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Innovative Management Information
February 2001


Site Selection: Good Information Is Critical To Success


Gathering data about potential locations for expanding contact center operations or for starting up new ones is the next thing that happens after the decision is made to "go for it." The boss who has the responsibility to make the final decision to select the new site is not about to take the risk and spend big money on a whimsical speculation that finding workers to do the job will be easy, that the telecommunications infrastructure will be cutting-edge to meet the demands of the market, or that the community will care enough to lend a hand in helping to make the operation successful.

At the very beginning of the location process, the savvy business leader will sound the call for data to match against a set of selection criteria. Top executives will form a team of data-gatherers and location-evaluators in companies with specialized management groups. A personnel and/or labor relations expert will be a part of the team, as will people who have technical and production expertise. Someone who understands real estate and knows how to negotiate will participate, as well. In other words, a team approach means tapping multidisciplined expertise.

Having a team means that data gathering and much of the decision making is shared before the time arrives for a final decision. It is not uncommon for a location decision to be made on a team recommendation. A team can, of course, be in-house; however, advisors, such as real estate consultants, are often used. A CEO or owner and a consultant may make up a team. I believe most decision makers should seek advice from their peers and business allies when faced with critical decisions, whether they are working with a company team, using the services of a consultant or going it alone.

Whatever the approach, the whole process of selecting a location is one of moving information toward decision. Ultimately, the decision is only as good as the data on which it is based. The data, however, have to be skillfully analyzed and presented in the correct context, comparing apples to apples and oranges to oranges.

Five or six years ago, the approach to selecting a location was to find contacts willing and able to deliver reliable, up-to-date data as well as the services needed to help move a strategic plan through a six-stage process for becoming operational. In case you are facing a responsibility for choosing a location for a contact center or any other type of business or industrial operation, I will list the six stages here for your convenience.

  1. Create a strategic plan with a timeline and critical decision points for data gatherers and data analyzers to use for guidance throughout the project.
  2. Develop specifications for screening along with a set of criteria for making choices. (Divide your criteria into three lists: one that shows the absolutely essential things that the final location choice must have; one that shows things needed, but not essential; and one that shows things wanted that will make it possible to choose between two locations that turn out to be equal in what they offer.)
  3. Build your team or advisory group around what you determine your needs are in stage two. If you are not the person who will be in charge of the onsite operation at the new location, select the individual who will lead the next three stages of the process.
  4. Gather location data and cull your list of candidate communities to those that clearly meet your essential selection specifications.
  5. Screen the best location choices and negotiate with community leaders and real estate owners to select two or three possibilities, moving to the final choice at the time of opportunity.
  6. Make your deal so that it is a win for your company and a win for the area you have chosen, then proceed to start up your new operation.

Obviously, the gathering of critical information and its analysis occurs throughout the six steps from beginning to end.

These steps of the location selection process have remained the same since the beginning. During the past five years, however, the Internet has emerged as the means of choice by which data gatherers find their way to informational resources.
I recently attended a "competitiveness conference" of the Mid-America Economic Development Council where Bob Henningsen, administrator of the Iowa Department of Economic Development's Division of Business Development, made a presentation on his state's efforts to standardize the format for presenting data about available buildings and sites, and Iowa com-munities. He opened his remarks by saying, "The Internet is increasingly becoming the source of choice for site selection." Henningsen also made reference to a study conducted by his state in 1999 that found that well over half of business executives surveyed use the Internet for gathering information. The finding triggered a redoubled effort by the state to present data for site selectors on the Web in a standardized format. This information can be viewed at http://www.smart.state.ia.us/buildin.htm.

The time between the decision to begin a search for a location and a ribbon-cutting ceremony is being compressed more and more. In the not-too-distant past, before today's rapid-paced technology development and all it brings to economic change, a typical project to select a new location could take many months. Data gatherers expected to wait for days or weeks for area or community packages and proposals to reach them.

Having information available on the Internet has made the time compression possible. The problem is the lack of a standardized approach to presenting data. This situation is compounded by informational overload on the Web, along with the diversity of ways that area development and community economic development organizations, as well as real estate owners, present themselves and what they have to offer.

If you have experienced the frustration of using an Internet search engine to try to find data resources or official community Web sites, you realize that the effort is becoming increasingly difficult. The pat answer to the question about how to get a position with the top 50 search engines is to register with key words that will place a Web site in the "first-found" position or, at least, in the first dozen or so Web sites a search engine locates. Anyone with Internet experience knows this will not work in a way that gives data gatherers a clear path to their best resource choices.
Adding to the problem is the diversity of ways Web sites are designed and presented. Some are entertaining designer showcases that are impossible to navigate. Some are strictly for advertisers and not for users. (Advertising overload can come quickly to Web sites. The shakeout that is occurring with dot coms is, to a great extent, caused by misguided marketers whose expertise was gained in a time before the Internet. These people have extrapolated their experience and, at best, are simply learning at the expense of clients.)

