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Episode 5 – Talent and Workforce Driving Corporate Locations

Site Selectors Guild
Episode 5 - Talent and Workforce Driving Corporate Locations
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Rick Weddle: Welcome to Site Selection Matters where we take a closer look at the art and science of site selection decision making. I’m your host, Rick Weddle, president of the Site Selectors Guild. In each episode, we introduce you to leaders in the world of corporate site selection and in economic development. We speak with members of the Site Selectors Guild, our economic development partners, and corporate decision-makers to provide you with deep insight into the best and next practices in our profession. In this episode, we have as our guest, Dennis Donovan, principal with Wadley Donovan Gutshaw Consulting, and chairman of the Site Selector Guild’s Marketing Committee.

Dennis is one of the nation’s leading site selection consultants. In his role as principal of Wadley Donovan Consulting, he provides high-quality service to clients, recruits and grows the best class of talent, and manages the business. Wadley Donovan advises corporations on the geographic deployment of business operations. Their core specialties are location strategy, site selection, labor market analytics, and incentives. Today, Dennis will talk with us about workforce development and talent, and how it’s driving location decisions in the current economic environment. Join me as we welcome Dennis Donovan to “Site Selection Matters.”

Dennis, today we hear a lot about how the key factors of site location have changed. And how workforce in labor is becoming more important, perhaps the most important decision driver. Is that really true?

Dennis Donovan: Rick, it indeed is. I would say it’s been true for certainly the last half-decade, perhaps the last decade. And it’s more critical than ever. We have record-low unemployment. We have labor deficiencies across all skill sets throughout much of the country. And it has become the number one determinant of success for any new or expanded operation. In fact, it also has become critical for deciding how companies optimize their global footprints. Because of labor, either surplus, cost, or shortages. It has become paramount in making decisions of where to geographically deploy business operations.

Rick: You know that you really highlighted a couple of really important things, record low unemployment, skilled efficiencies, we’ll come back to that. But you know, this is the longest recovery we’ve had, maybe in history, since we keep records the way we are doing. That’s really changed the economic development world, hadn’t it?

Dennis: Well, it has. It’s put a lot of pressure on economic development organization in their workforce stakeholders to be able to keep up with the demands of local businesses. Also, what businesses have been doing is investing significantly in technology and in process efficiency. And what that has cost is a change of the skill sets. So, they may have employees that needed a certain set of skill sets, such as, you know, relatively unskilled labor, maybe needed good basic skills, they are upgrading into middle skills. And so, you know, getting those workers trained and having a supply of those workers is very important. Workforce, including the role of economic development workforce, has absolutely risen, to me, to the pinnacle, more so than business attracted, you can’t track business if you don’t have the workforce.

So, it’s really the number one priority in any economic development organization that is not heavily involved, at least on the coordinating basis in workforce development, needs to do so immediately.

Rick: Good point. Let’s follow up on that skill deficiency issue. Some have said, the biggest issue, and it sounds like you agree, facing America today is no longer job creation because of the length of that recovery, but rather closing that skills gap. And that often means retraining workers who’ve been displaced, through no fault of their own, from their old jobs. You know, what are your thoughts on this issue, and how important it is, and how we go about it?

Dennis: Well, number one is upskilling the existing workforce in almost all organizations, be it in business services, or manufacturing, even distribution, that’s really critical. Second is the displaced workers, and many displaced workers do not possess the technology skills that are required to obtain comparable jobs. The jobs are there, the skills are deficient. And the third is taking the large reserve that we have in this country today of the underemployed or the marginally employed or those that are not in the workforce, in getting them ready to assume entry-level jobs, and have the skills where they can move up an organization. So, you have three streams of improving the skill sets of our existing workforce.

And I have to tell you that any area that has a higher-than-average proportion of its workforce without a high school degree, think about it. If you can just get that proportion of adults to the U.S. average, you automatically increase your qualified workforce by X percent, depending on what that statistic is.

Rick: Yeah, that’s very interesting. We seem to take that for granted. But we realize there were a lot of workers today that haven’t had the need for that high school diploma, or for that minimum level of technical skills. You know, Dennis, from a worker’s point of view, this could be a very scary time, I’m sure it is. If I lose my job because of automation, or a shift in the industry I’m working in, what am I to do? How can I know what skills? How do I know specifically what skills I need to accomplish or to develop to either avoid this or to bounce back if and when it happens? So, what’s a worker to do in this world?

