The company that the employer contracted with to take care of the family’s relocation needs mapped out the cross-country trip, and every 300 miles, they arranged to have the local pet store hydrate the traveling fishes’ water. The small piscean friends survived the trip, and the executive went on to perform well at the new company.
Such requests might seem strange coming from employees or new hires, but they’re becoming increasingly common. And companies increasingly are fulfilling these types of requests—especially for top talent in today’s hard-to-find executive-employee market. "At the executive level, employers are saying there’s no limit [to the relocation services they’ll provide]. They’re giving [incumbent execs and new hires] whatever they need to make the transition work," says Laura Herring, CEO and president of The Impact Group, a St. Louis-based consulting firm specializing in relocation counseling and work/family services.
And with good reason. According to a study of executives at more than 200 large firms last year by McKinsey & Co., a global management consulting firm based in New York City, Corporate America is engaged in a war for senior executive talent that will remain a defining characteristic of the competitive landscape for decades to come. Three-quarters of corporate officers surveyed said their companies had "insufficient talent sometimes" or were "chronically talent-short across the board." Besides a more complex economy demanding more sophisticated talent in the future, two relocation-related factors will make finding and keeping senior talent a problem: Small- and medium-size companies are competing with larger firms for talent, and job mobility is increasing.
Many organizations that are feeling the pinch of recruiting and retaining executives are scrambling to beef up every imaginable benefit to entice the best from the rest. One notable area is relocation services. Adding everything from pet relocation to elder-care assistance counseling, firms are finding that better relocation benefits are helping ease the transition pain for their executives who must relocate, and for new employees taking key positions. In most cases, these new benefits make sense. They generally do make relocation easier for employees or new hires. But some experts caution that you might be at risk of throwing your money or effort away by piling on relo benefits. Here’s what’s new in executive relocation benefits and some insight into the growing debate over whether they really provide a return on investment.
Not the same old executive.
To understand why relocation benefits are changing, you should know the profile of relocating executives has changed quite a bit over the years. "Executives today aren’t the same as execs even 10 years ago," says The Impact Group’s Herring. Most executives who relocate these days are 35 to 45 years old. "Those people are part of the boomer generation and are married to other execs—a situation which never took place before," she adds. Traditionally, executives’ spouses used to do charity work and moved at the drop of a hat. Fast forward to 1999, and approximately 50 percent of relocating executives today are married to other executives, or at least are members of dual-career families. And about 50 percent of those married executives have children under the age of 18. Those children typically don’t just attend school, they also are involved in a host of after-school activities and sports. "As a result, we’re seeing execs listening to their families’ needs much more than they did 15 to 30 years ago," adds Herring. Today, children and spouses or partners have a lot more input into whether an executive will move for a job.
In fact, 63 percent of all relocation offers that are turned down are turned down because of spousal employment concerns, according to a 1998 report by Runzheimer International, based in Rochester, Wisconsin. Runzheimer is an international management consulting firm specializing in transportation, travel and living costs. "As a result, [companies] are having to offer spouse employment assistance now, just to be competitive with the top companies," says Herring. In a 1996 Runzheimer study, 56 percent of companies offered spouse re-employment assistance programs, and nearly 20 percent of companies that didn’t currently offer them said they were planning on adding them.
It used to be rare that women were asked to relocate for their jobs, but 25 percent of the managers and executives that The Impact Group moves each year, for example, are women. Its clients are 150 of the nation’s Fortune 500 companies. And more than 90 percent of female executives who are married have male spouses who also are working.
Both these demographic changes are driving the increase in job-search employment assistance during relocation. Increasingly, spouses or partners won’t agree to move unless they get help finding a job in the new location. But this is only one of the newest types of services companies are making available to their employees or new hires who relocate.
New transferee services make relocation as painless as possible.
Companies’ relocation assistance has traditionally focused on the harder side of moving: Helping sell the house, ship the belongings, paying for house-hunting trips and closing costs and so forth. These are expenses that most firms that cover relocation expenses will compensate in whole or in part.
However, most of the newest transferee services that companies are adding to their policies these days have to do with the softer side of relocation, such as coping with the move, and usually are referred to as family transition-support assistance. "I think many companies today are probably pretty similar on the cash side of what they provide in relocation," says Fred Meyland-Smith, vice president of human resources for St. Louis-based Ralston Purina Co.’s Pet Products Group, which moves about 120 people each year domestically. "The piece we think is distinctive is attending to the psychological side of the relocation. Movement of an individual or a family today is a complicated challenge. I think we need to be cognizant of that and provide some assistance to make the move as smooth and as comfortable as possible for the new hire." The underlying reason: Helping make a move easy usually means the employee or new hire will be able to become engaged in his or her new position more quickly.
