Any one who has been relocated knows how the process works. You typically get the job and then the company works with you to relocate your family. You sell your departure house, stay in a corporate rental in your new city until you find a new home and all’s well that ends well.
But today, companies are being very picky about who they relocate. That’s because the terrible housing market and economic recession has put a strain on an individual’s ability to sell their home.
There is an excellent article on this topic in the latest issue of Mobility magazine. The article talks about changes in the relocation industry as triggered by the housing crisis and economic recession in the U.S.
The article discusses a recent survey by Cartus, Danbury, Connecticut, called “Emerging Trends in Global Mobility: U.S. Domestic Policy.” The study sheds some light on what companies and relocated executives are feeling these days when it comes to relocation.
Some significant findings include:
- 79% of survey respondents said there was an increased reluctance to relocate this past year,
- 94% of the respondents said this reluctance to relocate was due to real estate concerns,
- 70% say their inability to sell their departure residence as being their greatest real estate challenge. Loss on the sale of the home and negative equity tied for second place.
This means that companies that depend on a mobile workforce are being forced to reconsider their strategy. Instead of full-out relocation, many companies are making short-term assignments, expanding their telecommuting program, extending the length of business travels, hiring locally, and putting temporary holds on relocation in general.
What we’re seeing is that, today, companies can’t simply relocate an employee and be done with it. Rather, they need to involve HR in the process and both the company and relocated executive need to consider if the real estate burdens are worth the talent move after all.
In terms of corporate housing trends, it will be interesting to see the fall out. Relocated families once comprised a large portion of corporate housing users; however, it looks like the bigger portion of corporate renters will come from those on extended business trips and short-term assignments.
Someone who is put on a year-long project in another state isn’t going to want to lug luggage with him each week – especially given the airport restrictions for carry-on baggage. It would make sense to see more companies turn to long-term corporate rentals as the top choice of accommodations over a transient hotel where the executive must pack up his belongings each week, live out of a suit case and eat fast food or room service each day. The executive will not stand for that – rather he would want a place to call home away from his home. He would want a fully functioning kitchen and a place to leave his “stuff” between visits.
Read the full article on the Mobility website and tell us what you think the fall out will be with diminished relocations and longer business trips? Is this the new norm or just a temporary solution until the housing market and economy improve?