Project Management: The Relocation of the Company - Term Paper Example

PROJECT MANAGEMENT Introduction: To remain competitive in the market, operating locations are extremely important and are considered as a core strategy. Relocation helps the companies to access the market, improve business position, improve business performance achieve cost effectiveness and develop better supplier- customer relationship. Relocation is driven in several types of business entities such as corporate headquarters, warehouse, back office operating unit, research and development or customer service centers. Relocation of the head office can be a tedious and time consuming work and it can also result in major interruption in the day to day flow of activities. Most of the businesses do not have the right resources or the enough time for the corporate relocation. There are also rules and regulations that the company need to comply with as there can be legal implications on the relocation. (Abishek Agarwal, n.d) The company location is an important element of its market position and ironically the essential factor for a company’s relocation is the historic market positioning as the company needs to restructure accordingly. (Mark, 2003) The common relocation objectives that the company will usually have are the following- Improved morale of the employees and better staff retention Helps in increasing the operational efficiency and enhances the productivity Improve the quality of the service provided Improve the working environment Better supplier relationship. (Liverpool City Region, 2006) According to Dennis J. Donovan, There are different factors that need to be considered before relocating a company’s corporate headquarters, Human resource factor Creating continuity and risk management Cost effectiveness Human Resource Factor Changing the headquarters can be an emotional traumatic issue and can affected the morale and productivity of the employees. To keep up with the confidentiality, the companies need to analyze and discuss the potential relocation with the executive management team, the most important decision makers and managers. (Dennis J. Donovan) Creating Continuity Relocating the company headquarters can prove to be disruptive and challenging in nature for the business as it involves many changes. The risk involved in the relocation should be assessed correctly and should be managed adequately. This exercise needs to be made at each phase of relocation process to ensure risks are managed proactively. The business needs to identify the risks so that the normal flow of the business is not disrupted. (Dennis J. Donovan) Cost effectiveness One of the main reasons for the relocation of the business entity is for cost reduction. There are some costs associated with the headquarter relocation and main cost items, these include, real estate costs in the new location amount paid for employee retention during the transition period Significant number of new employee recruitment done for the new location Employee relocation charges for high level executives The below table represents metrics for a corporate Headquarter relocation (Dennis J. Donovan) It is essential that the company try to leverage the strategic advantages to the new location and increase the turnover. Many corporations relocate to lower cost locations which will help in reducing their overall costs of doing business. The cost savings can be low real estate costs, facility costs, salary and low labor costs and tax in different locations. (Dennis J. Donovan) (Dennis J. Donovan) Brief description on different phases of the relocation program A structured approach is very essential in determining the relocation strategy. The analytical approach has 3 phases that a company needs to have for the relocation. Phase 1: Planning Phase 1 of the relocation usually happens 3-6 months before the relocation date. Creation of proper budget is the first step towards relocation process. (Office Relocation Checklist) There must a clear business case that captures the details of anticipated benefits, costs involved and other risks involved. The business needs to assess the impact of other factors such as economic performance that can affect the decision making process. There can be various operational risks that can be involved in the relocation period with respect to business, employees, new location or systems. Realistic assumptions on anticipated difficulties, labor shortages, communication, infrastructure issues need to be specified as this will help in limiting the unnecessary costs. The business case must be supported with impact analysis document investigating the likelihood of each risks occurring and its impact on the business during the relocation process. Another document that needs to be prepared by the business is the ‘business blueprint’ which summarizes organizational principles, values, vision and policies that will govern the new premises. This document is very useful as it clears the ambiguity about the new premises and provides ongoing communication to the business on the relocation procedures. The planning team should also develop and track the benefits and performance indicators. There are some businesses which has suffered while attempting to mange the technology, office and staff during relocating the company headquarters while others have succeeded (Impact of Relocation- A report for the Independent Review of Public Sector Relocation, 2004) Planning also includes preparing a master checklist that helps in tracking all the major and minor elements involved in relocation. (Office Relocation Checklist) The standard relocation project management structure is given below (Impact of Relocation- A report for the Independent Review of Public Sector Relocation, 2004) Phase 2: Location selection It has been observed in various research studies that the fear of relocation was worse than the actual