Measuring a moving world

Measuring a Moving World

Jack Griffin

© 2010 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/ert.20293

Employee relocation may be necessary forboth domestic and international organiza-

tions to implement new or changing corpo-rate initiatives or simply fill positionsvacated by seasoned workers. Providing relo-cation services is a benefit companies canoffer to retain or attract qualified workers. Insome instances, however, employees may bereluctant to make the move, and employersmay offer additional incentives to make relo-cation more attractive. In either case, reloca-tion services represent a substantial invest-ment for corporations. How employers andemployees view corporate relocationsdepends on a variety of factors, includingeconomic conditions at home and at the relo-cation destination, the real estate market,and geo-political events.

For the last 43 years, Atlas Van Lines, Inc.,has released an annual Corporate RelocationSurvey that explores trends in how corpora-tions move their existing employees or newlyhired people and the factors that affect thenumber of relocations from year to year. Toqualify for survey participation, a respondentmust have relocation responsibility and workfor a company that has either relocatedemployees within two years preceding thesurvey year or plans to relocate employees inthe year of the survey. Annual survey resultsare released in April, and for the 2010 sur-vey, Atlas received responses to its onlinequestionnaire from 274 participants, whocompleted the questionnaires between Jan-uary 11 and February 26.

Most of the respondents (79 percent) iden-tified themselves as working in the HR func-tion or relocation-services departments andwere primarily from service (40 percent) andmanufacturing/processing (33 percent) firms.Respondents from other business segmentsincluded those in wholesale/retail (11 per-cent); financial services (10 percent); govern-ment and military (1 percent); and otherindustries (4 percent).

For analysis, the responding firms are cat-egorized by size: small, with fewer than 500salaried workers; midsize, 500–4,999 salariedemployees; and large, 5,000 or more salariedemployees. Most of the respondents (39 per-cent) for the 2010 survey are from smallcompanies. Thirty-two percent are from mid-size companies, and 29 percent are fromlarge organizations. Over half (53 percent) ofthe companies that participated in the 2010survey are international firms.

SURVEY HIGHLIGHTS

Although survey results indicated noticeableeconomic improvements for companies,along with a relative increase in the numberof relocations, many companies, particularlysmaller firms, still have concerns for thefuture. Overall, companies are significantlymore optimistic than they were a year ago,judging by expectations for relocation vol-ume and budgets. (See Exhibit 1.)

The percentages of firms expectingdecreases in 2010 for relocation volumes and

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Employment Relations Today

budgets are down by about half from 2009.More than one in five firms expect relocationvolumes to increase in 2010, and roughlyone-fourth or more of midsize and large firmsexpect budgets to increase as well.

Small firms are the least optimistic, withroughly a third expecting decreases in reloca-tions and budgets. In contrast, most largefirms anticipate that the number of reloca-tions will stay the same or increase, as willbudgets for these. Although the percentage offirms expecting further cuts to relocationsand budgets is still higher than in recent non-recessionary years, the number of firmsexpecting increases is roughly twice that oflast year, indicating the beginnings of recoveryfor domestic and some overseas economies, aswell as the relocation-services industry.

Midsize and large companies reportedlower median numbers of relocations for thesecond year in a row. The average volumes—10–19 relocations for midsize companies and100–199 for large companies—are down from20–49 and 200–399 ranges reported by thosesize firms, respectively, for 2002 through2007.

Jack GriffinEmployment Relations Today DOI 10.1002/ert

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International Relocation Volume

International-firm relocations appear to havebeen hit hardest last year; half reported thatrelocation volumes decreased in 2009,whereas about a third of regional andnational firms reported decreases. Interna-tionally, relocation volume expectations areup slightly compared with those expressed in2009. Nearly two-thirds of firms expect inter-national volumes to remain stable, 18 percentpredict increases, and 17 percent predictdecreases (39 percent expected decreases in2009). Looking by company size, some pre-dictions are similar to overall relocation vol-umes: about one-fifth of midsize and largefirms expect international relocations to in-crease, while small firms are less optimistic—one-third predict that their international relo-cation volumes will decrease.

Although manufacturing/processing firmsare more likely to report decreases in interna-tional relocation volumes than for-profit ser-vice firms for 2009 (32 percent versus 16 per-cent), over half of both firm types expectinternational relocation to remain stable in2010, with close to a fifth or more anticipat-ing increases.

ECONOMIC OUTLOOK

Signals of guarded optimism emerge fromfirms’ 2010 predictions for their companies,the U.S. economy, and the real estate market.The majority of firms expect their financialperformances to improve, and roughly halfexpect the U.S. economy to improve in 2010.For the U.S. real estate market, expectationsare more influenced by company size: morethan half of small and midsize firms indicatethey expect stability, whereas just a third ormore expect improvement in 2010. Large

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firms are more optimistic—about half expectimprovement over last year. The most impor-tant trend is that the vast majority of respond-ing firms expect improvement or stability, notdecline, as compared with the far more direexperiences and expectations of 2008–2009.

