Mistakes to Avoid When Choosing a New Office Location
Moving your business or siting a new operation can be stressful. It can be overwhelming without careful research and detailed planning. Importantly, recognize the more common pitfalls of choosing a new office location.
Site selection requires a thorough understanding of why you’re considering relocating or opening a new location based on representation from all relevant departments. Human resources, operations, finances, and IT should be involved in the process as early as possible. An incomplete project team at the outset can result in significant back tracking later in the process.
In addition, the team requires both a leader and day-to-day manager. Among the pitfalls that the team should avoid when embarking on the process of selecting a new office location are:
- Not fully articulating the underlying drivers and expected outcomes once a new office is operational
- Overlooking the current physical footprint to ascertain whether expansion of an existing site should be considered
- Not adequately defining human resources requirements such as:
- Initial headcount
- Potential maximum headcount
- Proportion of new hires that must have direct experience vs. qualified entry level. This alone will shape the size, character, and ultimately cost of locations that can satisfy talent criteria.
- Following a “me too” model by focusing on areas with a significant concentration of similar operations, could result in selecting an overheated labor market where significant supply/cost pressure will persist. Sometimes (e.g., in certain technology sectors) locating where there is a plethora of similar businesses is justified. But for the preponderance of operations it is advisable to avoid areas where there is an extensive collection of office operations requiring similar staffing needs. Over saturated labor markets carry major disadvantages from an HR perspective.
- Letting incentives drive the selection process, given that finding labor markets where there is significant supply at affordable cost is becoming ever more challenging. Letting incentives assume a major role is ill advised. In addition to the labor market other key location determinants will include an available building in the right sub labor market, accessibility, telecom and electric power infrastructure, and natural disaster risk. Incentives should enhance an otherwise compelling location. In other words, consider incentives “icing on the cake”.
- Failure to get buy-in from the Executive Team
- Failure to choose the appropriate “sub labor market” once in the ultimately selected location. Office location is first and foremost an “HR Deal”. Of course, real estate is important. But if the worksite is displaced from where targeted skillsets reside, the ability to successfully staff the new entity will be compromised. Worksite orientation to the specific talent pool, office space attractiveness, amenities, access, and parking all have an influence on the ability to recruit/retain a high-quality workforce.
- Overlooking the current footprint. It is conceivable that one or more existing locations could accommodate new capacity. At least raise the question and ascertain if any existing sites should be benchmarked through the analytical process.
- A site selection committee entrusted with gathering and evaluating data about prospective new locations makes a huge mistake if it proceeds to a penultimate decision without involving the executive team. Regular reports and discussions should be ongoing throughout the process to avoid unpleasant surprises, pushbacks, and analytical do-overs.
- Don’t have too narrow of a focus at the outset. Without the benefit of an impartial, third-party advisor like a professional site selection consulting firm, it’s easy to overlook potential locations that deserve consideration. A site selection firm will have knowledge of the regulatory, political, and community landscape that will be important to your decision and may be able to secure more favorable incentives or terms than you would if you proceed on your own. Such a firm will know of potential locations for your business you would never have considered or maybe wouldn’t even have known about without their input.
- Breach of confidentiality is a no-no. Considering a relocation or new site can draw a lot of unwanted attention from real estate speculators, investors, competitors, and employees. People can jump to conclusions and put you in the position of spending time correcting misinformation or explaining nonissues to audiences who shouldn’t be involved in your process. In addition, competitors will learn of your strategic direction. Determine who needs to know and how to communicate. Create a project code name as well.
Avoiding those situations enumerated above when choosing a new office location will be instrumental to your business’s continued success. Choose a sub-optimal location and it is likely that the office entity will fail to deliver on executive management expectations.
The search criteria may indeed focus on recruiting/retaining best-in-class talent within acceptable cost parameters – and office space may well be a less compelling issue than the HR considerations. However, upon study, remedying a current negative situation may prove either impractical or too costly from a resource commitment standpoint. Allow WDGC to become a partner on your team to steer that decision-making process toward a long-term successful outcome.