Headquarters Relocation Best Practices
Choosing a new headquarters location can be a daunting and expensive process. But following certain protocol can ensure success.
John M. Rhodes, Senior Principal, Moran, Stahl & Boyer, LLC (Apr/May 10)
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Number of Fortune 1000 Headquarters by State
Characteristics of a Headquarters City
Companies and organizations select cities for different reasons to meet their needs. A combination of factors makes a successful headquarters city:
Reputation and overall image - a city's image is derived from perceptions of its growth dynamics, success of its sports teams, major industry presence, weather, amenities, and other factors.
Co-location with other headquarters - when a city reaches a critical mass of headquarters operations, there exist services and functional talent to support headquarters growth.
Specific industry presence -specific industries target certain communities and regions, such as Detroit for U.S. automakers, New York City for financial and fashion firms, Philadelphia for pharmaceuticals, Houston for oil and gas, and south Florida for access to Latin America. In fact, Fort Lauderdale has more than 150 headquarters that take advantage of its Latin American access.
Air access - non-stop flights to selected domestic and international cities.
Professional or collegiate sports and cultural venues - an important consideration for client, internal company, and family entertainment.
University presence - this ranges from access to MBA programs, to research and development activities for technology-based companies.
Reasonable operating cost - for some high-margin businesses, cost is a less important factor. However, for most of the maturing industries, cost of real estate and administrative labor is an issue.
Quality of life for attracting and retaining top talent - this includes cost of living (particularly housing), quality of schools, health care, presence of certain cultures, recreation, cultural activities and venues, weather, and crime rates.
Minimization of risk - derived from the actual and perceived incidence of natural events and potential terrorist activity.
Culture that welcomes and quickly assimilates executives and their families - the time required to be in a community before a person is appointed to high-level volunteer positions is one indication of ease of assimilation. It also corresponds to neighborhood layouts, interactive activities, and the attention new people receive.
Attracting and Retaining Headquarters
A community can focus on different attributes to enhance its position in attracting and retaining headquarters operations:
Know your strengths and weaknesses - every community has assets and liabilities. A headquarters city should take stock of what it can offer a company or organization - both inherently and through investment - and leverage those assets. Focus on:
Air access to key international destinations
Available, ready-to-build Class A offices and developments that offer unique environments
Types of industries and headquarters already present in the community
Quality of schools
Relative cost of housing and lifestyle options
The capabilities of local universities, including academic programs and research and development activities
The process and venues for assimilating executives and their families into the local culture
Continuous improvement - a community that never accepts the status quo and embraces change is one that will stay vibrant and contemporary. Companies want to be in a place that is receptive to evolving needs, adapts to shifting situations, and is always improving.
Get the stakeholders on the same page - successful cities get educators, developers, government officials, service providers, businesspeople, and the greater community to work from the same page. Building a shared vision and a reasonable level of consensus is critical.
Take care of current headquarters - communities tend to view existing employers and headquarters as if they will always be there. Bad idea. Instead, spend time understanding the needs of each company and utilize their feedback to better position the community to not only retain existing companies, but to attract additional headquarters.
Invest in a company's future - a community and its residents must realize that it costs a company significant resources and major organizational risk to relocate. It is not "corporate welfare" to provide a company incentives to come to a community. Incentives should be positioned as investments in the company, just as individuals invest in a company stock.
Let the world know what you have to offer - being the best-kept secret is never the formula for success in any sales situation. Companies have many choices for placing their headquarters. Target your community's message of being a headquarters location to the highest potential audience and reinforce it constantly. There are many innovative ways to reach prospective companies, as well as site selection experts, business consultants, and commercial brokers.