We looked at the employment laws and working hours in other countries but they didn’t present as easy a fit as those in the UK.

Jacki Vause
Managing Director
Peppercom Europe

Starting up and growing a company demands a great deal of flexibility from a workforce.

In many parts of the world, hiring and firing can be legally complex and administratively onerous.

Add high wage demands to the equation and growth can turn to stagnation – or worse.

How does the UK compare with Europe?

According to the World Bank’s Doing Business 2005 survey, when assessing the level of difficulty of hiring and firing (zero being best), the UK scored 10 and 11 points respectively while Europe averaged a much worse 26 points for both hiring and firing.

This is because is comparatively easy to hire (and fire) workers in the UK due to a more flexible system of employing staff. For example, the concept of temporary or contract work is common.

Such user-friendly recruitment procedures have a commercial appeal.

Peppercom: Expanding from the US to the UK

So, when US PR company, Peppercom, wanted to take advantage of the booming world telecommunications market, it established its European headquarters in London.

“When we founded Peppercom Europe [in 2002], the media market was very much in freefall,” says Jacki Vause, Managing Director of Peppercom Europe.

“However, Peppercom in the US was confident that Europe had a market that would be ultimately profitable.”

Keeping costs low

Because of the poor market conditions, it was essential that set-up costs were kept low.

So, rather than taking on permanent staff, Peppercom favoured flexibility in the workforce.

“We looked at the employment laws and working hours in other countries,” explains Vause, “but they didn’t present as easy a fit as those in the UK.”

Are wage costs stable?

Fixed overheads – particularly salaries – were also a factor.

“In the US, there is very much a bonus culture, and it’s hard to calculate how much of your profits will be eaten up in bonuses,” says Vause.

“In the UK, the culture is more of a basic-wages culture so we have no problems in working out just where we are in our business plans.

How do management salaries measure up?

The Chartered Management Institute backs this up. In its yearly management survey (published June 2005), it found that the average total earnings for managers in the UK was US$82,143.

The national average management bonus is US$8,080 (see table), so the bonus is only 10 per cent of total income. Which means that managers’ salaries account for a large proportion of guaranteed take-home pay.

The UK - A stepping stone to bigger markets

The UK is a valuable market, but its proximity to the larger European market is a big attraction.

“Our global clients wanted to implement campaigns that had been successful in North America, and the UK was very much perceived as the gateway to Europe for the company,” explains Vause.

“I am sure that the close political ties between our countries [the UK and the USA] and the lack of language barriers also gave a subconscious feeling of security to our choice of the UK as a base. But whatever the exact reason, it’s been a good choice.”

Source: Managers.org.uk