relocation. Employees and employers are always comfortable with locating to a highly perceived quality of life, good infrastructure and world class universities as it would attract many skilled and qualified work forces. The long distance relocation is also now made feasible as the ICT costs have been reduced significantly. The business needs to ensure that the city or the area where it is getting relocated to is easily accessible by all and also ensure the availability of public transport. The business is also required to perform environmental impact assessment. Phase 3: Persuasion Campaign The mobility of people is very difficult to enforce as there are dependencies involved. The success of the relocation depends on persuading the right skilled people to agree to move. An effective communication program helps in addressing employee dissatisfaction, concerns and this helps the business in persuading the employees to the new location. The following options are usually adopted by the business to help the employee relocate to the new location: The company helps in selling the existing houses and also guarantees the best prices. Trial periods for a short period before committing to relocate. Increase in salaries and bonus for the employees. Detailed Comparison between the three cities and locations 1. Out town Science park near Liver Pool Liverpool Science Park is based in the heart of the knowledge quarter offering the companies a complete package of business support and expertise knowledge. Liverpool Science Park is the fastest developing and growing science park in the UK. The ambition of the liver pool science park is to deliver world class infrastructure as it is developing state-of-art communications. Liverpool Science Park helps in supporting the knowledge both locally and at a regional level. (Liverpool Science Park, 2009) Historically, the core activity of Liverpool is into manufacturing and trading. Liverpool is one of the most densely populated areas outside of London. There are 1500 companies providing more than 50,000 employment opportunities. In terms of transport and logistics, Liverpool is situated 2 hours from London and 30 minutes from Manchester and this is considered a strategic asset for any business. The key challenges for this city is the availability of skilled labors and working towards full employment as the city is fighting high levels of graduate attrition and college drop outs and decreasing age of the working population. The number of city residents who qualify of a level 4 skill is lowest in the UK. The city unemployment rate is also 63% compared to UK which is at 75%.There is also a higher level of occupation moving outside the city for better work opportunities especially to Manchester and London. Increasing full employment to 80% is one of the main important objectives for the city. Productivity per employee is very low compared to the other cities. There are more than 50,000 businesses that exist in the city and in most of the cases; there is a significant import of labors from other parts of UK and Europe. More training needs to be given for the new recruits to meet the demand of the business which would result in more investment. Liverpool needs to tackle 2 distinct issues which are to increase the level of business density and develop the existing businesses to improve the competitiveness. (Liverpool City Region, 2006) Liverpool city region strengths include: City has good business connectivity both in terms of infrastructure and logistics. The government is integrating the ports, airport and logistics into a single cohesive entity. Transportation and communication is easier and better. Connectivity and traveling to over 30 places across Europe and this is considered a strategic gateway for trading Liverpool is considered as a premier business location for many companies as the premises are suitable for many businesses. The main reason is that Liverpool is considered as the capital of culture. (Liverpool City Region, 2006) There are some noted weaknesses which needs to be considered before relocating the company headquarters as these issues can result in devastating results There is clear productivity gap that exist in Liverpool Non availability of skilled labors and surplus of un skilled labors among the working population Significant level of unemployment in the city region with over 3,00,000 unemployed people Despite good infrastructure available to connect with Europe and other countries, the connectivity between Liverpool and other parts of the UK remain very weak and inadequate 28% of the population in Liverpool suffers due to poor health conditions. (Liverpool City Region, 2006) 2. Central Edinburgh Edinburgh is considered as the largest financial center after London in the UK with standard life, royal bank of Scotland and HBOS having head quarters in this city. It is the financial hub and ranks UK’s second largest and 6th largest in the Europe. This city has a total population of 1.3 million and is considered as the 7th largest city in the UK. The city is committed to collaboration and aims at competing effectively in the world stage (Glasgow and Edinburgh, 2007) To enable fast access to major cities in the UK and in Europe, Edinburgh has an excellent air, road and rail service which reduces the travel to work timing. The city has one of Europe’s best public transports and was awarded the best urban bus service outside London. The city’s key asset is the young skilled and highly motivated working population. Edinburgh has one of the world’s largest knowledge and world class schools and UK’s top universities and research institutes are located as the city is committed to good education and training. 