Making corporate moves
In today’s economic environment, organizations face
demands from customers and shareholders for more value
and return on investment (ROI). In response, many of them
are seeking to achieve cost savings and drive efficiencies—
not only through strategic consolidation of support services
but also through the physical relocation of corporate
headquarters or other facilities that serve the business.
These transitions may involve cultural and operational
transformations such as:
• Changes to the organizational operating model, and/or
changes to functional service delivery model
• Labor force reductions, affecting labor cost and
workforce capability
• Consolidation/Geographic relocation of the
physical workplace
While each of these transitions can be complex and
challenging, corporate consolidations/relocations in
particular require careful planning due to the significant
impact on the entire workforce, productivity, and
profitability that is likely to occur over the transition period.
The imperative to effectively manage employees and
external stakeholders impacted by a strategic relocation
is amplified in cases where the transition is complicated
by concurrent operating model changes or labor force
reductions.
This paper is intended to provide organizations considering
a relocation insight into potential risks and challenges, and
provide guidance on leading practices and considerations
for a successful transition. It includes:
1. Key strategies to consider during a corporate relocation
2. The role of HR in workforce transitions during a
corporate relocation
3. Industry spotlight: three reasons why consumer products
companies are considering a corporate relocation
Note: The intent of this paper is to provide guidance to
companies specifically regarding the relocation of salaried,
non-union corporate office employees. There are additional
considerations involved in the relocation of factory or
unionized employees (e.g., union negotiations) that are not
covered in these sections.
1. Key strategies to consider during a
corporate relocation
Decisions, decisions
So you’ve made the decision to move your business, now
what do you need to think about first?
The keys to moving forward with a relocation—considering
the potentially disruptive impacts to the business and its
employees—are to plan ahead and be decisive even in the
face of numerous uncertainties. It is easy for leaders to get
caught up in and stalled by conversations about individual
circumstances and the desire to make exceptions to every
rule. Making key decisions up front gives leadership a
plan to coalesce around and will help to minimize isolated
discussions about individuals and exceptions.
Set up a dedicated transition team that understands the
needs of the business
Ineffective transition teams are usually either (1) too
far-removed from the transitioning business to have the
expertise needed to make business decisions during the
transition or (2) business experts who need to juggle
day-to-day responsibilities with transition duties and
therefore do not have the bandwidth to focus on transition
needs. It is important to set up a balanced team that is both
dedicated to the transition and close to the business.
To achieve a balanced team, it is advisable to set up a
transition management office with an appointed transition
lead to manage the effort. The transition lead will be
responsible for engaging the appropriate functional experts
and business leaders to assist with the transition. It is the
transition lead’s responsibility to escalate any risks or issues,
including lack of adequate support, to the leadership team.
It is very common for HR Business Partners to be directly
involved as well, given that there are many people issues
to manage during this transition. HR Business Partners can
also assist in the identification of additional transition team
members and resources. These additional resources can
provide support and guidance even if they are not part of
the dedicated central team:
Additional resources
Value-added to the transition
Local contacts
Transitions are generally more effective when they are “high touch.” It is a good idea
to engage local personnel (identified by HR) who sit in both the departure and arrival
locations, if existing, to support with any on-site activities including information sessions,
integration events, and feedback collection. If you are relocating your business to a new
facility, be sure to identify resources who are willing and able to travel to the new location
to support on-site activities.
Recruiting team
Typically in relocations, only select key employees are provided with offers or incentives
to move. Depending on the relocation acceptance rate, there may be a need to ramp up
recruiting in the new location for business continuity. Engaging the recruiting team early
on can help reduce its response time when these needs arise.
People managers
A leading practice for transitions, or any organizational change for that matter, is to
engage people managers early and often. The more ownership people managers have,
the more employees are likely to feel supported by their direct leadership.
Policy experts and legal team
With a change of this magnitude, it is critical to engage the right team of experts to
provide guidance on policy decisions as well as review for legal risks. Not only will you
need support from your compensation team (and any approval committees/boards)
and benefits teams in pulling together the employee package information, but also all
documents that are provided to employees related to benefits, compensation, and other
required notices need to be reviewed by the appropriate experts.