These types of services, provided by either the in-house relocation professionals or a third-party firm, are focused on helping the transferees find the resources they need to duplicate their lifestyle in the new location. This includes finding out which schools, activities, churches, community services and resources are available in the new location that will fit their families’ needs.
A unique new service that some companies are offering transferees is what might be described as community familiarization trips. The same third-party real estate firms that help employees relocate often also host employees and their families in the new community for a few days before a house-hunting trip, just so they can get to know the new area. Meyland-Smith took advantage of this service when he joined Ralston Purina about four years ago as a new executive. "My wife and I were looking at things like schools, churches and entertainment, and getting a feel for this town," he explains. "This is a service aimed at introducing and acclimating a person."
Other services that companies are adding to their relo packages include benefits such as pet relocation and related services. They also are providing elder care and transition-support assistance for elder relatives—either by helping locate and move the elder relative to the transferring employee’s new city, or by finding and implementing services such as Meals on Wheels or hospice services to continue caring for the elder relative where they already live. According to results from a survey conducted by the Employee Relocation Council (ERC), based in Washington, D.C., nearly one-fourth of firms today offer elder-care assistance (21 percent—up from 17 percent in 1995). With the primarily boomer population who comprise the bulk of transferees, such services are critical in helping them decide to make a move.
Policy exceptions for executives.
Although most employers (66 percent) have only one formal written relocation policy, according to the ERC, an increasing number use a tiered-policy approach. One-third of firms (34 percent) now have more than one relocation policy, up from 21 percent in 1994 and 10 percent in 1988. The most common means of structuring a tiered policy program is based on the firm’s salary structure.
And the proportion of organizations deciding to put cafeteria-style, menu-driven policies in place has increased. Thirteen percent offered such policies as opposed to 7 percent in 1994. Under this type of policy, either the employee or organization may make the assistance selections. The vast majority of respondents indicated the business unit or division made the assistance selections.
"Most policies cover the masses," says Herring. "But senior execs tend to have more exceptions to policy. If an exec is losing a significant amount of money on the home sale, it could be that the corporation will empower the relo manager to change the policy for that executive." And that’s not all.
Some companies go so far as lavishing their incumbent senior managers or new executives with relo services so all they have to do is step off a plane in the new city. Not only will companies pay for the senior manager’s entire move, but they’ll also pay for an executive’s home contents to be completely unpacked and placed. "I’ve just talked to an interior-design company that will not only have the furniture in place, but have the whole house decorated by the end of the day that the belongings arrive, with pictures hung and floral arrangements made to compliment the new decor," says Herring. These types of complete relocation packages are usually reserved for the most senior executives.
Benchmark—but don’t just load on relo benefits without a strategy.
Just as it was with other benefits options, companies are seemingly piling on more and more relocation benefits in an effort to attract and retain the right people. Many large firms especially will benchmark to see what other companies are doing, then simply add on services in a one-upmanship type of benefits game.
According to Runzheimer’s "Survey & Analysis of Employee Relocation Policies & Costs, 6th Edition," compiled in 1997, nearly two-thirds (63 percent) of respondents now benchmark their policies against those of competitors to determine how well their relocation policies measure up.
"We definitely want to understand what the trends are and benchmark ourselves against other companies," says Meyland-Smith. "But do we use relo benefits as a recruiting tool? I would have to say perhaps. But it’s not one of the primary discussion points. I think the person considering a move is considering a number of other factors before they get to what the relo package is. We believe we need to be competitive in that arena, but we don’t see relocation as an influential recruiting tool."
A good strategy is to take all relevant factors into consideration, including what other companies are doing and what your employees want and need. "We found in talking to people throughout the relocation industry and HR professionals, that a lot of candidates these days are driving relo policy," says Daniel T. Bloom of Daniel Bloom & Associates Inc., an HR and corporate relocation consultant based in Largo, Florida.
Sometimes, even executives’ spouses or partners will drive the benefits. And, to put it bluntly, they’re getting away with it. "The companies who are waiting for their employees to ask for these things are definitely lagging behind the companies who are offering these things proactively," says Herring. "Because, trust me, the recruits are all talking. It’s not unusual that executives’ spouses will get together and talk about it." If one finds out that they didn’t get the same new-fangled relo service that some other senior executive got, they’ll march right in to the VP of HR’s office and ask why they didn’t get that service when they moved, too. In Herring’s opinion, "Now, so discrimination doesn’t take place, the companies have to offer some of these things to absolutely everyone who moves."
Ralston Purina’s Pet Products Group is one of them, because it doesn’t make distinctions in its relocation policy for executives as opposed to lower-level employees. "The differentials will appear in base pay and in added compensation, such as a signing bonus," says Meyland-Smith. "A move is as challenging for a person who’s making $60,000 a year as it is for someone who’s making $160,000." The difference is that most companies have a higher stake in someone they’re paying $160,000 and often offer better services to them to help retain them.
