Dollars Versus Value Relocating Key People

Relocating an employee or recruit to a new location can be risky. Aside from the stress of the actual physical move, the impact of the transition to a new community is tough on the transferee and often tougher on spouses and other family who come along.

Employers know the costs of losing a good employee because of an unsuccessful relocation. And when the person making the move is a key executive or manager, the stakes for all parties involved can escalate.

Trends show that the push toward a streamlined, no-frills relocation policy during the nineties is giving way to more in the way of full-service transitional support. That can be especially true for a key company person whose position poses weighty questions regarding relocation costs, the privileges of rank, and dollars versus relative value.

Spending more dollars on soft issues.
For the past several years, the average cost of an employee relocation has stood at $45,000 to $50,000. For a variety of reasons for instance, a valuable wine collection, a large house or an antique car the cost of moving a corporate executive often runs well above the average. But the cost of relocation can involve more than just the packing and moving.

Companies increasingly are offering transferees and recruits “soft” services, such as family transitional programs, spousal job-search assistance and support for special needs. Many say they have to offer these benefits to compete with the benefits other corporations are offering.

“What used to be considered soft issues are looked at more often as bottom-line issues today because employers are learning that investing money in a successful relocation can be the smartest and least expensive route in the end,” says Laura Herring, president and CEO of The IMPACT Group, a St. Louis-based firm specializing in global employee relocation assistance services.

“An unsuccessful or traumatic move means loss of productivity, loss of the money invested in this relocation, and possibly the loss of a valuable employee,” she continues. “That’s why companies are starting to respond more proactively to the personal and family dynamics of a move.”

According to Herring, the cost of transitional services provided by an outside consulting firm can run from $650 to $3,000. She adds the relocation assistance industry has seen 20 percent annual growth in providing transitional services for corporate employees.

“The younger segment of the workforce has learned to expect and ask for these kinds of benefits because they’re coming up in a labor market that’s forced to be more accommodating,” says Herring.

More seasoned executives may also be in the position to expect more when it comes to a crucial move, some HR managers say.

“If we are moving one of our executives, that person is usually a seasoned employee someone who’s been here awhile, and who is very valuable to us,” says Sandy Christensen, vice president of Northern Trust Company, a financial services company in Chicago. “That person’s level demands that we review any extra requests with upper management. We don’t always agree to everything, but often we’ll grant reasonable requests because we want the move to go as smoothly as possible for a key person.”

More relocation of your most valuable people.
The current philosophy for a growing number of companies today is that the relative value of a person who is key to the organization makes a successful relocation doubly important.

There’s a growing consensus that the last thing companies need is an employee starting out in a new location with the stress of unsettled family concerns, or any other unresolved issues.

Of the companies that participated in Atlas Van Lines’ most recent corporate relocation survey, 71 percent said they expect the number of relocations by their organizations to increase through the year 2003.

Bill Agopian, human resources consultant for Toyota Motor Sales USA Inc., says he anticipates geography will become a greater issue in relocation negotiations, along with cost-of-living differentials and family and spousal needs.

“People are not so quick to agree to go to a place just because the company asks, like they were years ago,” says Agopian. “HR people today are especially challenged to meet the needs and demands of employees and their families because if they don’t, another employer might. That’s when companies have to decide if they’re willing to make concessions on costs and spending. In the case of a highly valued employee, we look at concerns and do what’s needed, within reason, for long-term solutions.”

Some companies are actually going well outside the lines to insure against the loss of a highly valued employee if the relocation goes bad. For example, it may be written in the employer’s agreement up front that if after one year of employment the employee decides that the move isn’t working, the company will pay expenses to move the employee back to his or her former position and community.

Locate the gray areas.
Many HR and relocation professionals advise that a “living” relocation policy one that can be changed and find-tuned along the way will better serve both company and employee.

A hard, fast policy might feel secure on paper, Agopian notes, but it can be very cumbersome when individual employee situations can vary so widely. “I worked for a wise woman who once said that you write a policy so that you can make exceptions to it,” he says.

It is estimated that about 70 percent of companies are using relocation benefits as a tool in recruiting and retention efforts. Most human resources managers concur that ultimately, what their organizations perceive as the relative value of an employee will drive what they invest in an important relocation.