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Challenges in Company Relocation from Urban to Rural

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Discusses the problems a company would experience when relocating its executives from a heavily populated industrialized area to a small, rural town.

A heavily populated industrialized area’s environment is characterized as an area with socially and economically related adjacent communities. On the other hand, the environment of a small, rural town is characterized by large, isolated regions with low population density (e.g. small towns and farms). Moreover, the living costs of a heavily populated industrialized area are higher than that of a small, rural town. (Heizer & Render 2008)

One major problem will be reluctance to re-locate due to the drastic change in lifestyle from urban, fasting moving environment to a slower and more relaxed lifestyle; morale will be affected. Hence, there would concern for the employees working in the current urban site re-locating to a small, rural town heavily. The company may face resistance from employees as amenities of a small, rural town are lesser than that of a heavily populated industrialized area (i.e. employees may not want to live with the inconveniences and lack of amenities).

In response to this issue, the company may have to offer incentives to encourage employees to make the move over to the new location. For example offering reasonable relocating packages to the employee in the form of housing, or even transport, as well as providing the employee with healthcare benefits and insurance. This would incur additional cost for the company

However, there is also the risk of losing talented employees who are not willing to relocate, or employees resigning when they are unable to cope with the experience cultural difference (having come from a heavily populated industrialized area). This would have an effect on the company’s operations (i.e. new employees would have to be hired and there would be a steep learning curve, resulting in slower operations). This would be an inconvenience for the company, as well as incur additional cost for employee recruitment and training. One problem group will be the married executives with school going children. They will be reluctant to re-locate due to the lack of good schools and recreational facilities.

The entertainment, social and cultural activities will be lacking in small towns, affecting morale. In addition, residential housing, shopping facilities, medical facilities, and adequate fire and safety protection play an important role in the decision of executives to relocate.

Once employees have been relocated to the new location, the company would need to have programs to integrate employees into the culture of a small, rural town, giving them time to adjust. The company will also need to consider the political aspect: given the attractive terms (such as public financed training of workers in a local industrial trade school), the company might be expected to hire more locals. This will again incur more costs as the company need to hire people to run or manage such programs, also lost working time to provide for employees to attend such sessions.

Moreover, relocating a company involves more than just transportation of machinery and goods, and redeploying its employees. It also involves the transfer of (sensitive) human resource activities and personal employee information from one location to another. The transfer of such information has to be secured, least company secrets (confidential data) are leaked, putting the company at a risk. There is also the possibility of incurring additional costs when machinery and goods are damaged during the transportation.

In addition, the company will lose some of their executives who do not want to move, as relocation also breaks social networks which some employees are not willing to accept. This would be an inconvenience for the company, as well as incur additional cost for employee recruitment and training.This applies to all re-location moves not just the move from big city to small town which is the focus of this question.

References:

  • Heizer, J & Render, B 2008, Operations management, 9th edn, Pearson Prentice Hall, New Jersey

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Abigail Zhu

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