Is Talent the X Factor in Amazon’s HQ2 Decision?

By Steve Bates February 15, 2018
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​Amazon is about to make the battle for talent a full-fledged war in the community it selects for its second headquarters.

The Seattle-based online retailer has narrowed its search to 20 communities. But none of these cities and suburbs can give Amazon the 50,000 or so employees it will need without a substantial amount of disruption in their employment markets.

Economic development officials in some of the localities are offering major financial incentives, such as tax breaks and commitments to improve transportation. However, human capital experts say the importance of the local talent pool to a company such as Amazon cannot be overestimated.

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Nick A. Egelanian, president of Annapolis, Md.-based real estate consulting firm SiteWorks, has helped two communities with bids for the Amazon headquarters. He said that in his discussions with Amazon representatives, "We were told that access to talent was really their No. 1 criterion. They want access to creativity."

Amazon would not comment for this article. In its request for proposal (RFP), it identified the likely job categories for the second headquarters as executive/management, engineering with a preference for software development engineers (SDEs), legal, accounting and administrative. It has asked the 20 communities to provide labor and wage rate information for these job categories as well as "specific opportunities to hire software development engineers and recurring sourcing opportunities for this type of employment."

Amazon then asked the communities to detail "all levels of talent available," including executive talent, "and the ability to recruit talent to the area."

For a decision this momentous, a large company like Amazon might also want to do its own analysis of the 20 talent pools, experts say. There are some obvious places to start, much of it publicly available data. The U.S. Bureau of Labor Statistics has a rich trove of statistics about the numbers and types of jobs that are held in each community. Unemployment rates by job category and population churn data might be relevant.

In choosing a site, "the size of the talent market will matter a lot," said Jay Doherty, a Mercer partner and co-founder of the Workforce Sciences Institute who lives in the Richmond, Va., area.

But numbers don't tell the whole story. "The hardest thing is to look at the data and to create insight from it," said Joe Ungemah, a Minneapolis-based talent management practice leader for Willis Towers Watson. For example, he said, determining cultural fit between workers and employers requires sophisticated analysis.

And just because a given community has a certain number of software development engineers, "doesn't mean that the talent is available," said Britt Ryan, head of talent for San Francisco-based recruiting software firm Entelo.

"To make a career change is exciting but very stressful" for many workers, so Amazon will have to woo them, Ungemah said.

"It's inevitable that there will be an impact" on existing employers in the region selected, observed Andrew Hunter, co-founder of London-based Adzuna, a global job search engine. Not only will existing employers lose talent to Amazon, he said, but there will be upward pressure on salaries in general in the community Amazon selects.

Employers will need to focus on their employee experience to minimize departures, Ungemah said. "But they shouldn't wait. They should be doing that now anyway."

Experts See an Upside

Some experts say there will be positive outcomes from the talent pool disruption. Amazon will help make the region selected for its second headquarters known as a desirable destination for tech employees and other talent as well. People will want to live and work in the community even if they are not employed by Amazon.

And not everyone hired for the new headquarters will have to live near it, helping to minimize dependence on one region's talent pool. "The world of work is becoming increasingly distributed and virtual," said Kurt Heikkinen, president and CEO of Montage, a recruiting software firm based in Delafield, Wis. "Organizations are allowing an increasing amount of employees to work virtually. Geography will not be a restraint."

Doherty noted that more U.S. employers are using contractors, which should affect some of Amazon's staffing decisions. He said that the company will probably not even ask itself the question "Where should we go for cybersecurity?" because of the expertise and cost-effectiveness of outside firms.

Other talent—particularly Millennial workers—will be willing to move across the country or the globe for the right position at Amazon.

Given that the company expects to be staffing its new headquarters "over the next 10 to 15 years," according to its RFP, Amazon will need to work with local educators to build a pipeline of skilled workers. Amazon is asking each of the 20 communities to provide information on educational "programs/partnerships currently available and potential creative programs with higher education institutions."

And the nature of the jobs Amazon expects to fill could change significantly over 15 years. Automation is altering the workplace, and Egelanian noted that Amazon's "interest in robotics is incredible."

"They can't predict all the changes in their business" over that time, said Heikkinen. "They're quite simply looking for athletes"—people with nimble minds and positive attitudes who fit well with the company's culture.

Experts all have their own predictions on which community has the best chance to win the Amazon headquarters jackpot, which could be decided in 2018. However, their shortlists are all different. Clearly, leaders in 19 communities are going to be disappointed.

Entelo's Ryan put it this way: "The cream will rise to the top."

Steve Bates is a freelance writer in the Washington, D.C., area.

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