We live in a world where Economic Development Organizations (EDO) must operate on two parallel paths: business development (business retention, expansion, recruitment, and start-up) and talent development (talent retention, development, and recruitment). In short, it’s a “chicken and egg” world: we need people to staff our businesses, and we need businesses to provide jobs to our current and prospective residents.
The process used by site selectors to advise companies on location decisions is well documented and proven, as shown by the inverted pyramid. It’s essentially a sequence of elimination that evaluates a series of optimal location criteria, resulting in the selection of the finalist community.
The process used by individuals, on the other hand, is significantly less structured. Perhaps I’m exaggerating by using the diagram, but it illustrates my point. Individuals are less predictable than businesses.
Comparing Business vs. Individual Location Decision Making Process
Ady Advantage studies the location decision-making process among individuals and businesses, these are some of the major differences:
- We find that when individuals research locations it is often more opportunistic versus the rigorous approach used on the business side. What is readily packaged and available to them for easy research. This is exacerbated by the proliferation of consumer-focused lists of best places to live for any number of arcane reason (best places for chefs, dog-lovers, bicycle fans, etc.).
- Another difference is the duration of the search. Individuals often have a wider time range, ranging from weeks to years. Businesses most typically act within three- to six-month once they make the decision to move or expand.
- And individuals also use different criteria than businesses do to evaluate a community (more on that below).
- For both individuals and businesses however, they are more alike than different when it comes to one additional consideration – what the impact of a new location will have on them. For both, it is high stakes – helping the individual or business thrive in the “right” place or suffer in the “wrong” place.
For business location decisions, the location criteria have changed little over the past decades. They are still a combination of operating costs, operating conditions, and quality of life factors. The importance of each criterion varies based on the industry and the specific company, but the general list of factors remains steady. As an example, the availability of labor is often the most important criterion for site selection projects.
Individual location criteria also tend to fall into three categories: fiscal consideration, opportunities, and quality of life. A common example of location criteria individuals consider is the availability and affordability of housing.
In comparing the location criteria between businesses and individuals, we do see some parallels. For example, a fatal flaw for both would be the lack of availability of suitable real estate – be that a site/building for the business or a home for the individuals. Overall costs are also at the top of both parties’ checklists – again, not always the lowest costs, but often competitive costs relative to all the other factors.
A key complementary criterion is businesses want to know how likely it will be that they can find workers to help them and individuals want to know how likely it will be that they can find a job. Of course, remote work factors into that equation for some – if they have a job and can bring it with them.
- If you haven’t already done so, update your Strategic Plan. Acknowledge that both businesses and individuals need to be part of your plan. Though we are seeing EDOs dedicate significant resources to talent and workforce issues, we are still seeing a lot of Strategic Plans that simply tack talent-related initiatives into the typical BRE, business attraction, and business start-up framework. Updating your plan will better represent your actual goals, priorities, programs, and outcomes. This improves your odds of creating sustainable strategies for the future.
- Dig into the decision-making process for individuals who have come to your community:
- Find out how they went about it.
- What factors or criteria mattered to them?
- Why did they ultimately choose your location?
The answers to those questions will be the clues that help you position your region to attract more people like them.
- Use what you learn to identify gaps in attracting more of the people you need (hint: occupations and skills your employers need now and in the future), and work to address those gaps. Frequently, these include issues such as
- Entry-level housing
- Public transportation
- Things to do
- Programs to meet other newcomers or become part of the community
- One of the impacts of COVID is an increase in site selection activity in many sectors. Companies that have cash reserves, are benefiting from an uptick in demand, and are trying to mitigate global supply chain issues. At the same time, labor is tight across the country. As a result, the process is getting more competitive. You should consider using an experienced site selection consultant to help you find the best location for your long-term success.
- Whether you go it alone or engage a site selector, you will benefit from putting some thought into forecasting your labor needs for three to five years out. Be as specific as you can about the skills, qualifications, and training support you need for each occupation. The more you can articulate this, the more likely you will be to find a location with the right people available to staff your facility.
- Because talent is and will continue to be in such high demand, expand your location criteria to also include some of the criteria that tend to facilitate talent retention and attraction, such as the availability, affordability, and diversity of housing, broadband, and childcare. These are criteria that impact talent, which means they impact businesses, too.
Economic Development has always required creativity, flexibility, research, and strategic thinking. While trends feel to be shifting with unprecedented speed, remember you still have these fundamentals. If you are at an EDO, take the time now to review your strategic plans and framework. As business developers and site selectors continue to lean on your research and creative thinking and visions. If you need help to build these frameworks or lighten the load of research and strategy development, we’re here for you.