Location decisions are typically driven by financial factors like real estate, costs, corporate taxes or government incentives, with talent considerations taking a back seat. Even when real estate teams and CFOs take talent requirements into account, they often lack the granularity that HR leaders can bring to the table.
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The COVID-19 pandemic created an opportunity for many organizations — and an urgent necessity for some — to rethink their office location strategy. The new and critical variable is talent. With many organizations now expecting the hybrid workforce model to be permanent, the best location strategy will consider access to talent and variables that affect employee experience in addition to the traditional real estate and tax considerations.
Gartner research shows that 72% of CFOs expect their corporate real estate footprint will decrease over the next two years, and 35% are shrinking their real estate portfolio now.
Traditionally, location decisions are primarily driven by real estate, costs, corporate taxes or government incentives, with talent considerations taking a back seat. HR leaders need to bring talent to the fore, providing granular talent intelligence that senior leaders can add to the equation as the organization sets its location strategy.
By including talent strategies, the businesses will drive long-term business resilience and competitive advantage.
“Talent-first strategies will drive long-term business resilience and competitive advantage,” says John Mattox, Senior Principal, Advisory, Gartner.
“ But HR leaders will need to work their way up the value chain and meet their CFOs where they’re at in the location decision-making process and bring granular labor market data to the table. ”
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Talent variables in location strategy
HR leaders can have an impact on location strategy even if certain decisions have already been made. For example:
- In predetermined locations, provide guidance around strategic sourcing.
- If a general geographic area has been identified but the address hasn’t, provide labor market data to inform the final decision. For example, by favoring one city over another, you could run into tougher competition or distance yourself from target candidate pools.
- Offer insight on location factors that can affect employee experience, such as commute times and infrastructure.
When no hub locations have yet been chosen, this presents a perfect opportunity for HR leaders to elevate the conversation to a more strategic view of how location strategy fits into workforce planning.
Four benefits of a talent-first location strategy
When HR leaders do manage to embed talent considerations and intelligence into location strategy, they equip their organization to capture four key benefits.
- Competitive advantage. Your location strategy will reflect a realistic assessment of the competition for, and cost of, critical talent profiles. “Keep in mind that concentrated markets are harder to penetrate. Despite a large volume of available candidates in a location, the competitive landscape may drive up salaries and recruiting costs,” adds Scott Engler, VP, Advisory, Gartner.
- Long-term sustainability. With effective planning, your chosen talent hubs will be well-positioned to meet future growth. For instance, you’ll know whether the nearby university ecosystem is robust enough to feed talent pipelines needed to drive long-term business strategy or scale to meet your needs during times of high growth and expansion.
- Diversity. The demand for recruiters with experience in diversity hiring jumped 800% between 2017-18 and 2019-20, according to Gartner TalentNeuron™ data. Location decisions could either boost or hamper organizations’ DEI goals. Use talent intelligence to pinpoint diverse talent pools in locations you may not have considered.
- Stability and resilience. COVID-19 is just one example of the macroeconomic and geopolitical forces that can hit organizations hard and fast — and HR leaders must try to plan for and mitigate them. Brexit, for example, prompted global organizations with hub locations in the U.K. to proactively consider alternative locations in Europe with high English fluency and reliable infrastructure.
“Progressive HR functions have been guiding location strategy post-COVID using the same foundational principles that have served them well in the past, layering in data on emerging trends, and challenging traditional assumptions around how and where work gets done,” adds Engler.