Relocation vendor
In some cases, employing an external relocation vendor can be a good investment if
you don’t have the resources or expertise to do it yourself. Relocation vendors handle
logistics such as site visits and employee relocations (home sales, finding rentals, etc.) and
contribute to “selling” the benefits of relocation for employees who may be on the fence.
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Determine the employees you need to move to keep
the business strong
Even before you think about relocation incentives and
engagement strategies, one of the first major decisions you
will need to make as a team is determining who actually
needs to move with the business. Your relocation and
engagement activities will be shaped in large part by the
type of talent you are trying to retain.
As a rule you need to prioritize key leadership that is needed
to maintain business continuity during the transition and
beyond. A stakeholder analysis will enable you to pinpoint
which leaders you can expect to retain and who may need
to be incentivized to move with the business. Once you’ve
identified them, these leaders will also help you identify key
talent-those with knowledge, skills, or expertise that are
core to your business, with deep subject matter expertise
and/or knowledge of strategic markets and product lines.
When determining the need to retain key talent, it is also
important to look at industry trends and identify potential
areas of investment in talent for long-term growth. Key
talent in these high-demand areas should most certainly be
considered for relocation incentives.
Your stakeholder analysis will also allow you to identify
individuals within the business who are influential to others.
Key influencers are crucial drivers of engagement and can
be especially useful in persuading key talent to relocate
with the business. This analysis will guide many other
talent considerations including allocation of budget for
relocation and retention incentives, approach to contractors
and non-exempt employees, and potential for economic
incentives.
Commit to reasonable time frames
As with any major organizational change, you may feel torn
between the impulse to “get it over with” quickly and the
need to take the time do make the right decisions that will
position the organization for sustained success long after
the relocation. Keep in mind that in a corporate relocation,
more so than other types of organizational change, impacts
go well beyond the workplace, affecting families and
local communities as well. Employees may essentially be
asked to uproot their families or walk away from their
current job-this is by no means an easy decision, even with
lucrative financial incentives. As such it is important to give
employees a reasonable amount of time to consider the
relocation news, make a personal decision, and complete
the transition.
Below are some guidelines for setting reasonable time
frames around relocation activities and milestones:
Milestone type
Timing considerations
Leadership engagement
It is important to recognize that whether or not they decide to move, leaders in the
organization will be dealing with the impact of relocation personally, while also trying to
lead employees through the change.
Give impacted leaders adequate time to process the news and make their personal
decision about relocation before seeking their help to lead transition efforts. A leader who
has come to terms with his/her own personal situation will be a much more convincing
change advocate.
Employee announcement
Consider two competing factors when determining when to communicate to employees
that a relocation decision has been made. On one hand there is a need to tell employees
well in advance of the target move date so that they have sufficient time to make
preparations (e.g., housing search, trailing spouse job search, school transfers). Note that
before you can share any information, you must be prepared to provide details of the
move, including individual impacts to employees. The longer you wait, the greater the risk
of information leakage. On the other hand, though making the announcement sooner
rather than later may stop information leakage internally, the news will become public as
soon as it’s announced. The longer the lag time between the announcement and move,
the greater the potential risk to the business as talent gets poached by competitors and
productivity and morale are impacted by uncertainty and ongoing change.
The balance that is struck will depend on a variety of factors including culture, local
competition, current job market, and attractiveness of the new location.
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Milestone type
Timing considerations
Move decision
Be sure to set a deadline for employees to decide whether they will relocate with the
business or not, but consider employees’ needs before doing so. Employees need to be
provided adequate time to make a rational and informed decision. They need time to
fully process the news and to consider relocation options both for themselves and their
families. You can help employees with their research by providing information sessions
and site visits to the new location (see page 9, Engaging employees through the move
date, for more details). Failure to provide adequate time and information will negatively
impact morale and retention.
