September 12, 2011

Overcoming Relocation Hurdles

Overcoming Relocation Hurdles in Talent Acquisition and Retention

Greg Schreiner

Greg Schreiner

By Greg Schreiner, Executive Recruiter, Clean Tech Talent Manager

Despite the high rate of unemployment, finding the right talent remains an issue. A recent survey by Robert Half reported that just over half the executives reported that it is difficult to find skilled professional talent currently.

When finding the right talent locally doesn’t pan out, relocation is often the only alternative. And while relocation adds to the human resources expense, the majority of firms recognize the importance of this component in attracting the talent they want. The 2010 Atlas Van Lines Corporate Relocation Survey reports that 67% of companies offered incentives to encourage relocations in 2010. Financial and other incentives can overcome the hurdles to relocation.

Hurdle 1: Costs of Relocating

Many companies offer some sort of assistance in moving. Despite the recession, it is quite common to provide relocation assistance.

  • Relocation bonuses. The Atlas survey reports that half of employers offer relocation bonuses. This includes money towards packing and shipping expenses, storage, and other incidentals involved in moving.  
  • Temporary housing. The most popular relocation assistance offered is temporary housing benefits; 67% of firms across company size offer this.

Hurdle 2: The Housing Market

It gets more complicated when the talent you’ve identified owns real estate; especially when (as is often the case) the value of that real estate has been negatively impacted. The sales process is typically long and in many cases the owner has negative equity in their homes can’t even consider moving for a new job without assistance. According to a 2009 Worldwide ERC® Benchmarking Survey, 95% of organizations who experienced problems with employee relocation reluctance cited the weak housing market as the biggest Hurdle.

There are some solutions that an employer can consider offering as part of a relocation package:

  • Purchase or closing cost benefits. Employers may offer some amount of money towards the closing costs on the sale or purchase of a home.
  • Loss on sale protection. In order to motivate an executive to lose money on a property in order to relocate, some companies offer a loss on sale benefit. This is basically a subsidy to mitigate or lessen the loss that is realized by selling in a bad real estate market. This can obviously be an expensive proposition for the employer; it is also potentially a real impediment to a well-functioning job market as talent often feels locked into one geography.
  • Property management benefit. If there is a certain loss at sale, perhaps holding onto the property is an option. Employers may offer (payment of) property management services to facilitate the rental of the property, subsidies for any loss due to rental-mortgage differential, subsidies for the purchase or rental of a home in the new location.
  • Short term assignments. If a permanent relocation is not cost effective, employers may consider short-term assignments. Transfers of a year or so may be more affordable.

Hurdle 3: Employment of Spouse/Partner

Census Data shows that 54% of U.S. married-couple households have two income earners in 2009; the figure rises to 66% for households with minor children. So when one spouse or partner finds a great new opportunity requiring relocation, it can be problematic. If the relocation means the other spouse will need to look for a new job and forego earnings, this can be a daunting proposal. According to the Atlas survey, 40% of employers report that the partner’s employment “almost always” or “frequently” affects a candidate’s relocation decision.

Solutions to the dual income issues include helping the employee’s spouse with a new job:

  • Outplacement assistance. Employers can offer direct assistance or team up with a job search or recruiting professional and to provide job search training and assistance for the partner. The Atlas survey reports that approximately one-fifth of U.S. companies, and one-third of companies with more than 5,000 employees, offers outplacement assistance to spouses.
  • Company network. Employers may be able to provide networking assistance from within their own employee pool.
  • Financial assistance. Companies may consider offering a stipend to help compensate for loss of income during the spouse’s job search; or travel benefits on an interim basis for either partner to visit each other if the employee’s spouse does not move prior to finding a new position.

Hurdle 4: Acclimation

Even when a dual-income spouse’s career is not an issue, relocating to a new area entails risks of acclimation for the household as a whole. Onboarding the new employee to the new company is critical to the longevity and productivity of the employee and the company. Settling in to the new town is also a process for the employee, the partner and any children.

Acclimation can be facilitated in many ways, for example:

  • Relocation resource service. Using an internal or external relocation resource to help the household get to know the area and resources is important. Offering such a service before an offer is even made can increase the comfort level of the prospective employee immediately. Making this service available for the transition period will aide greatly in settling the new employee’s entire household, and should facilitate an engaged and productive relationship.
  • Company community. A new employee and the accompanying family will benefit from connecting with the other employees and their families. From advice on where to shop, to learning the corporate ropes, opportunities to connect via company events or social opportunities can play a critical role in the onboarding and acclimation the newbies.

Hurdle 5: The Company’s Location

A company can outgrow its location, or find that the location never did provide a competitive advantage. Labor often represents 70% to 80% of operating cost of the headquarters; this will be increased if there is high talent turnover. If talent acquisition and retention becomes too difficult locally or too expensive with relocation, consider virtual employment, rotating locations, or a new location. 

  • Go virtual. Avoid the relocation problem by instituting virtual or remote work opportunities. The internet and mobile technologies out there can make almost any location an equal opportunity virtual office. Telecommuting offers real bottom line benefits in terms of real estate and facilities management and costs, technology connectivity and productivity, as well as the green benefits such as less impact to the environment from infrastructure and real-commuting. Many companies are also finding that the opportunity to work remotely promotes the work–life balance of their employees to everyone’s benefit.
  • Open a satellite office or Move your company. If talent is short at the corporate headquarters’ location, consider opening a branch office or moving your headquarters. Choose a location that already has a ready supply of the talent you need, and will appeal as a location to any relocating talent you attract. Choose a location that is close to major transportation hubs to facilitate travel time and costs for clients or suppliers. This is a selling point to prospective employees too. Why not choose a cluster? Such a location will have a larger talent pool, typically breeds innovation for all the players, and may benefit from investment or tax advantages from local government and industry associations.

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