The Politics of Place and What It Means for Talent Strategy

The influence of politics on where workers want to live now has key implications for a company’s talent strategy. A survey of 500 U.S. real estate agents shows 32% of agents had at least one client who relocated in 2023 due to political fit. My research examining the personal stories of 1,300 U.S. individuals who moved gives context to how local politics can drive workers to relocate — whether it’s people saying they are “tired of a whacky left-wing agenda,” prefer “to live in a more liberal, fact-based environment” or simply want to escape “incompetent” political leadership. The looming presidential election and state-level focus on social policy will intensify this inclination.

Workers are now more apt to prioritize geographic identity in general. Research points to the less stable nature of contemporary work as a reason that greater weight has shifted to our nonwork identities. Further, as pandemic-induced isolation and distributed work made geographic place less vital to our jobs, place started to become more vital to who we are.

At the same time, the entanglement of geography with sociopolitical issues steers residential sorting along political divides, narrowing an organization’s access to talent. This makes local political environments significant to workforce strategies. Let’s examine three ways organizations navigate the red and blue tensions inherent in place and analyze when utilizing each strategy makes the most sense.

1. Separating Organizational Identity From Politics of Place

When an organization is anchored in a politically characterized area, leaders can mitigate the influence on the workforce through structural policies. The following examples show how two companies neutralize politics of place by remaining explicitly apolitical and offering workers at least some extent of geographic flexibility.

Pella Corp., a national designer and manufacturer of windows and doors, is based in the politically conservative city of Pella, Iowa. Pella Corp. has invested significantly in local quality-of-life offerings such as child care, housing, restaurants, and entertainment. These fundamental amenities appeal to all types of talent, regardless of political persuasion. Every job post specifies that the company treats “all persons equally, regardless of political affiliation and belief.”

In 2019, Pella opened a satellite office about an hour away to support workers who prefer to live in the more diverse metro area of Des Moines. About 100 of its 600 office workers choose to work from this location. As one of the otherwise long commuters said, “It really does factor into the decision in terms of wanting to stay with Pella and wanting to grow as a team member there.” Pella’s approach has placed it among Newsweek’s America’s Greatest Workplaces for Diversity in 2023, a list of employee-rated companies that “respect and value different kinds of people.”

Basecamp, a project management software company based in the politically liberal city of Chicago, offers a bumpier example of how an apolitical approach may work. Basecamp employees work remotely and engage collectively in online company forums. In 2021, Basecamp’s cofounding CEO announced a controversial policy prohibiting discussion of political and social issues in those forums, with the rationale that limiting polarizing discussions would let the company focus on its core mission and projects.

The change was met with mixed reactions and led to the company offering employees who disagreed to leave with severance pay. Notably, a significant number of employees took the offer. Today the policy remains the same in Basecamp’s code of conduct, and the company’s continued growth suggests the approach was effective in the long run, despite the short-term flux. However, a key factor to this approach succeeding is its alignment with the company’s broader business strategy, which is based on economic pragmatism: The policy and company mission are aligned in taking a pragmatic rather than values-based approach, as leaders seek to foster workforce unity and purpose.

2. Influencing Local Politics in Place

When companies are anchored in a place that presents a specifically identified sociopolitical threat to maintaining the workforce, leaders should attempt to counteract the threat. The regulatory environment is generally viewed as imposed on companies by political and societal actors. However, companies can take actions to legitimize or delegitimize the prevailing regulatory and social order.

For example, Salesforce CEO Marc Benioff was one of the first major business leaders to publicly oppose Indiana’s 2015 legislative act known as RFRA (Religious Freedom Restoration Act), a law with implications at the intersection of religion and business. He used media platforms to call attention to the act’s potential for discrimination against LGBTQ+ individuals. Salesforce threatened to reduce its investments in Indiana, where it has a significant employment presence, and called on other business leaders to do the same. Most germane to maintaining the workforce, Salesforce offered to relocate employees who felt at odds with living in the state due to the legislation. The effort prompted an amendment to the act that explicitly prohibits discrimination based on sexual orientation and gender identity.

Similarly, the CEOs of Lyft and Uber reacted after the enactment of a Texas law in 2021 that allows private citizens to sue anyone assisting in an abortion after about six weeks of pregnancy. Both companies’ CEOs publicly condemned the law over its implications for women’s access to health care and the legal risk imposed on their drivers. Most apropos to supporting and maintaining its freelance workforce, Lyft created the Driver Legal Defense Fund to cover the legal fees for any of its drivers sued under the law while driving for Lyft. Uber made a similar commitment.

