Senior Client Partner, Sector Leader, Professional Services
A New Way to Bring Home Talent
They’ve raised starting salaries. They’ve handed out bigger signing bonuses. They’ve let people work remotely. Now comes the latest benefit they’re offering to attract top talent: an affordable place to live.
Desperate for talent amid record-high job openings and low unemployment, organizations like resorts, food-processing companies, and universities are wooing candidates by handing out rent and mortgage subsidies. Some are literally building new houses for their employees. Firms are investing time—and in some cases—millions of dollars in residential real estate.
These organizations have found that the high cost of real estate in certain areas has deterred new recruits from taking on jobs. “It’s a way to break down one of the big barriers to employment,” says Juan Pablo Gonzalez, a Korn Ferry senior client partner and sector leader of the firm’s Professional Services practice.
Companies aren’t putting up foundations themselves, of course. They’re farming that work out to construction contractors. But they are using land they already own (or buying land near their workplaces) to construct new homes and apartment buildings.
Providing real estate for employees isn’t a new phenomenon: “company towns” first appeared in the US during the Industrial Revolution. Most provided squalid living conditions, however. Even towns built with the best of intentions, such as Pullman, Illinois, didn’t end well. At its peak, Pullman had 14,000 residents, all living within walking distance of the train-car factory in which they worked. But the residents resented the fact that they couldn’t buy the homes they lived in. They also felt they were under constant watch by their employer. More recently, Silicon Valley firms have invested in housing projects in Northern California to help employees find affordable housing.
To attract people to high-cost environments, companies in the past have usually just raised salaries or offered relocation allowances. “Other than for executives or university faculty in high-cost markets, or for temporary residences, I’ve rarely seen housing benefits addressed by employers,” says Ron Seifert, a Korn Ferry senior client partner and leader in the firm’s North America Workforce Rewards and Benefits practice.
Some organizations are finding that conventional incentives aren’t enough. In certain parts of the country, expenses associated with the hot housing market quickly eat away higher salaries or allowances. Plus, many of those perks often go to more senior employees, not lower-paid workers at a resort or food-processing plant. Indeed, someone who wants to work at a hotel in Vail, Colo., might not be able to live anywhere near the pricey resort town.
Acting as both employee and landlord could be a double-edged sword, says Radhika Papandreou, a senior client partner and head of Korn Ferry’s North American Travel, Entertainment, and Leisure practice. On one hand, it could give companies an edge in getting employees. But it could also create a standard that will be hard to walk away from. “If it’s taken away, it will hurt morale,” she says.
And what happens if the employee living in the house eventually quits? Do they get to keep living there? Alternately, what if the job market softens, and the organization finds itself not needing more employees? It will be stuck with the property. “I get the idea, but it’s taking companies out of their core mission,” says Bradford Frank, a Korn Ferry senior client partner in the firm’s Global Technology practice.