Talent makes the city

Each year, A.T. Kearney analyzes dozens of metrics to determine which global cities are the most competitive now— and which may be the frontrunners of the future.

The resulting Global Cities Report provides policymakers, city planners and government officials with essential insights into why leading cities stay atop the rankings, as well as what’s behind the acceleration of notable challengers. 

The 2019 report encompasses 130 cities, yielding some expected results, a few surprises and a clear call-to-action. New York, London and Paris continued their decade-long dominance of the top three spots in the Global Cities Index, which measures the current performance of cities.

However, heated competition and big moves among the fifth- through 10th-ranked cities suggest that change may be afoot.

The common denominator among cities that witnessed the most success? Human capital. It’s no coincidence that the world’s most competitive cities have a growing and diverse workforce.

While this year’s report reiterated the importance of people, the data also revealed an eye-opening trend: With the exception of the expected global leaders, most cities are struggling to attract, develop and retain high-quality talent.

For cities that want to stay competitive — or become more so — the differentiator is people. Moreover, developing strategies now to bolster human capital may make the difference between finding success or falling behind. 

The talent leaders  

To measure human capital, the Global Cities Index examines several metrics, including foreign-born population, scores of universities, residents with tertiary degrees, international students and international schools.

The metrics emphasize diversity because the world’s most competitive cities draw talent from not just their counties or countries but from around the globe. 

Several cities stood out this year in the human capital realm. Index-leader New York routinely ranks highly in human capital metrics. This year Chicago, Los Angeles, Boston and San Francisco also performed well. Around the world, Beijing, Tokyo, Sydney, Singapore and Dubai all boasted high human capital scores. 

It is worth noting that the majority of cities that rank highly for human capital also rank highly for business activity. These two key indicators have a reciprocal relationship; the presence of bright minds and global talent fuels business activity — and the opportunities generated by those businesses attract even more human capital.

The well-being connection

However, while business opportunities may draw talent to a city, providing an enjoyable, affordable, vibrant place to live is what keeps them there. An analysis of the leading Index cities revealed that those cities that improved the most in human capital since 2015 also improved in personal well-being.

Personal well-being is a key metric in the Global Cities Outlook, which assesses cities’ potential. The Index and Outlook complement each other, offering an analysis of current performance and a look into the future.  

The link between human capital and personal well-being is especially clear in examining the performance of Chinese cities. Consider that the country accounted for eight of the top 10 most-improved cities in the human capital realm.

The Global Cities 2019 Report spotlights how Chinese cities are taking a citizen-centric approach to their next phase of development — with a focus on improving the well-being of their population and the happiness of their people.

Some of these initiatives include increasing the affordability, walkability and cultural offerings of cities, in addition to leveraging technology to improve human services and convenience. With the country facing a pending population contraction, such efforts will be vital to attracting and keeping their valuable talent base. 

Now is the time to invest in people 

It’s all about the people. Some leading cities have already figured this out, while many up-and-coming cities have some work to do to improve their competitiveness. Encouragingly, the Global Cities Report reveals that change is achievable. 

A top ranking in human capital today doesn’t guarantee one tomorrow — and vice versa. Cities that take action now can improve.

For example, Houston jumped up six spots in the human capital rankings thanks to an increasing number of residents with tertiary degrees and more international schools. The city also established a program called UpSkill Houston to further develop the talent pool for local employers.

Boston, a longstanding leader in human capital, improved even more — a credit to how well the city has integrated its international students into the community as well as the high scores of its universities.

Meanwhile, Miami witnessed a dip in its human capital performance, as the number of both residents with tertiary degrees and international students declined.

Attracting and retaining human capital should be a priority for every city. As noted, the recipe for doing so involves both sustaining businesses and jobs, which draw the talent, and providing high-quality living conditions, which encourages people to stay.

The result is a vibrant economy that serves the needs of companies and people alike. For cities wanting to be more competitive in the talent arena, understanding the needs of their highly skilled workers is crucial.

Cities should work on implementing talent policies and strategies that leverage their existing strengths and build up the desired qualified and diversified workforce to succeed in a complex and global talent competition.

Andrés Mendoza Peña is a partner in the Automotive, Transportation and Infrastructure Practice with global management consulting firm A.T. Kearney and Nicole Dessibourg-Freer is a principal in the firm’s Consumer Products and Retail Practice. Both are co-authors of A.T. Kearney’s annual Global Cities Report.