Job relocation versus govt tax incentives

“We are not getting people to shift here. Not very happy to have this factory despite it is the tax haven for us,” says Dharmesh Bindra, who runs a pharmaceutical factory out of Baddi, Himachal Pradesh. He got 10 years tax exemption and shifted base to a small, quaint Himachal town from Mumbai’s industrial area.

This did not surprise me. It is very common to think that the right financial perks are all that take one to successfully relocate to a new location. Same goes for companies who relocate just because of its tax incentives. It indeed is the backbone for survival or growth from one factory to the second but without solid planning of manpower relocation, the slowdown in production will be a dampener.

In fact, success comes to firms with a solid base of talent in the vicinity and their ability to entice skilled workers to relocate for new growth opportunities. Where a company chooses to locate will largely determine who applies for vacant positions. In practice, most job candidates will be found in the company’s own backyard. The paper published at Harvard Economic Research Base found the number astonishing. About 71.5% of job applications started on Glassdoor were job openings within a candidate’s own metro area.

This simply means that most people seek a job where they are established: with children in schools and health care for elderly parents. A common joke on relocation in Tata Telecommunications Ltd was: Singles should be open to relocate more. That’s fun of life. Married men are not allowed fun.

That simple lesson that most applicants will come from the local labour market — is critical for companies who are considering to relocate or open a new office and expect to hire a significant number of skilled workers who aren’t already in the area. Talent, in today’s tech-driven economy, is the most important asset for most companies. Employers will have an easier time filling open roles if they’re willing to move to where the qualified candidates are. Companies should not assume that a large number of workers would be willing to pack their bags to follow an employer to the city that offers the best tax incentives, said Andrew Chamberlain in a Glassdoor Economic Research paper.

Does this mean relocation is something organisations should not consider? If that was true, how come every tax haven is filled with factories and people? Fact check here says that those places are exempted for 10 years in most cases. And then lots of established organisations start moving out in slow pace. Union Territory Daman and Baddi, in Himachal, sure see their fair share of Exodus.

Financial Perks are the only reason to stay put for factories as well as employees. Organisations come for a long-term play in the market. They cannot wipe themselves out by creating a company culture which is just based on giving 15% extra or in some cases 30% raise to people.

Do you know what having ‘good organisational culture’ mean? Typically, it doesn’t mean free lunches in funky office cafeterias or having a swanky gym overlooking a valley. Charming it may be, but sadly, this does not help in root culture building.

Whopping 89% people state that key statistical drivers for the overall company rating on Glassdoor, a recruiting and exit review website, include having learning and career growth opportunities for employees, establishing clear company values and a mission that connects with a larger social good, along with having high-quality senior leadership. Those are the parameters and factors that can, in turn, help companies attract talent from anywhere.

My last word on relocation? Take the plunge whenever possible. A new environment pushes your comfort zones to the last limit. Years from now, this will be the best qualification on your resume.

The writer is a strategic advisor and premium educator with Harvard Business Publishing