According to the US Bureau of Labor Statistics, for the past several years the national unemployment rate has fluctuated between 3.7% and 5.2%. That means in today’s competitive market, it’s getting more and more difficult for businesses to recruit, hire, and retain top employees.
So what’s an employer to do? Many firms now offer attractive benefits packages to lure candidates from around the country. A critical aspect of these packages includes relocation services to make the moving process for transferees and new hires less stressful, more efficient, and more cost-effective. As these companies will agree, a well-managed relocation benefits package can make a huge difference to recruitment efforts. And the right benefits package - and relocation policy - can be a factor in whether or not a potential employee will agree to move and/or accept a new position.
However, in a recent survey, only 67.8% of HR and Purchasing professionals queried reported extending any kind of relocation package (2.4% had no idea what their policy is). Slightly more than half stated that they provide a full-service package to new hires; others offer either a lump sum compensation or have an expense reimbursement program. While this implies that most companies understand having to relocate is a significant factor in accepting a new job, a great opportunity exists for corporations to gain a foothold in recruitment by developing a comprehensive corporate mobility package. An insufficient benefit package may be a substantial factor in losing potential employees to a competitor.
Who is Offering Relocation Service Packages?
In the 2018 study, “Corporate Mobility and Talent Recruitment Trends”, information was gathered from a cross-section of businesses of every size - from 50 to 10,000+ employees - and from a variety of sectors. This study discovered that some industries offer relocation services more often than others. The top five industries most likely to provide moving services to new hires include Engineering, Computer/Technology, Financial Services, Business Services, and Retail. Businesses which provide benefits packages, but less comprehensive ones, are Real Estate, Healthcare, Consumer Packaged Goods, and Industrial/Manufacturing.
There is a direct correlation between business sectors that have more problems with recruitment and hiring, and those who do not offer full-service relocation and moving packages. To compete in the current job market, businesses may benefit by reevaluating their benefits packages and offering relocation services to newly hired employees. It may be worthwhile for every company to consider, that by including moving and relocation as part of a job offer and benefits package, they could gain a competitive advantage for talent acquisition.
Why Is Talent Recruitment Becoming More Difficult?
Companies responding to the 2018 study reported three top reasons, from a list of six, why they were having difficulty hiring talent: One was the tendency for employees to job hop (60% selected this answer), the second reason was that fewer qualified applicants were applying for open positions (44.5%), and the third reason was due to increasing competition for good applicants in their industry (36.3%).
More than 95% of survey respondents recognized that moving and relocation benefits play an essential role when recruiting new employees. Overall, businesses are realizing that to find more and better-qualified applicants, they need to reach outside their immediate area. As competition stiffens and the economy grows, potential employees know they will have to move to new locations for their job. And they assume their employer will help them do so.
Full Service vs. Lump Sum vs. Expense Reimbursement
Inevitably, corporate relocation and moving packages vary from business to business. The study shows that, of the companies surveyed, more than half (55%) offer a full-service program, while 26% give their new employee a lump sum check, and 19% reimburse the employee’s expenses.*
To clarify, a full-service relocation package can offer everything from house hunting assistance and packing, moving, and storing of all household goods to covering travel expenses and paying closing costs, realtor fees, and more. Lump sum benefits offer a potential employee compensation of a certain dollar amount, most often dependent upon their position. And reimbursement programs refund employees’ expenses after they’ve moved to their new location. The latter two programs leave it to the employee to make all of the moving arrangements.
However, in the computer and technology sector, recruiting top talent is a huge challenge and is expected to remain so. Therefore, statistics show that this area of business is most likely to provide a more attractive, full-service benefits package compared to other industries. At least 67% of tech businesses offer a full-service relocation program; 22.6% uses a lump sum service, and only 9.4% reimburse the employee.
Don’t Lose Your Perfect Candidate
The most significant impact of a less-than-complete moving and relocation program may be the potential for losing a great new employee or the ability to retain top talent. In the survey, it was reported that the four top industries most likely to sacrifice a good candidate due to poor benefits packages are: Engineering (59.5%), Consumer Services (57.1%), Financial Services (51.5%), and Education (50%).
However, other industries have been affected as well. More than 31% of the businesses responding reported losing six or more potential new hires each year because of a lack of relocation benefits. Forty-nine percent of corporations relayed losing between one to five candidates due to an inferior benefits package. Coincidently, those industries most uncertain about whether or not their relocation policy had an impact on hiring also reported little to no losses in talent acquisition.
Whatever the reason, it is important to know why a potential candidate was lost to a competitor. Providing quality benefits packages, which include attractive relocation services, proves that the company has a commitment to prospective employees.
What Is Your Cost Per Hire?
It is advisable for businesses to execute valuable research as to why a potential candidate chose another company as well as knowing their cost-per-hire. What specific factors contributed to the candidate’s decision? And what did it cost the company to hire - or lose - that person?
A simple way to calculate the cost-per-hire (CPH) is to add the cost of the internal recruiting costs to the external recruiting costs and divide by the number of candidates. (IRC + ERC / # of candidates = CPH)
There are many costs incurred during the hiring process, including in-house HR and recruiters’ salaries, third-party fees, advertising costs, marketing pieces, job posting fees, travel expenses, employee referral bonuses, and more. This does not include the expense of moving new employees once they are hired.
Although costs vary by region and industry, it can be a shock to see the bottom-line. According to the U.S. Department of Labor, after all expenses have been factored in, the total cost of recruiting and hiring one new employee in a manufacturing or professional industry can be more than $5,000. Even in services-related industries, hiring a new employee can cost over $1,000.
According to the SHRM (Society for Human Resource Management) “Human Capital Benchmarking Report”, the average cost per hire in 2016 was $4,129, and the average time to fill an open position was 42 days. This data reflects the fiscal year 2015 and was collected from February to April 2016. Two to three years later, the cost is certainly higher.
With the current economy and labor market tightening, competition to acquire top-level employees is fierce, and it may only get worse. Having a good-quality benefits package can level the playing field and ease the pain for recruiters and HR professionals trying to recruit top talent.
Starting a new job is stressful enough for an employee. Don’t add the burden of moving as well. While it may be easier for a business to simply hand out a check (either before or after the move) and let the employee make all the arrangements, most new hires have no experience in handling all the details required of a substantial move. Don’t put your candidates at a disadvantage before they even start their new position.
Living in a mobile society is part of acquiring talented employees, and an attractive benefits package may mean the difference between a candidate accepting or declining a job offer. It can also mean the difference between a satisfied transferee and a disgruntled one. Businesses can’t afford to offer less than vigorous relocation packages if they expect to retain and hire quality employees in today’s economy.
Unfortunately, offering a reimbursement or lump sum package – while preferred by many companies – may not be the ideal solution. By forcing employees to choose a moving company, pack their belongings, and find a new home on their own, the potential for damage and unexpected liabilities is high. During the busy moving season (June through September), securing a high quality, full-service mover and desirable moving dates may be difficult. New employees may have to rent a truck or leave themselves open to rogue, or less than reputable, moving companies.
As the world becomes more complex, business sectors that are able to add relocation and moving packages into their benefits offerings will be that much further ahead of the game when it comes to recruiting, acquiring, and retaining top talent.
*For more information and to read the complete survey and report, please click here.