A Successful Relocation Starts With Why?
August 18, 2014
Executing a business headquarters relocation is a major challenge. So much so that it is a fairly rare occurrence. However, when undertaken for the right reasons, a strategic relocation can significantly enhance business results.
Rarely does a business relocate simply to reduce costs. Only if the move is made from a very high cost area to a significantly lower one is there an immediate cost savings. Even so, the unexpected and hidden costs that emerge frequently outweigh the initial projected savings. The decision to relocate requires the careful consideration of many factors, and total alignment with the overarching business strategy.
Recently, I was reviewing some data related to eleven large, high profile companies who have relocated headquarters or executive offices. There were some interesting highlights, which I’d like to share with you.
Access to talent and recruiting challenges were the most often cited reason for relocating a headquarters. Businesses that require highly skilled workers, particularly in the areas of science and technology, are drawn to areas with existing talent pools. For many businesses, this is a key consideration as workers in high demand fields are unlikely to relocate to undesirable locations.
Aligning with other business units is the second leading reason for relocation. Merging a regional headquarters into corporate headquarters, moving corporate headquarters to closer proximity with manufacturing and post-merger consolidation were mentioned by several of the companies in the report.
Only two of the moves were directly related to cost reduction. One of those involved moving the headquarters of a financial firm from high cost Manhattan to nearby Stamford, Connecticut. The two locations are about an hour apart in a region where a long daily commute is the norm. Moving headquarters a short distance is much more likely to achieve cost reduction benefits. The other relocation that sited cost as a key factor was the move of FedEx Kinko’s from LA to Dallas. Though cost was an important factor, this move was part of a strategic realignment of business units.
The key to a successful corporate relocation is to start with asking why relocation is right for your business. Perhaps proximity to other key players in the industry makes sense. It could be that you need to improve your ability to attract the best and brightest employees. Or maybe now is the time to consolidate operations into a central location. Only after making a careful analysis of why you need to move can you determine where you should go.
If you think business relocation is strategically advantageous for your business, give us a call. We have the tools and resources to help you make the right decision.
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