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When Quality of Life Closes the Location Decision Deal

Just like beauty, quality of life is in the eye of the beholder. When it comes to choosing a location, it's a minor consideration for some. But for others, it makes all the difference.

Dec/Jan 10
A range of different factors contributes to the overall - and highly subjective - definition of quality of life (QOL). For some people, it's an area's cost of living and the quality of its school systems. Others find a city's climate, access to beaches and mountains, and recreational opportunities to be the most important features. A vibrant downtown, complete with nightlife and culture, might be the biggest draw for others.

Which quality-of-life criteria have the greatest impact on the site selection process depends on the type of project and the work force that will be moving. Is it the full complement of positions or just upper management? Will it be a distribution facility or a headquarters? For example, the quality of local schools is usually a big consideration for a company planning to relocate managers and other mid- to lower-level employees, but not as much of a concern for senior executives who can afford private schooling or whose children are grown.  

Why It Matters - or Doesn't
"Depending on the type of project, quality of life typically ranks somewhere in the bottom half of the list of site-location factors," says Larry Gigerich, managing director for Ginovus LLC, a consulting firm in Indianapolis, Indiana. "Quality-of-life issues typically have a much greater impact on projects that are trying to attract certain types of employees. As an example, he says companies planning information technology, life sciences, research and development, and corporate headquarters projects tend to rank quality-of-life issues higher on the list than those planning other types of projects.

"Of the 13 site selection criteria we [use to] evaluate sites, quality of life has relatively minor impact in the early stages," says Jim Colson, president and CEO of Growing Economies International LLC in Phoenix, Arizona. "In the later stages, it becomes more important and is measured relative to the other short-listed location candidates." He says communities that are perceived to have high QOL tend to assume it and not talk about it as much, while those that with lower perceived QOL tend to oversell what they do have.

"Like most factors, QOL's relative weight depends also on the stage of the project," says Mark Sweeney, senior principal with McCallum Sweeney Consulting in Greenville, South Carolina. "Projects with a high level of personnel relocation - for example, headquarters - will have QOL weighted high from the start of the project. For projects with critical/key relocations, even if it is a small number of employees, QOL will still be an important factor, although it may not reach that status until later in the decision."

For most site selection searches, quality of life does not become an important factor until the project reaches a short-list stage. "Normally, cost factors weigh more importance during the selection process," says David White, executive vice president of marketing for the Colorado Springs Regional Economic Development Corporation. Money magazine ranked Colorado Springs as one of the most livable large cities in America in its 2008 survey. "Quality of life can become the deciding factor later in the selection process, especially for an industry that must attract quality talent and young professionals," he says. "Typically, the higher the average salary of the company, the more critical a role quality of life plays."

Quality of Life Criteria
Key attributes for a high quality-of-life ranking include high-performing schools (public, private, and post-secondary), affordable housing in a variety of good neighborhoods, efficient public transportation, short commute times, low crime rates, high-quality healthcare, spouse employment opportunities, and competitive child-care costs. A good balance of lifestyle amenities - shopping, entertainment, sports, weather, alternative employment opportunities - is also highly regarded.

"In general, the idea of QOL diversity is also important," says Sweeney. "How diverse are the housing and education assets? How diverse are the cultural and recreational choices? Metro areas typically score better on this diversity factor than smaller, less developed locations. On the other hand, three primary issues individuals look at in evaluating a location - and so should companies - are housing, education, and safety. The best scoring locations for these factors can be of any size and location." 

For a large group move - such as Nissan moving its headquarters to metropolitan Nashville, where there was potential for relocating employees across all the spectrums - the concept of QOL diversity is especially important. "In addition, geography - the starting location and its relation to the receiving location - can be an issue," says Sweeney. "Moving from a coastal urban city to a middle-America small city or town can present a culture-shock challenge and vice versa. The cultures of the West Coast and the metropolitan cities of the Northeast are strongly embedded in people, and firms that relocate from these regions will have to account for this when they consider new relocations."

Which QOL factors are the most important in site selection depend on the type of operation that's being sited. "For instance, a company that's locating a call center may emphasize quality-of-life factors such as commute times, student population, and the number of restaurants in a community - considerations quite unlike those of a company that's locating a manufacturing operation," says Michelle Comerford, a site location expert with Austin Consulting in Cleveland, Ohio. "A manufacturing operation that's dependent on technical and highly skilled workers will have a different set of quality-of-life factors."

Austin Consulting recently worked with an international manufacturing company to help locate a data center that would employ about 15 highly skilled professionals. Because the company determined that a broad range of locations could meet its new facility's requirements for technical infrastructure, security, and labor, it could pay more attention to the quality-of-life factors that were important to its corporate culture, including climate, cost of living, and the number of colleges and universities.

"Some of these quality-of-life factors were important in meeting operational needs, such as facility reliability and access to required labor force skills," says Comerford. "In addition, in order to be more attractive for recruiting and retaining managers, this corporation gave strong site selection consideration to proximity of airports, executive housing, high-ranking public and private schools, hospitals, shopping, and recreational facilities."
Happy Employees
It's been well documented that companies perform better when their employees are happy in the workplace. Quality of life has a huge impact on overall employee satisfaction, productivity, and retention. "Employees who are happier are more productive, miss fewer work days, and are more creative, focused, and loyal," says Gigerich. "Quality-of-life factors add value to a company's bottom line."

Sweeney agrees. "Quality of life flows into personnel issues and ultimately productivity," he says. "A high quality of life is particularly important for recruitment - the ability to attract the best and most desired talent to your location - and retention - having employees stay with the company because they are satisfied with their quality of life. Job satisfaction is positively correlated with productivity, and QOL will influence that." He says dissatisfaction with QOL issues can lead to key people performing below peak and ultimately leaving the organization, disrupting productivity and increasing costs.

Cities that are consistently mentioned when discussing a high quality of life include Austin, Texas; Charlotte, North Carolina; Denver, Colorado; and Minneapolis-St. Paul, Minnesota. Emerging high-QOL communities include Albuquerque, New Mexico; Boise, Idaho; Greenville-Spartanburg, South Carolina; and Nashville, Tennessee.

"Companies that choose to locate [in Sacramento] are looking for a diverse and broad talent pool and know that quality of life is important for recruiting and retaining the best employees possible," says Tracey Schall, director of strategic marketing for the Sacramento Area Commerce and Trade Organization. Sacramento was among Fortune's 100 Best Places to Live and Launch a Business (2008) and Forbes' Best Cities for Young Professionals (2008). "We particularly see this trend when working with international companies, especially those companies originating in Europe."

Marc Vogt, CEO of a German solar company, recently set up operations in Sacramento. "We see the U.S., and California in general, as being a strong potential market for us," he says. "We also wanted to locate on the West Coast because of our exports to Asia." Why did he choose Sacramento instead of San Francisco or Los Angeles, or elsewhere along the coast? He says the company looked at Oregon and Washington, states that offered similar incentives to California. But in the end, quality of life won out. "I have a 3-year-old daughter, and I just couldn't see her in rainy Seattle." The city's parks, access to mountains and the San Francisco Bay area, a thriving downtown, and abundant bike lanes were also factors in the decision.

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