What does a city exodus mean for your business?

With knowledge workers now finding they can operate entirely from home, many are leaving their urban lives behind, but this raises challenges over pay and company culture for many businesses

The United Nations predicted in 2018 that as much as 68 per cent of the world’s population would live in cities by 2050. Better prospects and higher wages turned economic centres such as San Francisco, London and Berlin into magnets for knowledge workers. With the majority of these professionals now largely working remotely, and that expected to continue in large part post-pandemic, will cities have the same pull

Home buyer inquiries among those living in the UK’s ten largest cities increased by 78 per cent in June and July 2020, according to data from property site RightMove. The breakdown of where they were looking to move to shows a 126 per cent increase in village locations, compared with a 68 per cent increase in towns.

Work marketplace Upwork recently claimed that 23 million American workers are considering relocating, with over half of this number planning on living more than two hours away from their current property. 

BlueConic, a customer data platform with offices in Boston and Amsterdam, has already seen almost a third of their 45 US employees move out of state, with their head of corporate marketing relocating to Florida to be closer to her parents. 

“From the beginning, we told our employees they would not be required to return to an office, even post-COVID, so if they wanted to make longer-term life choices, such as moving to be closer to family, they could do so,” says chief operating officer Cory Munchbach.

While BlueConic employees are free to work from anywhere, they must consider how relocating will affect their ability to conduct their duties. Munchbach cites account executives operating in specific locations, not moving across several time zones, as an example. 

How will relocating employees affect salaries?

Moving away from economic centres may seem appealing, but will workers be as keen to up sticks if it negatively impacts their pay? 

Spotify recently said all employees in the United States will be paid San Francisco or New York-level salaries, regardless of location. This won’t be possible for all organisations, with other tech companies such as Twitter and Facebook saying employees face a pay cut if they want to relocate. 

Dr Guido Cozzi, a professor of macroeconomics at Switzerland’s University of St. Gallen, believes that after an initial period of fluctuating salaries, talent moving away from cities will lead to an improvement in quality of life.

“Nominal wages will fall, however real wages will rise,” says Cozzi. “Congestion in big cities forces workers to pay higher rental prices, reducing their real wages.”

Munchbach suggests that knowledge-based workforces will eventually see pay packets flatten due to the dispersal of talent from historic economic centres. 

“It’s how compensation should have been from the very beginning, with wages based less on region and more on competencies,” she explains. “This approach will also help under-represented groups in various industries in getting fair compensation and greater accessibility to roles.”

Recruiting from wider talent pools

Cozzi believes that with “the development and refinement of the technologies and processes of distance working”, the global economy, and in turn companies and employees, will hugely benefit in the next five to ten years. 

Increased digitalisation will allow organisations to focus on competencies, recruiting the right people for the job regardless of location, leading to a rise in productivity. 

“We believe that geographical boundaries will become less important to employers,” agrees Laura Ryan, international director of human resources at Dropbox. 

Dropbox has also allowed staff to relocate and work completely remotely since the outbreak of the pandemic, a move that Ryan believes will enable them to access a wider pool of talent. 

“We’re prioritising skills, rather than location. It’s easier than ever to work flexibly across the world, and to collaborate with colleagues and partners in many more ways,” she says. 

Building culture and setting goals across locations

While there are benefits, there are also challenges to this shift away from cities, with some businesses struggling to connect with their remote workforce. In November, Leesman’s ongoing work-from-home study found more than a third of respondents felt disconnected from their organisation. Could this feeling be exacerbated by working further from the company’s original base? 

“More distance shouldn’t mean less community at work,” says Nazir Ul-Ghani, head of Workplace from Facebook in Europe, Middle East and Africa. 

Ul-Ghani accepts moving out of offices has curtailed the social aspects of work, but is steadfast in his belief that building culture and camaraderie across locales is possible. 

“When companies turn to communication and collaboration technologies, they can unite their people and create a safe space where employees cannot only access information, but connect with colleagues on a personal level,” he says. 

“This can actually level the playing field, creating an equity of experience across the organisation by ensuring workers who aren’t based at headquarters feel equally informed, empowered and connected.” 

Initiatives, such as Dropbox’s Coffeebox scheme, are designed to digitally recreate the connections between peers. 

“Staff meet informally with the leadership team,” says Ryan. “It recreates the chance encounters an office environment used to offer. Remote working means more employees can take part in initiatives like this, bringing a truly unified, global company culture.” 

The method of delivering communication across a disparate workforce may be easier to access, but the quality of the message has to be stronger than ever. It also requires the employee to ground themselves in the business and its goals, despite the lack of contact.

“Having a remote workforce puts the emphasis on exceptional communication,” says Munchbach. “The onus is on leadership to make sure we’re communicating with the right formats, but it also requires employees to make time to digest that information.

“Aside from having technology in place to deliver this communication, leadership also needs to instil those core expectations with their employees.”