Why clustering could pay dividends in the war for talent.

October 3, 2017    Ann Clarke     

While the idea of co-locating like-minded businesses, also known as clustering, is not a new concept, it is certainly gathering muster as businesses looked for innovative ways to thrive and attract the best talent.

Perhaps one of the most famous examples of clustering is Silicon Valley. Referring to the large number of silicon chip manufacturers and innovators in this part of California, it is now home to 39 Fortune 1000 businesses and countless start-ups. Such is the success of clustering here that the term Silicon Valley is now used as much to describe all high-tech businesses in this field as it is the geographic area.

So why has this idea of building a critical mass of one type of business or industry in one location proved so successful? The simple answer is that it’s the proximity of talent and resource, the potential for ‘knowledge spill-over’ and the opportunity for partnered working that make it work so well. As an article on the British Council website describes: “Lots of businesses in one place creates a critical mass with clout when seeking support investment. It also creates competition, which pushes companies to improve.” Proof that clustering is really working can also be seen in the number of start-ups and entrepreneurs popping up on the fringes and the amount of interest and partnership with universities too.

For businesses striving to improve their performance in relation to recruitment and retention, choosing an office location in a relevant industry cluster can pay dividends as it brings a talent-rich pool of highly relevant skills to the doorstep. However, with such a high density of like-minded businesses in one area comes a heightened risk of talent attrition, as employees seek out new opportunities or are head-hunted. The saving grace, of course, is that all cluster businesses face the same challenge and that the swell of hyper-local talent makes recruitment far easier.

To make sure a business is well prepared for the opportunities that clusters create, here are the five key areas to consider:

1. Covetable workplace and facilities – While clusters often attract impressive co-working and shared spaces as a means to engender creativity and cross-pollination of ideas and skills, it does not mean that your own work environment can be below par. In fact, there’s a strong case for making the work environment a stand-out asset that will have you talked about within the cluster, sector and beyond. Well-designed environments that support how work is done and which include creative, innovative and stimulating spaces can be directly linked to improved productivity and employee engagement. Make sure the organisation’s workplace is fit-for-purpose and stimulating. Whether it’s including the very best technologies, embracing flexible working or including yoga and relaxation rooms, the workspace can be a powerful differentiator for talent (new or existing) and potential clients.

2. Culture – Culture is an important component of employee engagement and particularly retention. Workplace culture should consider the physical and mental wellbeing of employees and engender collaboration, learning and camaraderie. A positive workplace culture not only unlocks productivity, it also ensures that employees speak highly of the organisation if and when they leave. Within a cluster environment, culture and reputation are inherently linked.

3. Opportunity for learning – With so make like-minded businesses in a cluster and the inevitable movement of staff between them, you stand to benefit from new skills, insights and knowledge. Known as ‘spill-over’, this transfer of insights and new skills can help to transform businesses and keep innovation and growth at full tilt. Make sure that the opportunity for learning and development is integral to operations and that sociability is encouraged both within and outside the organisation.

4. Partnership – One of the real benefits of being in a cluster is the accessibility of other interconnected useful businesses, suppliers and specialists that may be ripe for partnering or supporting on projects as necessary. Be open to conversations with neighbours and actively look for introductions and ways to work together. Success for cluster businesses is self-perpetuating.

5. Career progression – For candidates keen to progress their careers, choosing to work for businesses in clusters is often a way to be ‘fast-tracked’ thanks to the amount of opportunity and innovation at play. Make sure you have thought about clear career paths and progression for ambitious new recruits joining the business, as if you cannot sate their appetite, they will seek opportunity elsewhere.

Remuneration, financial benefits and pension packages are no longer the only considerations for candidates in the job market. Such is the focus on work/life integration and life-long learning that candidates’ ‘wants’ have increased. They are seeking flexible working, supportive workplace cultures, opportunities for professional growth, a sense of belonging and interesting spaces in which to work and relax. Clusters often provide the right conditions for these wants to be met and the dynamic work experience and career path that so many seek.

Cluster environments will not be right for every business, but for those in the knowledge economy they are certainly helping to give critical mass, unlock funding, drive innovation and develop new skills. As the war for talent rages, solidarity in numbers does seem to be working well but even cluster businesses must still be equipped for the fight and that means making sure that workplace, culture, partnerships and career progression come up well above par.

To find out more about the war for talent and how to attract and retain the best talent, download our War for talent whitepaper, which is full of guidance and advice:

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