Workplace Issues

Silicon Valley CFOs Decry Some Local Issues

The area's high cost of living and long daily commutes don't make it any easier to attract talent, which is in shorter supply in the Valley than ever.
David McCannMarch 3, 2020

The exorbitant costs and long commuting times that prevail in the San Francisco Bay area are plaguing operations for Silicon Valley companies, according to local finance chiefs.

Morning traffic on Highway 101 in Silicon Valley

Among 144 CFOs polled by the San Jose chapter of Financial Executives International (FEI-SV), 77% said the highly influential business region “does not do well at all” in delivering an affordable cost of living, while 58% said the same for “enabling reasonable commuting time.”

Even an income of $400,000 per year does not guarantee a comfortable existence, according to FEI-SV’s survey report.

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The exorbitant costs have pushed people farther away from primary Bay Area business centers like San Francisco, San Jose, Palo Alto, Redwood City, and Oakland, exacerbating the commuting nightmare.

Whole companies are also growing disenchanted with local business challenges, which notably include increased staffing difficulties. Bare Escentuals, Jamba Juice, and Bechtel are examples of notable companies relocating their headquarters elsewhere, while Slack, Lyft, and Square are opening second headquarters rather than expanding in the Valley.

“Companies are increasingly casting nomadic eyes on less pricey locales that feature equally skilled workforces,” the report said. “Decades of outsourcing basic technology functions and the country’s declining STEM educational system have left the area with a smaller supply of back-end IT pros, front-end software developers, and hardware engineers than in recent eras.”

Said Bob Worthington, managing partner at executive services firm Hardesty LLC and second chapter vice president at FEI-SV, “We as a community have our hands full with the current costs of doing business in the region, and we may potentially have larger challenges ahead if we enter an economic slowdown, as many experts predict.”

CFOs, who are accustomed to longer-term views of events and trends, can provide needed perspective, Worthington noted. “It’s up to senior finance leaders to provide pivotal counterbalance [with] an eye on fiscal responsibility and what could be in store three to five years from now,” he said.

One way companies can combat these problems is to emulate the actions of Facebook, which is constructing 1,500 living units close to its Menlo Park headquarters, and Google, which is buying 300 modular homes. But former FEI-SV president Mark Muenchow urged companies to exercise great care and precision in placing new housing developments.

“You can’t hire good waiters and other restaurant workers [in many areas],” Muenchow said. “You can’t hire childcare and teachers and all that sort of stuff. They’re all getting priced out of here.”

Also, CFOs should unify to advocate for an expansion of high-speed railways in the region, as well as public policies that could achieve lower housing costs, the report counseled. It quoted Jan Robertson, CFO of M&A advisory firm SiVal Advisors, as saying, “Political issues and resistance at local levels really need to be addressed. We see lots of local ordinances.”

At the same time, she implored regional business leaders to abandon their adversarial relationship with the government.

“Too often I hear the attitude here in Silicon Valley where people just sort of dismiss government as something to be contended with rather than looking at it as a real power partner,” said Robertson. CFOs, CEOs, and other senior executives should make their voices heard not only at the local level but also in the state capital city of Sacramento and in Washington, D.C., she stressed.

Muenchow additionally suggested that Silicon Valley executives should focus lobbying efforts on shaping worker immigration policies. He asserted that companies must look overseas for talent, especially engineers and technicians, due to American’s declining birth rate and educational system. “I’m not convinced that the big companies are thinking about it,” he said.

Meanwhile, other problems are hindering Silicon Valley as well. While large corporations are generally having no problem raising money, some smaller ones are finding they have to work harder to secure funds.

A quarter (26%) of startups with little to no revenue said that access to capital was either fair or poor; the same was true for 15% of early-stage growth companies with less than $1 million in revenue.

Unsurprisingly, perhaps, the area is marked by some disturbingly discriminatory workforce practices.

Silicon Valley’s penchant for gravitating toward brash young leaders seems to have had a trickle-down effect on age-related workforce demographics, the report noted. A large majority (82%) of survey participants either strongly or somewhat agreed that “older, experienced workers routinely face age discrimination.”

Further, 28% of the CFOs strongly disagreed that black and Latino employees are on equal footing with other population groups in Silicon Valley companies. And 22% strongly disagreed that women have such equal footing.

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