About two-thirds of American employees work remotely at least part of the time. Ensuring compliance means more than just making sure they log on at the right time. Tax expert Jennifer Stein talks about the importance of aligning all your organization’s stakeholders to reduce risk.
As companies pivot to address a shifting workforce, aligning key stakeholders is more important than ever. We’re living through a moment CNBC has dubbed “The Great Reshuffle,” where high-profile companies are scrambling to redraft their mobile work policies and reexamine their workplace processes. However, especially in the era of mobile work, if policy and leadership aren’t aligned, these company-wide moves can be risky.
Misaligned stakeholders can easily lead to noncompliance, tax violations, penalties and reputational damage. Fragmented leadership may also cause your employee experience and work culture to suffer. If employees are hearing mixed messages from their leaders, it can lead to major frustrations, and they may leave for a new company.
Fortunately, you can bring your stakeholders together and navigate tax and compliance risks by taking a few important steps. Here’s how to align your key stakeholders and avoid tax and compliance pitfalls.
Start by understanding where risk is rising
Aligning stakeholders has always been a high priority, but shifts in the workplace are pushing it into critical territory. Remote work has surged in the past few years, and even within companies that are bringing employees back to the office, mobile work is growing. All told, according to Zippia research, 26% of U.S. employees now work remotely, 66% work remotely at least part-time, and close to 92% work from home at least one day per week.
What many don’t realize is that within these remote work models, overlooking just one stakeholder connection point can tip your company into noncompliance. For instance, imagine a U.S.-based remote employee wants to work from Canada for a month. This one move may require input from every department, from HR and corporate tax to payroll, immigration and more.
In this scenario, if you leave HR out of the conversation, the employee may miss out on emergency medical benefits. Overlook your accounting team’s leadership and your employee may unknowingly set off extra tax withholding or reporting obligations by working within a new country. And the list of risks can go on and on.
Simply put, failing to line up your key stakeholders at this time of major change can spark noncompliance violations on multiple levels. The best way to start fighting off these risks is to step back, examine the risks you face and be open to involving stakeholders throughout your organization.
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Read moreIdentify who your key stakeholders are
It may be tempting to assume tax and compliance responsibility sits squarely in one or two departments. However, much of the time, a decision will ripple across the organization. For instance, if you’re setting up a remote work policy, it may require input from immigration, corporate tax, payroll, HR and more. That’s why it’s important to identify all key stakeholders for each individual initiative before you start mapping out a policy. On a case-by-case basis, pinpoint who has signoff, who needs to be involved and who, you’ll need to secure buy-in from prior to pushing new processes forward.
Not sure who your stakeholders are? Here are a few guiding questions to help you determine who should be involved in your mobile work decision-making process:
- Who needs to be alerted if an employee changes their work location?
- Are there area-specific health and safety laws employees need to consider?
- Do any of your employees’ work locations require immigration paperwork?
- Are employees receiving equity compensation that requires country- or state-specific withholding obligations?
- Will an employee’s tax withholding or social security requirements change based on their work location?
- Will the employee’s presence within an area trigger extra tax requirements for the company?
- Will unemployment insurance or workers’ compensation change based on the employee’s whereabouts?
- Will your company’s insurance plans cover your employees in new locations?
Depending on how you answer these questions, your stakeholders will vary. However, asking these types of questions will help reveal how far the tentacles of responsibility extend across your organization.
Secure buy-in early
One of the most frustrating mistakes a business leader can make happens when you seek buy-in from stakeholders late in the policymaking process. That’s because one person’s opinions can change another person’s plans — and those alterations can mean you end up having to reset your policy. It can also leave stakeholders feeling left out, which may lead to resistance against your initiative. You can protect against this extra work and frustration by getting buy-in early on and building out your policy from there.
Set up a collaboration meeting
Once you’ve identified your stakeholders, a figurehead needs to bring them all together in a collaboration meeting. The goal of this meeting is to secure buy-in from your stakeholders, set parameters, and give everyone a moment to express their views.
At this meeting, be sure to lay out the “why” that’s propelling your policy. Lay out the benefits and the risks that your proposal is designed to eliminate. These meetings will help clarify your vision for the rest of the organization, and they will give stakeholders an opportunity to lend their expertise — and feel more like they have a vested interest in seeing the project succeed.
Start preparing your teams for the future of work
Aligning key stakeholders has always played an important role in the corporate world. But mobile work is complicating tax and compliance issues, and it’s more crucial than ever to make sure all your stakeholders are on the same page. By recognizing these complexities, determining who your stakeholders are, and proactively rallying them around a single vision, you can prepare your organization for even stronger compliance in a risky business environment.
Jennifer Stein has more than 25 years of experience in expat and foreign national tax preparation and consulting. She joined Global Tax Network in 2011 and serves as managing director. While clients’ projects may look similar on paper, she understands that every employee situation is unique. She coaches clients to understand the complexities of sending employees across borders and helps them work through the many requirements of home and host reporting.
