The company sought someone with a highly specialized background in operations, says Joly, a partner at Management Search Inc., a national executive recruiting firm.
"There aren’t many people who fit that profile, so I was happy to have found a solid candidate," he says.
The interview process went smoothly and the candidate soon accepted the offer. But before he could relocate to North Carolina for the new job, the candidate had to take care of one important task: selling his home.
Unfortunately, he lived in Michigan, one of the hardest-hit real estate markets in the country. When the real estate agent gave him an estimate on what his house was worth, it was about $100,000 less than what he had paid, Joly recalls. "It became unfeasible for him to move."
The candidate promptly withdrew his acceptance, and Joly was forced back to square one. Unfortunately for him, Joly says he’s been in this predicament on three separate occasions during the last six months.
"You are doing twice the amount of recruiting work, but not getting paid for it," he says.
He is not alone. An increasing number of talent acquisition experts say problems in the real estate market are taking a toll on recruiting, primarily because persuading candidates to relocate has gotten significantly more challenging and much less lucrative.
"I have seen more executives turning down job opportunities because they don’t want to relocate," says Joseph Benevides, senior vice president of global relocation services at Paragon Global Resources and president of Washington-based relocation services industry trade group Worldwide ERC. "They don’t want to take the risk in this real estate market."
The trend could have serious repercussions for hiring companies, says Dan Martineau, head of search firm Martineau Recruiting Technology. The next time a vacancy comes up, it may mean employers will either be unable to fill a position or have to settle for a second-tier candidate, he notes.
Companies have attempted to prevent a weak real estate market from curbing hiring plans, says Bud Cole, business development manager for Crown Relocations, a global relocation vendor in Huntington Beach, California. He says employers are willing to pick up the tab for real estate agent commission fees and closing costs on the purchase of a home. Some companies are giving executives money to offset the losses they may have incurred by selling a property in today’s market.
Such strategies have been successful, Joly says, but while Fortune 500 companies can afford it, many midsize and small employers can’t.
What’s more, many of these perks are offered exclusively to the top-level C-suite executives, Joly says. That leaves other critical, lower-level executive positions vacant, since companies are unwilling to cover relocation costs.
Joly suggests employers broaden the number of executives eligible for relocation benefits. Other talent acquisition experts are urging companies to get more creative when it comes to the challenges of relocating an executive.
"Employers are going to have to go the extra mile if they want to wrestle this beast down," says Ed Newman, founder of the Newman Group, an HR consultancy.
Newman suggests that companies ask themselves a critical question before making it mandatory for an executive to relocate: How necessary is that person’s physical presence? Depending on the position and responsibilities, it may not matter whether an executive is based at a company’s headquarters or telecommutes from a satellite office or even from home.
"Working remotely can be a good solution," Newman says.
Employers should be proactive in exploring alternatives to executive relocation, says Peter Felix, president of the Association of Executive Search Consultants in New York.
"Companies should be as flexible as possible if it means being able to secure a star performer," he says. "It will pay off for them over the long run."
Felix says adopting "extreme commuting" measures—not requiring a physical relocation but periodically commuting long distances to be in the office—also may work. Ultimately, however, it’s up to each company to answer how valuable an employee will be and what it will take to hire that person, he says.
Regardless of what approach they wind up implementing, Joly urges companies to act quickly.
"Strong executive talent is not going to be on the market for a long time," he says. "Smart competitors will always be there to scoop them up. Companies can lose out on a star performer."