance plan and pricing information, you will have to get quotes from health insurance providers (like PEOs (Professional Employer Organization) (Professional Employer Organization)). Health insurance quotes typically require proof of US corporate formation, Federal ID number, US bank account, and employee census details.
401K – A 401K plan is an employer provided retirement savings account that allows employees to contribute a part of their pre-tax salary. US employees widely expect their employers to provide 401K plans which not only reduces their taxable income it also aids in savings for their post-retirement years. Providing a 401K plan to employees is not complex or expensive and many employers offer matching contributions to their employees 401K accounts. Common employer contribution strategies include matching contributions up to a certain percentage of the employees’ contribution, for example: 50% of the employees’ contribution, up to 6% of their salary. Some employers choose to contribute a fixed percentage of the employees’ salary to their 401K account, regardless of whether the employee contributes. 401K matching from employers is not needed but is a competitive advantage when recruiting and hiring in the US tech market.
Human Resource Policies – Having a well-defined human resource policy is a cornerstone for recruiting, hiring, and employee retention. These policies include clarification on processes around vacation time, holidays, expense reimbursement, travel, and remote working.. Also, having a clear remote work policy can be a good recruiting and retention tool in the US market.
Dependencies – There are several dependencies that will affect your company’s ability to be “talent ready” to hire in the US market including headquarters site selection, corporate formation, opening a US bank account, finding a PEO (Professional Employer Organization) or other benefits provider, and completing a 409A valuation for the parent company. Each step should be taken before you can compete for talent in the US market.
If you have questions or want to discuss the talent readiness of your company to expand to the US market, feel free to book an online meeting with us. We are always happy to answer your questions.