Rethinking Human Capital Flight in a post-Coronavirus World
In the wake of Coronavirus, we are equipped with a new perspective and have a fresh opportunity to tackle the global problem of brain drain.
By whatever name, ‘brain drain’ has existed from the beginning of civilization. Talented individuals have always relocated from the towns and villages where they happened to be born, to the bigger towns and cities where opportunity was thought to exist.
There, in a nutshell, is the genesis story of every big city in the world.
In the late 20th century through early 21st, this has also been the formative dynamic responsible for the various “technopoles” with names like Silicon Valley, Silicon Fen, and the 128 Tech Corridor. Aspiring technologists from small towns around the world, finding no local opportunities to participate in the exciting developments taking place in their fields, would leave the communities in which they’d grown up and gravitate towards opportunity in other places.
For a very long time, brains have drained in this manner from one location, accruing to the benefit of another location. But is this really a problem?
For the cities towards which talented individuals have flocked, the benefits are legion. Financially and culturally, the influx of talented individuals adds tremendous value. Well-paid immigrants plow their paychecks back into local stores and services; they add to the local tax revenues; they contribute to a greater investment in local arts, schools, and services. And the companies for which they work also prosper, which in turn makes those employers (both individually and in the aggregate) able to offer ever-more-attractive salaries in those cities, driving the cycle forward to untenable extremes, as in the Bay Area.
But for the places left behind, there is a substantial toll. The perennial problem of “human capital flight” has drawn the attention of researchers from around the world. And there is no shortage of data through which to glimpse the negative effects of brain drain to the places left behind.
A 2018 study commissioned by the City of Milwaukee showed the city and the state of Wisconsin are losing college graduates at an alarming rate (and working age people generally) who go to have their productive careers in other places. (Source: Recommendations on Reducing Human Capital Flight (Brain Drain) from Milwaukee). A 2014 study of countries in the Middle East and North Africa (MENA) region showed that highly skilled individuals were 4X more likely to emigrate, a figure which was twice as high in the MENA region compared to the developed world. (Source: The Plight of Human Capital Flight in OIC Countries). As we think about the effects of this dynamic over decades, it becomes clear that this is a vector in the widening wealth inequality gap.
Whether they wish to pursue a professional future in the place of their birth or some other place is for each talented person to decide for herself. It would be nice to imagine a future world in which it becomes easier for talented people to emigrate in pursuit of professional fulfillment. But, in the wake of this historic pandemic, we are given an alternative that may prove eminently more practical, a world in which talented people get to realize their full potential irrespective of their location.
Evolving a New Model of Employment
The need to move in pursuit of a job is an outdated 20th century idea. In the 21st century, we have the technical wherewithal to connect highly skilled people with the jobs that require their skills, regardless of where they are. The collective, forced work-from exercise imposed on so many of us by COVID-19 has emphatically demonstrated the feasibility of working this way for all types of organizations. Working from home really does work. And from that realization another quickly follows: home can actually be anyplace in the world where a good Internet connection can be found.
Think about what that means in terms of classic emigration and the movement of people to the places where the high-skill jobs exist: If highly skilled workers can work productively from home, and if home can be anywhere, such workers don’t necessarily need to relocate. A software engineer working for a firm in the Silicon Valley can do so from a home in the mountains of Italy, Peru, or Papua New Guinea.
A software engineer living in one of these locations might want to move for the experience of living in Silicon Valley, but that’s not the same as needing to move for the job. Indeed, an individual with close ties to family or the community could stay in their small town and still achieve the professional fulfillment (and commensurate salary) that once they would have had to move to achieve.
“Technology can change the dynamics of employment, which can in turn change the dynamics of the brain drain. Effectively, we lose the drain and keep the brain. For everyone involved— policymakers, employers, and workers—this new reality has profound implications.”Tony Jamous
Changing the Brain Drain Dynamic: a Call to Action
a) Opportunities for policymakers and legislators
Let’s start with policymakers, for they’re the ones traditionally pulling and pushing the levers that manage who can move and work where. The reality is that technology lessens any pressure a legislator might feel to cap immigration. If skilled workers do not have to move into a country to perform the jobs—because the jobs can be performed from anywhere—then there will be fewer applicants for immigration visas and local work permits.
At the same time, because technology can enable skilled workers to work from anywhere, legislators in cities, states, and countries that have traditionally experienced the emigration of skilled workers should be looking at lowering the barriers to employment as a way to retain their skilled workforce. Where legislators might once have tried to encourage a company to build a local office or headquarters as a way to retain talented workers (or even lure new talent to the area), they need to reconsider. When high value companies need less and less physical office space, it will be harder to lure such companies to the city or state where you would like to encourage them to bring their operations (and their workers). However, by implementing policies that make it easier for those companies to hire your skilled workers, you make it easier for your skilled workers to stay in your city, state, and country (even if their employer has no physical presence in the country). The economic benefits that would have accrued if a company had opened a local office and hired those workers still accrue, even if the company only employs those workers remotely. The remote employees that live in your city, state, and country will still purchase groceries and housing and fuel locally, which would not be true if they emigrated to work for the same employer in the country where that employer is based.
b) Opportunities for Employers
Because technology enables you to engage employees anywhere, the pool of skilled workers from which you can draw is as wide as the world. Your employees no longer need to live within a few miles of your offices (you don’t even need “offices” in the way you once thought you did). You don’t need to factor in a relocation package or the complications of immigration sponsorship to hire the employees you want. You just need to connect with them and make them an offer they can’t refuse.
