It has a direct link into the firm’s global headquarters. It performs a balancing act between seeking global efficiencies and achieving effective local market delivery.
EHQs can range from a crumbling shed on a desolate industrial estate to a sweeping corporate castle on a grand boulevard. They are a high-quality target for investment promotion agencies, representing prestige and high-quality jobs. They are where the top corporate decision-makers can be found. There are several locations in Europe that specialise in trying to attract EHQs, flaunting their low-tax regimes, their super-skilled multi-lingual talent and accessibility to absolutely everything an EHQ desires.
But the question is, are EHQs an endangered species? What with the continuous flattening of hierarchies, forthcoming tax hikes, currency fluctuations and the prospect of savage cost-cutting everywhere, surely they are looking vulnerable?
The last downturn in 2001 helped create shared service centres, taking out the non-core activities of headquarters and offshoring and outsourcing them to achieve efficiencies. Will our current troubled economic times help spur on new efficiency/new location models for other parts of the EHQ, such as the statutory compliance function or the strategic value-adding function? No doubt the management consultants are currently conjuring up some new tricks for the corporates.
With all the advances in information and communication technologies we now have working independence – everything can now be done by one person and their laptop. But perhaps the face-to-face imperative will still hold sway and the top people will continue to club together in the interests of strong corporate leadership. Let’s watch that space.
Douglas Clark is director of Techlocate, a site search and inward investment consultancy, which is part of RSM Tenon, a top 10 firm of accountants and business advisers.