Q&A: Expansion and Relocation

True confessions

When relocating employees, llamas
and other family secrets play role

by Beth Ewen  

Small employers might think they have a disadvantage when recruiting employees from around the country. They probably can’t pay as much of the relocation cost as their bigger counterparts can. They may be surprised to learn that many times the “soft” issues, such as where to house the family llama and how to survive the winter, are what make or break a recruiting effort.

So says Judy Haydon, who runs Burnet Relocation in Edina. She shared tips about convincing recruits to come to the Twin Cities. It turns out that many services that relocation firms provide are free to the employer. Plus, any prospective employer can listen to a recruit’s concerns and figure out a way to address them. Now, if she could just do something about the weather…

Upsize: How active are small companies in relocating employees from around the country and abroad?

Haydon: Recruiting from out of the country now is more difficult because people are having trouble with visas after 9/11. The economy has affected the activity because people are unemployed and available locally to work. Smaller companies are still transferring people here from elsewhere, however. It will pick up as the economy improves.

Upsize: What are people looking for when they’re recruited to the Twin Cities?

Haydon: The No. 1 concern is the weather, because there’s always the misconception that they’re not going to survive. People think they can’t go outside. The other thing they’re concerned about is there’s nothing to do here.  They hear so much about the Mall of America, but don’t know what else is here.

It’s a misconception because there’s so much. The theater is second only to New York City. Our economy is still good. The educational opportunities for children are awesome here.

Upsize: So how can employers get the word out?

Haydon: They should be sharing personal experiences, having the recruit talk to someone who lives here. It may be hard to recruit here, but once they’re here it’s hard to get them to leave.

You do have to manage their expectations on the cost of living. Our housing isn’t as expensive as on the coasts, but it’s not as inexpensive as some think, and if you’re coming from a smaller city it’s hard to get what they want. You can send them information, but unless you bring them to see the housing, they may not have an accurate picture.

Upsize: How can you convince prospects to move here?

Haydon: The best thing to do is sell the whole family on the relocation. At least bring the spouse, of course, but children are important, too. Children can make or break that relocation, especially if they’re in high school. If you can, bring them and show them a variety of areas, visit the school they’ll attend, or whatever it is they’re looking for. If they’re active in sports, arrange a visit with some coaches. If everybody is crabby at home, the transferee isn’t happy and it’s not going to be a successful relocation.

Upsize: When your counselors work with prospective employees, what do they do? What do the pros ask?

Haydon: We have relocation counselors educating them on all the soft issues I’ve been talking about. The counselors know everything about the area, so they know what to say when people ask about a church or synagogue, or a day care center, or job opportunities for the spouse.

They spend a half hour to an hour on the phone. Start by asking them, what are the obstacles to the move? Is it the children? Is it caring for an elderly parent? Have they ever transferred before? What kind of area do they live in now? What kind of house do they have? Do they want to replicate their experience or do something new? Do they want to buy down? What are their children interested in? Do they need a nanny? Do they have pets? Are they wanting a shorter commute? Once you ask a few questions they’ll tell you all kinds of things.

Upsize: It sounds like they tell more to the outsider than they do to their prospective employer.

Haydon: Most times they do. The counselor is an advocate, and meets with them face to face, so they get a good feel for how much the person is committed to the move, or for what the real obstacles are. We do share that information with the employer. 

Upsize: How much does it cost to relocate someone?

Haydon: For a family of four, it costs about $51,000, if you include all the services from where they came from and where they’re going to.

Upsize: What portion of those costs are companies paying these days? What does it take to be competitive?

Haydon: Smaller companies are looking to keep costs down. For example, some companies are giving flat fees, but they should be aware that some things are not taxable to the transferee. Van lines are not taxable, and the last trip en route to the new destination is not taxable, so companies are better off paying for those two things directly.

Also, be careful of the IRS. A recruiting trip is not a business trip.

Upsize: Where are companies cutting back?

Haydon: It used to be that companies would do buyouts of old homes; that’s not as common as before. Some companies are doing a buyer value option. It’s a way to circumvent taxes for the transferee. The house is sold to the corporation and then to the new buyer. It’s no cost to the company, although they have to be aware that they could end up with the house if the buyer falls through.

In the past, companies would pay for short-term living, and they’re shortening the period that they’ll pay for. Also, instead of giving carte blanche as in the past, so the person would find the nicest place they could to live temporarily, they’re giving a flat fee. That way the employee will be more conservative.

Upsize: Are big companies economizing too?

Haydon: The corporations are getting a lot more lean and mean. Before there might be a recruiting trip, then two or three more. Now it’s expedited. They might come for a recruiting trip, accept the job on the trip and buy a house then, too.

Another difference is fewer and fewer are paying the whole $51,000 cost. They’re picking and choosing, so if it’s someone they really want to get, they’ll offer it all, but for everyone else, the package is much smaller.

Upsize: What about the other way? When companies here expand elsewhere, do they generally relocate local employees or hire in the new location?

Haydon: They usually offer some people in the current location positions in the new location. But it’s amazing. If they say there are 50 positions in the new location, a very small amount tend to move. If they grew up here it’s extremely hard to get them to go.

Upsize: Do companies have to do a large number of moves to work with a relocation service?

Haydon: Some services work with only larger companies that do, say, 50 or more moves a year. We work with all size companies. That’s something you should ask the firm you’re thinking of working with. Sometimes a company that only has one move a year — maybe they’ll have 10 down the road. That’s how we look at it.

Many of these services are complimentary. For example, the counseling services I’ve described, where the counselors talk with the families to find their concerns, do not cost the employer anything. We get paid through a referral fee from the agent who closes the home sale. Many other firms work that way, too. Then there are menus of services that we and others charge for, for example, tracking expenses or creating relocation policies.

Upsize: What do you think makes for a successful relocation?

Haydon: If they want to bring their children on a visit, let them. If they have pets, they’re not going to put those pets in a kennel; they want the pets with them at their house. You have to understand what’s important to them, and see through their eyes. We had someone who had a llama, and we had to find an area where you could keep a llama.

Upsize: So if you want that employee to come, and you think having a llama is dumb, you can’t say so.

Haydon: People like the idea that you take the time to truly care about what their issues are. You have to listen to make them feel happy. You have to not make light of any of the issues because they are important to them.