The Leader - September 2007 - (Page 26) loca tIoN velocI ty: G o o d to day, but W hat abo ut to mo rro W ? FI G . 1 labor market INdIc a tor s a Nd preferred charac ter IstIc s labor market indicator population size preferred characteristic(s) sufficiently large to accommodate the daily needs of the business. a ratio of at least 250:1 (population vs. facility headcount) is advisable. moderate. rapid growth could signal an over heated area. but static or a decline in growth could be a harbinger of a labor supply deficiency. balance is important. younger is better but that also could appeal to many other companies. generally avoid areas with an over concentration of retirement age population. higher income areas tend to be higher wage. so usually prefer areas with household incomes near or below the national average. need a sufficient critical mass to sustain staffing requirements. a good rule of thumb is that the work force should be 100 times larger (at a minimum) than a new facility’s planned headcount. higher the better and beware of areas with less then 3.5%. persons working in lower paying occupations that could likely be readily trained. typically should be at least a 25:1 ratio of underemployed per new hire. persons working in occupations that would provide an experienced applicant flow. a minimum should be 10:1 ratio per new hire. a red flag should be raised if an area has a proportion of a specific industry (e.g., financial services) markedly above the national average which could signal an over concentration of the specific industry. the working age population (18-64) should be expanding faster than the labor force. if it is not, a supply problem is likely. median salary by pertinent occupation. should be at or below the level deemed appropriate. rate of salary increase should be no higher than the national average and/or pace of inflation. examine the roster of both the largest and comparable employers. avoid areas where there is a notable concentration of similar employers. in gauging the competitive employer base, attempt to ascertain how many would be takers (higher wage) vs. feeders (lower wage). a notable concentration of feeders is generally acceptable. this is a strong indicator of immediate future labor market competition. stay away from areas where a significant number of similar companies have been establishing or growing operations. a positive for temporarily augmenting labor supply. of promising locations, and (b) Location Evaluation to select the best long-range option. locatIoN screeNING growth age household income labor force size unemployment rate underemployment occupational employment The objective in this phase is to generate a shortlist, often three, of the most viable locational candidates. As location velocity’s main ingredient is human resources, it is important to examine statistical indicators suggesting whether an area’s labor market is: (a) balanced, in surplus or tilted toward greater demand than supply and (b) acceptable on the level and stability of labor cost. At left are several prime indicators that can either portend “smooth sailing” or “rough seas.” Most of the information in Figure 1 can be gathered from public (e.g., U.S. Bureau of Labor Statistics) or private (e.g., Claritas) data sources. Salary information should be double checked with local wage surveys provided by economic development agencies. Additionally, employer rosters would only be available from economic development groups. locatIoN evaluatIoN employment by industry population/labor force growth ratio salary level salary trends major employers new/expanding employers downsizing employers In this phase, a company’s study team visits each short-listed area. During field investigation it is critical to hold confidential interviews with companies employing the kinds of workers that your new facility will require. During these interviews, delve into the company’s recent labor market experiences. Also, probe for employer insights on emerging dynamics influencing the demand, supply, quality, and cost of requisite skill sets. Furthermore, be sure to understand what it will take from an HR perspective to achieve and maintain “employer-of-choice” status. If attaining that posture is beyond the new operation’s capability (e.g., too costly) then that location is probably not a good fit. It is advisable to ask employers to assign an overall rating (1 to 10 scale) on major labor market considerations. Then discuss in more detail the rationale underlying the th e le ade r 26 september / october 2007
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