Dennis: Well, one thing that, you know, a lot of companies today are offering tuition reimbursement, both for certifications and for obtaining degrees. And most companies today are not saying that this has to be totally job-related. So, taking advantage of any corporate sponsorship, for certification, even if it isn’t demanded on a job, or learning new skills or learning related skills, how to be more computer literate, for example, or be more familiar with robotics, whatever it may be, taking advantage of those training opportunities is critical. I’m talking about byword, you know, in the position.

And I thought that might be an issue, I would be reaching out to, you know, my Workforce Development Board and say, “Look, here’s what I bring to the table. These are my skill sets. Can you tell me what the array of companies are in the area and what our company is looking for today, and I’d like to be able to get into a program where I can enhance my skills, should, you know, there be any disruption to the companies that I work within this particular market?” So you gotta be proactive today, you really do. You can’t sit back and relax because of these global vicissitudes, you know, a company may be doing well locally, but on a global basis, the facility just doesn’t fit into the strategy of the company.

Rick: So, really, what you’re saying, and I wanna kind of probe a little deeper on this is workers need to take ownership of their own career path. And maybe the time to start reskilling or upskilling is before you’re displaced before you lose your job, while you are in your existing job, and there are programs that some companies have to reimburse tuition or to help you advance your skill while you’re there. So, really, it’s about taking ownership and getting ahead of the curve in that. Any comments on that?

Dennis: Yeah, best time to do it is when you seem to be at the pinnacle of your career, everything’s doing well. You’re building up a savings plan, you know, you got a family, things seem to go well work. That’s the exact time you should be doing expanding your skills, capabilities.

Rick: Is it different, in your view, for younger workers than older workers? Is it harder for older workers, easier for younger workers to think about reskilling? I know, I worked in The Heartland in the Ohio area, at one point in my career, and a lot of those displaced auto workers, you know, that it was really hard for them to think about retraining, they really wanted their old job back and it was difficult, and there was cultural issues around that. And that interfered with a lot of the kind of reskilling opportunities, but, you know. So, it’s really not a one size fits all because it seems like the difference in the age cohorts is substantial.

Dennis: You know, I think it’s a matter of attitude and psychology, it’s really not a matter of ability. Older workers have every… You know, they may be a little bit further behind the curve in terms of the technical skills required in today’s world, but they’re certainly capable of learning it and there’s just a bevy of support systems in nearly all communities that will help them attain these skills and usually not in a significant cost. So, again, if I’m working in an auto plant in Marysville, Ohio, I want to make sure I’ve got the technical skills in case that plant ever closes down or downsize. But you gotta [crosstalk 00:09:49] yourself and you gotta take advantage of the… You know, all the auto companies offer tuition reimbursement, take advantage of it, and expand your skill base. Expand your knowledge of it.

Rick: And the kind of skills are important because you don’t want to replace a pretty good high-income job after you’re displaced with an entry level or a starter job, that’s a pretty big bath to take from a financial point of view. It’s very frightening for workers, so they have to work on owning and helping to take advantage of these programs for reskilling. Let’s…

Dennis: Number one, I think, is fundamental skills, fundamental skills are absolutely critical.

Rick: What would you call those fundamental skills?

Dennis: Fundamental skills are all the basic skills of reading, writing, and so forth. But also, computer literacy, being familiar with, you know, software, with Microsoft, and so forth. Those are absolutely key. Those are fundamental skills. You have to be technologically up to speed, that is critical. And then you’ve got skills related to your particular job. And again, you know, what kind of additional jobs that are emerging would require the skills that you’re now applying, if they were indeed upgraded or expanded? So, it takes some time. And companies are willing to help employees do this. They realize by empowering employees, you know, yeah, you may lose a few, but if you do this with your existing employees, they’re gonna stay with you.

So, most companies today are enlightened because they have to be, and you know, used to be, well, you can go get a certification, but it’s gotta be totally job-related. That’s no longer true. For most companies today, you know, you can take advantage of training programs that expand your capabilities to make you employable, not just for that company, but for others as well.

Rick: Dennis, what about…and we hear a lot about soft skills that are, you know, not computer literacy, not the basic skills, but, you know, collaboration, teamwork, communication, and, you know, if you’ve been running a tool and [inaudible 00:11:50] a machine, numerically controlled machine and tool and die shop for 25 years, maybe you haven’t done a lot of team building and things of that sort. What are your thoughts on soft skills?

Dennis: You know, this is one of the deficiencies that we see across the board, even with existing workers. Again, the soft skills, I divide them into basic skills, which are reading, writing, arithmetic, communications, and then into, you know, job preparedness, how do we interface with coworkers? How do I become a part of the team? How do I engage in basic problem-solving? How do I dress for work? What are the rules of behavior in the workplace? And unfortunately, this stuff isn’t taught in school, so you can get into training programs where soft skills are taught, and more and more workforce development have soft skill training available for workers.

