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PwC’s report ‘Preparing for tomorrow’s workforce, today’ highlights the concerns businesses have about the uncertain global landscape. Factors such as turbulence in the global economy, rapid technological innovation, ageing populations and changing demographics are causing concern for many businesses.
According to a global survey conducted by PwC of 1,246 senior executives across more than 10 industries in 79 countries, to effectively respond to macro uncertainties, one of the top five capabilities companies consider important for future development is the ability to access flexible and diverse talent when they are needed. A growing number of companies are expanding the boundaries of their talent pools to become more agile in their use of key talent capabilities:
As the boundaries of the company's workforce expand, the management boundaries of the HR function need to be adjusted. Rather than focusing solely on traditional employees, HR must now manage the entire workforce to ensure compliance and effective management. To achieve this, they should collaborate with other functions to provide integrated management/services to the entire workforce group.
The current employment mode faces challenges in keeping up with changes in the internal and external business environment
The current unified and fixed employment mode is advantageous for efficient business management, but it is insufficient to meet the diverse business needs of the rapidly changing external and internal environment. For example, flexible employment may be required for temporary business needs, while workforce mobility may be required for ecological companies, different business units within a group, and across regions and countries.
Flexible employment mode often comes with advantages and shortcomings that require effective management
As companies expand their workforce boundaries, many of them are adopting flexible employment modes such as dispatching, outsourcing, consulting and shared employees, as well as flexible office modes such as remote working and shared offices. While these modes offer advantages such as flexibility, high efficiency, and low cost, there are also shortcomings in HR management mechanisms that are not adequately addressed. This can lead to several issues including corporate security, management risks and inefficiency.
Employment model must meet regulatory requirements while supporting the business
Businesses need an employment model that meets their needs quickly and effectively, enabling them to attract and retain top talent. However, these needs must be balanced with legal and compliance requirements to ensure that employment practices are lawful. This can be challenging at times and companies must work to balance their business needs with compliance requirements. In addition, for companies with overseas operations, the employment models based on Chinese laws and regulations may not necessarily meet the legal and market practice requirements of overseas regions.
Business needs of the employment model do not match clear financial and tax strategies
In the course of doing business, companies often lack a clear understanding of the logic behind employment requirements and appropriate financial and tax considerations. For example, in the case of cross-entity employment, it can be challenging to determine how to share the labour costs between companies, and in the case of cross-border employment, it can be difficult to determine how to balance financial and tax considerations and how to rationalise corporate and personal tax in the context of flexible employment.
Clarify the logic and framework of organisational governance of the Group's business ecology, guide employment governance, and define the organisational access boundaries of employment management. By combining business needs and management requirements, we can help formulate employment blueprints, clarify the employment modes of different organisational forms, optimise employment types and standards, and improve the role division and collaboration mechanisms of different functions in key scenarios for different employment types.
Based on the business needs and management requirements of companies, as well as different market practices, formulate HR management policies for flexible employment, design management policies and implementation plans for flexible employment modes, flexible office styles and working hours, and other aspects of talent selection, training, employment and retention, and advise on optimising corporate culture to promote the implementation of flexible employment mechanisms.
Clarify employment compliance requirements and management principles, design an employment compliance management defensive structure, and analyse the scope and control methods of employment compliance management. Based on national employment compliance requirements in different countries and regions, the model, business needs and scenarios established by the business unit, we help to assess employment risks and propose specific solutions, measures and steps. This includes guiding companies from setting up and improving employment compliance management systems and policies to establishing basic principles and ways of addressing compliance issues, ensuring that companies at different stages of development have a holistic view of employment compliance and specific action plans for implementation.
For both domestic and overseas employment, select the key countries and regions with frequent overseas employment from a tax perspective, provide a summary analysis of the permanent establishment and transfer pricing risks associated with the Group’s typical employment scenarios, and recommend the optimised approach to address tax risks arising from the current employment mode of the companies. In addition, provide guidance on the future communication mechanism and process between HR and tax.