An easily solved problem with many Web sites that are information resources is their lack of an "up-front" presentation of a name and complete address of a person to contact. Data gatherers want to know the people who stand behind the data. They want the choice of making contact by regular mail as well as e-mail, phone or fax.

Dennis Donovan, senior managing director of the Wadley-Donovan Group, a site location and economic development consulting firm in Morristown, NJ, has predicted a trend toward centralized Web sites, at the national level, that provide location data. His prediction indicates that site searchers will soon be offered a Web site for screening communities based on location selection criteria at the outset of their projects. Donovan is affiliated with American Community Network, which offers information on cities and counties throughout the U.S. (If you are interested, visit http://www.FindMeHere.com and search for American Community Network as a case-sensitive phrase for access to the Web site for ACN.)

Various associations offer site selection resources on the Internet. For example, in 1998, the National Association of Manufacturers introduced its Site Selection Network. NAM members use the SSN to publish location selection requirements on the Web. Non-members are invited to use it also, but must pay a fee approaching that of joining the association. Areas and communities that wish to provide information and make proposals to site seekers pay to see what NAM has published on the Web. (Visit http://www.FindMeHere.com and search for NAM Site Selection Network as a case-sensitive phrase for access to more information about SSN and the name of a contact.)

A similar service to what NAM has may be found at www.SiteLocationAssistance.com. The Site Selection Directory is free for all users to access. Site Location Assistance.com is not owned or sponsored by an association.

Another example of associations that bring people who are looking for locations together with real estate representatives, site location consultants and economic developers is the International Development Research Council. IDRC is a highly regarded association that sets standards for data used in the location process.

Good information to support decisions about new locations and startups is more accessible today than ever before, thanks to the Web. Though it is convenient to use information brokers or to collect data from secondary sources when "broad-brushing," when the time comes for making choices between those areas or communities, or real estate sites, that appear to meet your selection criteria, find the people who can stand behind the information at the level where it is directly applicable. Networking for information and knowing the contacts who provide it is a most important factor in any formula for successful decision making.

Bob Glover is the founder and developer of the Site Location Assistance Network on the Web. The Site Location Assistance Network on the Web is geared toward virtual networking for putting data gatherers and decision makers involved with location-selection or business startup projects together with informational resource and service providers. The Network is free and open to all users and is unbiased in presenting areas and communities that want economic development.

[ Return To The February 2001 Table Of Contents ]

Labor And Real Estate Considerations For Site Selection


Anyone with a passing knowledge of call centers knows that labor is king. The latest cost component breakdown shows that personnel recruitment, training and salaries account for 70 percent of the operating budget of a typical call center. With such overwhelming statistics, it remains a given that the site selection process for call centers begins and ends with a requisitely skilled, available labor pool. Since the fundamentals of finding the right labor market have been explored in voluminous detail in the media, I will highlight some of the innovations that have emerged to uncover untapped sources of labor as companies contend with an unemployment rate that remains perilously low.

Old Line Site Selection
The U.S. Bureau of Labor Statistics designates 315 of the most populous metro areas as Metropolitan Statistical Areas or MSAs. As the name suggests, the Bureau maintains a wealth of statistical information on these areas, comprising demographic and economic information. Consequently, site selection efforts for call centers tend to limit their scope to just these 315 areas because they represent the most populated areas across the country and are therefore within the "comfort zone" of corporate America, and because information ranging from demographics to economic data is much more readily available for these traditional markets.

"The consequence of the MSA paradigm is that these designated areas have become saturated with call centers and other employers," said Jim Trobaugh, senior vice president of CB Richard Ellis' Call Center Solutions Group (CCSG). Considering that a particular location is defined as being saturated when more than two percent of the jobs are in the call center industry, it is inevitable that former hotbeds like Salt Lake City, Omaha and San Antonio are at the saturation point. It is therefore vital that the site search be broadened to take into consideration new and often obscure locations.

Trobaugh said, "The key to success is to ensure that you have done the proper research, because unlike MSAs, the most pertinent information on these smaller cities cannot be downloaded from Web sites or gathered through government sources. Ultimately, this keeps these communities hidden from the herd."

Project Profiler
In undertaking this more exhaustive search for the right labor location, site selection consultants today take a multiphase approach in qualifying all prospective locations to respond to a call center requirement. The first step in the process entails having the client complete a questionnaire that asks a full range of questions regarding their call center project, including the following.

