H E A L T H W E A L T H C A R E E R

M E R C E R | C O M P T R Y X

H R ’ S R O L E I N S I T ES E L E C T I O N

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W E L C O M ET O D AY ’ S P R E S E N T E R S

AMY TILLESNA Solutions ConsultantWorkforce Metrics

amy.tilles@mercer.com patrick.gutmann@mercer.com

Patrick GutmannSector Leader Europe

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A G E N D A

S I T ES E L E C T I O NA P P R O A C H

W H YB U S I N E S S E S

E X P A N D

Q & AH O WM E R C E R |

C O M P T R Y XC A N H E L P

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As locat iondecisions evolve –a cross- funct ionalteam has emergedas the norm

instead offaci l i t ies orf inance/taxdriving thedecision

• LOB Leader(s)• Human Resources• Tax• Finance• Facilities/Real Estate• LegalAnd depending on the situation:

• Sourcing manager/procurement• Labor relations• Government relations• Information technology

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WHY BUSINESSESEXPAND

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Why do companiesexplore new si telocat ion decisions?• G r o w t h• G e o g r ap h i c

e x p a n s i o n• Ac q u i s i t i o n

i n t e g r a t i o n• R e c r u i t i n g d i f f i c u l t i e s• To f i n d l o w e r c o s t

s t a f f• P ro x i m i t y t o

c u s t o m e r s

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NEW SITE LOCATIONS –DRIVEN BY COST ANDOTHER FACTORS

© MERCER 2016 8© MERCER 2016 8

SITE SELECTIONAPPROACH

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M O S T A P P R O A C H E S T O S I T E D E C I S I O N S H A V ET H E S E C O M M O N E L E M E N T S

1

2

3

4

5

6

7 NEGOTIATION, START-UP

FRAME SITE DECISIONwhat strategic considerat ions should guide locat ion choice(organizat ion, markets, customers, suppl iers, geography, future)

GATHER RELEVANT EXTERNAL AND INTERNAL DATA

MULTI-FACTOR LOCATION ANALYSIS

FINANCIAL ANALYSISdetai led on-going and one-t ime costs

RISK ASSESSMENT

SITE DECISION

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C R E AT E A F R A M E W O R K F O R L O C AT I O NE V A L U A T I O N

30%

16%

13%

12%

8%7%

7%

5%S I TE S E L E CT IO N D E C I S IO N

COSTS

LABORAVAILABILITY

INFRA-STRUCTURE

LABORDEMAND

HAZARDRISK

EDUCATIONECONOMICINCENTIVES

PURCHASINGPOWER

Example Only

Each location decision willhave different factors and

weightings

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S I T E S E L E C T I O NC O N S I D E R A T I O N F A C T O R S

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E X A M P L E S O F T Y P E S O F D A T A A V A I L A B L E

LABOR AVAILABILITY

• Labor supply• Unem ploym ent rate• Im migrat ion laws• Prevalence o f par t - t ime workers• Recrui t i ng index• Job created/FDI

LABOR COSTS

• Gross pay• Total pay growth rate–managem ent,

technical /professional , c ler i cal /technic ian, and operat ionsoccupat ions

• Gross em ployer payrol l costs perem ployee

• Employer costs af ter corporate taxcredi t

• Occupat ion speci f i c com pensat i on andbenef i ts costs

• Benef i ts prevalence and costs• Net employee pay af ter tax• Indi v idual m arginal tax rate• Labor law r ig id i ty

LABOR QUALITY

• Col l ege enrol lm ents , degree program s,univers i ty qual i ty

• Number of local inst i tutes of h ighereducat ion

• Percent Engl ish-speaking• Adul t l i teracy rate• Col lege degree holders and percent

wi th Bachelors degree• Annual patent appl icat ions and num ber

granted• Output per worker

INFRASTRUCTURE

• Of f ice space costs• Of f i ce space vacancy rate• Transpor tat ion cost index• Ut i l i t y cos t index• Qual i ty of publ i c serv i ces and

transpor tat ion index• Comm ute t im es/distance• Inf ras tructure rel iabi l i tyBUSINESS CLIMATE

• Incent i ves to em ployers• Nat ional GDP growth• Increases in nat ional pr i ce level• Household i ncom e level• Maxim um corporate m arginal tax rate• Nat ional h ighways• Nat ional internet users• Nat ional te lephone l ines• Nat ional elect r i c i ty consum pt i on• Sector growth rates• GDP per capi ta• Country bond rat i ng• Intel lectual knowledge• Pension requirem ents

RISK PROFILE

• FX volat i l i t y• Average annual days los t• Likel ihood of greater than 10%

property loss• Secur i ty r isk• Pol i t i cal s tabi l i t y r i sk• Corrupt i on index• Governm ent ef fect i veness r i sk• Legal and regulatory r i sk• Macroeconom ic r i sk• Foreign t rade and payments r i sk• Tax pol i cy r i sk• Labor m arket r i sk• Financ ial r i sk

