Employee Relocation Trends and Implications for 2002

February 7, 2002

The editors of Workforce have looked into their 2002 crystal ball and identified what they think are the major issues affecting HR management today. Then they examined the impact of these issues on individual HR functions.

What's happening in your company that contradicts or confirms these trends?

Read the quick synopsis below. Then to give your opinion, click on the Employee Relocation Survey.

Workforce will tabulate these results and include them - and selected comments - in the next version of this article.

Major Trends Affecting Human Resources Management in 2002

Trend #1: Significant HR issues are intertwined with the current economic climate.

The economic climate has significant HR implications, and conversely, some HR issues are affecting the economic climate.

For instance, there is an ongoing labor shortage, obscured, in part by the current - but temporary - economic cycle. This labor shortage will have long-term effects on businesses' ability to compete in the world marketplace. Therefore, HR must manage to that labor shortage, despite contrary evidence.

Trend #2: Tough times require continued cost-cutting beyond layoffs.

It looks as if the 9/11 events may have helped to delay the country's economic recovery. Thus, many companies will continue to look for ways to cut costs.

In 2001, layoffs targeted less-skilled and marginal performers. In many organizations, only key employees are left. Additional staff cuts could hurt current business and hinder future economic recovery.

Companies cannot over estimate the importance of key employees to an organization and the continuing need to retain the best and the brightest.

As a result, HR will need to look at both trimming expenses and fulfilling HR's demand to keep and attract the best employees.

Trend #3: "Re-engineering" - or its next iteration - will become an important way to cut costs.

Since downsizing won't achieve the necessary cost-cuts, companies and HR departments will have to re-engineer their processes and do what they now do faster, cheaper, and smarter.

HR will have two roles:

  • First, it will have to look at its own department and make HR more efficient, more cost effective, and a greater contributor to bottom-line stability.

  • Secondly, HR will work with executive and line management to support their re-engineering efforts.

Trend #4: The pending economic recovery will lag unless there are qualified employees in place to make it happen.

Sustained economic recovery is in the hands of the intellectual capital of an organization - its remaining employees.

Because those employees are vital to long-term corporate success, HR is responsible for maintaining their commitment, well being, skill sets and continued employment.

Therefore, HR will use all of its traditional tools to develop and maintain a competitive workforce.

How These Trends Affect Employee Relocation

  1. Housing Is Still Expensive in Many Major Metropolitan Areas
    It hasn’t been in the headlines, but the cost of housing is still an issuein many job markets. Despite low interest rates and the fact that the housingmarket has eased up in some areas, such as the Silicon Valley, housing costs arestill significantly higher in many communities.

    And costs will continue to rise. According to a recent Home Price Forecastdone by the Cambridge, MA research firm, Case Shiller Weiss for The Wall StreetJournal, home prices nationally will increase by an average of 2.8% this year.In cities such as San Diego, housing prices will go up by 0.8% while in others,like Washington, D.C., prices are could jump more than 7%.

    This fact may make it hard to recruit new employees or relocate existingemployees to communities where housing is costly.

  2. Reluctance to Travel and the Need to Balance Work/Family Life
    What will happen to the long-distance commuting employee in the wake of 9/11?While the terrorist attacks emphasized the importance of friends, family, andcommunity, it also has made many people nervous about airline travel.

    Does that mean that commuting executives will look for jobs closer to home?Will they move their families closer to the jobs? HR will need to help suchemployees make informed decisions.

  3. Pressure to Relocate
    When unemployment was at 3%, companies were eager to accommodate manyindividual employment requests, including the virtual office and long-distancetelecommuting.

    However, with the push for increased productivity and with more people in thejob market, telecommuting and virtual office options might be withdrawn fromsome employees.

    The face-to-face relationship has distinct advantages to some employer. Thus,there may be some additional pressure on employees to relocate.

    On 9/11, many companies lost key staff and "sudden succession" became anissue. HR realized, if it hadn’t before, that succession planning was not aluxury, but a necessity.

    And so HR has new emphasis on looking at key jobs and identifying thosepeople who could fill the open positions. To make that a reality, many employeesneed additional experience -- sometimes at a different location. In suchsituations, relocation becomes a definite training tool.

  4. Increased "Long-Term" Assignments
    Competitive pressures will dictate that a vendor be "on site" for aclient. One way to get and keep the business will be to temporarily relocate keyservice personnel to the client’s site.

    If employees need experience in other locations and job assignments, butcannot relocate, then a long-term assignment short of a relocation becomes anoption.

  5. Global Security Issues Impact Global Relocation
    When Americans are targets and the country is at war, global relocation willdecline. Some executives in dangerous locations will be brought home, evenbefore their tour of duty is over.

    On the other hand, the globalization of business will not stop, and Americanmanagers will continue to be posted abroad. What will change is stepped upsecurity, even in such seemingly benign environments as major European cities.

  6. Fewer Corporate Dollars Allocated to Relocation
    Corporate relocation is expensive. Many organizations are looking closely atthe relocation packages they offer and the people who receive them.

    New hires will continue to receive less complete relocation packages thantransferees, and those will be closely evaluated based on the return oninvestment.

How These Trends Affect the Demand for Employee Relocation Services

  • Cost-of-living Issues and Mortgage Assistance: Because of housingcosts, HR will have to closely examine cost-of-living calculations.

    In addition, HR may consider working with mortgage companies to provide loanassistance and achieve volume discounts.

  • General Relocation Assistance: There are competing pressures on anindividual employee’s relocation decisions.

    HR will call on relocation specialists to develop relocation packages andprovide education and assistance.

  • Temporary Housing: More long-term assignments will require increasedtemporary housing options.

  • Spousal employment assistance: The costs of raising a family, being ahomeowner, and having an expected standard of living generally require twoincomes. Many employees will be ask about spousal employment assistance beforethey accept relocation offers.

  • Global Relocation Assistance: For those companies either bringing homeexecutives or still sending them overseas, HR will need assistance in relocatingthese key professionals.

  • International Security: Given the volatile nature of the world and thethreat of terrorism aimed at Americans, HR will increase its use of firms thathave experience in international security.

Source: Margaret Magnus, Publisher, and The Workforce Editors, January 2002.