However, allowing employees an indefinite time to make decisions places all the
uncertainty on the business. For instance, the recruiting team needs time to fill any future
vacancies in the business based on the employee relocation decisions. People managers
also require time to conduct knowledge capture and transfer from those employees who
will not be moving with the business, to ensure business continuity.
If adequate support and resources are provided to help employees come to a rational and
informed decision, the decision can be due within 1–2 months following
the announcement.
Move date
Finalizing the actual date of relocation requires thoughtful consideration of several factors.
The ideal move date will occur at a time that will be the least disruptive to employees and
to the business, and should consider the following:
• Family factors—a good time for families to move is during the summer in between
school years. This will ease the transition for families with school-aged children.
• Recruiting factors—also coinciding with the school year cycle is the recruiting and
hiring cycle for recent graduates, which is important if you plan to hire from local
campuses to fill any talent gaps.
• Seasonal factors—if at all possible, it is also a good idea to avoid seasons/periods
that are the busiest or most critical for the business (e.g., Halloween for a candy
business, football championship season for a snack foods business, back-to-school for
companies that produce school supplies).
• Financial factors—economic considerations, tax implications, and savings realization
also play a part in finalizing the relocation date. Since these factors are transactional,
they are relatively easier to manipulate and in most cases should not be prioritized at
the expense of the earlier mentioned factors.
Relocation vendor
In some cases, employing an external relocation vendor can be a good investment if
you don’t have the resources or expertise to do it yourself. Relocation vendors handle
logistics such as site visits and employee relocations (home sales, finding rentals, etc.) and
contribute to “selling” the benefits of relocation for employees who may be on the fence.
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Agree to confidentiality and make it binding
Finally, as you engage others in making these critical
decisions, it is important to strike a balance between
involving all those who can support the transition
and maintaining confidentiality prior to announcing
the relocation decision to all employees. Determine if
non-disclosure agreements (NDAs) are needed before
engaging leadership and other change agents who can
help with the process. It is important to keep a tight lid on
any talk of relocation until you are able to inform impacted
employees whether or not they have a job in the new
location. Even if you are offering relocation to all employees,
the incentives for individuals may vary widely, and it is not
prudent to make an announcement until you can provide
with certainty the terms of relocation for each individual. All
transition team members should be required to sign NDAs
to keep plans under wrap until announcement day.
Anticipating questions
Announcing the decision to relocate the business is
hard news for leaders to deliver. Employees are likely to
experience a range of emotions from sadness to anger in
addition to having a multitude of questions. Addressing the
most frequently asked questions in a concise and consistent
manner is critical to minimize uncertainty in the aftermath
of the announcement.
The two big questions you need to prepare for and
proactively address are: (1) “Why are we moving?” and (2)
“What does this mean for me?” Be prepared to tackle these
before moving forward with an announcement.
The news of relocation is likely to cause employees to jump
to many conclusions. Relocations are often associated
with business units that are underperforming or no
longer viewed as strategic to the company. This negative
association may cause employees of the impacted business
to lose pride in their business, which can reduce retention
and morale.
However, companies may choose to relocate for a variety of
reasons, many of which are extremely positive and strategic.
These reasons include, but are not limited to, regional
economic incentives, strategic market focus, operating
model changes, and organizational synergies. Employees
care about the why and want to know that there is a solid
business reason for such a big, disruptive change.
The rationale will vary for every company and therefore
cannot be prescribed. However, once you’ve articulated the
“why,” the following strategy will help you communicate
the rationale clearly and effectively to help employees
understand the reason for the relocation. A relocation
announcement should include three fundamental activities:
• Plan the approach
–– Analyze stakeholders to determine audience needs,
including internal and external (e.g., press release/
reactive statements, government relations, social
media monitoring).
–– Build your communications plan based on audience
needs and determine the cascade order.
–– Create a checklist to manage the details (e.g.,
technology requirements for webcast/video
announcements, leadership presence at impacted
location(s), time zone considerations).