And again, that needs to be absolutely critical. And I’ll tell you, workforce development, you must have soft skill and wraparound programs for the underemployed and those that want to enter the labor force, but are now, you know, systems are, you know, there are no margins, is absolutely critical, soft skills, wraparound services.

Rick: Interesting variants. Let’s move a little bit now into from a company’s perspective. In this environment that we’re in today, just how does a company go about figuring out where they should locate new facilities? How can they be sure in the locations they choose that they can actually find the skill workers that they’ll need to manage and grow their company?

Dennis: Yeah, that’s become a vexing challenge. So, the most elementary input that a company can develop to make sure that they will be enough to log outcome to a site search, is to define the need. And this is not easy to do. What are the skills that are going to be required? What is the skill mix of the new operation? Now, skill mix and the scale. That’s absolutely critical. How many people are we going to need in this block of skill sets, right? And how many we’re gonna need your one? And what is it likely to be in the future, year three, and year five, to the best of our knowledge, are these skill sets likely to change in the future? So, it’s really defining the need that is critical. So, if you don’t define a need properly, then it’s gonna be hit or miss in terms of whether a new location will be successful from a human resource standpoint, this is really key. So, it’s not just the real estate executive or even the HR executive, you have to have a team involved in the beginning to define basic skills, scalability of those skills. Now and in the future, that is absolutely key. And then there needs to be a profile built what would be the ideal candidate in these different job families or skill mix? And so, that profile that will need to guide the entire site selection process. Right. So, that’s what I would call the discovery or project definition phase, number one.

Number two, then what a company needs to do whatever the geographic search territory is, could be one state, could be a whole country, could be several countries, what needs to be done, there has to be a very systematic metric driven process by which potentially acceptable locations are identified for a number of factors, including HR. For example, if we know that we need 500 people, well, you probably want to be in an area that has at least a minimum of 250, right, 250 population for 500. All right. So that says, I can’t get an area, where the population, either in a metro or in a 30-minute commute is less than 125,000. Then we’re gonna be looking for what I call macro indicators of labor force, educational attainment, that would mean, you know, concentration of manufacturing skills, you know, how many production workers, things like this, or whatever the company needs, you know, white-collar underemployment, blue-collar underemployment, these are macro skills.

So, you go through a sequence of identifying locations, population, characteristics, age, and so forth, that meet the what I would call the shell, around the core, you know. So, you wanna be in an area where the demographics are favorable on a broad basis. All right. So, again, setting a series of metrics and then screening areas and [inaudible 00:16:32]. Now, you’re gonna be down to a reasonable list of locations, it could be metros or counties. So now we gotta drill down. Now we know what these job families are. So, we have got to be in areas where we have X times those skills in the market. And what it’s become a real challenge now is that many of the skills are not defined in government sources. So, it places an additional burden on a company to go to alternate sources of data, you know, to get a handle on how many, for example, biochemists that we have in there. How many robotics technician, so you’ve got to go to different data sources and sites to be able to develop that information, so that you can continue screening for areas that have a sufficient critical mass, but then when you’re down there, then you got to look at competitive demand.

So, what is the concentration of those skill sets in a market versus a national average? You may not want too high a concentration, because it signals that there might be saturation in the market. So, a lot of judgment has to go into this kind of analysis. And then you might want to look at, you know, a site analyst, location analysts may want to look at, you know, a number of these different, you know, sources, it could be Glassdoor, Indeed, LinkedIn, or whatever, you may combine them and say, “Okay, here’s the pool that is available. Now, how many? What is the demand for that based upon jobs open in that market?” So, you got to come in from a couple of different perspectives.

Ultimately, that will lead you into a long list of locations, and maybe you have 6 to 10 that seemed to be able to statistically meet the requirement in the labor force.

Rick: Hey, Dennis, this seems like almost a daunting task for a company unless they do this all the time. I’m assuming that you would suggest that a company would be helped along the way with getting a professional consultant or a site locator to assist them with managing this very complicated analysis.

Dennis: I would say so and this has not been self-serving because I’m in the business. But I mean, this is a new paradigm in this field. It used to be you just go out and get published, it takes no more. So, I mean, it does require skill, and quite frankly, it requires time. And I’ve been doing this for a while. And even I’m doing it myself. It takes time and a lot of analysis. I mean, if you’re seeing, for example, on one database, a plethora of labor, but minimal demand, and you know, that’s a high wage demand, then you know you’re not in the right database, so you gotta move on to another one. So, it is… Yeah.

