Business Relocation
When the winds of economic change are brought to bear on a business it often results in the need to relocate. Sometimes the winds are warm and the business needs to expand, sometimes the winds are cold and it needs to re-trench and shrink. in this new millennium business leaders are much more likely to have to face up to the need to relocate. The pace of change – particularly in technology and in key market sectors is getting faster and faster.
Not that change is a new phenomenon of course. As far back as 501 BC the Greek philosopher Heraclitus was teaching his pupils that change was the only permanent condition (and illustrating it by pointing out you can never put your foot in the same river twice)! But I suspect even Heraclitus would be amazed by the “don’t blink or you’ll miss it” razzle-dazzle pace of 21st century change.
You might say; “So what, moving a business can’t be that difficult?” and you would be right of course. Providing that a relocation project is thoroughly researched and properly planned and executed the benefits can be enormous. But whatever you do, don’t get it wrong. That way lays potential disaster. Insolvency practitioners just love relocation projects that go wrong. But understandably the people who were running or working for the company don’t.
If you have moved home (and who hasn’t) you will know how stressful it can be. Domestic relocation is right up there in the Premier Stress League. Only death in the family and divorce are reckoned to be more stressful. And when it comes to relocating a business our research has identified a daunting variety of tasks awaiting anyone faced with finding the best future location for the business; successfully transferring operations there; persuading staff to move and, at the same time, maintaining productivity and keeping the people running it happy and motivated. Easy it isn’t. Difficult and stressful it most certainly is, and moving internationally multiplies the potential hazards.
Let’s then have a look at some of the main issues anyone planning to embark on a relocation project should be thinking about in order to maximise the benefits for the business.
Critical criteria
(aka “Singing off the Same Songsheet”):
It’s essential that the key decision-makers in the organisation understand (and more importantly agree on) the key criteria that any alternative location, building or site must satisfy. To start with it must be seen to offer positive and quantifiable advantages over the old location. The wise Chairman or Managing Director will carry out, or commission, a feasibility study into the options available and then compare the alternative locations, sites or buildings with the existing business base or bases. By using the key criteria agreed by the executive team the positive advantages could be identified and evaluated.
Typically these criteria will include issues such as accessibility; operational costs comparisons (rents, rates, service charges, utilities etc); the availability, quality and cost of staff in the new area; the costs of staff relocation, recruiting and redundancies and how to minimise staff losses and maintain efficiency before, during and after a move.
And even if the relocation project is only to offices nearby – or even within the same building (usually called “churn”) the advice to agree on the criteria the new workplace should satisfy still hold true.
Just two examples will serve to illustrate the perils of ill-considered relocation. In the 1980’s a leading company moved 600 staff out of central London. But three years later everyone was moved back to London because the business proved to be fundamentally unsuited to its new rural Berkshire site. In the US a company moved lock, stock and barrel from New York’s Broadway to Orlando in Florida. Over 60% of their buttoned down collared New Yorker employees declined to move and the company found recruiting replacements in Florida almost impossible. After just two years they relocated again. Back north to offices in New Jersey, directly across the Hudson River from their former offices on Broadway! But by now so many clients had defected to their competitors that within six months the company was taken over.
“Location, Location, Location” (Does it still hold true?)
Conventional wisdom within the property sector has always held that there are three things to consider when moving a business – Location, Location and Location. But in these days of globalisation, lightning quick technology and markets changing so quickly that Managing Directors’ need spiked running shoes to keep ahead of their competitors is this still true? I venture to suggest it isn’t.
Witness the way organisations occupy business premises. Not long ago you would have been invited to sign a 25 year lease and accept “upward only” rent reviews every five years (irrespective of whether market rents had increased or decreased). If you wanted to move on you would have remained liable for the ongoing rent until an alternative tenant could be found. But even then your landlord would need to condescend to accept them as financially sound enough to take over your commitment!
But that was yesterday. Today you can rent business space by the month, by the quarter, by the year and enter into a lease for as little as three to five years. Flexibility and fastness of foot have taken over from the Pension Fund dominated and hidebound business rental market of the 20th century – and a good thing too. The commercial needs of business occupiers now largely dictate to the Developers and Commercial Property Agents. And those who were foresighted enough to see this coming and who introduced greater flexibility for those seeking business space have done very well.
So Are Your People Now Really Your Biggest Asset?
Accountants scan balance sheets to examine assets and liabilities. Balance sheets have always been seen as the major indicator of the value of the business. But as the business world forges ahead to capitalise on new and emerging market opportunities what is the one really crucial asset you just can’t do without? The answer of course is people. The right people, with the right skills, in the right place and aiming the business at the right target opportunities are absolutely crucial to growth, profitability and profit. Key people constitute the prime asset of many businesses.
In a relocation project it therefore makes good commercial sense to carefully examine these assets. Who are they? Where do they live? Will they be in favour of, or against, moving? What might you have to offer in their relocation support package to keep them? If you’re about to toss a coin to decide if you are going to move to Oxford or Milton Keynes it’s a good idea to first investigate the effect such a move will have on your ability to retain and motivate the key players in your team. Keep them and you will stay on top. Lose them and you could be relegated to a lower business league.