• Align messaging to the business objectives
–– Develop key messages by considering the benefits
of the relocation to the business and to employees.
The rationale should be both strategic (e.g., synergies
gained) and specific (tied to tangible benefits e.g.,
cost savings, talent concentration). Messages should
be crafted to be balanced, and not overly positive.
–– If the relocation is simply a cost-saving measure,
be straightforward about it and be prepared to
demonstrate significant savings to offset the lack of a
more strategic intent.
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–– Develop a set of talking points for leadership for
consistency and to build trust with employees. This
is yet another opportunity to align leadership and
get their buy-in as well. Provide leaders with a set of
reactive FAQs with suggested responses to some of
the more difficult, direct questions that employees
may have.
• Address the rumor mill
–– Even with “foolproof” NDAs in place, rumors
regarding the relocation may leak out. When an
employee brings up relocation rumors, leaders should
not contradict them with a bald-faced lie. Prepare
talking points that address the question head on
without committing to anything that you don’t yet
want employees to know.
–– In the same vein, prepare talking points in case
employees ask leaders, “If you knew about this, why
didn’t you tell me sooner?” There are many reasons
for not disclosing the news prematurely, including
the need to be able to finalize details and provide
notifications to all impacted employees.
“What does this mean for me?”
The other critical question that needs to be answered at the
time of announcement is how employees will be impacted.
A convincing business rationale will only reach employees’
ears if you immediately answer the question of “what
does this mean for me?” Without the assurance of a job in
the new location or the certainty of a severance package
to help tide them over during the transition, employees
can quickly fall into feeling anxiety and mistrust. This can
negatively impact morale, productivity, talent retention, and
even company image.
As such it is recommended that you immediately follow the
announcement with individual notification meetings with
every impacted employee. Engage the HR Business Partner
to help coordinate these meetings and prepare required
materials (refer to section 2: The role of HR in workforce
transitions during a corporate relocation).
The key to success
Relocation efforts take significant time and energy and
often detract from doing “business as usual,” so it is
important to plan carefully and support it fully with
leadership backing and dedicated, experienced resources.
Since talent retention is so important to companies,
leadership alignment and stakeholder engagement
are both critical from the very early stages of planning.
Engaging internal experts to weigh in on decisions can
help prioritize the interests of both the business and your
employees so that your customers and your brand are not
negatively impacted during the transition. As you
prepare for announcements and employee
notification meetings, this guiding principle
will continue to navigate you through
decisions about key messages and
employee package elements. Finally as
you manage the transition, by putting
people first you are also putting the
business and your customers first, as
your key talent will be critical to business
continuity.
Keep in mind that while many other
organizational changes can occur simultaneously,
when you’re undergoing a relocation effort it
is advisable to minimize other changes to the
business that may further distract from the
relocation and distress employees during a time
of uncertainty and indecision. Instead, focus on
strengthening performance in other business
units or regions that are not directly impacted
by the relocation, if any, to compensate for the
inevitable hit that the relocating business will take
during the transition. Most consumer products
companies have the ability to do this because of the
diversity of their product lines and brands. Doing so will
help you weather the storm and be ready to realize the full
benefits of the relocation once the transition is complete.
Finally, when all is said and done—roadblocks overcome,
risks managed, employees relocated—make sure you
acknowledge all of the hard work, and celebrate!
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2. The role of HR in workforce transitions
during a corporate relocation
In any corporate relocation, HR plays a critical role in the
workforce transition. Talent retention during the transition
period can be a major challenge as employees deal with
change and uncertainty, and it often falls on the HR
Business Partner’s shoulders to keep employees engaged
and retained through and beyond this major event.
Because of this criticality, it is important that HR Business
Partners are closely involved in the transition effort as
part of the core transition management team. Often, HR
Business Partners will be tasked with the responsibility of
leading the team and executing on the transition strategy.
