When it comes to evaluating cities, regions and states for business, rankings issued by news and industry organizations get a lot of attention and credibility. Communities looking to attract business and investment tout those rankings — and for good reason. We live in a world where top 10, top 5 and top 3 lists are emphasized and valued.
Many times, these rankings can be a double-edged sword. When they are good, cities, regions and states use them as a branding tool to differentiate themselves from their competitors. When they are bad, local leaders prefer to ignore them and question their methodology.
But when it comes to making multimillion dollar financial investments, how much weight should relocating and expanding companies put on rankings? Not that much, says site selection consultant Dean Barber in a post this week on his BarberBiz blog. Instead he offers this advice to companies: Do your due diligence internally and go where you need to be.
Senior management should not decide to invest millions into a place because of what a cable television network may say. You do it because it makes the most sense in terms of your long-term strategic plans of serving your customers well.
Not a One-Size-Fits-All Approach
Just yesterday, Business Facilities magazine released its 2012 State Rankings Report, crowning Texas for the second consecutive year as the top-ranked state for the Best Business Climate. Utah took second place and Virginia third. Southeastern and Midwestern states swept the rest of the top 10, including: Florida, Louisiana, Indiana, South Carolina, Tennessee, Georgia and Nebraska, respectively.
While it’s true that many of these states have common key advantages — low business costs, business-friendly policies, diverse industry, colleges and universities, workforce availability and training, good infrastructure, etc. — these alone aren’t enough to base a decision upon, says Barber, who happens to live in the highly ranked Texas.
Do I believe that Texas is a better place for business? Well, yes and no. There is certainly a positive vibrancy to the business climate here, and I’m happy with my choice of moving my business here. And I may even have developed a bit of swagger. But Texas will not work for everyone.
Sometimes “a company actually needs to be in a place where the operating costs might be higher,” he says, due to factors like the nature of the work, the location of its customer base and the specialized skills and talent of the workforce there.
The better choice, depending on the needs of the company, might be South Dakota, or Arkansas, or Pennsylvania or even, gulp, California. The better choice means a deeper dive into the data and motivations of a company willing to take a hard look at itself and its customer base.
Barber’s message to companies: Take notice of the rankings, maybe even use them as a starting point, but don’t get overly excited about them. Instead think about your needs and delve deeply to find the best match for you.
What do you think? Are rankings overrated? Please discuss and share your thoughts below.