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Quality of Place and Its Role in Corporate Location Decisions

As companies compete for talent, “place” is an asset that can be honed, improved, and marketed to potential employees.

Matthew Tarleton, Vice President & Principal, Market Street Services and Evan Robertson, Senior Project Associate, Market Street Services (Q1 2014)
As we travel the country working with communities large and small, urban and rural, from the Deep South to the Pacific Northwest, one thing is clear: our client communities, and their resident businesses, are increasingly concerned about developing, retaining, and attracting the talent necessary to produce a sustainable work force.

This statement should surprise no one. Nearly all the executives (95.1 percent) surveyed by Area Development in its 28th annual Corporate Survey rated availability of skilled labor as “very important” or “important” in their site selection factors. This factor is now considered more important than highway accessibility (93.5 percent) and labor costs (90.8 percent).

In today’s highly competitive environment for talent, a compelling quality of place - a community’s attractiveness to existing and future residents and workers - is a competitive advantage. Motivated by executives’ increasing concern over their businesses’ future growth prospects in an ever-tightening labor market, companies are choosing locations attractive to tomorrow’s skilled, mobile work force. And many workers - especially recent graduates and young professionals - are selecting a place to live before securing employment.
Schultz Library on the campus of Sonoma State University, Rohnert Park, California
Sonoma not only attracts talent, but retains it within the county as well. It is home to a host of innovative companies that have leveraged the talent brought to the region by companies like Agilent and General Dynamics. Pictured: Schultz Library on the campus of Sonoma State University, Rohnert Park, California
An Example
Sonoma County, located in the northern part of the San Francisco Bay Area, is widely known as the heart of California’s wine country. The county and its various municipalities have frequently appeared on a variety of publications’ “best places to live” rankings. The factors that have contributed to these rankings - collectively, the community’s quality of place - have supported a number of recent corporate relocations. Home to nearly half a million people and a highly educated work force, Sonoma’s companies have turned the area’s high quality of place into competitive advantage when it comes to talent attraction and retention.

Douglas Clark, CEO of Sonoma-based cloud computer firm Métier, describes the company’s relocation decision: “As a cloud-based technology company, we can locate our operations anywhere. Rather than offshoring, we chose to inshore. Inshoring requires that you locate in a desirable location that attracts top talent. We selected Healdsburg as our global headquarters because the community offers the quality of life and cultural offerings that attract exceptional professionals.” Companies like Métier have made the connection between place and competitive advantage: attracting a skilled work force is intricately linked to the community’s physical and social characteristics. Sonoma not only attracts talent, but retains it within the county as well. It is home to a host of innovative companies that have leveraged the talent brought to the region by companies like Agilent and General Dynamics.

Richard Schroeder, CEO of LithiumStart and former general manager of General Dynamics’ Sonoma-based Healdsburg operations facility, relocated to Sonoma County without full-time employment specifically for the quality of life and lower cost of living. After joining Versatron, a small startup in Sonoma, Schroeder sold the business to General Dynamics and grew the division to over 200 people. Finding the right talent for such a specialized market required looking outside the area. Many of the top engineers at General Dynamics were recruited and relocated from competitors around the country, including Buffalo, Cleveland, and the San Francisco Bay area.

“There are a lot of smart and talented people here who are building exciting companies,” says Schroeder. “Attracting the talent to grow them requires looking outside the area. But once they get a taste of this quality of life, it’s hard to think of living anywhere else. I remember recruiting a husband and wife from Buffalo. A long weekend interview and visit in late January sealed the deal pretty easily.”

The inherent point in Schroeder’s statement: quality of place and the availability of skilled labor are expressly linked. Though provision of necessary and sufficient infrastructure is unquestionably important, place is more than highways, telecommunications capacity, and land. It transcends a pleasant climate, low crime rates, and quality public schools. Place is the physical and social fabric the binds residents together - it is the focal point of community. It instills a sense of belonging and provokes attachment.

Community attachment binds people to a community. It is why residents stuck around Pittsburgh long after the steel mills shuttered their plants. And it is central to the city’s rebirth. Community attachment engenders “sticky” environments attractive to current and prospective talent. Community Attachment
The Soul of the Community Survey - a partnership between the James L. Knight Foundation and Gallup - found a positive correlation between community attachment and local GDP growth in its 2010 survey of 26 participating communities. Communities with the strongest attachment enjoyed local GDP growth of 6.9 percent, while those reporting the lowest attachment levels grew by just 0.3 percent.

