Why You Shouldn't Base Site Selection on Where Current Employees Live

(and What to Do Instead)

12 OCT 2021

Photo by Joshua Rawson-Harris on Unsplash

Where should you base your office?

Seems like a pretty easy question, right? Where your current employees live is the common, most obvious answer. You might also think to move your site where target employees live. Accepted wisdom says that if you select a site near your current or target employees, you can more easily retain and recruit talent.

Problems with Site Selection Based on Current Employees

  1. Diversity:  Selecting your site based on where employees live is a flawed approach as it can reduce your diversity. If you don’t already have diverse talent, choosing a site where current employees live likely places your office in a less diverse area. Office location in a less diverse area makes it harder to achieve your diversity goals.
  2. Need for Data Science Capabilities: Another pitfall with site selection based on where current employees live is that this analysis requires data science capabilities your HR department likely doesn’t have. Brokerage firms also don’t have data science teams either and tend to rely more on backwards looking, non-current and less useful datasets like Census or USPS data. So, it’s up to HR organizations to analyze and interpret vast amounts of data with little help, which often results in flawed conclusions that do little to make your site selection advantageous.
  3. Quantifying Valuable Talent: Site selection based on where current employees live also requires quantifying how valuable talent is. For this approach, it’s important to know which of your executives, software engineers, senior employees, or any other talent is most valuable depending upon your Industry. Then, this is weighed against where the majority of employees live. For a salary-weighted analysis, the analyst must know employee salaries. This quantification process, without the right data & approach, can be difficult and yield poor results for achieving your talent goals.
  4. Impact of Commute Time: Along with talent value, it is also important to factor in commute time data to ensure you locate your office near where current employees live. However, if you don’t assess different commute time data, you could end up with a location that’s not accessible by public or private transportation. Even though your location should be great for employees based on this incomplete data, your site could end up hurting your efforts to retain employees.
  5. Preparing for the Future: In addition to data problems, site selection based on where current employees live doesn’t prepare your company for the future. Instead of helping you achieve your future goals (like reducing costs, increasing diversity, and increasing employee skill), this approach keeps your company stuck in time and making decisions using backwards-looking, stale data.

Problems with Site Selection Based on Target Employees

An alternative to basing site selection on where current employees live is basing it on where target employees live. Traditionally, this approach relies on two steps: (i) generalized census data to get a rough estimate of where certain employees live (for instance, software engineers), and (ii) overlaying this data with the diversity of that region to ideally should show you where target employees live, so you can place your office nearby to aid recruitment efforts.

However, this approach is also faulty for two key reasons:

  1. Generalized census data doesn’t tell you whether your target employees actually live in an area. It’s just an estimate of where similar types of employees should live.
  2. Census data doesn’t tell you if the diverse talent you want is in the talent pool you’re trying to recruit from.

With this outdated approach, you risk selecting a site based on where target employees are estimated to live – only to find out few (if any) of these target employees actually live there.

The New Approach to Site Selection

At Terrain, we believe the best approach to Site Selection is to analyze where target employees currently work.

Rather than approximating where current or target employees might live, it’s possible to use data of where target employees currently work to help make a better decision.

By analyzing the actual talent composition in any neighborhood/city, it’s possible to understand where employees currently work that have the skills you seek. It’s also possible to understand the diversity metrics of that labor pool and directly compare it to the diversity of other global talent pools. This approach enables users to find dense talent clusters that increase your chances of successfully recruiting employees you need.

You can also improve your site selection by locating it near similar companies. Most companies can’t successfully open an office in a neighborhood without an existing office market. This is because only a few large companies (like Google, Facebook, Amazon, etc) have enough brand equity to change an existing commute pattern. Opening your office in a location that goes against these established patterns is a high-risk, low-reward prospect.  Instead, locating your office near similar employers allows you to take advantage of existing talent clusters and patterns.

One of the incredible, and somewhat recently forgotten, things about real estate is the physical and emotional response it elicits from us. Choosing the right office and headquarters location can play a major role in successfully scaling your organization. The right space, located in the right market, can serve as a major asset in attracting the best talent and creating a safe, enjoyable workplace for employees. Choosing wrong may lead you to struggle to recruit the top talent you work so hard to recruit.

The good news is that our analysis can help you select the best site to help your business thrive. Request your demo today to see how Terrain can help.

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