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How the Economy Continues to Impact Domestic Relocation Policy?

May 18, 2010 by MSI

Read any relocation focused survey conducted in the past 12 months and you will see a marked consistency. Domestic relocation volumes are down for both existing employees (transfers) as well as new hires, and talent management continues to be a pressing challenge for human resource and mobility professionals. So, what is leading to these factors and how are mobility professionals addressing the challenges? 

Aside from the fact that many corporations have been focused on downsizing over the past 24 months and are simply not moving as many people as they did historically, there are a few key economic drivers that are fueling continued reluctance to relocation or a need for increased benefits provided by the corporation to entice a relocation acceptance.

As nearly 25 percent of Americans are currently ‘underwater’ on their homes, potential transferees are reluctant to take a loss on their existing home and relocate to a new destination. As such, individuals are either refusing a transfer or requesting additional benefits in terms of loss on sale assistance or home sale incentives, property management assistance or duplicate housing allowances so that they may rent in the new location and maintain their existing home. According to the Worldwide ERC's 2009 U.S. Benchmarking Survey, of those companies reporting making changes to their domestic relocation policy, the top four changes in order of prevalence were:

• Added or enhanced a home sale bonus/incentive for employees who find buyers for their homes
• Added or enhanced a home sale incentive for buyers
• Added loss-on-sale assistance
• Modified policy to provide loss-on-sale assistance to more employees
  

For corporations, employee reluctance to relocation has also prompted the investigation and implementation of new solutions including short-term domestic assignments, telecommuting, and extended business travelers. In fact, many large organizations have gone so far as to develop specific relocation policies for these new groups of individuals.

As domestic relocation has continued to decline since 2006, so has the profile of the individual. From new solutions such as telecommuters and business travelers to an increase in the number of renters, we question whether or not this will be the ‘new normal’ continuing into the future, or will the relocation industry recover as the economy does and return to historical trends. How are you addressing these challenges in your organization? What are your thoughts regarding the future of domestic relocation and it’s impact on policy, program structure, and talent management?