46% of the working population is qualified and the city has the highest qualified professionals in Scotland and the workforce being amongst Europe’s most qualified. The labor cost in recruiting a skilled workforce is also 30% lower than London’s labor cost. Hence this city’s talented workforce is valued by many companies and government agencies. The city has the most sophisticated highly qualified and fast growing population (Glasgow and Edinburgh, 2007) The city has also has competitive rental and real estate rates that are much lower than the other cities including London. The infrastructure, logistics and the support services provided by the city exceeds the business expectation. The business has a huge range of office place locations, which include Edinburgh Business Park, Edinburgh city center and waterfront which provides world class office accommodation. The occupational costs involved in setting up or relocating the office is much cheaper than the other cities. The city has the right mixture of world class culture and tradition is considered as the most dynamic and modern cities in Europe. The quality of living survey conducted has ranked Edinburgh as the best locations nationally and internationally to work in. The city has also hosted number of world conferences, international events and festivals and tops in the best tourist place in the UK as the city is surrounded by mountains and the best scenic locations. Edinburgh is Scotland’s primary tourist location destination and is leading in the field of science and technology (Glasgow and Edinburgh, 2007) 3. An out of town Science Park near Coventry This city is known as the city of change. One of the visions of the city is to extend, grow and make it easily accessible for people and also make the people choose this city to live in and make it a desirable place to do business. A survey study reveals that Coventry is one of the best places to invest and do business in the UK. There are huge development opportunities for setting up businesses as many science parks are being developed. The government has identified Coventry as one of main growth points in the UK and there is massive scope for development and growth. The communication network in Coventry is good in terms of rails and air but it is still developing road transport schemes. Coventry airport provides the cheapest and low cost passenger flights and freight operation. The city has been dominated by industries such aerospace, cars and telecommunication and this city was the most effected during the economic slump. The city is vulnerable and has adverse effects during any government de-regulations or any economic change. Coventry is still a developing city in terms of infrastructure, support services and business support. (Coventry City Council, 2009) Conclusion: Edinburgh is considered an efficient and cost effective option for the company relocation as it yields more gain for the company in many ways. It is one of the most successful relocation locations for many government and other companies as the city attracts world class companies, Highly skilled workforce and highly educated working class. Recruiting new employees in this city will not be an issue. Edinburgh has the most productive workforce in the country in terms of GVA per head. Edinburgh is connected well by both air and road. This city has an international airport and is connected by rail and coach services also. City is considered as the financial hub in the UK as most of the financial service business headquarters are situated in this city Edinburgh is considered to offer the best quality of life in the UK and it is the least polluted city in the UK. It is also considered as the best place to live and work in the UK (7) Overall, the relocation delivers significant advantages not only in terms of cost savings but also process efficiency and development. The pre requisite of relocation success is determined by detailed planning, execution and the role of strong executive leadership. Organizations usually use business premises as a way to introduce significant business changes. The availability of office space is more in Coventry and Edinburgh as there is a massive market for business development. Labor costs are also critical drivers for relocation of business entities to a different location. Comparing the labor wage costs between the 3 cities revealed that the workforce in Edinburgh is 30% lower than the other cities. This is because the city offers the best training, education and development and the work force is also highly qualified. The real estate and the lease costs is also another factor for determining the location as there can be significant rental saving of 20-30% per annum (Impact of Relocation- A report for the Independent Review of Public Sector Relocation, 2004) Literary References Abishek Agarwal, checklist for Hiring a Relocation Company, Online, retrieved 17th Feb 2010 from http://www.streetdirectory.com/travel_guide/217207/travel_and_leisure/checklist_for_hiring_a_relocation_company.html Coventry City Council (2009), Coventry Investor Prospectus, United Kingdom Dennis J. Donovan, Human Resource Challenges in a Corporate Relocation, WDG Consulting, New Jersey, retrieved 17th Feb 2010 from http://www.wdgconsulting.com/%5Cnews%5CPPP_wp_Donovan_2.pdf H. M Treasury (1995), A Framework for the Evaluation of Regeneration Projects and Programmes, January Impact of Relocation- A report for the Independent Review of Public Sector Relocation (2004), online retrieved 14th Feb 2010 from http://www.hm-treasury.gov.uk/d/ExperianResearch.pdf Liverpool Science Park (2009), Liverpool Science Park ic2 brings the future to Liverpool- Investment now Jan 2009, press release 30th Jan 2009 Liverpool City Region (2006), Development programme Report, Liverpool Mark Sweeney (2003), the corporate Headquarters Challenge, Business Facilities, 4 (1-5) ‘Office Relocation Checklist’ online retrieved 18th Feb 2010, from http://www.ecctelecom.com/download/Office_Relocation_Checklist2.doc Glasgow and Edinburgh (2007) Great places to live, work and play, Read More