Head Offices

Topic Box from the 2006 Sixth Annual Benchmark Report

Head offices are the command centre of a company, the place where strategies are developed, senior managers work, professional services are employed, and where control over business decisions reside. The number of head offices in a region, and rate of growth or decline in that number, has become an important benchmark of both a region's attractiveness to business investment and its relative economic success.

Head offices have a significant positive economic impact on the region in which they reside. A variety of functions are carried out at the head office that may not be present at smaller 'branch' offices, factories, or other facilities of the company. The majority of high-paid and high-skilled professional and managerial positions in a company are generally located at the head office as are many of the company's research and development functions, both of which provide spin-offs for the local economy. In addition to high-skilled employment within the company, head offices are in constant need of outside services including accounting, advertising, engineering, consulting, legal, banking and financial services, generally hiring these services locally and creating 'trickle down' effects for the region in which they are located.

Corporate head offices also have a significant effect on other businesses in a region. Creating and training their own skilled labour pool can have additional economic benefits as professionals, from within the company and without, take on employment for other businesses in the area thereby furthering the creation of a skilled labour force. The presence of head offices encourages a higher level of corporate involvement, support and donations to local charities, educational facilities and community events.

Vancouver lost head offices between 1990 and 2001. Province-wide data show that BC's position on total head offices appears to have deteriorated in 2005 following improvements in 2003 and 2004. In 2002 BC was home to the head offices of 9.6 percent of Canada's 500 largest companies. This grew to 10.0 percent in 2003 and 11.6 percent in 2004 but fell to 10.8 percent in 2005. Employment in Vancouver head offices has also been on the decline, from 16,894 in 1999 to 11,938 in 2005. Calgary has replaced Vancouver as the top city in Western Canada, going from 11,815 in 1999 to 19,428 in 2005.

Many factors influence a company's location decision. Government policy decisions naturally have a significant impact: relative tax rates, infrastructure, support for small and medium sized businesses, and the nature of the regulatory environment rank among them. Agglomeration effects are also a significant factor with companies often choosing to locate where they can find the inputs they require, principally a skilled professional or specialized work force, key production resources, and transportation and technological infrastructure.

The location of head offices is an important indicator of the relative success of a region's economy and the attractiveness of its business environment. Attracting head offices not only means that the region is perceived as a viable place to "do business" but also provides numerous benefits for the broader community.

Sources: Statistics Canada (2003), Hollowing-out, Trimming-down or Scaling-up? An Analysis of Head Offices in Canada, 1999- 2002, cat. # 11F0027MIE; (2006) Head Office Employment in Canada, 1999 to 2005 cat. # 11-624MIE-014; Business Council of British Columbia (2005), Corporate Head Offices in BC; Investment Dealers Association of Canada (2003); Unlocking British Columbia's Economic Potential, speech by Terry Salman, President; Canadian Council of Chief Executives (2005), The Immigration Advantage: How Multiculturalism Helps Canada Compete, speech by David Stewart-Patterson, Executive Vice President.