"I think it’s clearly a very competitive [labor] market. From our research in best practices, one thing that organizations should keep in mind is that more isn’t necessarily better," says Susan Leandri, director of the global best practice group at Arthur Andersen based in Chicago. The relocation benefits you provide your professionals should be in synch with what their real needs are. If you implement a new relo benefit, for example, then people don’t take advantage of it and you take it away, you might create some ill will that might not have existed before. It helps to survey your employees and find out what they really need, and then create programs geared toward those. "I think that’s a key element of best practices in this area. More isn’t necessarily better, but focus on the needs of your employees and create programs around those key needs," says Leandri. She suggests asking employees: If you could have three out of five things, what would they be?
Because such services can run into the thousands of dollars, the return on investment for relo services, like any other benefits, must be clearly convincing.
Is there ROI on relocation benefits?
Perhaps the most important factor that many internal HR and relocation professionals forget to determine is: What’s the return on investment to providing relocation benefits? Will just adding extra relo services for transferees really have a direct and positive impact on your company’s effectiveness or profits? Will they really help you recruit those difficult-to-recruit executives and, better yet, help retain them?
That question is coming under heavy debate within the relo industry. And at this point, it’s anyone’s guess because the connection between relo services, recruitment and retention, especially of executives, hasn’t been charted or studied in scientific detail yet. Bloom suspects there’s a strong connection, and has embarked on a study to determine the connection. "This is purely hypothetical on my part at this point because I don’t have any solid data to back it up yet, but I suspect if you look at just the real estate end of relocation, there might not be a strong connection to recruitment or retention," says Bloom. "But if you look at relo policies to include new community orientation, assistance in getting settled in the new area, and assisting the transferee in developing a sense of community where they’re going to, then I think it plays a role and I don’t think anybody’s looking at it."
Bloom says that in his research, he spoke with someone who does exit interviews at Ford Motor Co. "She says she has done 100,000 exit interviews for the company and relo has never played a factor in why people leave," he says. "But they never ask whether the relo policy had anything to do with the turn down."
Indeed, there’s anecdotal evidence that suggests relocation policies and benefits do play a role in whether employees take a job transfer or a take a new job in a new location. Herring shares an example of one company that wanted one of its executives to be the new plant manager in another location. "She would have been the first female plant manager for this corporation," says Herring. Initially, the woman turned down the offer saying that it wasn’t a good time in her personal life to make a move. But, through what Herring calls "Recruitment Plus" or "Pre-decision" for current executives, they call the person to find out if they’ll share the reason why they won’t make the move. In this person’s case, her 7-year-old son had a sensory-learning integration problem, and she had spent about four years figuring out with a team of doctors and specialists identifying the problem and lining up the resources to deal with it. After Herring’s team identified which doctors and specialists in the new location could handle the employee’s son’s challenges, the woman decided to take the new job and make the move.
In this case, spending some extra money to help remove barriers for an employee can be the extra effort that helps your firm achieve its staffing goals. But you need to figure such services carefully into an overall plan. According to the Runzheimer study, the average relocation budget is $2.7 million. It’s a cost that relocation managers have been keeping fairly constant over the past few years. That means they continue to hold the line on costs, while still meeting the fundamental needs of transferees.
When companies do provide relo benefits, companies often look at the return on investment in terms of what impact the transferee has on the organization, according to Jac Fitz-Enz, president of The Saratoga Institute based in Santa Clara, California, an organization well known for its HR benchmarking studies. "If I’m going to spend an extra $20,000, it’s probably going to be worth it because I’m assuming I’ll be able to keep the person for at least three to five years," he says. "I’m paying him or her a big chunk of money, and I expect him or her to make a major change in the organization." It all comes down to impact.
"In general, I don’t think [relocation benefits] make a difference until after the decision to take the job is made," says Fitz-enz, who says his organization hasn’t studied the connection between relocation benefits and recruitment or retention. He doesn’t think there is a strong connection. Instead, he points to the top factor, based on his firm’s research, that does have a strong connection to retention. "What we’ve found in doing exit interviews with approximately 50,000 people over the past two years—especially with people in the professional ranks—is that the reason people leave is a perceived lack of career opportunity," he says. "Of course they want money, but mostly what they want is interesting, stimulating work with an opportunity to grow—and that’s the primary stuff that HR ought to be focusing on. And all these HR programs are basically background. Benefits, in general, are background."
Remember, relocation benefits—like other benefits—are just that: Extras. They’re tools HR professionals can use to help drive desired outcomes, such as recruitment, retention, loyalty, competitive advantage and so on. If your goal is to attract and retain high-level talent, many of the newest relocation benefits may help your firm achieve that outcome as part of a strategic compensation and benefits package. But remember, even Santa Claus doesn’t give kids everything they want. He finds out what’s on their most-wanted list first—then checks it twice.
Workforce, March 1999, Vol. 78, No. 3, pp. 89-94.