Five Recruiting Scenarios 5: Guild Cities
Across the globe, people are moving to the city. 2009 marked the first time in human history that more people lived in the city than on the farm. We inhabit an increasingly urban planet.
One of the most interesting features of those cities is that they are increasingly organized by profession. Silicon Valley for Software and Consumer Electronics, Seattle for Software and Large Scale Engineering, Los Angeles for Entertainment , Houston for Energy, Austin for Software, New York for Finance and Publishing (what’s left of it), Northern New Jersey for Pharmaceuticals, Boston for Education.
You get the drill. As the economy shifts from manufacturing to more conceptual disciplines, a new economic organization is beginning to emerge. It’s different than the company towns of the past. There’s economic power in the concentration of conceptual expertise.
If you are a software engineer in Cleveland, you are a scarce local resource. Rather than being the key to higher wages and increased security, being a scarce resource makes you vulnerable. When your company closes down, you have to move, essentially.
On the other hand, Software Engineers in Silicon Valley (where they are almost a commodity) are paid 20% better (here’s Cleveland, here’s Silicon Valley). When your company closes down in Silicon Valley, you move next door.
The educational and cultural infrastructure support the companies of the area. So, a software engineer is always out of phase in Cleveland and in phase in Silicon Valley.
The combination of job security, level of challenge and pay differentiation make the Valley (or Seattle or Austin) attractive destinations for people just starting their careers in software and software related disciplines. The same dynamic holds true for most engineering and technical professions, music, entertainment and so on.
Every metro area has its embedded collection of Overhead and G&A (O,G&A) Functions. The lawyers and accountants always live in the boundary areas where there are lots of coffee shops. The HR people inhabit the slightly lower status suburbs. Marketing people live near the HR people. All of the local O,G&A professionals serve the technical people who actually create value.
It’s obvious that HR, Recruiting in particular, has a strong regional bias. If you are in Cleveland, you compete agains Silicon Valley for Talent. If you are in Silicon Valley, you play against your local competition. The budgets, procedures, incentives, priorities and even the skills vary significantly depending on whether you recruit within a region of professional concentration or against it.
Imagine the logical conclusion of this trend. It’s the hyperlocal version of outsourcing. When expertise is concentrated by Geography, the local market gets employees while the national market buys contracts. Increasingly, the company’s financial function is in New York, its lobbying in DC, its IT in one of the IT areas, and so on. Concentrations of workers in a high broadband culture means organizations that are flat and geographically distributed.
How would Recruiting change in a geographically distributed world where major functions are executed by contract?
This research is sponsored by Pinstripe Talent.
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