The following further highlights firms’responses regarding 2009 economic perfor-mance compared with 2010 expectations, cut-ting across differences in company size, type,and location:

❏ Significantly more large firms (54 percent)reported improved financial performancein 2009 than midsize (41 percent) or smallfirms (36 percent). However, the expecta-tions for improved financial performancefor 2010 more than double among firmsin all size categories as compared withtheir expectations for improvements in2009. For example, 54 percent of smallfirms reported that they expect improvedfinancial performance in 2010, comparedwith only 26 percent that anticipatedimprovement for 2009.

❏ Both manufacturing/processing and for-profit service firms are split on financialperformances for their firms in 2009;about 40 percent reported better financialperformances, and roughly 40 percentreported worse. For 2010, manufactur-ing/processing firms are slightly moreoptimistic than service firms (70 percentversus 59 percent), but the overwhelmingconsensus from firms in both industries(96 percent) is that they expect financialimprovement or stability this year.

❏ More than a third of nationally and inter-nationally operating firms report theirfirms’ financial performances worsened in2009, compared with about a fourth ofregional firms. However, international

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firms are the most optimistic regardingperformance improvement in 2010; closeto three-fourths of these firms expectimprovement compared with about half ofnational or regional firms.

❏ Northeastern, midwestern, and southernfirms are the most optimistic on financialperformances; close to two-thirds expectimprovement, compared with about halfof firms from other regions.

❏ Close to half of firms expect the U.S. econ-omy to improve in 2010 across companysize, business reach, regions of the UnitedStates, and manufacturing/processing andservice industries. The exceptions are thatslightly fewer small firms (40 percent),regional and national firms (41 percent),

and firms based in the Southwest (38 per-cent) and Central/West (33 percent) regionsshare this optimism.

❏ Southern firms are the most optimisticregarding the U.S. real estate market;more than half expect improvement thisyear, compared with about one-third orfewer firms in other regions.

DIFFERENT IMPACTS FOR NEW ANDSEASONED EMPLOYEES

Market pressures are expected to have vary-ing impacts on different classes of employees.About four out of ten firms reported decreas-ing relocations for entry-level/new-hire andmiddle-management employees, whereas a

Northeastern, midwestern, and southern firmsare the most optimistic on financial perfor-mances; close to two-thirds expect improvement,compared with about half of firms from otherregions.

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little more than one-fourth of firms reporteddecreases in relocations for senior managers/executives. Nearly one-fifth of firms reportedthat relocation volumes among senioremployees actually increased in response tomarket pressures.

Differences in relocation volume forlower-level employees were noted in differentbusiness sectors as well. Close to half of manufacturing/processing firms decreased the number of employee relocations forentry-level/new-hire and middle-managementemployees, whereas just over a third of for-profit service firms did so.

As for international firms, about half ofrespondents decreased the number ofemployee relocations for entry level/new

hires, nearly double the percentages ofregional and national firms that did so, inresponse to market pressures. Half of interna-tional firms decreased relocations for middle-management employees as well, comparedwith about a third of regional and nationalfirms. About one in five regional and nationalfirms actually report increasing middle-man-agement employee relocations in 2009 inresponse to market pressures, compared with12 percent of international firms.

EMPLOYEE RELUCTANCE TO RELOCATE

Although the market pressures felt by com-panies are certainly the strongest influencein the decreased relocation volumes for the


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second straight year, other factors are res-ponsible as well. Employee reluctance torelocate continues to play a major role. Morethan half (56 percent) of firms saw employ-ees decline the opportunity to relocate in2009, and nearly a third of firms say thenumber of employees declining relocationlast year increased. Midsize and large firmscontinue to feel the brunt of employee reluc-tance; 30 percent of midsize firms and 42percent of large firms say more employeesdeclined relocations in 2009 compared withthose in the previous year (versus 19 percentof small firms). Employee reluctance to relo-cate was more noticeable for national andinternational firms than it was for regionalfirms.

Not surprisingly, housing/mortgage con-cerns topped the reasons employees had forturning down offers to relocate for the sec-ond year in a row. Those concerns (77 per-cent) remain above family issues/ties (51 per-cent), which had been the top issue citedsince its addition to the survey in 1983.

For large firms, housing/mortgage concernsare by far the biggest factor; 88 percent indi-cate employees declined relocation for thisreason. Although housing/mortgage concernsare the biggest issue cited by small and mid-size firms as well (63 percent and 74 percent,respectively), roughly half or more of thesefirms also cite family issues/ties andspouse/partner employment as reasons relo-cations were declined in 2009.

