For most corporate projects, there is a well-defined return on the investment. When a company evaluates the financial aspects of headquarters relocation, the cost may be high and the return may not be easily quantifiable. For example, a publicly-held company has a headquarters with 150 employees in a major metropolitan area. It noted three strategic needs to justify relocation:
- Lower operating costs
- Better access (via non-stop air access) to specific geographic markets
- Lower residential real estate cost and other positive quality of life attributes to attract top talent
As a company evolves from a small business to a major corporation, its structure, headquarters operations, and strategic location needs change. Companies evolve from having all operations in one location to being global holding companies resulting in these different types of headquarters:
- Small to Midsize Company Headquarters – all company functions and operations are located in one city.
- Corporate Headquarters – traditional executive and functional operations in one location that can vary widely in the number of employees.
- Holding Company Headquarters – typically small organizations with executive and financial operations that have oversight of multiple companies.
- Division or Subsidiary Headquarters – may have a full complement of executive and functional senior staff. Back office and shared services operations may be located at the corporate headquarters location. This depends on the level of centralization of a company and life stage of the business.
- Regional Headquarters – scenarios include foreign companies requiring U.S. or Americas presence; domestic companies with regional headquarters; and domestic companies that need access to the Caribbean or Latin America via south Florida, or the Pacific Rim via the West Coast.
The Site Selection Process
Identifying the optimum location for a headquarters operation focuses on four questions:
- What strategic issues must be addressed, and how will relocation achieve solutions?
- What are the risks to the organization from relocating?
- What are the one-time costs and ongoing incremental costs or savings from relocation?
- Which locations provide the best situation for the organization when weighing opportunities versus risks and costs?