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www.HartfordBusiness.com July 17, 2017 • Hartford Business Journal 3 CT at center of corporate relocation strategy By Karen Ali Special to the Hartford Business Journal H ealth insurer Aetna's decision to relo- cate top-level employees to New York City, while maintaining the bulk of its workforce in Hartford, is part of a nationwide management trend in which companies are increasingly separating their corporate exec- utives from the rest of their workforce. General Electric followed a similar path when it decided to move a few hundred top C-level execs to Boston, while maintaining thousands of workers in Connecticut. Travelers Cos., which employs around 7,000 in Hartford, has its corporate headquar- ters in New York City. Companies separate and/or move their top brass to larger cities for myriad reasons — recruitment of talent, fostering university part- nerships, and having better access to clients — but a major consideration is so executives can manage their firms from afar, experts says. It allows for decision making to become less personal and more strategic, said John Glascock, a real estate professor at UConn. "When we fire people or outsource, it hap- pens at a distance," Glascock said of execu- tives removed from the majority of their workforce. "We also do not know [those employees] personally." In the '80s and '90s, when firms downsized, Glascock said, they found it disrupted the flow and ability of corporate headquarters and the firm to work effectively. Many workers who survive a layoff feel guilty for being left behind and/or wonder if they'll be next. "Thus firms have decided to separate their corporate headquarters from most workers and to allocate different parts of the firm to dif- ferent locations with the headquarters clearly separate," he said. "This is about strategic man- agement of the firm." Glascock said that other examples include Exxon moving its C-suite from the New York City area to Dallas and Boeing to Chicago, while workers are in Seattle and South Carolina. Another example, he says, is HSBC, which has headquarters in the Canary Wharf sec- tion of London, while most of its operations are in Asia and many — if not most staff — are in Hong Kong. Relocation drawbacks While some companies are choosing this bifurcated strategy, not everyone agrees it's a good idea. Marissa King, professor of organiza- tional behavior at the Yale School of Management, said there's no substitute for having executives located with the rest of the company. "Morale, communication and innovation suffer when executives are separated from their core business. A video conference can never replace the value of a chance meeting in a hallway," King said. In addition, moving large business units is difficult, King added. "Employees have families and are a part of communities — they don't want to be moved," King said. "This results in a hybrid solution of moving the C-suite." Another problem is it creates the percep- tion of an elite status for top executives, said David Cadden, a Quinnipiac University busi- ness professor. "This generates resentment on the part of the other members of the corporate head- quarters staff," Cadden said. "All in all, I can see very few rationales to move only the top portion of your executive staff to a new cor- porate headquarters." Attraction of big cities Many companies choosing to separate their corporate headquarters are trans- planting their execs to big cities for myriad reasons, including the ability to recruit top talent, which is increasingly found in larger, urban environments, Cadden said. Cities are attracting Millennials and oth- ers with strong social media and IT skillsets, which are increasingly in demand. Meantime, many CEOs are looking for greater relevance. "There is a desire by CEO types to be in a relevant city — Hartford is not one of those," Glascock said. "GE's CEO clearly had that in mind as well as the other factors. Moves usu- ally have more than one motivation." Joel Grieco, a commercial real estate bro- ker at Cushman & Wakefield in Hartford, said taxes, overall cost of doing business, financial incentives, access to labor/clients and building synergies with universities and/or other com- panies are also factors companies take into account when deciding their location. Cadden echoes that, saying cities like New Continued GREEN SOLUTIONS…ONE SOURCE The company that builds and installs the critical systems in virtually every type of facility is the same company you can rely on to maintain them. For over 50 years, our clients have trusted us to provide sustainable, more efficient, greener facilities. We are experts in: Energy Systems & Incentives Building Automation Technologies Sustainable Design & Operation 860.871.1111 Toll Free: 800.741.6367 nemsi.com License #'s: E1-104939 • S1-302974 • P1-203519 • F1-10498 • SM1-192 • MC-1134 MECHANICAL • ELECTRICAL • PLUMBING • SHEET METAL • BUILDING AUTOMATION • FACILITIES SERVICES I L L U S T R A T I O N | B Y R A W P I X E L . C O M , S H U T T E R S T O C K . C O M A rendering of Aetna's New York City corporate headquar- ters in a trendy section of Manhattan. R E N D E R I N G | C O N T R I B U T E D