Client Challenge #4:
A consumer goods company uses one pay scale for their employees in over 100 stores across 50 cities in Asia. Recognizing significant cost differences exist between the big cities and other store locations, they wanted to introduce base pay differentials for store employees. The goal was to enable staff to have a similar savings potential after living costs. However, they did not have the data points for pay differentials in those cities in that country.
Solution:
AIRINC consulted with the client to understand the current pay structure and to establish a baseline location that would act as the reference point for comparison.
Using the salary midpoint, the purchasing power of store staff in that base location was calculated. The calculation took into account the cost of goods and services, accommodation, tax and social security, and savings.
The comparative purchasing power in each location across the country was then calculated. Based on the results, we recommended the locations be tiered into four bands that grouped locations. The company was able to make an informed decision on pay and begin transition to a differentiated salary approach.
Learn more about the Geographical Differential Index.
