Corporate Mobility

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As the majority of US workers adapt to a remote-first workplace in response to the pandemic, an increasing number of firms are feeling a newfound freedom to pick up tent stakes and change locations in search of greener pastures. Marc Cenedella put his finger on this issue this week in his latest Ladders newsletter, saying “the pandemic has been teaching billionaires and their staffs just how easy it is to work from a place that is not Manhattan.” In Austin, for example, the year has seen a wave of corporate relocations bring new firms to the city including Dropbox, Splunk, the venture capital firm 8VC, Palantir Technologies, and Oracle. Other firms such as Tesla, and Apple have also elected to expand their operations in Austin, far away from their original locations in Palo Alto and Cupertino, California. While high profile employers benefit from state and local governments fighting with each other to offer tax incentives and other inducements to create jobs, the fact is that remote work solutions now afford companies of all sizes the ability to relocate their physical operations more easily than ever.

Companies no longer need worry about retaining key talent or fear losing critical expertise because of a move. In fact, with 77% of employees wanting to continue working from home after the pandemic subsides, 50% indicating that they will not stay with an employer that won’t allow them to do so, and 50% expressing a desire to move to a different location themselves, a corporate relocation can now be positioned as a benefit to current employees while reducing costs and opening access to new local talent pools for the firm. As 2020 draws to a close, we clearly see that “Corporate Mobility” no longer refers only to one’s ability to climb the corporate ladder. It also describes organizations’ ability to pick up and move their ladder to entirely new locations.

Firms can use a move to right-size their square footage in response to revised business volumes, remote work policies, and expansion plans. They can reduce expenses through lower state and local taxes, cement or form strategic partnerships, and reduce supply chain costs by locating near shipping hubs and business partners. All of these are potentially sound reasons to make a move. However, the way your employees respond, and the results they produce, will most likely hinge on one of three factors: personal impact, compensation, and a meaningful rationale beyond saving a dollar for the organization.

Personal impact:

When a business moves, employees want to know how they will be impacted in both concrete and abstract terms. Be prepared in advance with responses to specific logistical questions such as:

Do you expect employees to move with the firm? If so, will the firm cover the cost of a move? Is the company relocating to a desirable place to live?
How will decisions be made about who can or cannot use telecommuting to continue in their current role without moving?
When will the move take place and what additional duties or job changes will employees need to take on for the firm to make the move on time?

Like an iceberg, there are usually deeper issues and concerns underlying the initial wave of logistical questions that employees will ask. Leaders must proactively address the abstract issues, such as trust, that lie below the waterline. An increasingly common practice in corporate relocations is for firms to allow employees to choose whether they want to make the move with the company. In moving to Austin, for example, Oracle has announced that employees must choose for themselves whether they want to come to Texas or telecommute permanently.

While self-determination is laudable, leaders should expect employees to hold or form assumptions about whether their physical presence or absence is likely to have a long-term impact on their career progression and opportunities for development within the firm. Anticipate and listen for questions that test these underlying hypotheses and be honest and frank in your responses. If employees who make the move will likely have more development and promotional opportunities, say so. If the firm intends to ensure that telecommuters will have equal opportunity for advancement, share the concrete steps the firm will use to make that happen. While these conversations are critical for any organization that moves its location, they are doubly important for firms with traditional workplaces that will have a mix of colocated and remote employees for the first time as a result of the move.

Compensation:

Newly remote employees are already saving thousands of dollars in reduced expenses during the pandemic and reclaiming personal time previously sacrificed to commuting. Firms often choose not to adjust their compensation because of a move, providing de facto raises for those moving to less expensive locations or transitioning to full time telecommuting. When firms do alter compensation, the most common adjustment is to increase pay to account for moving to areas with higher living costs. However, not every employee experiences higher net compensation. Firms such as Facebook have made downward adjustments at times when they or their telecommuting employees move to areas with lower living costs. While it’s no surprise that compensation reductions based on worker location are controversial, employees have a right to know how a company move will affect their compensation for better or worse in the short and long term.

Meaningful rationale:

Perhaps the most important implication of a corporate move is the opportunity for leaders to perform a hard reset on their company culture. If company culture is “how we do things around here” it follows that a move provides leaders with a massive opportunity to reform and remake their company culture as they determine both the people that will make up the “who” in the culture equation and what is meant by “around here” in both physical and virtual terms at the same time. Moving forces leaders to clarify what they are looking for as they retain talent and bring new folks onto the bus. As Simon Sinek points out, the only thing that all leaders have in common is that they have followers. Leaders can manipulate compensation and benefits to ensure that most of their following will make the physical or virtual move with them. However, that would be a grave mistake and a squandered opportunity.

When organizations move, they are in a unique and powerful position to choose the followers they wish to bring with them physically or virtually. Compliance can be achieved by manipulation or force, but seasoned leaders know that loyalty and trust come from inspiration over manipulation. When the company relocates, leaders should position the move to appeal to their highest value talent who believe strongly in the mission, vision, and purpose of the organization. The best way to do that? Be transparent, treat employees fairly, and articulate how the move aligns with the underlying cause or guiding values of the firm.

When people believe in a mission, they are more willing to sacrifice to advance it. The mission gives meaning to routine offerings of time, talent, and energy as well as the sacrifice demanded of telecommuters who dedicate a portion of their home to their work or parents who decide to uproot their families to follow a job to a new location. To bring an organization to a new physical or virtual location, leaders must show that they are worth following. If they wish their people to make the metaphorical journey with them, they must clearly articulate and connect the change to the beliefs that underlie what they do. Cost savings are not enough. Leaders must show how the move will help the organization achieve the mission.

As we conclude the last regularly scheduled article this year, I leave you with this: if your organization makes a move, be sure it is about more than money. Profit matters, but it has no value in isolation. Profit has value because it is the fuel that allows the organization to embrace its mission, become a better version of itself, and stay true to its original purpose. Moving creates a unique opportunity to articulate your values and build loyalty to your business. It is an opportunity to surround yourself and your team with others that believe in the mission so much that they are willing to follow your leadership virtually or physically to a new location. If your firm is contemplating a move, don’t waste the opportunity.

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References:

Leadership Legitimacy

Engagement and Work-life Balance: What We Know and Why it Matters