Amazon splits HQ2 between NYC, Northern Virginia due to talent potential

UPDATE: Nov. 13, 2018: It's official. Amazon has selected both New York City and Northern Virginia for the split locations of its upcoming HQ2, bringing a total of 50,000 jobs to the region. The Virginia headquarters will be based in Arlington, while the New York center will be in Long Island City. Amazon also announced it would be opening a new Operations Center of Excellence in Nashville, Tennessee, bringing more than 5,000 jobs to the area, the company said.

Employers in both regions should expect short-term talent challenges and may need to act now to get in on the talent pipeline before Amazon officially moves in. Google, for example, recently announced its own expansion in New York, aiming to double its staff in the area over the next 10 years, The Wall Street Journal reported. Both areas are known as growing tech hubs with great potential for much-needed tech talent.

In a tight talent market, employers already need to be making the right moves to attract and retain top employees. For employers in these regions, the ante just went up.

Dive Brief:

As Amazon decides where to place its second headquarters, it will need to consider which city offers the best talent. This may have proved a challenge for the online retail giant, however: Amazon plans to split HQ2 between two cities to better source tech talent, according to multiple reports. The Wall Street Journal reported there would be two headquarters locations, with one in Arlington County, Virginia. The New York Times reported a location in the Long Island City neighborhood of Queens.
PayScale released a report that sizes up cities according to the talent pools they hold and ranked Boston, Washington, D.C., New York, Austin, Texas, and Chicago and Dallas — which tied for fifth place — as the top contenders. PayScale selected the top cities by first identifying the 25 most common jobs and the 25 most common skills at HQ1 to determine what kind of talent HQ2 will need. Then it assessed how prevalent these types of positions are within the HQ2 candidate cities, as compared to the national average, and the percentage of workers within each talent pool likely to look for a new employer.
"In today's tight market, attracting and retaining people is a core strategic initiative for many organizations, but might become even more imperative for companies who find themselves competing with Amazon in the new year," Katie Bardaro, chief economist at PayScale, said. "For organizations located in cities with a high talent acquisition index measure, we recommend these employers determine the overall level of employee satisfaction and ensure employees are being paid at or above market value. We also encourage managers to talk openly with staff about their pay and how pay decisions are made at the company to ensure all workers feel good about their deal and don’t look for greener pastures."

Dive Insight:

Amazon's decision to split HQ2 between two cities is not the first move it has made with respect to talent. In January, it knocked Detroit from its list of potential HQ2 locations because the Motor City lacked a sufficient talent pool. The new headquarters could bring 50,000 jobs, many of which will require the same top tech talent with which its Seattle headquarters is saturated. This will come as good news to workers who call HQ2's locales home. But companies that find themselves with a new, powerful neighbor will need to brace for serious recruiting competition, according to Moritz Kothe, CEO of kununu, but it's not all bad news.

"In the short term," he previously told HR Dive, “it’s going to be great for employees and net negative for other companies trying to hire in that space. Long term, the talent pool will be bigger and more mature so it should be better for companies, too."

Once Amazon announces which pair of cities it has deemed worthy of HQ2, companies will need to think about how to retain current employees and attract new ones. "Amazon’s HQ2 arrival might pressure incumbents to rethink and readjust what makes them good places to work for and what makes them different," Natalia Panowicz, COO at Codility, previously told HR Dive. Leaders will need to consider how they compensate employees, especially if Amazon decides to pay above the local job market. "But fair and competitive compensation is only one of the factors that employees take into account when making job choices," Codility said.

Employers should consider whether they boast strong, positive workplace cultures which attract and keep employees — and they'll have to show that off during the recruitment process. Organizations can develop such cultures, even if their budgets don't allow for sky-high salaries or million-dollar marketing plans. Smaller businesses can offer an entirely different employee experience to workers who may not want to work for a behemoth like Amazon by making available opportunities for work-life balance through measures like flexible scheduling and remote work options.