I have to admit I’ve been one of those HR Pros who got to design and develop relocation policies a few times in my career. I admit this because my philosophy on relocation has changed somewhat over the years – not because of my experience with relocation design and administration – but because I was put in positions – 4 times – in which I went through “professional” relocation for various HR positions in my career. That fact has more impact on my philosophy of relocation than all other issues combined.
So, Fact #1 on getting a better relocation policy for your company: force those designing the policy to actually relocate, at least once. If you haven’t relocated, you can’t design the policy – it’s that simple.
People who haven’t relocated to another state for a job have no idea what impact it has on your life – it’s not the same as moving to a new house in another part of the city you live in. For the most part, if you have a significant other and some kids thrown in the mix, it’s probably one of the most stressful events you’ll go through in life. You get hired – Yeah! You have to go show up at new job – without family, belongings, etc. You’re trying out the new position, culture, etc. all the while your spouse is home trying to run life, now without 50% of the support resources (who is now living in a hotel or furnished apartment, eating out each meal, sitting around doing nothing, etc. – you’ll only understand if you’ve been through this!).
You need to find a new house, but not until the old house is sold, find the right schools, etc. etc. Oh, and by the way, you probably have some HR administrator going over your relocation expense reports like they’re a Zapruder Film. Oh, I’m sorry Mr. Sackett, you seem to have spent $1.32 too much on parking at the airport last week. Really!? I haven’t seen my wife and kids for two straight weeks and we’re talking about $1.32? DON’T UNDERESTIMATE FACT #1.
I know the talk, lately, about relocation, has been about how difficult it is to get people to relocate because of falling housing values. Workforce Management’s recent article Recruiters Get Creative with Relocation in Sluggish Housing Market by Leah Shepherd speaks specifically to this dilemma. Clearly, it’s more expensive to get people to relocate, but I will argue that it isn’t more difficult. HR folks are classic in confusing expensive and more difficult – finance people don’t have this same issue. It’s not more difficult to get some to relocate, its just more expensive.
Here is where Fact #2 comes in: Never allow your Hiring Managers to get involved with Relocation.
Believe me, they will want to – it’s interesting how people who already work for a company tend to view relocation dollars spent, like the person receiving the relocation is getting a huge bonus! All of sudden your Hiring Manager believes they are personally responsible for every penny that is spent. They aren’t, and you the HR Pro understand this, and that’s why we keep our Hiring Managers out of the picture. We need them to have a great first impression of the new person – so take money out of the picture so they can focus on the fit and skills.
HR/Recruiting Pros are in the business of increasing talent of their organizations and this fact has to be paramount when discussing the finances of corporate relocation. This brings us to Fact #3 on how to make your relocation policy better: don’t budget relocation as a single annual amount, budget relocation by the percent of hires you anticipate in having to relocate.
Look, it’s way too easy for finance and executives to look at the HR budget and say… wow, $1.5M in relocation budgeted for 2010 – you need to cut that by $500K. Great, I’ll do that – but tell me which people we won’t be hiring? Recruiting Pros need to come to the table with market data supporting why relocation is necessary and at which roles and levels. Cutting relocation isn’t a question about saving money, it’s a question about which talent is less important to the company – because that’s the real cost. Also, budgeting by hires forces departments and divisions to answer to their talent management strategies, instead of throwing it on HR’s back. Hey, its August and we’ve already spent our Relocation budget for the whole company! No, Mr. Hiring Manager, it’s August and we’ve spent your department’s relocation budget – you better talk to Mr. CEO and tell him why you couldn’t manage your budget.
Hey, I get it – dropping house prices are killing relocation budgets and making it too expensive to bring in talent that needs to buy and sell houses. The big questions HR Pros have to answer though is what real value this hire is going to bring to the company, and what’s the ultimate ROI. If you’re hiring a sales person who realistically is going to bring $250-500K to the bottom-line in one year – paying a house buy-out of $50K and Realtor costs on the new home at $25K all of a sudden doesn’t look like a bad ROI – but HR Pros need to be able to make that business case for top talent.
And lastly, Fact #4 – Don’t come to a Relocation Gun fight with a knife. Know what the person brings to the table, and be able to show the alternatives – but either way show the impact to the organization.