Prior to finalizing and executing any employee-related
transition plans, it is important to gain alignment across the
organization on the rationale, scope, impact, and timing of
the relocation. Section 1, Key strategies to consider during a
corporate relocation, elaborates on these decisions and the
appropriate level of leadership who needs to be involved in
making them. After the details of the transition have been
agreed upon, the organization will rely on HR to execute on
the plans and deliver successful results.
Preparing for Announcement Day
Learning about the organization’s decision to relocate is
hard news for any employee to receive. Irrespective of
whether they are directly impacted or not, they will likely
experience a range of emotions from sadness to anger.
Proactively anticipating and addressing these sentiments by
providing consistent, accurate information relevant to each
employee goes a long way in generating calm and order on
a day that is inherently chaotic and disturbing.
The two areas that need the most preparation for the
Transition Announcement Day are (1) Creating individual
employee packages and (2) Identifying and preparing the
key communicators to deliver individual notifications.
Creating individual employee packages
In a relocation, employee packages fall into two
categories—for those employees who are offered a position
in the relocated organization and for those who are not. If
offered relocation, employees should be provided with the
details of both their relocation package and the severance
package they would be eligible for if they were to decline
their offer, so that they can make an informed decision.
It is also important to consider the impact on any present
interns, past interns who may have a pending offer, and
any contractors critical to the business.
The details of the documents provided for each group of
employees are listed in the following table.
Employees who are offered a position
in the relocated organization
Employees who are not offered a
position in the relocated organization
Terms if offer to relocate is accepted
• Severance benefits—employee may be
entitled to severance based on position
and tenure. Information on any pension
plans, retirement accounts, etc., should
be included
• Position/Title/Compensation—include
description if role is changed or new
• Relocation benefits—financial assistance
that is being offered for the employee’s
move, if any
• Relocation incentive—in some instances
key talent may be offered a bonus
above relocation benefits
• Effective date—official date of transition
to new position
• Final acceptance date—date by which
a response to the revised terms and
relocation offer is due
• Relocation policies—relevant company
policies related to relocation
Terms if offer to relocate is declined
• Effective date—official date
of separation
• Employee Assistance Programs—
designed to help the employee and his/
her family cope with the changes
• Placement services—offering the
displaced employee access to job
placement and resume writing services
• Severance policies—include any relevant
company policies related to severance
• Retention incentive—employee may be
offered a retention incentive to remain
with the business through the transition
• Severance benefits
• Effective date
• Severance policies
If, and after employee has declined
position in the relocated organization
• Retention incentive–if relocation offer
is declined, employee may be offered a
retention incentive to remain with the
business through the transition. This
information should not be shared prior
to the employee making a decision
• Employee Assistance Programs
• Placement services
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Beyond these primary documents, supplementary
information that can be added to employee packages
include employee FAQs, area information for new location
and spousal job placement support assistance (if any). If
needed, packages for critical talent can be enhanced on an
exception basis as well. Companies can employ incentives
that are financial (e.g., housing incentives) or non-financial
(e.g., job title promotions) to persuade critical talent to
move with the business.
The more information companies can provide employees
to help them understand their personal impact, the more
employees will trust that the company has their interests in
mind. This trust will go a long way in keeping employees
motivated during the transition period between the
announcement date and move date.
Identifying and preparing the key communicators to
deliver individual notifications
“Key communicators” are leaders in the organization who
have been identified to conduct individual notification
meetings with employees. They are critical enablers of a
smooth transition experience and should ideally be both
reputable within the organization as well as invested in
the employee (e.g., a division or functional group director).
Leading practices suggest that employees should not receive
information that is of impact via an unfamiliar person
in the organization. It is also advisable to pair each key
communicator with an informed HR professional, who can
objectively provide pertinent information to the employee
during and after his/her meeting.
The selected key communicators may or may not have
had any prior experience in delivering job-impacting
communications to employees. Irrespective of their level of
exposure to transition execution, it is important to provide
key communicator training for consistent messaging and
approach across all employees. HR professionals involved
in the conversations should also undertake the key
communicator training.
