Building your U.S. Team
There are many benefits to having a local team in the US that can fully focus on establishing your presence in the US market. However, to set-up a successful team in the US presents both opportunities and challenges. Nearly 50% of companies experienced significant challenges in finding skilled talent in the US. This is partly due to the differences in employment regulations and benefit structures in the US compared to Benelux. Additionally, cultural differences were found to be challenging during interviewing candidates and working together with new team members. These findings are very similar to the findings in 2020, where also 50% of companies found it difficult to attract skilled labor.
Different companies state the importance of preparing well for hiring in the US, by engaging with HR experts, using recruiters to find employees and by sharing experiences with other entrepreneurs to familiarize themselves with best practices for the US.
Found it Difficult or very difficult to attract skilled labor in the U.S.
Challenges and Strategies for Attracting Skilled Labor in the U.S. Market
Among the surveyed Benelux ventures, those operating with a U.S. entity (Group 1) predominantly (80%) reported having employees in the U.S. Within this group, 62% indicated employing between 1 and 50 individuals in the U.S., while 18% reported having between 50 and 250 employees in the U.S. Most (38%) of the surveyed Benelux ventures in group 1 hired their first employee in the U.S. within the first year of expanding to the U.S. market. Additionally, 43% hired their first U.S. employee within five years of expansion, while 21% waited five years or more to make their first U.S. hire.
“Recruiting and managing personnel in the US presented significant challenges, particularly navigating HR procedures and cultural differences. Lack of experience in hiring and managing a US-based team posed initial hurdles.”
Recruiting U.S. Employees
Among the surveyed Benelux ventures, those operating with a U.S. entity (Group 1) predominantly (80%) reported having employees in the U.S. Within this group, 62% indicated employing between 1 and 50 individuals in the U.S., while 18% reported having between 50 and 250 employees in the U.S. Most (38%) of the surveyed Benelux ventures in group 1 hired their first employee in the U.S. within the first year of expanding to the U.S. market. Additionally, 43% hired their first U.S. employee within five years of expansion, while 21% waited five years or more to make their first U.S. hire.
This suggests that the Benelux ventures in this study operating with a U.S. entity generally opted to hire relatively quickly after entering the U.S. market. During qualitative interviews, some respondents mentioned that for strategic reasons, they chose to hire a local sales manager early in their expansion. This approach helped them build relationships and leverage initial partnerships in the U.S. market.
Figure 28: Number of Employees in the U.S.
Within Group 2, consisting of Benelux ventures without a U.S. entity, a significant majority (56%) reported having no employees in the U.S. This suggests that more than half of these ventures operate entirely from their home base in the Benelux region. Furthermore, 11% of these ventures manage their U.S. employees through a professional employer organization (PEO), indicating a preference for leveraging external expertise to handle complex employment regulations and administrative tasks. Additionally, a small fraction (2%) relies on the payroll services of EU entities to manage their U.S.-based employees, highlighting a minimal but existing trend of cross-continental payroll management.
An industry expert in this study underscores the substantial challenges that Benelux ventures without a U.S. entity encounter when trying to navigate the U.S. labor market. Without a physical presence, these companies likely face hurdles in understanding and complying with local employment laws, establishing effective human resource practices, and managing employee relations from a distance. An additional layer that this expert also highlights involves the fiscal consequences associated with employing U.S.-based staff. Companies without a U.S. entity may expose themselves to U.S. taxation. This exposure can arise from creating a U.S. presence or taxable presence in the U.S., potentially subjecting the venture to federal, state, and local taxes. The lack of awareness and understanding of these tax obligations can result in significant financial liabilities and compliance risks. Ventures using PEOs or EU payroll services must be particularly aware in assessing their tax exposure to avoid unexpected fiscal burdens.
Employees in the U.S. Without a U.S. Entity
Employees via the EU entity's Payroll
Employees via an employer organization
Don't have employees in the U.S.
Navigating HR Challenges
Benelux ventures participating in this study have encountered a multitude of recurring challenges, each presenting unique hurdles on the path to establishing a U.S. team. These challenges include:
Respondents in this study encountered significant challenges in hiring talent within the U.S. They strategically weighed the options between recruiting U.S. talent, potentially onboarding them initially in the Benelux region, appointing a local representative, or working with expats. Each approach presented its own set of advantages and difficulties.
Navigating U.S. employment laws proved to be a major hurdle for our respondents. The complexity arises from the fact that employment laws in the United States are regulated at the state level, with each state having its own substantial differences. This variability requires a deep understanding of multiple legal frameworks to ensure compliance.