Other company attempts in this domain can take the form of long-term initiatives, such as Google’s involvement in workforce housing issues in the San Francisco Bay area. In 2019, Google announced a $1 billion commitment to help address the area’s housing crisis, including rezoning a portion of its own land for housing and providing funding for incentives to developers. Years later, Google continues to actively seek to influence local politics around zoning and development to address a quality-of-life factor that is essential to its workforce.

3. Relocating Headquarters in Purple Places

An unprecedented number of companies relocated their headquarters during the past six years, reflecting a shift in how companies think about the ideal environment for their operations. When deciding where to have a physical presence, some companies have strategically landed in places that do not have a distinct political majority. These so-called purple places tend to take the form of a moderately blue city within a red state, offering business-friendly state policies while also providing a localized political climate that appeals to — or at least does not threaten the identity of — a broad swath of workers.

This approach is relevant for companies that not only emphasize highly skilled talent but also require in-person hours at the same location, obliging the workforce to live locally. In this situation, a relocation strategy may be better than remaining in place. However, the effectiveness of this approach rests on its prioritization of workforce preferences.

Global asset management company AllianceBernstein is saving a reported $80 million annually after closing its Manhattan headquarters and relocating 1,000 jobs to Nashville in 2022, but it is still finding its footing in employee hiring. A blue-to-purple city move often offers economic savings for businesses because several factors of affordability are intrinsically tied to the political landscape. However, cost savings do not automatically align with a talent advantage. Economic logic actually suggests the opposite. Agglomeration, such as the clustering of finance companies in New York, drives up costs but also provides tremendous access to pooled labor.

Citadel’s decision to relocate its Chicago headquarters to Miami shows a more talent-centric focus. Cost savings were not a driving factor given that Miami labor costs are similar to Chicago, despite a state income tax advantage and its pricier real estate. The company’s founding CEO, Ken Griffin, described workers’ quality of life as the motive. Politically, Miami-Dade voter registration strikes a nonpartisan-like blend of Democrat, Republican, and no party affiliation. An excerpt from Griffin’s 2022 internal announcement about the move also shows that locational options were given to accommodate talent that is rooted in place or may prefer a blue state like New York:

Chicago will continue to be important to the future of Citadel, as many of our colleagues have deep ties to Illinois. Over the past year, however, many of our Chicago teams have asked to relocate to Miami, New York, and our other offices around the world. With our new office opening at 425 Park Avenue, our expansion at 350 Park Avenue, and our new headquarters opening on Brickell Bay, in the heart of Miami’s booming financial district, we are in a strong position to support these transitions. We recognize that the choice of where to call home involves personal, family, school, and other considerations, and we will provide comprehensive support to meet the needs of our teams.

Initial signs suggest the approach is effective in terms of talent. Citadel has placed 250 employees in Miami since that announcement and is about to add another 130,000 square feet in advance of the planned headquarters tower. Applications to Citadel’s internship program, a key hiring pipeline, increased by 65% in 2023 to 69,000 applicants, with Miami a designated primary location for new hires from this crop of talent.

A contrast of these two company examples suggests ways to reap talent returns on a purple-city headquarter relocation. The relocation requires a focus on talent rather than cost, a long-term return horizon, flexible options for employees who are rooted in the old place, and a way to assure that workers in the new locale perceive a path for career growth when faced with a relative absence of alternative local companies. The CEO must also set aside their personal political leanings to make this happen.

Of course, the talent dynamics of a headquarters move are more straightforward if a change of political climate involves simply moving across the river. CoStar Group, a publicly traded real estate data company with an onsite workforce, announced plans to move its 500-employee corporate headquarters from downtown Washington, D.C., across the Potomac River to Arlington, Virginia. Although only 20 minutes apart, Arlington is politically a paler shade of blue than Washington, and its violent crime rate is about half the national average. CoStar has tactfully not gone on record regarding the role of political climate and quality-of-life issues in its move, slated for late 2024.

Business, politics, and place are inexorably intertwined. Companies have always weighed these considerations for the non-people aspects of their business operations but have given less attention, until recently, to what the politics of place means for workers. What better time than now, with the presidential election underway and state-level policies in flux, for companies and leaders to examine how the local political climate impacts their ability to attract and retain a workforce.