🔒Subway’s dual HQ strategy still rare for CT, other companies

Sandwich chain Subway recently reinvested in its home state of Connecticut, cutting the ribbon on a new headquarters building in Shelton, a few miles north of its original Milford home.

The building becomes one of two headquarters Subway will maintain — the second was established earlier this year in Miami.

The company says Shelton will be home to business functions including human resources, finance and legal, while Miami hosts the brand’s consumer-facing operations, as well as staff from the Latin America regional office.

The franchising giant joins a select list of companies that have decided to split their executive functions between two sites.

The most high-profile name on that list is Amazon, which had economic development professionals scrambling all over the country, including in Connecticut, when it announced a competition for the site of its second headquarters in 2017.

Virginia eventually won the race for what was dubbed HQ2, and phase one of the development opened in Arlington earlier this year.

“It ​is ​not ​that ​common,” said Mohammad Elahee, of establishing dual headquarters, “​but ​I ​think ​it ​will ​become ​more ​common ​in ​the ​future.”

Elahee is a professor of international business at Quinnipiac University. He believes the accelerated changes in remote-working technology during the pandemic have made a dispersed headquarters much more achievable.

“Even ​though ​history ​has ​not ​always ​been ​kind ​to ​companies ​with ​two ​headquarters, ​I ​think ​in ​the ​future, companies ​can ​seamlessly ​operate ​with ​two ​or ​even ​more ​than ​two ​headquarters,” he said.

One company that moved in the opposite direction is consumer packaged-goods maker Unilever, which consolidated its headquarters to the United Kingdom in 2020, after almost 100 years of being split between Rotterdam and London.

Elahee said past difficulties included the expense of maintaining two sites, and the threat that they might find themselves out of step.

“The ​biggest ​challenge ​was ​when ​a ​firm ​would ​have ​two ​headquarters ​in ​two ​different ​places, the ​organizational ​culture ​in ​each ​headquarters ​would ​evolve ​differently, and ​that ​would ​create ​division,” he said. “​If ​something ​goes ​wrong, ​one ​headquarters ​would ​blame ​the ​other ​headquarters.”

But improved connectivity can solve that issue, and Elahee now expects companies that go with a dual structure to realize a few different advantages, particularly in a highly politicized environment where states like Florida take issue with big corporations like Disney.

“Maybe ​many ​firms ​don’t ​want ​to ​keep ​all ​their ​eggs ​in ​one ​basket,” said Elahee. “​If ​something ​goes ​wrong ​in ​one ​place, ​they ​can ​easily ​relocate ​to ​another.”

It could also, he said, facilitate companies playing one state off another to generate more tax breaks.

Talent considerations

Access to particular segments of the global marketplace is another siting factor, along with the geographical availability of skilled executive employees, said Keith Pennington, an assistant professor of management and entrepreneurship at UConn’s School of Business.

“If ​you ​want ​to ​look ​a ​little ​bit ​further ​from ​the ​C-suite, ​but ​still ​in upper ​management, ​​that’s ​a ​really ​distinct ​type ​of ​talent ​pool ​to ​draw ​from,” he said.

It can tend to create particular places where headquarters thrive.

“Look ​at ​Minneapolis, ​for ​an ​example ​of ​a ​cluster ​of ​a ​lot ​of ​​corporate ​headquarters,” said Pennington. “They’re ​all ​in ​different ​fields, ​but their ​upper ​managers ​job ​hop ​from ​one ​place ​to ​the ​next ​within ​Minneapolis. ​There’s ​this ​surplus ​pool ​of good ​upper ​management ​that ​could ​work ​at ​all ​different ​kinds ​of ​companies.”

Some companies end up with dual headquarters as a result of a merger — that’s the case with New England’s biggest utility company, Eversource.

It was created from a merger of Hartford-based Northeast Utilities and NSTAR, headquartered in Boston. When the deal went through in 2010, the new company surprised business commentators by maintaining both sites as equal headquarters.

“Place matters,” said Jim Hunt, Eversource’s corporate ​secretary ​and ​executive ​vice ​president ​for ​corporate ​relations.

At the time of the merger, he said, both companies had a strong affinity with their home states and felt it was important to maintain a significant corporate presence in each. 

The company considers itself an important anchor for the city of Hartford from its headquarters at 56 Prospect St. 

