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Essential Knowledge:
Today's Job Market Reality-Recruiting, Relocation, and Real Estate |
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The
For employees, balancing these financial stresses remains their number one focus. Meanwhile, employers worry about how to manage recruitment efforts to fill languishing job openings. Given a healthy economy, talent wars are fast paced and challenging---requiring incentives to capture talent at all levels including C-suite executives, middle management and new hires. However, today there are no “givens” in our economy- incentives that enticed us in the past may not be on target for top job candidates today. Relocation policies and packages need to be sensitive to these needs, and both employers and employees are having to be creative in finding the middle ground between them to find success.
Employers
Historically, relocation packages have been structured to offer more to candidates at the high level positions within the company and less to lower ranked relocating employees. Today, this holds true with the continued use of tiered relocation programs. As such, new hires and/or renters typically receive lump sum amounts to use as they see fit with little to no logistical support to handle their move. Middle management might be provided logistical support along with key benefits such as temporary housing and household goods shipment and real estate assistance. The sliding scale of generosity ultimately reaches executive-only offerings including departure home buy outs, loss on sale protection, and unlimited supports for all milestones along the relocation timetable.
According to the 2007 Worldwide ERC® New Hire report, “more than 90 percent of companies surveyed reported having difficulty in recruiting the right people, and more than 20 percent considered the problem fairly severe.” Nearly 80 percent of the respondents to the survey utilize relocation policies as a part of their recruiting strategy. The recruiting woes have only become more challenging.
In Gina Ruiz’s article “Sagging Real Estate Market Taking Its Toll on Recruiters” for Workforce Management Online (April 2008), she discusses how recruiters are working twice as hard to fill one position more than before. After much courtship by the company, the desired candidate reviews the relocation package eagerly only to ultimately turn down the offer after estimates on the home appraisal are provided. Having lost significant amounts of equity in the real estate bust, candidates simply cannot afford such a financial deficit nor are small to medium sized companies able to cover such a loss.
In recruiting dynamics, real estate markets outside a company’s own state have a bigger impact then their own real estate market on the success of all three tiers of their relocation program. For example, in the Houston Chronicle (June 2008), it was noted that while the city is considered to be a “job creation machine,” many of their job openings remain vacant. Companies who are accustomed to spending money on housing issues to recruit only those at the top of the corporate ladder are now wondering how to afford the same for middle management. With the average cost of a relocation around $62,000, (Worldwide ERC®) it is a difficult task at hand. If not handled with some creativity and speed, companies will remain top heavy in upper level management while middle management job vacancies will remain open, leaving productivity struggling.
Meanwhile, new hires and renters drag their feet on offers to relocate to areas that do not provide a reasonable cost of living that would allow them to eventually purchase a home.
Creative solutions for Employers
If look-see trips are not currently offered, consider them now and be focused. Employees need to ensure they are making the best decision for themselves and their families. The best way to provide resources for this is a look-see trip focused with answering their specific questions about the area. Engage a destination service provider or a real estate professional knowledgeable in relocation issues to provide personalized assistance. This is the best opportunity for the candidate to determine if this relocation will meet their personal needs. If the employee has realistic expectations of what their lives will be like in the new area, then success of the relocation will dramatically increase.
In order for employees to be truly productive in their new position, their primary focus needs to be on their job and not their relocation. The pending home sale is the main reason that an employee would stay tied to their old location and for the relocation to drag on and impact their ability to be focused. Instituting a program that encourages the relocating employee to list their home at a competitive price and prepare their home for marketing, encourages a quick sale. Even in today’s challenging housing market, a quick sale is possible if the home is ready and priced right.
An employer’s relocation program should encourage their employees to be strategic in the marketing of their home from the start. This means engaging a real estate agent that understands the dynamics of relocation and has success in moving properties in challenging markets.
When a home buy out is offered, be realistic about costs. Consider carrying costs of inventory homes carefully. An employer should expect to pay one percent of the appraised value each month that a home remains in inventory. Taking a home into inventory typically will cost twice as much as an employee generated sale.