Key components of the key communicator training should
include the following:
• Rationale to be communicated to the employee, and
the process that was adopted to identify the several
employee groups who will be impacted. It is important
for all key communicators to provide a common
understanding and messaging across the organization.
It will also help them confirm that all employees in their
purview have received the appropriate communication.
• Schedule for the Announcement Day, including
details of any employee meetings, locations, and
times for individual conversations and scheduled key
communicator/HR debriefs to capture firsthand reactions.
• Overview of materials that will be provided within the
individual employee packages and details of resources
that will be available for employees.
• Contingency plan for employees who may be absent
during the day of notification. It is best to schedule a
telephone call with employees who are on leave, so they
are not made aware of the transition through a third
party. Impersonal notifications (e.g., email) should be
avoided as much as possible.
• Communication guidelines outlining what could and
should not be communicated, key talking points, and
information on how to cope with employee behaviors/
reactions that they may experience during their meetings
(anger/hostility, denial/bargaining, grief/sadness).
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Announcement Day
A majority of organizations consider scheduling the
announcement toward the end of the work week, so
as to allow employees to digest the news and its impact
over the weekend. Selecting a Thursday will also allow
the organization to provide additional support and
resources to employees who may need it the day after the
announcement. HR professionals and employee assistance
should be also be available on site for a couple of weeks
following the announcement to answer any employeespecific questions.
Typically, the announcement day begins with a press release
followed closely by an announcement to all employees.
It is important for leaders to be visible and interact with
employees, providing rationale and acknowledging the
level of impact on individuals and the organization. During
the all-employees meeting, information should be shared
on the plans for the day, including schedules for individual
conversations and available resources on site. Employees
may be encouraged to take the day off to discuss the
implications with their families.
Individual meetings should ideally be scheduled for 20–30
minutes, with 5–10 minutes between each to give each
employee ample time to ask questions. Meetings should be
arranged so as to communicate to those with the highest
impact first. Arrangements could be made for lunch and
refreshments during the day. Additionally, employees
should be provided with access to transportation (e.g., cab
vouchers, shuttles to public transport) in case they are
too distraught to drive. Additional security should also be
arranged for the announcement day, and a couple of weeks
following it.
Leading practices suggest setting up a central command
center that key communicators should contact after each
meeting to confirm that there are no issues that require
immediate attention. Gathering feedback from all key
communicators and HR professionals at the end of the day
will allow the organization to get a pulse on the mood, and
alert the transition execution team of any potential issues.
Engaging employees through the move date
Once you’ve announced the relocation and notified
employees, you will enter into the tenuous transition period.
It is important to recognize that impacted employees
may be highly distracted during this time. Those who are
not moving with the business will be actively searching
for a new job. Those who are on the fence will be busy
researching and weighing the options. Even those that
have decided early on to move with the business will be
distracted by the departure of their colleagues and the
sense of loss. It is important to build an engagement plan
that meets the needs of these different groups, as they
can each impact the business in different ways during the
transition. It is vital that leadership, while acknowledging
the impact and potential changes, also focus on the vision
and mission of the organization and foster a positive
outlook. HR Business Partners should be closely involved
during this stage to track individual employee decisions and
engagement levels.
Let’s take a look at the different groups of employees based
on their situation, and engagement strategies for each
based on their specific needs:
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Employee decision
Potential needs
Engagement strategies
Undecided
• Learn more about the
opportunity and the new location
• Site visits—visit to the new location to meet potential
new colleagues and explore the region
• Explore available job options as
point of comparison
• “Tap on the shoulder” conversations—personal
outreach from respected/influential leadership to
encourage relocation
• Expert office hours—on-site resources available to
answer detailed HR questions
Relocating
• Learn more about the
opportunity and the new location
• Site visits—visit to the new location to meet new
colleagues and explore the region
• Concern for departing colleagues
• Ambassador program—buddy pairings with colleagues
in new location who can help with onboarding and be
a familiar face.1 Welcome events and other celebratory
activities with ambassadors will help motivate and
excite employees for the future in the new location.
