A Solution for the Recruiting Dilemma of Small Town Companies
Recruiting executives and professionals into small town companies is a challenge. Even if the company is prepared to pay generous relocation costs (A good package might cost $70,000 to $100,000), the candidate may not be able to make the relocation fit the rest of his or her life. The reason is obvious.
The recruiting process treats employees as if they were isolated entities. Nothing could be further from reality. They are connected to networks of individuals and their networks: spouses, children, older parents, siblings, friends, communities… who are affected by their professional choices. Most of these networks are geography dependent: spouses have local jobs and friends, children have their school, friends and local sports teams and elderly parents may have a network of friends and doctors on which they depend. Everyone has a local network of preferred resources that might or might not be available in a small town. When candidates consider a job opportunity, they have to consider the impact of all these actors in their life. Even if the company is generous, if the spouse has to give up his or her income, the net outcome may be a loss. And if things don’t work out, the incoming employee will pay the price a second time on the way out. This is where a small town company is at a disadvantage as it often cannot find local candidates who can accept the position without unduly disturbing their network.
The solution is not only simple, but easy to implement: create a second company office in a bigger city. Executives and professionals can be recruited in the local market of the second office and work there or at the small town location. The size of the city of the second office will make it easier to attract talent than in the home town.
How to make it work
Think long term. Build more than an outpost, build your future headquarters but do it progressively. Use natural turnover to shift positions to the new location. Make it clear to existing employees that at no point will they be forced to relocate, but give them the option. If they understand that the future headquarters and professional opportunities lie in the bigger city, they might decide to build their own lives there. This is an evolution, not a drastic change. The original location can continue in parallel indefinitely, offering its low cost benefits in the supply chain and back office of the company.
The first person to recruit he bigger city might be the easiest to have in a remote location: the Sales leader. No office required until more employees are recruited in this location, at which time shared offices offer a flexible and affordable solution.
While you might find Sales leaders eager to work remotely, you should not settle for their location by default. The choice of the second location should be deliberate. It should be easy to access from the current location as employees should travel between the two frequently: aim for no more than half a day’s drive or direct flights from the nearest airport. The cost of living of the two towns should not be too far from each other for salary parity and to facilitate transfer of employees from one location to the other.
Other business criteria should also be considered. Is the company far from its industry’s center of gravity? Creating a second office there could give access to the relevant talent. Since this might become the headquarters in the future, local business laws, taxes and incentives also deserve consideration. Future geographic expansion within the U.S. might also point to a more central location as a 3 hour time difference does not facilitate communication. In this case, the half day limit on travel time might be relaxed.
Strategic partnerships, joint ventures and potential future sale of the business when the owner wants to exit might also be a consideration. In all these cases, location in the same town as the other party could remove subtle hurdles.
When is it time for a second location?
An ideal time is when the company starts building the executive team I described in my previous post. It can be sooner, though. It could start with the recruitment of a technical manager critical to the business and continue with the buildup of his team.
One benefit of having a presence in a larger city is the flow of fresh ideas. In a small town, employees tend to be stable or circulate among a limited pool of employers. This keeps the company out of the flow of external ideas. Being in a bigger city drives more ideas your way, ideas for improvement and growth, and prevents falling behind the rest of the industry. The ideas come in through new hires, professional networks and sales people from potential vendors.
There is certainly a cost associated with having a second location. 80% of companies are started where their owner lives. A small town’s low cost of living and stable and cheap work force can be important assets at the start. But farther down the road, they can become a drag on growth. The savings afforded by this set up are borrowings from the future. Delaying the start of the second office can become as costly as compounded interests and late payment penalties. The method outlined above is the least costly approach. It not only facilitates the recruitment of executives, but of middle managers and professionals as well. Is it time for your company to think about a second location?