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Interactive Exercise
This exercise will teach you how to establish a geographic salary structure using ERI's Geographic Assessor (GA). This online tool enables users to compare the cost of labor and cost of living for more than 10,000 locations worldwide. Detailed two-city reports can be adjusted by earnings level.
The Geographic Assessor tool is useful for planning:
- business development and site selection for new or relocating businesses
- employee relocations
- geographic salary structures and differentials
- international assignment management
Problem Statement
Sarah Desmond is the HR manager for Aero-Mechanical Products (located in Springfield, Massachusetts). The company produces machined parts for the aerospace industry. The business is growing thanks to the company’s attention to cost and quality. There was even a discussion about expansion plans during a recent executive meeting. Sarah is concerned.
The meeting discussion began with how to expand the plant in Springfield but ended with support for building a new plant in the Southeastern United States. The proposal is to look at Tuscaloosa, Alabama. An executive even went so far as to point out that the cost of living is almost 20% lower in Tuscaloosa, so the company’s payroll costs could be 20% lower.
Sarah suggested that she be allowed to check this out. The rest of the executives grudgingly went along, giving her a few days to gather some information.
Analysis
Sarah begins her research using the Geographic Assessor by selecting Springfield and Tuscaloosa for a comparison of the two cities. Follow along with her analysis by clicking on the Load Step-by-Step button.