Amazon's Talent/Location Equation

The retailer's plan to divide its new headquarters between two cities is the latest example of firms using location as way to attract top talent.

If two is better than one, than it stands to reason that three is better than two. At least that’s what Amazon appears to be thinking when it comes to building corporate headquarters.

After nearly a year of considering proposals from 20 cities vying to be the retail giant’s second home, Amazon is splitting the location between two cities instead of one. The decision is part of the increasing trend of organizations moving headquarters or setting up outposts that give them better access to talent, specifically talent with digital skills. Indeed, according to the Wall Street Journal, one of Amazon’s primary reasons for choosing two cities is to allow it to recruit more of the best technology talent.

So, instead of building a new location in one city for 50,000 new hires, the new plan is to build two locations, New York City and Arlington, Va. (outside Washington, D.C.), to house 25,000 new hires each. An official announcement could come as early as this week, according to the WSJ. Whichever final cities it chooses, Amazon’s arrival to two cities likely will make it one of largest local private employers in each area, says Craig Rowley, a senior client partner with Korn Ferry specializing in retail.

Whether in traditional locations like Silicon Valley or New York City, in regional hubs such as Austin or Denver, or in the burgeoning digital hotbeds popping up in cities such as Detroit and Milwaukee, organizations like Amazon are looking at location through a whole new lens. “There’s been a real sea change in how companies are thinking about getting to talent,” says Melissa Swift, senior client partner for digital solutions at Korn Ferry. “Leaders are realizing that to attract the digital talent they need they need to physically be in tech-heavy centers.”

The new talent-location equation represents a reversal from the historic thinking that technological advances can free workers to do their jobs from anywhere. It also supports data that shows fewer workers are relocating for their jobs than ever before. The number of people who relocated for work has declined by nearly 50% in the last decade. Organizations are, in essence, expanding into tech centers, particularly those with an abundance of early career talent, as a way to keep the talent pipeline flowing amid these dynamics.

As a result, the approach organizations are taking to location is evolving from being HQ-led to more of a portfolio approach with multiple locations serving as regional headquarters, says Scott Macfarlane, vice president of client development at Korn Ferry. “The economic reality is that demand for digital talent is far outstripping supply and when you are competing from a limited talent pool, you have to proactively engage with them,” Macfarlane says. A Korn Ferry study earlier this year, for instance, found that by 2030, thanks to a global shortage of as many as 85 million workers, organizations worldwide could be paying an additional $2.5 trillion to secure talent.

Macfarlane cautions, however, that organizations pursuing a portfolio location strategy run the risk of creating an Us vs. Them internal culture. “If there is no connection to the rest of the organization, then it’s not going to help with recruitment and retention,” Macfarlane says.