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How Would Your Talent Problems Fare if Amazon Chooses Your Area for HQ2?

*Editor’s Note: At the time of this interview, Amazon had yet to announce its new HQ2 location. However, on November 13, Amazon announced that New York City and Arlington, Virginia, will be the locations of its second headquarters. Rumors are flying about Amazon’s likely next location (or locations) for its second headquarters (HQ2). James Davis, the editor of HR Daily Advisor, and contributor to Recruiting Daily Advisor was lucky enough to sit down with PayScale’s Lead Economist and VP of Data Analytics, Katie Bardaro to discuss PayScale’s latest research into HQ2 and related talent considerations.

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Source: Hakinmhan / iStock / Getty

You can view the PayScale report here.

Recruiting Daily Advisor (RDA): Amazon’s Jeff Bezos is rumored to announce the location for their second headquarters soon. And while there is no company like Amazon, many can take a lesson from their major consideration: the availability of talent. What did your research show about the importance of this consideration?

Bardaro: In today’s tight talent market, access to needed jobs and skills is a critical consideration to building up a new location for any company. In the case of Amazon, the jobs and skills of interest to them are in high demand, but low supply. They are niche, hot skills that face strong competition. In order to successfully kick off a new location, access to a ready-made talent pool is pivotal to its success.

RDA: What other considerations were highlighted in your report for organizations that are looking to expand into a new location?

Bardaro: Three other considerations we included in our report are the percent of dissatisfied workers, the gender breakdown of the jobs of interest, and median pay rates. When organizations are looking to expand into a new location, access to talent will depend on not only the supply but how dissatisfied that talent is with their current employer. Those who are dissatisfied are more likely to be poach-able. In terms of gender, many organizations are focusing on gender equity when it comes to compensation and opportunities so having an understanding of access to women in needed roles helps them to address these issues head-on. Lastly, compensation is an important factor for any organization to consider when it looks into expanding as labor costs are often some organizations’ highest costs.

RDA: How will organizations with the same location as amazons HQ2 be impacted? How worried should they be?

Bardaro: Organizations located in the same place as HQ2 will now be competing with a tech juggernaut who offers numerous benefits and competitive wages. These organizations will want to ensure they are using fresh market data to attract and retain employees in key positions. We are in a seller’s market when it comes to labor in that the unemployment rate is incredibly low and competition for needed talent is quite high. Compensation can be a pivotal part of the equation when it comes to talent strategy. Further, organizations will want to do a pulse check on the rate of dissatisfaction among their current workforcethose who are dissatisfied pose the greatest attrition risk so detecting and addressing this quickly is necessary.

RDA: I was told that you were able to calculate what percentage of workers in a specific talent pool across 20 metro locations were dissatisfied with their current employer. How did you make that determination? What lessons can organizations take from your analysis?

Bardaro: The percent of workers in the talent pool in the given locations were calculated as the percentage of respondents who answered “Strongly Disagree” or “Disagree” to the statement, “I am extremely satisfied working for my employer.” See above about the risks of having a dissatisfied workforce when competing with Amazon.

RDA: Your research revealed that gender equity is likely an important factor in Amazon’s HQ2 location choice. Can you us a little bit more about that?

Bardaro: Amazon has come out and said they want to address gender equity as an organization. Research shows that “getting it right” from the beginning can be easier than fixing systemic issues. Therefore HQ2 presents a unique opportunity for Amazon to focus on gender equity with a fresh talent pool. Currently, within Amazon, men make up 73% of the company’s professional staff and 78% of senior executives and managers. By including a gender breakdown in the data, it signals with locations on the short list offer the greatest potential for creating equal representation of men women across jobs and management levels.

RDA: How can organizations that are looking to expand determine gender equity in an area?

Bardaro: For organizations looking to relocate who wish to make gender equity a focus, doing their due diligence and researching the gender breakdown of the available talent pool is a good first step. Depending on the level of detail needed, organizations can access this data through the Census (via the American Community Survey) or via companies like PayScale who collect millions of new data points each year to understand impacts to compensation and available talent pools.

RDA: What advice would you have for an organization that finds itself located in Amazon’s HQ2 choice?

Bardaro: Be afraidbe very afraid. Just kidding, sort of. Really the important thing to remember is Amazon offers flashy new, well-paid opportunities in a tight talent market and thus your organization will likely have to pull out all the stops to remain competitive. This means setting competitive wages that align with your compensation philosophy, understanding the engagement of your current workforce, teaching managers how to communicate effectively around compensation topics, and using real-time market data to keep a pulse on these fast moving jobs.

Katie Bardaro is the Lead Economist and VP of Data Analytics at PayScale.

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