• Internal networking opportunities—building ties to
the company outside of current location. This will help
curb the sense of loss that employees feel as their
colleagues depart.
Not Relocating
• Look for a new job
• Transition out of current role
• Flex hours—offering flexible time that employees can
use toward job search, interviews, etc. This promotes
goodwill toward the company.
• Knowledge transfer plan—put structure around the
expectation for departing employees to capture and
transfer knowledge before they transition out of
their role.
Keeping track of these different groups and strategies
requires a bit of structure. Employee decisions should
be tracked throughout this transition, as they will also
inform knowledge transfer and hiring needs. It is extremely
important not to lose sight of the needs of your critical
workforce at this time. If budget or resources are limited (as
they usually tend to be), make sure you focus them on your
top talent with high retention risks. Set the expectation
that leaders should be engaging top talent and helping to
support any decision-making needs, and hold
them accountable.
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Industry spotlight—Three reasons why
consumer products companies are
considering corporate relocation
While corporate relocation decisions are not specific to any
one industry, the consumer products industry is currently
facing challenges that are forcing more and more CEOs to
undertake this move. Faced with pressure from consumers
to lower prices and shareholders to increase ROI, research
indicates that 3 out of 4 CEOs and other top executives in
the consumer products industry are clearly aware of the
need to make significant changes to their business model
to sustain historic margin levels and deliver more savings
to fund growth and expansion plans.2 Many consumer
products companies are being pushed toward corporate
relocation in order to drive efficiencies and deliver on
consumers’ expectations. For executives in the consumer
products industry, it is becoming increasingly important
to be prepared to execute a corporate relocation as key
market trends may necessitate this consideration. In the
event of a transition, it is critical for the company to
proactively prepare for the event to minimize disruption to
key constituents—in particular employees, customers,
and suppliers.
Though it can be a risky transition to make, companies
seek to gain several benefits from a corporate relocation;
benefits include reduced headcount and real estate costs,
access to new or different markets, and/or greater synergies
in key functional areas such as supply chain. While many
factors are contributing to the need for consumer products
companies to consider such a large-scale change, below
are three of the most notable trends that are impacting the
industry today.
Changing brand portfolios
There was a time when consumer brands used to be
synonymous with one product or at least one product
category. These days that is less true as major consumer
product companies race to bolster their brand portfolios
with diversified product categories. Many companies like
Post Holdings have been in the news recently announcing
major acquisitions. Post has been on an aquisition spree
of sorts and most recently signed a $2.45 billion deal
for Michael Foods.3 This purchase added eggs and dairy
goods to Post’s existing cereal business.
When companies come together through M&A transactions
one of the first ways to gain synergies is to consider is
the rationalization of corporate locations. As the industry
continues to see a flurry of M&A activity, more and more
consumer products companies will be faced with the
challenge of corporate relocations. If your business is
engaged in M&A activity, recognize that preparing for
relocations is an important step to maintaining business
continuity as you rationalize locations.
Aggressive promotions
While promotion offers have always been a reliable tool
used in the marketing and selling of consumer products,
consumer companies are under greater pressure now than
ever before to offer aggressive promotions to sell their
products. The trend is industry-wide as “slack consumer
spending and a broad shift toward fresher grocery
items” put pressure on consumer products companies to
maintain sales and meet growth targets.4 Most importantly
the industry has experienced slow growth in the US; in
fact, unit sales of consumer products have been largely
flat for the past three years according to Nielsen.5 As a
result, consumer products companies are becoming more
dependent on steep discounts to bolster sales.
As prices are driven down to account for promotional
discounts, consumer products companies must find
other ways to squeeze out marginal profits. Many CEOs
scrutinize operational costs to find savings by eliminating
redundancies. This often means consolidating locations
and/or sharing resources across business units. When
companies are already running lean, it often requires an
operational restructuring to be able to maintain business
operations with reduced staff. For example, Nestlé USA
recently underwent an operating model change and
corporate relocation that allowed the business to find
synergies and go-to-market as one company. Nestlé USA
CEO said in a press release “The decision also allows us to
better manage our costs and to improve our efficiencies
by operating as One Nestlé with our retailers.” If your
business is looking to achieve greater synergies across its
various units, a corporate relocation may be imminent. Being
prepared for this move is an important way to help achieve
cost benefits and reinvest into growing the overall business.
