Human Resources: Executive Summary: Relocation

Relocation activity was expected to increase in 2005 in both volume and budgets, especially for larger companies. Earlier in the decade, the slow economy forced cutbacks to relocation budgets, but they have bounced back somewhat as the economy has improved. According to the "38th Annual Corporate Relocation Survey," by Atlas World Group, current trends echo those of 2004. Though relocation packages and benefits are no longer as generous as they once were, funding for moves is growing again, especially in the IT industry.

Before the economic downturn, relocation packages included such benefits as temporary housing allowances, child care or eldercare assistance. Corporate executives often were reimbursed for moving such extras as art collections or boats. But now belt-tightening has forced relocation managers to keep costs to a minimum, so other forms of assistance to attract the best new hires and enhance the success of transfers are growing.

Temporary relocation has gained in popularity as a less-expensive alternative to permanent relocation for many workers - short assignments seldom include moving the entire family. A one-time lump-sum payment works best, according to relocation specialists, because it offers flexibility for workers to manage a move themselves, including any unusual circumstances or special costs that might occur.

Some worker relocations are driven by the relocation of businesses themselves, which in turn are influenced by technological and demographic changes. After all, the Internet allows some companies to carry out their business almost anywhere. Since the fall of the dot-com industry in 2001, many firms have left Silicon Valley and other metropolitan areas for cities such as Reno, NV, and Boise, ID - areas with lower housing and labor costs and, often, lower taxes. In fact, since 2001, information jobs in Boise have grown by 5.9%, professional business services jobs by 9.1% and the financial services sector by 11.3%.

But many employees are not eager to relocate, and family issues top the list of concerns for most workers faced with possible relocation. For example, children must change schools, and family ties to other relatives, particularly the elderly, may be strained or severed. In years past, employees were more willing to move because companies provided lifelong assistance via pensions and company-funded health insurance. But these benefits have eroded, and many workers would rather change employers than change their location. In fact, people in the U.S. are moving less often than at any time in the last 50 years. When they do move, however, it's slightly more likely to be an out-of-state move than it was back in 1994, according to a 2004 report from the U.S. Census Bureau titled Geographic Mobility.

Outsourcing relocation services is popular with 63% of respondents to the Atlas survey, particularly for real estate needs such as buying and selling houses for relocating employees. With the escalation in housing prices, homeownership may not be affordable in certain areas without company assistance. Other attractive outsourced services are paid contracts for moving household goods, counseling about move details, orientation tours to the new location and transportation arrangements for employees and families during the move. And some family-friendly groups even offer special assistance for moving the family pet.

In today's competitive market, a relocation provider must be an active partner. Teaming with the client requires certain skills to ease the moving process. These include good communication and an understanding of the legalities involved with relocation-related benefits. Such benefits vary among different fields, and most new hires have fewer relocation benefits than long-time employees. With proper preparation and qualified HR people, relocating employees can go smoothly and with a minimum of stress.

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