The Impact of Talent on Corporate Location Decisions
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIn today’s global, technology-enabled economy, talent has become the most important driver for corporate location decisions. A company may have a great product or service, but without the human capital, it cannot successfully execute its business strategy and leverage desired results. Local communities and economic regions must be able to demonstrate that they have a sustainable supply of human capital at the cost and quality level required for the industries they are targeting, or risk economic decline.
In the race for talent, it is important to note that no longer is the lowest cost labor always the best result for a company. Clearly, the cost of labor is a critical consideration for all companies, but the quality of the labor is usually weighted more heavily. In addition, metrics such as the growth of skilled jobs, annual job openings per capita, net migration, the students graduating annually with a two or four-year degree, and the percentage of the working population possessing a two or four-year degree are also very important. It is vital to have a good snapshot of the talent pool today, but also to understand what is in the pipeline for the future.
You might ask the question, aren’t all communities and regions struggling at some level when it comes to the issue of talent? The short answer is yes, but it is more difficult in some locations. As an example, many locations in the Northeast, Mid-Atlantic, and Midwest are experiencing a declining or flat population base. This is much different than areas of the Southeast, Southwest and Mountain regions of the United States. In addition, the manufacturing heritage of many states in the Northeast, Mid-Atlantic, and Midwest and the ability for previous generations to go straight from high school into a manufacturing environment, impacts the educational attainment profile of certain economic regions.
So, is there an easy way to solve the talent challenge? Unfortunately, there is not. The approach taken by a community or region has to first start with the human capital product that it has today and how they can enhance it in their area. Initiatives such as continuing educational opportunities, industry recognized credentials, and job skill specific certifications are usually very helpful, as well any vehicles that encourage continuing education/skills enhancement for adults already in the workforce. Collaboration between business and workforce development agencies is critical to ensure that human capital needs are being met.
The next step relates to the sustainability of talent in a location. Sustainability is impacted by what is in the pipeline (K – 12) and higher education institutions. In addition, retaining existing and attracting new talent into an area is critically important to support economic growth. A key component of the talent sustainability equation is investment in quality of place initiatives. The Indiana Economic Development Corporation’s Regional Cities Initiative is a great example of investing in quality of place assets. Indiana, like many Midwest states, does not experience the same population growth as other places in the United States. As a result, Indiana and its regions, must invest in assets that will attract and retain top talent in order to succeed economically.
As a site selection firm, we are asked to examine many issues that impact corporate location decisions. Issues such as; talent, tax structure, real estate, infrastructure, regulatory environment, and incentives all impact project and/or operating costs for a company. As a result, these factors must be weighted based upon what will have the greatest success on executing a business plan and maximizing outcomes. In most cases, talent will be weighted the heaviest when it comes time to make a decision. Communities, regions, and states would be well advised to invest heavily in existing and future human capital.
Larry Gigerich serves as Executive Managing Director of Ginovus and a member of the Site Selectors Guild.