“If ​you ​think ​about ​what ​a ​corporate ​presence ​means ​to ​a ​community, ​having ​foot ​traffic, ​the ​secondary ​impacts ​of ​the ​economy ​from ​helping ​the ​local ​shops,” Hunt said. “​I ​get ​my ​hair cut ​next ​to ​56 ​(Prospect), ​and ​I ​get ​my ​shoe ​shine ​right ​there ​as ​well. ​We ​are ​very ​mindful ​and ​invested ​in ​our ​communities.”

Hunt said Eversource doesn’t formally segregate functions between the two sites. 

“We’re a very hands-on leadership team. We go to where the work is,” he said. “I'll ​be ​in ​Hartford ​or ​Berlin on ​one ​day, ​and ​Boston ​or ​even ​Manchester, ​New ​Hampshire, ​in ​another.

“We ​do ​expect ​our ​executive ​team ​to ​be ​visible ​in ​all ​parts ​of ​the ​company,” he added.

Corporate headquarters can also have gray areas. For example, Travelers Cos. is technically headquartered in New York City, but the insurer has its largest presence in Hartford, where it employs over 7,000 people and hosts some senior executives. 

New ground rules

John Bourdeaux, the CEO of AdvanceCT, a nonprofit working with state government to attract and retain companies in Connecticut, said the thinking about corporate structure and siting is in a historic state of flux. 

“What ​does ​it ​mean ​to ​be ​headquartered ​somewhere?” he asks.

“In ​our ​post-COVID ​world — ​if ​we ​are ​post ​COVID — ​I'm ​not ​sure ​we ​​know ​yet ​what ​the ​new ​ground ​rules ​for ​business ​are,” he said. “​​I ​think ​that ​there's ​a ​lot ​of ​exploration ​that's ​going ​on, ​and ​a ​lot ​of ​discernment among ​company ​leaders.”

He points to recent reporting by the Wall Street Journal that revealed the CEO of Boeing rarely visits the company’s Virginia headquarters, preferring instead to work from his homes in either New Hampshire or South Carolina.

The aerospace giant recently opened an office location in Connecticut to accommodate two executives who live near New Canaan, their CFO Brian West and Treasurer David Whitehouse.

“Ten, ​15 ​years ​ago, ​having ​a ​headquarters ​meant ​there ​was ​a ​row ​of ​offices ​with ​mahogany ​doors ​and ​mahogany ​desks,” said Bourdeaux. “Today, ​it ​may ​mean ​something ​a ​little ​different. ​I ​think ​a ​lot ​of ​times ​we're ​harkening ​back ​to ​a ​notion ​that ​may ​be ​outdated — ​and ​the ​notion ​may ​not ​be ​updated ​yet ​either. ​I ​think that's ​still ​evolving.”

That state of flux makes it more complex for an organization like AdvanceCT to understand what a company needs and how they conceptualize their structure. But to Bourdeaux, it also represents an opportunity.

“I ​think ​that ​we're ​just ​having ​to ​be ​more ​flexible ​in ​our ​thinking, … ​from ​a ​recruitment ​standpoint,” he said.

The recent announcement that South Korea’s Hanwha Aerospace is moving a divisional headquarters to Connecticut is an example of where the state can win, said Bourdeaux.
 
Hanwha already had a significant presence here because of the state’s strength in components manufacturing. The division move will also build on a budding relationship that the company is developing with Central Connecticut State University.

Several other companies in Connecticut this year have also made headquarters-related news.

Telecommunications giant Frontier announced in September it will relocate its headquarters from Norwalk to Dallas. Frontier said it will maintain a presence in Connecticut, but chose Dallas because of the Texas city’s central location and because it’s “business friendly.” 

In January, Danish toy maker LEGO Group said it planned to relocate its North American headquarters and about 740 jobs from Enfield to Boston by 2026 in search of a wider talent pool. 

In that same month, Campbell Soup Co. announced it was relocating the Norwalk headquarters of its Pepperidge Farm subsidiary to New Jersey.

As for Subway, Bourdeaux suspects that alongside its storied history in the state, what led them to reinvest in Connecticut was talent.

“What ​they ​have ​here ​are ​employees ​that ​they ​trust, ​and ​employees ​who ​have ​made ​them ​successful,” he said. “And in ​2023, ​retaining ​employees ​that ​have ​made ​you ​successful ​is ​a ​very ​strong ​strategic ​move.”

“You ​undervalue ​it ​at ​your ​own ​risk,” Bourdeaux said.