In relocating staff focus on the “4 R’s”:
An easy way to ensure staff issues are being addressed is to use the “4 R’s” of relocating, recruiting, redundancy and retention.
Relocating: For those going with you a suitable support package needs to be established. After all they didn’t ask to move – you are asking them. Even if the new facility isn’t far away they will have concerns about how to get there, what it will be like, the effect on their future job and salary etc.
And if they are being asked to move home the number of personal, family and job concerns are hugely increased. Unless a comprehensive, and bespoke, relocation support package is provided there could well be trouble ahead.
Recruiting: The lesson here is basically not to make assumptions. Take time to check out the quality, availability and labour costs of staff in the new area. Talk to the Recruitment Agencies and some of the local employers. Ensure you know what skills you need and plan your recruiting campaign well ahead.
Redundancy: Although redundant employees are left behind, the way they are treated is very important. Care should be taken to avoid being dragged into an Industrial Tribunal for mishandling or misunderstanding matters. Check the formulae you intend to use in calculating redundancy entitlements. Are they generous enough? Should you offer some form of compensation even if, legally, no entitlement exists?
It is also worth remembering that the staff you take with you will recall how their former colleagues (who may well also be their friends or relatives) were treated. Future attitudes and commitments to the business could be affected if those being made redundant feel hard done by and communicate this to their colleagues who are moving with you.
Retention: Maintaining effective and efficient working at the old location is important to the smooth transfer of the business. Its often commercially prudent to offer “silver handcuffs” to persuade certain staff at the old office to stay on until closure. Otherwise, once they hear about the move, they will be out looking for jobs and may leave just at the wrong time.
“It’s space Jim – but not as we want it”:
A common relocation pitfall is to miscalculate, or simply “guesstimate” the space needed in the new facility. Underestimating future growth for example can result in having to try to shoe horn yet more staff into an already overcrowded building, or even taking extra overflow space close by – at best disruptive, at worst potentially breeding a “them and us” culture.
Over estimating space needs creates the possibility of having to pay for acres of unused space. You don’t really want to walk in and find your staff enjoying the novelty of communicating with each other by pencilled messages written on paper aeroplanes flown across empty floors.
With the range of inexpensive and easy to use space planning software now available there is no need to end up with staff feeling like sardines in a tin or wandering the corridors in search of human companionship. Take the time and trouble to make careful calculations about the space you need now, and within the timescale of your anticipated occupation of the new facility.
A removal – is a removal – is a removal:
It always sounds so simple – and sometimes it is. Often though, the contemporaneous focus of the employer, both on running the business AND planning and implementing its physical relocation from here to there, can become very difficult.
In most dynamic and growing businesses there isn’t much time to properly investigate things like – the most efficient physical juxtaposition of departments; new floor layouts; phasing the movement of equipment, plant & machinery and ensuring everything is clearly marked, delivered and up and running at the right time and in the right place.
Within the last ten years, dedicated move management companies have emerged to take the hassle out of the physical side of moving all the nuts and bolts of a business. They take on the selection and organisation of a removal company and ride shotgun on them to ensure everything – work stations, computers, filing etc (including “Penny’s precious pot plant”) – is in the right place when the new doors open for business.
The Practicality of Planning & Implementing a Relocation Project
Two key things are crucial to successfully planning and implementing a relocation project. The first is capacity and the second experience.
“Younger”, SME (small to medium sized enterprises) companies, are usually at a disadvantage here. Only rarely do the people responsible for driving the business forward have first hand experience of relocation projects. Secondly, most young companies don’t have dedicated personnel or facilities functions. But even if they have, the commercial arguments are stronger that these core skills should be used to continue driving the business forward rather than being diverted to organise a move.
Bigger organisations have more staff. But the problem here is usually that the primary focus is on protecting and maintaining the heart and core business and far less on the periphery, where outsourcing of any non-core services is fast becoming the norm.
And because relocation isn’t an everyday event relocation projects are more and more being handled by specialists – either by them providing an “implant” to handle the move or by the services being outsourced.
ARA – A Shoulder to Lean On.
The Association of Relocation Agents (“ARA”) has members throughout Great Britain, all of whom specialise in a variety of different ways, in helping organisations to relocate. Through its Chief Executive Tad Zurlinden ARA runs an advisory helpline to put anyone considering a relocation project, or simply needing some advice, in touch with appropriate ARA members. ARA carefully screens all applicants for membership and before being allowed to join members sign up to a professional code of conduct that includes the need to prove ongoing cover for Public Liability and Professional Indemnity Insurance.
AND FINALLY (IN A NUTSHELL) – The Four Golden Rules of Relocation:
1. THINK (Why? Where? When?)
2. PLAN (Discuss)
3. ORGANISE (Appoint)
4. ACT (Move)
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