HQ Economy: Twin Cities Talent Retention Strong, Headwinds on Horizon

MINNEAPOLIS — A decade after Minnesota Carlson Strategic Management & Entrepreneurship Professor Myles Shaver first identified the Twin Cities region as a premier “Headquarters Economy,” new research released in a white paper confirms that the region’s superpower — talent retention — remains unshaken despite changes to the area and the world of work.

In his 2015 research, Shaver sought to understand what factors create a thriving headquarters economy — a metropolitan area with a high concentration of headquarters from diverse industries. He determined that the Twin Cities’ HQ economy is fueled by strong talent retention, as skilled and highly educated managerial talent moved among the many companies rather than relocating out of the area. 

Last year, Shaver partnered with Work & Organizations Professor and Faculty Director for the Center for Human Resources and Labor Studies, Colleen Flaherty Manchester, to revisit the research for a ten-year update, collecting data from managerial and professional employees at 14 companies in the Twin Cities area. Participants anonymously completed surveys that asked a mix of questions about career mobility, quality-of-life preferences, demographics and hypothetical employment scenarios, such as relocating for work or switching to a fully remote job. Much like in 2015, the vast majority of respondents were from high-earning households and were highly educated, having earned at least a bachelor’s degree. Of the total degrees held by respondents, about 27% were earned from the University of Minnesota.

“One of the big striking findings is that the data are so similar,” said Shaver, the associate dean of faculty and research and the Curtis L. Carlson chair in corporate strategy. “It was immensely satisfying to see that even with a different set of people, the fundamental drivers of this economy are valid and persistent.”

Key findings from the study include:

• Retention Over Attraction: While the region struggles to attract outsiders, it excels at keeping those who arrive. When presented with hypothetical job scenarios, respondents — including Minnesota transplants — reported a preference for switching industries rather than relocating away from the Twin Cities. About 75% of respondents stated they would not prefer to live elsewhere, which is about a 3-percentage-point increase from 2015.
• The Dual-Career Capital: The percentage of married respondents in dual-career households increased by 11 percentage points since 2015 (from 69% to 80%). The prevalence of dual-careers was high in 2015; the continued growth bodes well for talent retention, as respondents in dual-career households reported being less willing to look for job opportunities outside of the region. National survey data show that the Twin Cities area is a leader among large metropolitan areas in the proportion of college-educated households with both partners employed in the labor market. 
• Quality of Life Priorities: Respondents ranked safety, job availability, high-quality healthcare, outdoor activities, and a strong local economy as the top five most important factors when choosing where to live. Not surprisingly, job availability for a spouse was a top-ranked priority for dual-career households, on par with job availability for oneself for these respondents. Conversely, professional sports — often used in talent attraction marketing — ranked second to last. 
• Some Top Factors Saw Ratings Drop: For most of the factors respondents identified as the most important in location decisions, the Twin Cities received high performance ratings. However, compared to 2015, respondents rated the following less favorably: a strong economy, a favorable cost of living, good quality public schools, and a good place to raise children. These shifts suggest potential headwinds on the horizon for the region.

Manchester plans to more thoroughly examine the mechanisms behind the double-digit increase in dual-career households. At play could be a generational shift, along with changes in work since 2020 that have made work more flexible from a technology and practice perspective. 

“While respondents' ideal schedule in terms of work modality varies from person to person, employees in dual-career households shared that having at least one spouse who has some work flexibility facilitates the careers for both spouses, men and women alike,” said Manchester, who holds the Bill and Sue Hodder Board of Advisors Professorship.   

Despite the region’s relative stability, Shaver warns against complacency for business leaders and policymakers. Shifts in the rankings for quality of life factors, such as the perceived quality in public schools, may be signs of challenges to come.

“I view this as an early warning sign for the region,” said Shaver. “Perceptions are important because at some point, people begin to act on what they are thinking. There is reason to question whether we have been investing in and protecting what the talent that drives our HQ economy deems important.”

The researchers suggest that to improve talent attraction, the region should pivot its messaging away from traditional marketing messages and toward its unique strength: a vibrant, multi-industry ecosystem where two-career households can thrive long-term.

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About the Carlson School of Management

Located on the University of Minnesota Twin Cities campus, the Carlson School of Management exemplifies a commitment to excellence through a focus on experiential learning and international education, and by maintaining strong ties with the Minneapolis/Saint Paul business community. Through its undergraduate and graduate programs, Minnesota Carlson offers access to world-renowned faculty members and an alumni network of 62,000 people. Learn more at carlsonschool.umn.edu.

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