What does a city exodus mean for your business?

The Unit­ed Nations pre­dict­ed in 2018 that as much as 68 per cent of the world’s pop­u­la­tion would live in cities by 2050. Bet­ter prospects and high­er wages turned eco­nom­ic cen­tres such as San Fran­cis­co, Lon­don and Berlin into mag­nets for knowl­edge work­ers. With the major­i­ty of these pro­fes­sion­als now large­ly work­ing remote­ly, and that expect­ed to con­tin­ue in large part post-pan­dem­ic, will cities have the same pull? 

Home buy­er inquiries among those liv­ing in the UK’s ten largest cities increased by 78 per cent in June and July 2020, accord­ing to data from prop­er­ty site Right­Move. The break­down of where they were look­ing to move to shows a 126 per cent increase in vil­lage loca­tions, com­pared with a 68 per cent increase in towns.

Work mar­ket­place Upwork recent­ly claimed that 23 mil­lion Amer­i­can work­ers are con­sid­er­ing relo­cat­ing, with over half of this num­ber plan­ning on liv­ing more than two hours away from their cur­rent prop­er­ty. 

Blue­Con­ic, a cus­tomer data plat­form with offices in Boston and Ams­ter­dam, has already seen almost a third of their 45 US employ­ees move out of state, with their head of cor­po­rate mar­ket­ing relo­cat­ing to Flori­da to be clos­er to her par­ents. 

“From the begin­ning, we told our employ­ees they would not be required to return to an office, even post-COVID, so if they want­ed to make longer-term life choic­es, such as mov­ing to be clos­er to fam­i­ly, they could do so,” says chief oper­at­ing offi­cer Cory Munch­bach.

While Blue­Con­ic employ­ees are free to work from any­where, they must con­sid­er how relo­cat­ing will affect their abil­i­ty to con­duct their duties. Munch­bach cites account exec­u­tives oper­at­ing in spe­cif­ic loca­tions, not mov­ing across sev­er­al time zones, as an exam­ple. 

How will relocating employees affect salaries?

Mov­ing away from eco­nom­ic cen­tres may seem appeal­ing, but will work­ers be as keen to up sticks if it neg­a­tive­ly impacts their pay? 

Spo­ti­fy recent­ly said all employ­ees in the Unit­ed States will be paid San Fran­cis­co or New York-lev­el salaries, regard­less of loca­tion. This won’t be pos­si­ble for all organ­i­sa­tions, with oth­er tech com­pa­nies such as Twit­ter and Face­book say­ing employ­ees face a pay cut if they want to relo­cate. 

Dr Gui­do Cozzi, a pro­fes­sor of macro­eco­nom­ics at Switzerland’s Uni­ver­si­ty of St. Gallen, believes that after an ini­tial peri­od of fluc­tu­at­ing salaries, tal­ent mov­ing away from cities will lead to an improve­ment in qual­i­ty of life.

“Nom­i­nal wages will fall, how­ev­er real wages will rise,” says Cozzi. “Con­ges­tion in big cities forces work­ers to pay high­er rental prices, reduc­ing their real wages.”

Munch­bach sug­gests that knowl­edge-based work­forces will even­tu­al­ly see pay pack­ets flat­ten due to the dis­per­sal of tal­ent from his­toric eco­nom­ic cen­tres. 

“It’s how com­pen­sa­tion should have been from the very begin­ning, with wages based less on region and more on com­pe­ten­cies,” she explains. “This approach will also help under-rep­re­sent­ed groups in var­i­ous indus­tries in get­ting fair com­pen­sa­tion and greater acces­si­bil­i­ty to roles.”

Recruiting from wider talent pools

Cozzi believes that with “the devel­op­ment and refine­ment of the tech­nolo­gies and process­es of dis­tance work­ing”, the glob­al econ­o­my, and in turn com­pa­nies and employ­ees, will huge­ly ben­e­fit in the next five to ten years. 

Increased dig­i­tal­i­sa­tion will allow organ­i­sa­tions to focus on com­pe­ten­cies, recruit­ing the right peo­ple for the job regard­less of loca­tion, lead­ing to a rise in pro­duc­tiv­i­ty. 

“We believe that geo­graph­i­cal bound­aries will become less impor­tant to employ­ers,” agrees Lau­ra Ryan, inter­na­tion­al direc­tor of human resources at Drop­box. 

Drop­box has also allowed staff to relo­cate and work com­plete­ly remote­ly since the out­break of the pan­dem­ic, a move that Ryan believes will enable them to access a wider pool of tal­ent. 

“We’re pri­ori­tis­ing skills, rather than loca­tion. It’s eas­i­er than ever to work flex­i­bly across the world, and to col­lab­o­rate with col­leagues and part­ners in many more ways,” she says. 

Building culture and setting goals across locations

While there are ben­e­fits, there are also chal­lenges to this shift away from cities, with some busi­ness­es strug­gling to con­nect with their remote work­force. In Novem­ber, Leesman’s ongo­ing work-from-home study found more than a third of respon­dents felt dis­con­nect­ed from their organ­i­sa­tion. Could this feel­ing be exac­er­bat­ed by work­ing fur­ther from the company’s orig­i­nal base? 

“More dis­tance shouldn’t mean less com­mu­ni­ty at work,” says Nazir Ul-Ghani, head of Work­place from Face­book in Europe, Mid­dle East and Africa. 

Ul-Ghani accepts mov­ing out of offices has cur­tailed the social aspects of work, but is stead­fast in his belief that build­ing cul­ture and cama­raderie across locales is pos­si­ble. 

“When com­pa­nies turn to com­mu­ni­ca­tion and col­lab­o­ra­tion tech­nolo­gies, they can unite their peo­ple and cre­ate a safe space where employ­ees can­not only access infor­ma­tion, but con­nect with col­leagues on a per­son­al lev­el,” he says. 

“This can actu­al­ly lev­el the play­ing field, cre­at­ing an equi­ty of expe­ri­ence across the organ­i­sa­tion by ensur­ing work­ers who aren’t based at head­quar­ters feel equal­ly informed, empow­ered and con­nect­ed.” 

Ini­tia­tives, such as Dropbox’s Cof­fee­box scheme, are designed to dig­i­tal­ly recre­ate the con­nec­tions between peers. 

“Staff meet infor­mal­ly with the lead­er­ship team,” says Ryan. “It recre­ates the chance encoun­ters an office envi­ron­ment used to offer. Remote work­ing means more employ­ees can take part in ini­tia­tives like this, bring­ing a tru­ly uni­fied, glob­al com­pa­ny cul­ture.” 

The method of deliv­er­ing com­mu­ni­ca­tion across a dis­parate work­force may be eas­i­er to access, but the qual­i­ty of the mes­sage has to be stronger than ever. It also requires the employ­ee to ground them­selves in the busi­ness and its goals, despite the lack of con­tact.

“Hav­ing a remote work­force puts the empha­sis on excep­tion­al com­mu­ni­ca­tion,” says Munch­bach. “The onus is on lead­er­ship to make sure we’re com­mu­ni­cat­ing with the right for­mats, but it also requires employ­ees to make time to digest that infor­ma­tion.

“Aside from hav­ing tech­nol­o­gy in place to deliv­er this com­mu­ni­ca­tion, lead­er­ship also needs to instil those core expec­ta­tions with their employ­ees.”