From their surveys, Gallup identified three primary factors that determine a resident’s sense of attachment: social offerings, openness, and aesthetics. A community’s social connectedness, its “welcomeness,” and the attractiveness of the built environment were highly correlated with attachment.

The Knight Foundation discusses these three attributes in its survey: “What attaches residents to their communities doesn’t change much from place to place. While one might expect the drivers of attachment would be different in Miami from those in Macon, Ga., in fact the main drivers of attachment differ little across communities. Whether you live in San Jose, Calif., or State College, Pa., the things that connect you to your community are generally the same. When examining each factor in the study and its relationship to attachment, the same items rise to the top, year after year.”

Community attachment binds people to a community. It is why residents stuck around Pittsburgh long after the steel mills shuttered their plants. And it is central to the city’s rebirth. Community attachment engenders “sticky” environments attractive to current and prospective talent. In the highly competitive environment for skilled labor, quality of place and the attachment it creates will increasingly drive individuals’ location decisions. Companies looking for skilled talent must be aware of and responsive to the types of communities that sought-after workers wish to reside in.

No “One Size Fits All”
Quality of place, and the community to which a company is rooted, is an extension of a business’s human resource department. Both are responsible for retaining and attracting talent from around the nation and world; their functions are symbiotic. Place is an asset that can be honed, improved, and marketed to potential employees. Locating in a “sticky” community can assist in attracting and retaining talent, though identifying them can be a challenge.

Business competitiveness is critically linked to human capital and a community’s ability to sustain a qualified knowledge and skill base. The increasingly prevalent reality of today’s economic development landscape is that top talent has the freedom and wherewithal to pick and choose from a long list of potential live/work locations. Individuals’ definitions of what comprises dynamic quality of place can also differ. Although many strive to achieve it, there is no “one size fits all” community. Therefore, finding a community that aligns with a company’s culture and that of its people requires research just like any other site location factor. It requires a comprehensive community assessment. It requires talking to people, understanding their emotions.

On site selection trips, decision-makers typically spend time with community leaders that influence quality of place. They may be mayors, economic development practitioners, leaders of chambers of commerce, or executives of nonprofit organizations heavily engaged in enhancing the area’s sense of place and community culture. Time is precious on these trips, but the manner in which you engage these leaders before making a location decision can provide greater insight into the community’s future public investment decisions, as well as offer a glimpse into the community’s proactive, or potentially regressive, approach to place-making and fostering local investment.

Dedicating public resources to cultural amenities, downtown improvements, bike trails and parks, and many other place-enhancing resources are the types of initiatives that can positively align with a company’s talent attraction and retention efforts. Ask the local influencers about these attributes. Then find time to break away and ask residents and existing businesses about these attributes. Bypass the steakhouse and resist the schedule that takes you to the community’s premier fine dining establishment. If possible, find time to explore the community on your own. Where are the young people? Where are they eating? Can you even find them? If so, talk to them. Should you choose that community, they will be your future work force. You must be confident that they are attached to the place.

While conversation and interaction with people is critical to understanding a community’s quality of place, a number of potential metrics exist to assess the community as well. Quantifiable measures range from the obvious - net migration, educational attainment and age of in-migrants, growth rates in the community’s young professional population (aged 25 to 34), student outcomes from public schools, and per capita crime rates, to name just a few - to the obscure - Walkscore (an online tool that assesses a community’s walkability), per capita charitable giving, volunteer hours per capita, and voter participation rates. All speak to quality of place and potential for attachment.

In today’s highly competitive environment for top talent, executives must approach each location decision and each community in a comprehensive manner. A location decision is not solely about cost; it requires an all-encompassing glimpse into the prospective community. Business competitiveness is critically linked to human capital and a community’s ability to sustain a qualified knowledge and skill base. The increasingly prevalent reality of today’s economic development landscape is that top talent has the freedom and wherewithal to pick and choose from a long list of potential live/work locations. Skilled workers are not attracted by economic opportunity alone. They desire a holistic package in a community, one that merits a holistic evaluation by the prospective employee and the prospective employer. They want economic opportunity together with a great location to live their lives, support them through their struggles, and inspire them with new ideas. A little fun doesn’t hurt either. This is life, after all. And it doesn’t occur in a vacuum; it occurs in a place.
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