Making corporate moves
11
Focus on emerging markets
Another reason that consumer products companies are
choosing to reduce their real estate footprint in the US is
so that they can reinvest capital into new markets. This is
due to both the stagnation of domestic sales as well as the
potential for expansion in growing international markets.
Many consumer products companies are looking for
expansion in emerging markets to make up for the lackluster
growth in domestic sales. For example, German consumer
products company Henkel is looking to expand to emerging
markets after seeing a 3.1% decline in organic sales in
North America.6
As consumer products companies turn their attention
to emerging markets, oftentimes they must find ways
to “utilize the existing workforce to support continued
long-term growth as a result of shrinking budgets and
reduced hiring.”7 This again drives the need for restructuring
and cost rationalization which are major catalysts for
relocation projects. Furthermore, as consumer products
companies continue to expand into new markets, the
physical relocation of key talent will become an important
consideration in the ability to grow the brand and business.
A well-executed relocation of both talent and operations
can be the key to success in a new market.
These trends in the consumer products industry are
prominent ones, and as such industry executives need to be
prepared for the distinct possibility of a corporate relocation
in the near future. Not being prepared to manage the
operational and people transition activities that are critical
in a corporate relocation will be extremely disruptive to the
business.
However, as challenging as a corporate relocation may
be, consumer products companies can also benefit by
making changes to establish a stronger platform for
long-term growth in a mature industry. Companies that
make bold moves in changing times have historically come
out on top. In that sense, a corporate relocation can be
viewed as an extremely positive and strategic move for
the company. There are other benefits to be had as well,
including regional economic incentives and improved
operational synergies. Whatever the reason may be, it is
critically important to plan systematically and to understand
the critical activities and potential risks in any corporate
relocation. If your organization is faced with a corporate
relocation, this paper can guide you through the process
and help you minimize business disruption.
The bottom line
In summary, companies within the consumer products
industry are experiencing three key trends that are catalysts
for corporate relocation:
• Changing brand portfolios: Increased M&A activity in the
industry spurs location rationalization
• Aggressive promotions: Cost reduction initiatives are top
of mind as promotional pricing drives down margin
• Focus on emerging markets: Companies are reducing
footprint in the slow US market to reinvest in new
markets that are growing overseas
Making corporate moves
12
For further information about this topic, please contact:
Kevin Knowles
Principal
Human Capital
Deloitte Consulting LLP
[email protected]
Joyce Chang
Manager
Human Capital
Deloitte Consulting LLP
[email protected]
Danielle Feinblum
Senior Manager
Human Capital
Deloitte Consulting LLP
[email protected]
Swapna Sathyan
Manager
Human Capital
Deloitte Consulting LLP
[email protected]
Chris Norman
Senior Manager
Human Capital
Deloitte Consulting LLP
[email protected]
Alyssa Loverro
Consultant
Human Capital
Deloitte Consulting LLP
http://www.forrester.com/Effective+Business+Change+Management+Requires+More+Than+A+WaitAndSee+Attitude/
quickscan/-/E-RES58525
1
2
Clark, Gregg. Industry Weekly. “Cutting Costs the Wrong Way Can Damage Your Brand”
3
Stynes, Tess. Wall Street Journal Online. “Post Holdings Swings to Loss”
4
Stynes, Tess. Wall Street Journal Online. “Post Holdings Swings to Loss”
5
Ng, Serena. Wall Street Journal Online. “Americans Lose Their Taste for Cereal, Soda and Soap”
6
Reeg, Caitlan. Wall Street Journal Online. “Henkel’s 14% Rise in Profit Buoys Shares"
Deloitte C&IP Learning, “Grow C&IP Through Organization Strategies
7
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