Whether your employees are janitors, lawyers, mechanics, or IT workers, wages vary wildly across the UK. Those working in the 15 largest towns and cities earn more than the average weekly wage of £539. That’s why when your office relocates you need to check pay rates. This article, written by the MIA’s trusted Business Helpline partner, Croner, creates a fictional organisation and shows the impact on employees’ salaries if its main store and head office were to move to different areas of the UK…
What’s in store for your workers?
To illustrate the point we’ve created a fictional organisation and put the details into Croner’s SalarySearch software.
In this scenario we’re looking at a kitchen appliance distributor. Company name: Pot Calling the Kettle Black Limited, or PCKB for short.
PCKB has a number of locations across the UK, but its main store and head office is based in Doncaster. The company employs around 200 staff in total.
For this example we’ll focus in on one employee: Gladys.
Gladys is a store manager who lives just outside of Doncaster. She earns £30,000.
The salary Gladys is currently earning is actually a little below the median for her area and industry.
Based on the size of PCKB, the industry, and the location, Gladys should be earning between £30,609 – £30,982.
However, Gladys does receive a bonus of £2,100, which is a little over the median at £2,050.
With those figures in mind, let’s take a look at what would happen if PCKB decided to uproot and move its offices to a different location. Let’s say to Central London.
You don’t need to be a Pay & Reward Specialist to know that everything is more expensive in London. So as you’d expect, salaries generally tend to reflect this theme.
The median salary for Gladys would now be £33,191 – £33,369, which is far from what she is currently earning. The average bonus would also increase to £2,235, which isn’t a huge jump, but it means that her previous bonus, which was generous, is now below-average in comparison.
Assuming Gladys was willing to relocate (or heaven-forbid, commute) she’d be expecting a reasonable pay-rise. If PCKB were unwilling to give her that pay-rise, she’d understandably want to look for employment elsewhere, or refuse to relocate.
But, that is a rather extreme example.
Perhaps, instead, PCKB decide to relocate to Sheffield. This is much closer to home and is more reasonable for employees who wish to remain at the company.
Because it’s so close to the original location, and there are no major changes to the company infrastructure, the salary range remains largely the same.
However, Gladys may request a pay-rise in order to counter-balance her expensive commute. Offering pay-rises for this reason can combat this issue, but be careful. This can quickly lead into pay-rises being requested across the board, and pay rates spiralling out of control.
Let’s look at one final example.
If PCKB decided to relocate to Cambridge, the median salary would be £31,747 – £31,893, with a bonus of £2,127.
In this scenario, the cost of commuting would again be a factor for many employees.
Gladys is happy to relocate, but her current salary of £30,000 remains below the median, as does her bonus.
Measurements on a larger scale
Throughout this example we’ve been looking at the salary of just one employee.
And while we won’t go into detail of every salary of every employee in the organisation (we have a word-count to stick to), we should rustle up a rough figure to work with.
Let’s use the move from Doncaster to Cambridge as the basis for this.
To meet the minimum range of a median salary for that area, Gladys would need a pay-rise of at least £1,747.
Now, if you remember, we said that PCKB had around 200 employees in total. With such a big move, it’s unlikely the entire workforce will relocate.
In an industry such as distribution, it’s likely around 25% of the workforce will move with the organisation. So let’s multiply Gladys’s pay-rise by 50.
This is simply a rough figure to show you what you might need to pay out to remain competitive in your new location.
That’s why it’s absolutely vital to research pay rates before you relocate.
Not sure where to begin?
Croner Reward’s SalarySearch software does the work for you, allowing you to filter pay per year based on company turnover, the amount of employees, industry, county, and more.
Figures are broken down into the lower decile, lower quartile, median, upper quartile, and upper decile.
Not only that, SalarySearch’s reports include details on benefits such as company cars, mileage, pensions, health schemes, holiday entitlement, and subsistence allowances.
As part of your membership with the MIA you can speak to a Croner expert for help with any of the above issues and get free in-depth, tailored advice. Email firstname.lastname@example.org or call 01403 800500 for the exclusive Business Support Helpline scheme number.