Considering the time investment, and then what the cost of the company would be, it’s really a very, very prudent investment, I would believe, from a company’s perspective.

Rick: So, knowing how to do it, and knowing how to do it right is a very key important aspect.

Dennis: Yeah, knowing where to get the information and knowing how to do it and do it right to make sure you’re coming up with the was adequate solutions there. But that only takes you so far. So, that’s like in, you know, so you’ve got the first phase which is definition. The next phase, what I call screening, getting down to a manageable number of locations, and that is critical because if you’re not in the right areas, then whatever else you do down the road, certainly could lead to underperformance at the ultimate site. Then what you have to do, and here’s where our economic development contacts come into play. You know, statistics can only take you so far. Now, we have to reach out in these long-listed areas, 6, 8, 10, 12, and say, now, we have to get information that is not readily available even on economic development websites, it should be, but it isn’t. So, what we have to understand, who are the major labor market competitors in that market? Who would we have to compete against? So, we need a roster of employers that are in the market. We also need to know who’s new and expanding because there may be direct competition or not, at the time when this new facility would be projected to come online.

And then we have to look at companies that are downsizing or have announced downsizing. So, how’s that added to the supplemental labor pool? Here is now so the time to start beginning looking at some markets, really critical. You know, for most hourly workers, you’re gonna draw the bulk in 30 minutes, even professional workers these days and not much beyond 45 minutes. To avoid that ultimate worksite, you gotta make sure that you have an available site or building in the right sub-market that gives you an advantage of recruiting and retaining labor. So, you get all this, and as this information has to be collected, and analyzed. And so, then we’re looking at data that are received from an RFI issued to an economic development agency. These statistics that we have already gathered. And then we do a scorecard analysis, and what are we looking at there. We’re gonna rank the areas on competitive demand, supply, availability, which is different from supply, you know, how available are they gonna be given what we know we can bring to the table, cost, unionization, of course, submarket. And then we do a scoring ranking on qualitative factors in cost and come up with a shortlist of locations that offer the best opportunities that we believe to meet the staffing requirements of the facility, that’s what we call a shortlist.

Rick: Yeah, let’s pivot if we can, Dennis, just in the time we have remaining a quick kind of punch list, if you could. What are the, from a community standpoint, we’ve talked about workers, we’ve talked about companies, from a community or region standpoint, or perspective, what are the two, three things that a community could do to enhance its competitive position in this time of labor sensitivity?

Dennis: Well, number one is to have a detailed list of the employer rosters in each location in terms of the industry, the function, the scale, that is really important. Most areas are deficient in that very basic statistic. And that’s really critical. For us, it tells us the most about whether an error is gonna be compatible for our clients’ operations or not. And I would strongly suggest that communities start going beyond the available data from like Bureau of Labor Statistics, and at least for your target industries, identify what those job families are, and then present data in terms of availability of those skill sets, both within the metro area and within commute sheds of major employment sectors are really important.

And you don’t see that today. And then that further needs to be aligned in terms of what is the talent pipeline from two and four-year colleges in those job families. So, we get a sense of not only demand, but the emerging demand as well. And then it would be really helpful too to have a good survey of what are the prevailing wage rates, particularly starting wage rates for these occupations in a market, and what are companies doing. We’d like to see what companies are doing in that market, relative to HR practices, it could be benefits, you know, time-off policies, and so forth, that are enhancing their ability to recruit and retain labor.

This information is largely missing from economic development agencies, they gotta go get it, and then it should be standard fare.

Rick: So, that really, again, reinforces the connective tissue of an expert approach, data-driven, about relationships to kind of go beyond the published data and get inside the information. That’s pretty interesting. Dennis, you know, you’ve given us a lot to think about today. What a great conversation. That’s about all the time we have though, for this podcast. So, let me say, thank you, Dennis, for talking with us today on this episode of “Site Selection Matters.”

Dennis: It’s been my pleasure, Rick, thank you.

Rick: Thanks for listening to this episode of Site Selection Matters. And a special thanks today to Dennis Donovan for helping us unpack and understand talent and workforce as an issue that’s facing our country today. One informative discussion certainly leaves us a lot to think about. Again, I am Rick Weddle, president of the Site Selectors Guild. We hope that you will subscribe to Site Selection Matters podcasts, on Apple Podcasts, on Stitcher, on Spotify, or wherever you listen to podcasts. We look forward to bringing you some great discussions in the year ahead. Until next time, good day.