A couple of years ago, a well-known brand asked us to compare Düsseldorf and Munich as potential cities for relocating a tech & ops team.
We went away, did our research, and came back four weeks later to recommend Düsseldorf. That’s annoying, said the client, we’ve already started hiring people in Munich.
As an example of how not to plan a team move, this takes some beating. But there are various other ways that companies also get location analysis wrong. Perhaps the most common is to forget about sustainability. No, we don’t mean paper-free offices and carbon neutral supply chains. We mean making sure the reasons you might move to a certain city today will still obtain tomorrow.
Take Dublin. A decade ago the Irish capital was a great place to situate any number of middle office functions. Labour was cheap, the city was attractive to young professionals and there were relatively few competitors going after the same talent pool. Fast forward to today and rental costs have increased by over 100%, the rush-hour roads are gridlocked and anyone you might want to hire is probably also being courted by the likes of Meta, Google and Salesforce. In short, the Irish capital has become a victim of its own success.
A similar process is observable in other popular offshoring locations. Office costs in Lisbon have risen 40% over the last decade. In Bulgaria, workers have witnessed a ten-year cost-of-living increase which is double the European average.
But if data changes that much, is there any point doing location analysis studies at all? Emphatically, yes, because none of the shifting scenarios we mention above was entirely unpredictable.
At Armstrong Craven, we might not have a crystal ball, but we do have a very good research team which interrogates people, not just spreadsheets.
We speak to business leaders, recruiters, estate agents, HR professionals, hiring managers and, of course, representatives of the talent pools our clients are most interested in. Instead of getting a one-off snapshot of a city at a certain point in time, we are able to make informed projections and thereby future-proof our clients’ decision-making.
In short, we think about location analysis differently. Here’s how you should think about it:
1. What are salaries doing?
This sounds like an easy one. Any local recruiter can give you a breakdown of pay ranges for different jobs and seniority levels. But is their information up-to-date?
And what will salaries look like next year or the year after that?
We approach the issue by asking sources some carefully chosen questions. When we speak to hiring managers, we ask them how many pay rises they’ve handed out this year or which roles have seen the fastest wage inflation. If our source is a candidate, we’ll find out what percentage of their pay goes on key items like rent and groceries every month? We’ll also get a sense of whether candidates feel well paid or whether cost of living is cancelling out each pay rise?
2. What’s the quality of life like?
Attracting someone to a location is one thing. Keeping them there is quite another – especially if they’re young, single and mobile. It’s almost always the case that large build-outs or relocations involve disproportionate numbers of early and mid-career workers. And if a city can’t continue to offer them the quality of life they are looking for, they’ll soon start looking elsewhere
So we ask about the simple, practical, everyday things: bar prices, cinemas, petty crime, finding a taxi home on a Saturday night . . . During a recent study, we identified one European city that was a great magnet for young talent pre-COVID but subsequently saw nearly 50% of its bars and restaurants close for business. Not surprisingly, a lot of the city’s young workers are beginning to review their options.
3. Who’s moving in or out?
The presence of other big brands in a city is a blessing and a curse. On the one hand, it suggests the place has something to offer. On the other, there’s every chance those brands will hoover up the talent you want for yourself.
Once again, a degree of future-proofing can be achieved by asking the right questions. For example, we always ask candidates who else is approaching them. That’s how we recently worked out that a well-known professional services firm is ramping up in Mexico City. Another good source are universities.
Who’s presenting to their students? Which companies are showing up at student fairs? An admissions officer once told us that a global tech firm was providing input to her university’s engineering syllabus – a sure sign that this firm was interested in molding, and subsequently hiring, students. Sure enough, six months later the same company opened an office in that very city.
4. What are other companies’ stories?
Just because a few companies have set up operations in a certain location, that’s no guarantee they’re happy there. By talking to hiring managers, we get the lowdown on just how easy it is to hire and retain talent. We ask about availability, retention, hiring times, candidate quality and candidate attitudes.
And we do get the occasional horror story. A business leader in one country explained to us that the local working culture simply didn’t align with his employer’s way of doing things. A source in another city complained that although the location had delivered everything they were expecting in terms of junior and mid-level talent, they were finding it almost impossible to find team leaders. As a result, they were having to relocate leaders from elsewhere at considerable expense. By uncovering other companies’ slip-ups and failures, we ensure our clients don’t ever make the same mistakes.
5. What are you not asking that you should be asking?
As the late Donald Rumsfeld advised, it’s always good to bear in mind “the unknown unknowns”. In other words, are there factors that haven’t occurred to you but which you really should be taking into account?
The only way to find out is to talk to people. Business leaders and hiring managers are a great source in this regard. But in order to access a truly strategic take on things, it’s wise to try and make contact with a COO. Is there some upcoming legislation you should know about? Are there tax incentives that are about to be withdrawn? Or increased? And what are the day-to-day challenges of running a business in that particular city? A couple of years ago we drew a client’s attention to the fact that a certain location sometimes experienced blackouts – not often, but often enough to disrupt the working day. This wassomething they had not even considered but which led them to shelve their plans and opt for another city.