For employees who have purchased their home within the last several years, employers should expect them to experience a loss on sale. Although the loss on sale benefit was once unwarranted due to a surging market, the likelihood of this loss protection being needed has increased significantly. Companies should consider the financial impact of the loss on sale benefit and may want to consider instituting a dollar cap on this benefit as these losses could reach six figures.
Offering temporary housing to all transferring employees, allows a softer landing in the new location. Employees can utilize this opportunity to become acclimated to the area and get a better sense of where they want to secure their permanent housing. Extra time is now needed to research and select affordable rental properties in markets where housing prices have dropped but remain cost prohibitive to the average homebuyer thus forcing more renters into limited properties conversely causing rent prices to increase.
Employers can consider signing bonuses for categories of new hires not offered in the past. Additionally, retention bonuses for those employees who stay employed after the first year beyond the relocation. Sweeten the offer with spousal employment assistance, a certain number of months rent or mortgage.
Create rotational assignments that require a series of short-duration stays instead of a permanent relocation. This will develop opportunities within the company to grow talent, transfer skills and knowledge and build teamwork for projects. Employers get to retain and/or to attract the best and brightest employees while remaining flexible and cost-sensitive.
Find the balance between attracting employees and containing cost. Be sure you have created a flexible yet effective relocation program that allows for the balance to shift from time to time. Then be diligent about the use of the program. Too many exceptions to the rule will create expensive disasters and set unmanageable precedents. Your hiring managers, recruiters and third party relocation company need to be utilizing the policy with consistent, combined efforts.
Employees
After having made a decision to accept a job offer, some employees are finding themselves in a new, scarier place living between past and future in dealing with the presence of two mortgage payments. That is exactly what happened to a couple featured in the June article in the Washington Post “Held Back by the House” (by ElBoghday and Lengel). The couple gave up their current jobs in the Florida Panhandle, relocated to the
However, the silver lining for some is that the reverse experience is also evident from time to time. Those candidates who have experienced significant appreciation in the value of their homes without the instability of the current depreciation can take advantage of relocating to a less expensive cost of living with ease.
How VISION Relocation Group Can Help
Policy Review and Development
Our consultative approach to working with our Clients enables us to provide customized solutions that address their individual goals and objectives. This is accomplished in the following ways:
Program Administration that Supports Recruiting Efforts
Our Account Managers understand the needs, priorities and intricacies of our clients. Our customized approach allows us to be flexible and consultative meeting the needs of each and every client. By understanding your priorities, we are able to effectively support your recruiting and retention efforts.
Our Relocation Counselor will work with your candidates to explain your relocation policy and answer any questions they may have regarding relocation benefits, keeping in mind that they could be an integral part in the recruiting process. Our Counselors are mature, experienced professionals who understand the importance of clearly communicating to your candidates who are making life-changing decisions.
Choosing a Qualified Relocation Real Estate Agent
To assist you in the recruiting process, we will assist you with Pre-Decision trips and area orientations. Through The Vision Alliance, our unique partnering arrangement with qualified service providers worldwide, we ensure that your candidate receives a customized, informative tour, which may include housing options, schools, recreational facilities and/or religious establishments. We manage these providers to ensure that they are aware that the family is a candidate for a new hire and that all of the candidate’s questions are answered and requirements met to keep the recruiting moment moving forward.
Setting realistic expectations is critical to the overall success of a relocation for both the company and the transferring employee. VISION helps clients understand the potential cost of a relocation, the reality of the housing market and its impact on the relocation. We help to foresee the success of a relocation considering the company’s policy and priorities as compared to the needs and priorities of the relocating employee. The declining housing market has had a financial impact to both companies and their relocating employees so understanding and anticipating those potential costs and the effects set the groundwork for a successful relocation.
Read more VISION Consulting Services articles and white papers. |
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