TalkTalk announced in January the move of their head office from London to Manchester, while EY reported that over a third of financial services businesses they track are considering or have already decided to relocate senior roles as part of post-referendum planning. There are myriad reasons why a business might explore the option to move its centre of executive gravity. Among these are: availability of talent in their current location; the geographical spread of their current management team; current head office cost; and a change in strategy, i.e. new international focus.
Whichever of these are the most applicable, the decision to relocate corporate HQ is seldom taken lightly and one important consideration is how to preserve the critical elements of the culture. Maintaining connectivity between a new head office and any ongoing operational hub is vital. If a part of the business goes from being the beating heart to an outpost, which management visit infrequently and where the power no longer resides, it can cause disenchantment and a loss of identity among staff of all levels. Therefore, links between the two should be good and discipline around visits by the leadership team – such as board meetings still occurring there periodically or the making of important announcements – should continue.
In the case of looking to be able to access more talent, old economy businesses such as manufacturing, people-intensive services or retail often evolve from an entrepreneur’s hub, not usually chosen particularly strategically and often somewhere inexpensive and therefore, often by extension, less attractive as a place to live and with a more limited – but typically loyal – captive workforce. It is important that the messaging is logical and rooted in fact, such as access to a pool of university graduates or better transport routes, rather than generic, in order not to alienate the existing team. The communication internally and externally should highlight the need for this adaptation in order to survive and thrive, including the incumbent operations and staff and the complementary and vital nature of the new footprint.
Organisations do not adopt a culture in a single day, instead it is formed in due course of time as the employees go through various changes, adapt to the external environment and solve problems. The external representations of culture are those that can be easily viewed; heard and felt by individuals. These include the dress code of the employees, office facilities and building design and the values and ethos of a company beyond financial performance or commercial success.
Consumer-facing or higher profile businesses can also face backlash – as James Dyson would currently confirm – as a result of any politics around the move. Repatriating money from a local (or national) economy, the knock-on effect of removing jobs from an area or a perception of penny pinching, can all be damaging to a brand and mean that the messaging around why a move is taking place should be positive and decisive. In times of heightened insecurity, it is not possible to slip these moves under the carpet and they should be addressed head on within the business as well as the media. This means the reasons for making this change need to be well considered, justifiable and long-term in nature.
Our experience would suggest that, done correctly and with sound grounds, evolving to a new corporate head office can work well but it needs a great deal of care and attention throughout the process and for a long period of embedding. Crucially, it requires nuanced stakeholder management throughout to ensure people are bought in and understand the decision and do not feel side-lined, as this can lead to churn or effects on performance. International relocations are met with a great deal more of suspicion than a move within country and lead to more immediate assumptions of penny pinching and greed at senior levels. Timing is also important – why now? Most significant is having the right leadership team to see it through and to provide visible, durable stewardship to ensure the best elements of the old structure are kept, while maximising the benefits of the new.