COMMUNITY

• Qual i t y of l i v ing• Costs of l i v ing/purchasing power• Access to cul tural inst i tut ions• Populat ion and growth

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S I T E S E L E C T I O NW H A T C E O S C A R E A B O U T

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U N I T E D S T A T E SB E S T L O C A T I O N S F O R T E C H S T A R T U P S

Mark Schi l l , Research Di rector at Prax is Strategy Group Per Forbes Stat ista Report

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W H E R E D O M U L T I N A T I O N A L T E C H C O M P A N I E SO P E R A T E ? ( A C C O R D I N G T O M E R C E R | C O M P T R Y X )

VIRTUALLYEVERYONE

THE PIONEERS

U N I T E DS T A T E S

C A N A D A U N I T E DK I N G D O M

F R A N C E

I T A L Y

S W E D E NS W I T Z E R L A N DN E T H E R L A N D S

A U S T R A L I A

C H I N A

I N D I A

J A P A N

S I N G A P O R E

H O N G K O N G

B E L A R U S

A Z E R B A I J A N

M A C E D O N I A

G E R M A N Y

M A L T A

I V O R Y C O A S T

C A M E R O O N

T A N Z A N I A

M O Z A M B I Q U E

M Y A N M A RM A C A U

D O M I N I C A NR E P U B L I C

T R I N I D A D &T O B A G O

J A M A I C A

P A R A G U A Y

G H A N A

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W H E R E D O M U L T I N A T I O N A L T E C H C O M P A N I E SE M P L O Y S O F T W A R E E N G I N E E R S ? ( A C C O R D I N G T OM E R C E R | C O M P T R Y X )

VIRTUALLYEVERYONE

THE PIONEERS

U N I T E DS T A T E S

C A N A D A

I R E L A N DU N I T E DK I N G D O M

F R A N C ES P A I N

S W E D E N

A U S T R A L I A

C H I N A

I N D I A

J A P A N

G E R M A N Y

U A EE G Y P TP U E R T O R I C O

C O L O M B I AC O S T A R I C A

P O R T U G A L

V I E T N A M

I N D O N E S I A

A R M E N I A

U K R A I N ES L O V A K I AL I T H U A N I A

G R E E C E

S E R B I A

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HOW MERCER |COMPTRYX CAN HELP

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S T E P 1 : U S E S A L A R Y S U R V E Y S O U R C E S T OU N D E R S T A N D L A B O R A V A I L A B I L I T Y

AM O U N T S P R O V I D E C O U N T S O F N U M B E RO F C O M PAN I E S A N D E M P L O Y E E SR E P R E S E N T E D I N T H E D ATAB A S E

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S T E P 2 : I D E N T I F Y J O B S A N D N U M B E R O FR E S O U R C E S

© MERCER 2016 20

S T E P 3 : S E L E C T L O C A T I O N S A N D I D E N T I F YC O S T S A N D V A R I A N C E

© MERCER 2016 21

S T E P 3 A : M O D I F Y L O C A T I O N S

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S T E P 3 B : M O D I F Y L O C A T I O N S ( M E T R O L E V E LE X A M P L E )

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1 . P R O J E C T IN G F U TU R E C O S TS

2 . COMPARING YOUR CURRENTLOCATION OR NEW LOCATIONS

3 . P R I C I NG AT U P P E R P E R C E N T IL E TOR E C R U I T S TAF F AWAY F R OM TH E I RC U R R E N T E M P L O YE R

4. BE NE FIT C OS TS

S E L E C T I N G L O C A T I O N S – O T H E R F A C T O R S T OC O N S I D E R

© MERCER 2016 24

LESSONSLEARNED

Successful decisions have all key stakeholdersRepresented—make decision criteria explicit, assessimpact to overall business, match what local labormarkets have to offer to workforce needs.

Focus only on factors that vary by Market—not on al lthe costs and quali ty ones.

Avoid original data collection, locationinformation—unless t iming is not an issue.

Perform due diligence—not just market’s but yourabi l i ty to manage within that environment.

Decisions based on costs alone often end indisappointment—be conservative in cost savings, stickto a short t ime-horizon.

Don’t ignore implications for your internal labormarket—understand balance between “bought” and“bui l t” talent needed for business success.

Know when it’s time to look across whole portfolioof businesses—don’t take each location decision asthey come.

Don’t copy others—f igure it out for yoursel f,uniqueness dominates, exploi t i t to create more lastingadvantage.

T H I S P R O C E S S O F F E R S I N S I G H T S B E Y O N DL O C AT I O N A N D S O U R C I N G S T R AT E G Y A N D H E L P S

I N R E C R U I T I N G , W O R K F O R C E P L A N N I N G ,G O V E R N M E N T R E L AT I O N S , I N C E N T I V E S ,

N E G O T I AT I O N S W I T H P A R T N E R S .

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W H A T ’ S C O M I N G ?

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