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                           PROJECT CASE  


MARRIOTT

Marriott retained WDG Consulting to recommend the optimal location for a shared services center. Accounting and other support positions were being consolidated from field operations to a centralized facility. The new business unit would employ 300 people and occupy 50,000 SF of office space. Predominant locational criteria included:
bullet Availability of accountants, accounting clerks, and well-qualified entry level clerical workers
bullet Wage levels below the U.S. average
bullet Nonstop air service to Washington, DC
bullet Availability of a 50,000 SF office building
bullet Presence of a university and two year college with a substantial number of annual graduates in accounting
bullet State-of-the-art telecommunications infrastructure
bullet Low risk of natural disaster
bullet Favorable tax environment, including no taxation of accounts receivable
bullet Absence of future labor supply/cost pressure
bullet Attractive quality of life, including below average cost of living, to enhance relocation of about 20 professionals

WDG Consulting initiated the location selection project by requesting a profile of the new business’ operating requirements. We then met with the client team to finalize informational building blocks and reach agreement on the relative importance of various location criteria. A two phase analytical process was then followed to ultimately recommend the location which could best satisfy the overaching needs of the new shared services center.

The objective in Phase One was to identify the three most promising locations to carry forward for a due diligence evaluation. WDG Consulting began the search procedure by focusing on all metro areas over 100,000 population with nonstop air service to Washington, DC.

We subsequently interjected additional criteria to reject areas until a long list of 10 places emerged. Early stage criteria utilized to eliminate potential locations included the following:

bullet Population characteristics
bullet Workforce educational attainment
bullet Civilian workforce trends
bullet Unemployment rate
bullet Financial services employment (over concentration is not desirable as this construes higher wages and intense labor market competition)
bullet Number of accountants and accounting clerks (prefer at least 5:1 ratio of resident skills vs. open positions)
bullet Median accountant and accounting clerk salaries
bullet Taxation of accounts receivables
bullet Natural disaster risk (earthquakes, floods, severe storms)
bullet Quality of life ranking
bullet Cost of living index
bullet Points of presence (switches) of the major long-distance carriers


Until this juncture, WDG Consulting relied on its national database containing uniform locational statistics for all U.S. metro areas. This was supplemented by accessing published data sources (e.g., U.S. Bureau of Labor Statistics, demographic vendors like Claritas, and specialized sources such as ESRI for disaster risk).

For the 10 longlisted areas, WDG Consulting secured more customized information from our state and local economic development contacts. In particular, we were looking for clues as to the competitive labor market environment. The following variables were used to further distinguish the 10 semi-finalist areas.

Roster of financial services firms and other companies with significant back office operations

bullet New/expanding white collar employers
bullet Downsizing white collar employers
bullet Nature of white collar firms looking to establish operations in the area
bullet Annual number of accounting graduates
bullet Four-year colleges
bullet Two-year colleges
bullet Availability of and gross lease rates for 50,000 SF office space
bullet Air travel time and cost to Washington and other gateway cities
bullet Tax practices/rates
bullet Possible incentives
bullet Local wage surveys

Each location was ranked based upon WDG Consulting’s factor weighting/area scoring model. This led to selection of three metro areas (in Tennessee, Florida, and Kansas) to study in a second phase.

During Phase Two, WDG Consulting visited the three finalist locations. Our field studies consisted of the following:

bullet Interviews with back office employers including shared services centers
bullet Interviews with other pertinent entities such as business associations, personnel agencies, job service, education/training representatives, telecommunications officials, tax officials, real estate brokers/developers, and economic development groups
bullet Physical tours of office space meeting stated criteria
bullet Creation of commute zone maps plotting residential skillsets and location of labor market competitors to determine the best geographic sector of each area from a workforce perspective
bullet Estimation of qualified applicant flow at competitive salary levels (WDG Consulting recommended a 60th percentile position)
bullet Determination of the ingredients (compensation, HR practices, career advancement, on-site amenities, etc.) that would make Marriott an employer of choice
bullet Request of the lead economic development agency to submit a formal incentives package

Outcome of Phase Two research was interpreted from the vantage point of the shared services center’s most important operating requirements. The three areas were contrasted on short-range and longer-term attractiveness for the following considerations:

bullet Labor market
bullet Availability
bullet Quality
bullet Stability
bullet Salaries
bullet Business costs (multi-year)
bullet Payroll
bullet Occupancy
bullet Taxes
bullet Travel
bullet Incentives (offset)
bullet Keys to employer of choice status
bullet Office space
bullet Shortlist
bullet Recommended
bullet Best alternatives
bullet Quality of life/transferee appeal
bullet Education/training
bullet Unionization
bullet Telecommunications
bullet Air services
bullet Taxation

Upon submission of the report, Marriott decided to locate the shared services center in Knoxville (TN) - - WDG Consulting’s top choice. The firm has enjoyed considerable success in Knoxville as evidenced by:

bullet Company doubled headcount in last 5 years
bullet Abundant supply of accountants, accounting clerks, and other skillsets (qualified applicant flow ratios have exceeded 5:1)
bullet Low turnover (less than 20%)
bullet Customized training provided by the local community college
bullet Relatively short commutes for employees (75% less than 20 minutes) by virtue of the office’s location, enhancing recruitment/retention
bullet Wage rates some 15% less than national averages
bullet Minimal labor supply/cost pressure
bullet Extra savings generated by a $5 million incentives package

 
     
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