Companies that realize the value inherent in a distributed global workforce will do things they’ve never been able to do before. The talent that will transform your company may not live anywhere near your company, but your willingness to hire remote individuals and support them in working in a distributed manner will enable you to build a team that you might never be able to build if you were to limit yourself to the pool of talent encircling your headquarters. In the past, organizations needed to open offices in the location that seemed most conducive to sourcing great talent; now, an organization can hire great talent from anywhere, with or without a physical office.
Keep in mind, though, that building a remotely distributed organization is a deliberate act. You need to invest in the idea of working remotely. Like being data-driven or agile, everyone needs to be committed to making a distributed organization work, particularly in these early days when we’re still sorting out how best to operate as a distributed organization of remote employees. We know we can do it. We’ve done it. But we’re still learning how to do it better.
c) Opportunities for Individuals
For the world of talented individuals looking for opportunities and professional fulfillment, the world of distributed organizations offers clear benefits: the world is your oyster. You can offer your services to companies based in any country, and work from wherever you want. All you need is a good internet connection and an employer who understands that they’re more competitive with you on the team, however remote you may be, than they would be without you on the team.
Today, highly-skilled individuals don’t need to move to contribute effectively—and many would prefer not to. There are any number of financial, familial, and cultural reasons to want to remain in a place. Others will want to emigrate for the cultural and personal experiences that emigration can present. And there will always be those who feel the need to emigrate because of social, political, or environmental turmoil. Such factors push people to emigrate, but even in a push scenario a highly skilled worker need not move to a location where their employer is based. In the world of the distributed organization, an employee who wishes to move could move wherever they wanted. If you’re from the north of Canada and always wanted to live somewhere warm, there’s no technical reason you could not relocate to a spot on the Mediterranean. If you’re working remotely, it doesn’t matter whether you’re in Canada or the sunny shores of Greece as long as you can interact effectively with your team.
The good news for highly skilled individuals is that companies embracing a distributed mode of operating will be looking for you. You need to keep your eyes open for opportunities. You need to understand how much you have to offer and demand to be compensated as well as any employee they would once have planned to move closer to headquarters. Just because you may be living in a place where the cost of living is lower than that at headquarters does not mean you should be paid any less. Your value to the company is not less.
Seizing the Day
The technology exists to enable the world of distributed employment. We all know that. Once I might have said that all we need is a spark to set this fire ablaze, but in truth that fire is already burning. Companies around the world are operating in an increasingly distributed manner and, like young companies that began using the cloud and did not have to shed the legacy of a large data center infrastructure, those companies that are starting as distributed companies will in time have a leg up on competitors still chained to a physical office presence and the constraints that imposes.
Distributed companies will form teams composed of the most talented individuals in the world. They’ll have lower operating costs because they’ll have no reason to maintain office space for everyone. They’ll build out a virtual presence in every country where their employees live, ensuring that they can abide by a country’s employment and tax rules in the same way they would if they had a physical presence in the country. They’ll provide their employees with all the tools that they need to be successful, just as they would if they were setting up that employee in a traditional office. They’ll find new ways to build teams, value differences, and capitalize on the camaraderie of like-minded people. They’ll build amazing products and services from which we all will benefit.
That’s not to predict the demise of every organization that has previously relied on a traditional office infrastructure. Clearly, some physical infrastructure will always be required—in manufacturing and in healthcare, for example—but organizations composed primarily of highly skilled “knowledge workers” will need to embrace a more distributed mode of operating. Their competitors will, which means they will need to do so also if they wish to compete effectively.
But look at that as an opportunity. Your company can search the world for the best and the brightest. Your employees will sign in from all corners of the globe to further the goals of your organization. You’ll need to build out a global infrastructure through which to employ these individuals in all their different countries, but even that is now a capability even a small organization can procure with ease.
For countries that have traditionally experienced large waves of labor-related emigration, there are opportunities to legislate in ways that encourage citizens to stay at home rather than emigrate for the sake of employment. One way to make that happen is to make it easier for foreign distributed companies to employ your citizens. Your country needs to let the outside world in to do business, even on a virtual basis. You benefit by not seeing your best and brightest emigrate. You gain from their experience and the paychecks they bring home. Their success will also inspire others in your country to gain the kinds of skills in demand in the world. Then they too can become part of the globally employed—without necessarily having to leave the country to make a difference.