Headquarters Relocation: Why-What-Whether-Where?
WDGC recognizes the sensitive and complex nature of moving corporate office functions, especially headquarters. The decision of whether and where to move embraces both data driven analytics and judgment gained from advising a wide array of companies over four decades. Determining the merits versus risks of relocation begins with a discovery phase that provides the foundation for a relocation feasibility analysis:
The first step in the decision-making process is to gain an understanding of the dynamics (internal and external) that are shaping executive management’s thinking on potential relocation. In effect this discovery phase defines why and what. Through a customized request for information and dialogue with the executive team, WDGC elicits responses and facilitates consensus on the following:
- Why is relocation being considered?
- Which corporate strategies would be strengthened via relocation?
- What should comprise the base case for comparison purposes?
- What are the overarching locational resources that any destination area should display?
- Are there any geographic preferential constraints?
- Should a short distance move be considered?
- What constitutes corporate headquarters for study purposes…C-Suite, C-Suite Plus, all front office, all front and middle office, or the entire entity including back office?
- What is the tolerance for move-induced attrition, especially among the most critical employees?
- Does a move need to produce a positive financial payback? That is annual savings must offset one-time costs within a reasonable timeframe.
- Should a seed and grow alternative be considered?
- When would be the optimal time to execute the headquarters relocation?
- What should be the communications/confidentiality protocols?
To measure the implications associated with a headquarters move, WDGC selects representative locations that could support key headquarters operational requirements. These sample locations may or may not make it to the shortlist stage should the project advance to the site selection phase.
The outcome of this analysis is a “go” or “no go” decision. To empower executive management to arrive at this decision, WDGC quantifies the following:
Human Resource Impacts
Relying on WDGC’s predictive model and consultant judgment gained from over 40 years experience in corporate site selection, WDGC projects rates of retention/attrition among various employee groupings. In developing employee impacts, WDGC and our client agree on (a) relocation eligible positions, (b) relocation policy provisions which could be tiered or one-size for all; and (c) retention policy features (including severance, stay bonus, and project completion bonus).
Headquarters relocation often entails a significant non-recurring (or one-time) cost. WDGC projects the key costs of a headquarters move, including: human resources (e.g., relocation, retention, replacement), real estate (e.g., lease break penalty), physical office move, and temporary duplicate operations. Recurring costs that vary geographically are also quantified including payroll, occupancy, travel, taxes, and incentives.
Cost comparisons are made against the base case (often a business-as-usual scenario). This allows executive management to gauge the incremental cost of a headquarters relocation.
As in any stage of site selection, qualitative factors can exert influence over whether and where to relocate headquarters. Illustrative qualitative factors include:
- Customer proximity
- Better air access
- Proximity to other company operations
- Accelerating the rate of internal change
- Enhancing innovation by accessing an industry hub/ecosystem
- Acquiring and retaining key talent
- Enhancing national recruiting
- Strengthening brand/corporate reputation.
Should the outcome of the feasibility analysis support relocation, WDGC would then proceed forward with final due diligence that both screens for, and field validates, the optimum location solution.