The desired age and educational level of agents. This allows companies to select the appropriate age and education demographics to include in a benchmark analysis. For example, a client may have ascertained from its other centers that individuals between the ages of 24 and 30 with some college experience (more than a high school diploma but less than an associate or bachelors degree) perform the best. Through the profiling process, a consultant can identify and apply these criteria to the benchmark analysis to highlight communities that accord with these criteria.

The starting and average wages paid to agents in the new center. This very important factor helps determine which communities can supply candidates within the client's desired salary structure.

Other questions include the client's geographic limitations (including appetite for extreme weather conditions), the project's timeline, the size of facility required, the center's hours of operation, percentage of part-time employees and the telecommunication requirements of the center.

The completed questionnaire becomes a crucial springboard for a site selection study that is specifically focused on the client's unique needs.

"This is a 'new and improved' method, for two reasons," said Mark Seeley, project manager, CCSG. "First, the call center industry has broadened to a degree that it includes everything from outbound telemarketing centers that pay minimum wage, to advanced technical support centers that may require technical certifications and pay $80,000 per year. Therefore, because requirements are so diverse, our information needs to be that much more sophisticated. Second, as labor markets quickly dry up in our booming economy, simply seeking out communities with high unemployment and a low cost of living isn't good enough. Call centers are stacking up on top of each other in markets that five years ago were considered great for these reasons alone. Therefore, research capabilities need to be up to the task of gleaning complex information to provide a solution that addresses all requirements."

Pounding The Pavement
Often, in the midst of so much demographic data, site selectors and call centers lose sight of one of the most effective means of compiling information: empirical research or, in simple parlance, pounding the pavement. Demographics and statistics are useful when trying to efficiently and accurately weed though several thousand potential communities, but once a short list is derived, nothing takes the place of good face-to-face conversations. This may entail flying to a short-listed community and setting up meetings with economic developers, community college deans, job center reps and local employers. These hands-on, in-person evaluations are indispensable.

"It's one thing to know that a community has an eight percent unemployment rate and median household income below the national average," said Trobaugh. "It is a whole other thing for the H.R. manager at the local Wal-Mart to tell you that he received 3,000 applications last month for sales clerk positions starting at $6 per hour as a result of a single ad placed in the local newspaper. We will often hold impromptu interviews with retail managers, call center employees or even pedestrians on their lunch breaks. If the economic development official assures us that a location represents the best real estate option and is located in a safe area, we don't take his word for it. We'll ask a sampling of people on the street if they would be comfortable walking to their car at night. The reactions and insights you get from locals are always the most enlightening."

Trobaugh also recommends that location scouts stay especially alert when touring the community. "Do all of the fast food restaurants have 'Now Hiring' signs posted in the windows? This could be an indication of a tight labor market. It would behoove you to pop in on one and have a conversation with the restaurant manager," Trobaugh said.

Alliance Building
Of course, demographics alone do not secure the optimal location for a new call center. A call center operator may do an exhaustive survey of labor trends in an area but find no existing buildings or prospective land parcels to accommodate their deadlines. What's more, if the labor market in question is a tertiary real estate market, it may be difficult to find the contractors and suppliers to complete the project on schedule. While the vagaries of the building process are par for the course, call center operators have become cognizant of the tremendous efficiencies to be achieved by partnering with national site selection consultants/developers who can draw on voluminous research, significant in-house expertise and relationships with vendors to fast-track the process. A number of prominent developers have recently partnered with site selection consultants to offer one-stop shopping for the call center executive.

Package Deals
While labor and the fundamental real estate issues take precedence in luring a call center to a particular location, economic development agencies in obscure locations such as Hazard, Kentucky; Milton-Freewater, Oregon; and Lancaster, California have been invaluable by aggressively courting call center operators with significant incentive packages, including tax credits, job training and even free land.

Sealing The Deal
Once the communities have been evaluated and approved by the operating units, the terms of the transaction become paramount. The trend we are seeing is towards initial lease terms of 10 years with a cancellation option after year seven. With build-to-suits, the minimum term tends to be 10 years, reflecting the landlord's concern with residual value. It is important to reconfigure call centers, for example, as rectangular boxes rather than squares so they have residual value as industrial buildings. Another important determining factor of the lease term is whether the call center operations are contract-based. In this case, the length of the contract (or concurrent contracts) dictates the terms of the lease. A contract-based call center requirement also tends to engender a dramatically shortened lead time for the site-selection process of as little as eight weeks.

Kurt W. Rosene is senior vice president and director of National Development for The Alter Group, build-to-suit and speculative developers of office, industrial, call center, research and development space, and healthcare facilities. Rosene is responsible for organizing and delivering The Alter Group's services, including program management; land acquisition and disposition; advisory land and site planning; design and construction; consolidation; and build-to-suit transactions to corporate clients across the country.

[ Return To The February 2001 Table Of Contents ]

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