Confidential: Should We Move Headquarters?

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Boss—I wanted to follow up on our discussion last week about our ongoing challenge of finding and retaining top talent at headquarters. As you know, we have several dozen key positions that have been open far too long, and we struggle to find the right fit locally or to convince out-of-state candidates to move here. The increasing cost of living, tax burden, and poor travel accessibility impacts our recruiting appeal, as does our aging building and outdated workplace. I think it may be time to evaluate how our current location is impacting our ability to achieve our long-term plans and provide the Board with options for HQ. Please let me know what you think. Regards, …

Headquarters relocations are often the most challenging decisions for companies to make, not because of technical requirements but due to the impacts on large numbers of employees and executives. They are typically considered and debated for years, usually with no decision or action taken, and even relegated or deferred to a future year (and potentially a future leadership team). Unfortunately, companies who shoulder the ongoing penalties of operating in poor headquarters locations don’t typically experience improving conditions, while the costs of transition escalate year over year. For some, an exasperating battle for talent, a regulatory change, or pressure from the Board to move is the impetus to finally analyze relocation options. Headquarters relocation strategies can vary significantly. Some companies redeploy just the top layer—an executive relocation of as few as 8-10 leaders—while others seek to minimize disruption by siting a so-called “second HQ” with several hundred positions in an (ideally) improved talent market. The most significant move is a full “lift and shift” of the home office to a new city, an action that impacts every position but with uncertain outcomes: some may or may not be offered a role in the new location, while others will decline to move.

The “second HQ” strategy has received an enormous amount of publicity in the last two years, but it is not a new phenomenon. With a second HQ, companies can alleviate growth constraints at the home office, maintain their existing talent base, and gain direct access to a new regional talent pool. This strategy can enable companies to achieve “employer-of-choice” status in multiple locations while minimizing disruption to the business. Naturally, it won’t improve hiring or operating conditions at the current headquarters, and requires more administrative finesse to function seamlessly across multiple geographies, but for many companies, a second HQ is a logical choice to address several of the pain points impacting a legacy headquarters location.

Regardless of the strategy for headquarters, the decision analysis should objectively evaluate each deployment scenario against the status quo. By varying the functional configuration, location, and timing, management can prepare a package of options that highlights the strengths and weaknesses of each, as well as an estimate of Capex and Opex impacts. CEOs should be mindful to eliminate noise and bias from the analysis, as everyone involved will have an opinion, especially on location. Objectivity and data reliability are key success factors to prize over speed in headquarters relocation assessments—the team will need the time and resources to prepare a rigorous analysis untarnished by personal preferences.

To find appropriate candidate locations for headquarters, agree on the weighting of Critical Success Factors prior to pulling the analysis together. Headquarters location candidates should typically provide a significant number of benefits in terms of ease of operations and cost management over the current state. These often include:

• Access to talent (executive, managerial, finance, IT, HR, etc.)

• Ability to improve and right-size the workplace

• Ease of access to key customers and industry players, either locally or through a hub airport with relevant direct flights

• A locational “image” that is aligned with the company’s brand and values

• Opportunities to improve the company’s tax position

How should CEOs drive a headquarters relocation project?

First, if the business case supports relocation, undertake a detailed site selection and incentives negotiation process to help ensure that the business is making the best choice, both for now and the future. If done well, the organization shouldn’t have to move again for a long time. Second, break the initiative down into manageable projects, such as headcount/functional planning, location strategy and incentives, facility planning and execution, change management and communications, relocation management, etc., each with interconnected program oversight. Additionally, while the circle of executives who are aware of the move will be small at first, the timing and transparent nature of the CEO’s communication with employees will be critical. Be clear about why the business is moving headquarters or opening a second headquarters, such as improving access to talent and customers, reinforcing connections with the industry and who it serves, etc.

On face value, moving headquarters can seem like an impossible task, one that is too costly and disruptive to ever undertake. But it can unlock strategic opportunities for the enterprise in terms of talent access, workplace transformation, and cost management that may be unachievable in a company’s legacy location.