Corporate Relocations Continue to Grow

By Kathy Gurchiek May 14, 2015
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Organizations relocated more employees in 2014 than in years past and the numbers are expected to continue to grow in 2015, according to the results of the recently released Atlas Van Lines’ 48th Annual Corporate Relocation Survey. Company growth and a lack of local talent tied for the top factors impacting the volume of relocations.

The findings are based on the results of an online questionnaire completed by 494 respondents between Jan. 20 and Feb. 26, 2015. Respondents had responsibility for relocation and were employed by a company that either relocated employees during 2013 and 2014 or plans to relocate employees in 2015. Half of the organizations represented by respondents were international firms.

Relocation Budgets

Nearly half of all companies surveyed reported increases to their budgets in 2014 for relocating employees. Small organizations (those with fewer than 500 employees) experienced larger increases than bigger organizations, and almost half of all respondents think their budgets will increase again in 2015. Few think their budgets will decrease.

How relocation expenses are handled appears to depend on the type of employee involved, the survey found. Two-thirds of respondents provide full reimbursement for transferees, and 38 percent pay for all new hires’ expenses.

More organizations in 2015 plan to provide lump-sum payments to executives than in the previous four years, on average. Lump sums were given to new hires more often than to other types of employees in 2014, but that practice is expected to drop markedly in 2015—from 59 percent of respondents to 43 percent. Fewer organizations also plan to provide lump-sum payments to entry-level employees, renters and homeowners.

Before 2000, full reimbursement was the most frequent method employers used to cover relocation costs for transferees and new hires.

Who’s Relocating

Nearly half of all relocations in 2014 involved new hires. Employees ages 30 to 40 were the most frequently relocated employees.

“We’re seeing a younger trend,” observed Phoebe Hodina, marketing specialist for Atlas. “Companies used to want to relocate their seasoned employees, the ones who performed the best. That’s not the case anymore” as the willingness of older employees to move has lessened—in part, because of resistance by employees’ families, she said. “Younger people are more willing to pick up and move.”

Alternative and Short-Term Assignments

The survey uncovered other changes from the previous four years.

Nearly two-thirds (65 percent) of respondents reported that they will use some alternative assignments in 2015. That’s up from 36 percent in 2014. Such assignments include extended business travel, cross-border commuting and permanent international transfers.

Year-to-date, an employee’s job function was the key factor in determining if an alternative assignment would be used. While assignment purpose and cost were other key factors in such assignments, they have fallen dramatically from 2013 and 2014—66 percent cited assignment purpose as a key factor in 2014 vs. 53 percent in 2015, for example.

Additionally, short-term international assignments that are less than 12 months are gaining favor at small and midsize organizations. International relocations for employees at larger organizations typically last one year or longer, but about half of midsize and larger organizations expect the use of short-term or temporary assignments to increase.

Relocation Incentives

Housing/mortgage concerns continued to diminish as a reason for employees to decline relocation; in fact, respondents indicated that it is at its lowest level since Atlas began measuring it in 2007. Instead, for the second consecutive year, family issues was the top reason for declining relocation, followed by spouse/partner employment.

Spouse/partner employment has progressively increased since 2011 as a reason for turning down relocation. In 2014, it reached its highest level since the turn of the century. Nearly two-thirds of midsize and large organizations reported it as the top reason for an employee declining relocation.

It doesn’t hurt an employee’s career to decline to relocate, more than two-thirds of organizations said. But 86 percent—the highest level reported after a significant drop in 2013—sweeten the offer with extra incentives or exceptions to their policy to encourage relocation. Most said the tactic was frequently or almost always successful.

Those incentives and exceptions include relocation bonuses, extended temporary housing benefits and cost-of-living adjustments. The incentive favored most appears to depend on organization size. Those with 500 to 4,999 employees, for example, were most likely to offer relocation bonuses, while those with 5,000 or more employees tended to offer extended temporary housing benefits.

Additionally, more organizations in general are offering employment assistance to the employee’s spouse or partner than in previous years. Use of this incentive rose from 44 percent for international relocations in 2014 to an expected 77 percent in 2015; it occurs more often at midsize and large organizations.

Other findings:

  • On average, companies relocated 50 to 99 employees in 2014.
  • The greatest growth in relocation occurred at international firms; more than half reported increases in overall volumes and budgets.

Atlas’ Hodina offered the following recommendations to HR for crafting a relocation policy:

  • Make sure the employee is the right fit for the relocation assignment. Over the past three years, about half of the organizations surveyed reported performing assessments on candidates before they were relocated.
  • Don’t be afraid to think about changing the policy for an employee or new hire who would be a good fit for the job but who might have different needs if relocation was required.

Kathy Gurchiek is the associate editor at HR News.

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