It’s the people who make it work
A Company establishing a new business base in the UK or mainland Europe has a whole range of factors to consider. Typically, first thoughts are about products and markets, and how the commercial potential can best be realised.
In fact, the success or failure of such a business expansion will often be determined by the people involved in it. People considerations should therefore be very high on the list of priorities. All too often they are almost an afterthought, or worse still, it is just taken for granted that people can be found.
Location is important for the business from a distribution or competitive point of view. It is also vital in relation to recruiting the best people.
And not just location. The whole employment package for new employees needs to be considered, including working conditions, remuneration and the range of benefits that should be offered.
One of the first hurdles that will be encountered when planning these packages is that there are no Pan-European solutions for either the benefits programme or indeed the cost of social security and level of State Benefit provision. Part of the decision making process about location will therefore need to take into account the cost of employment and the extent of employment legislation. Protected employment issues arise everywhere. There is no understanding of “employment at will” through many parts of Europe and the UK.
Even so, for a US company taking a first step into the UK, many of the employment laws will sound familiar. However, this in itself contains the seeds of danger, as it is tempting to assume that the rules applying in the UK are the same as at home. As a result, we have even seen some companies using a US contract of employment for their UK employees, which just does not work.
Before the recruitment process starts, a company should establish the standards it is trying to achieve in relation to its competitors. Often the requirement will be to provide a package, which is considered to be just above the median; but in some business sectors, this is just not good enough to attract the best people.
Recruitment, though, is only the start. With unemployment at very low levels in the UK, keeping staff is also a major issue. A competitive edge needs to be maintained if staff are to be retained.
For budgeting purposes, it is often possible to provide an employment package in the UK including a benefits programme that has a cost, as a percentage of payrolls, very similar to that applying in the US. However, the priorities placed on the range of benefits will be very different.
The number one benefit in the US will typically be healthcare. In the UK, by contrast, this will be third or fourth on most employees’ list. In the UK it is the pension programme that is perceived as the main benefit, and expectations about employer contributions are much higher. For a company with employees in a number of European locations, the position is more complex. Priorities vary throughout Europe because the levels of State Benefits are dramatically different.
Some careful early research and planning in such vital HR matters should be viewed as an investment which could not only save time and significant costs in setting up the business, but could ultimately be the difference between success and failure.
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