A survey published by Roland Berger has found that corporate headquarters in Europe are growing in size, but it's important that they add value to the entire group.
A survey published by Roland Berger has found that corporate headquarters in Europe are growing in size, but it’s important that they add value to the entire group.
Research on 86 globally active companies showed that corporate headquarters in Europe, depending on their industry and management organization, represent a cost factor of between 2% and 7% of their group’s sales.
Companies are redefining the role of their headquarters, which includes turning corporate centers into key drivers of operations.
Roughly 80% of the companies surveyed plan to keep their headquarters in Western Europe. HQ is to become a business partner for global operations for more than half of these companies. Western Europe remains an attractive location for HQs, even if the Asian markets are becoming more important for business.
The findings of the Corporate Headquarters study show that besides traditional tasks such as finance, accounting and controlling, HQ must focus more heavily on 5 key capabilities: providing strategic direction, managing complexity, driving innovation, working in global networks and ensuring the execution of actions worldwide. If headquarters can successfully provide these services, they can avert conglomerate discount and contribute real value.
Instead of relocating HQ abroad, Western European companies prefer to make their headquarters more international.
Almost 60% of the companies surveyed believe that their headquarters must become more international - through cross-border projects for example. Furthermore, key people are being transferred to HQ from other countries. Virtual management and communications tools, as well as flexible project and committee structures, are also becoming more common at headquarters. These enable companies with locations around the world to work together more efficiently in a close network. 53% of the groups expect more activity in this area.
Companies are outsourcing certain services to keep the high costs of Western headquarters in check. 30% of those surveyed intend to outsource IT, bookkeeping and HR functions in particular to external providers. This means the companies remain on the same outsourcing level as in 2010. About half of the companies use shared service centers for their global networks to cut costs. So far, 80% of these centers are located in Europe.