For international firms, housing/mortgageconcerns are the biggest issue—83 percentindicate employees declined relocations forthis reason. This is significantly more than atregional firms where three factors had simi-lar impact—housing/mortgage concerns (59percent), family issues/ties (55 percent), andspouse/partner employment (50 percent).

About one in five regional and national firmsactually report increasing middle-managementemployee relocations in 2009 in response tomarket pressures, compared with 12 percent ofinternational firms.

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INCENTIVES

To overcome employee reluctance to relocate,most firms offered incentives to encourageemployees to make a move in 2009. As men-tioned earlier, the primary concern foremployees in 2009 focused on housing, andso the most popular relocation incentive (for69 percent of firms) was extending housingbenefits. Relocation bonuses, loss-on-sale pro-tection, and cost-of-living adjustments(COLAs) rounded out the top four methodsused last year. In contrast, the most popularincentives in 2008 were COLAs (65 percent)and relocation bonuses (56 percent). Aboutnine out of ten companies reported that extraincentives “almost always” or “frequently”convinced an employee to relocate.

Survey responses regarding relocationincentives were further broken out by size offirm and whether national or international:

❏ For midsize and large firms, extendedduplicate/temporary housing benefitswere the clearly preferred incentive(offered by three out of four firms).

❏ Midsize and large firms are also muchmore likely to have offered loss-on-saleprotection as an incentive than smallfirms (52 percent and 62 percent versus18 percent).

❏ For small firms, the top two incentiveswere extended duplicate/temporary housing benefits and relocation bonuses(59 percent and 50 percent).

❏ National and international firms are morelikely to have offered COLAs than regionalfirms (40 percent and 41 percent versus 23percent), and international firms are morelikely than regional or national firms tohave offered loss-on-sale protection (52percent versus 26 percent and 37 percent).


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Although firms recognized the necessity ofoffering employees incentives to relocate, atthe same time, most also reported efforts tocontain costs in relocation policy/practiceover the past year. Although about a third ofall firms capped relocation benefit amounts,large firms are the most likely to havereviewed/renegotiated supplier contracts lastyear (42 percent) and tightened real estateassistance requirements (33 percent). Midsizeand large firms are also more likely to haverestructured policy tiers/eligibility for certainbenefits than small firms (28 percent and 33percent versus 11 percent, respectively).

LACK OF QUALIFIED LOCAL TALENT

During economic downturns, market pres-sures certainly overshadow other factors thataffect relocation volumes. However, a trendnoted since the mid-1990s is the increasingconcern about the lack of a qualified local talent pool and the impact of this factor onrelocation volume. (See Exhibit 2.)

The percentages of firms citing economicconditions as a major factor in relocation vol-umes in 2008–2009 are similar to the previousrecessionary peaks of 2002–2003 and1991–1992, and are up significantly from2005–2007. The concern regarding the lack ofqualified people locally falls significantly below2002, 2004–2008 levels, surpassing the lowestpercentage reported in the last recession

To overcome employee reluctance to relocate,most firms offered incentives to encourageemployees to make a move in 2009. As men-tioned earlier, the primary concern for employ-ees in 2009 focused on housing, and so themost popular relocation incentive (for 69 per-cent of firms) was extending housing benefits.

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(2003: 37 percent), but remains above lowsseen in 1988–1995. The bottom line is that theeconomy may trump other factors in recession-ary times, but it is clear that the availability ofqualified local talent remains a significantissue.

RETRACTION IN COMPANY GROWTH ANDBUDGET CONSTRAINTS

When asked to select the internal factors thathave the greatest impact on relocation volume—such as budget constraints, corporate growth,knowledge/skills transfer, and corporate reor-ganizations—corporate growth was consid-ered the most significant factor for a periodof 20 years—from 1988 to 2008—leading overbudget constraints, which came in secondduring that period. In 2009, budget con-straints became the leading factor for respon-dents. (See Exhibit 3.) Although the topinternal factor varies by company size, thecontinued decrease in company growth and


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increase in budget constraints is the keytrend across firms of all sizes.

When the results are broken out by the sizeof the company, three internal factors affectedlarge firms nearly equally: knowledge/skillstransfers (35 percent), budget constraints (34percent), and corporate reorganization (29 per-cent). Midsize firms indicate promotions/resig-nations as the largest internal factor (43 per-cent) affecting relocations in 2009, nearlyidentical to 2008 (42 percent). For midsizefirms, budget constraints (34 percent) and cor-porate reorganization (33 percent) are in sec-ond place, with both surpassing companygrowth (22 percent) for the first time. Smallfirms are the only ones indicating budget con-straints (21 percent) did not surpass growth (28percent) in affecting 2009 relocation volumes.

THE BOTTOM LINE

Although economic conditions, the realestate market, and employee reluctance to

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relocate exerted downward pressure on relo-cation volumes, the coming year may bringthe start of a recovery. Expectations appearmore optimistic than last year, albeit not sorobust as in times of greater economic


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strength. Relocation remains a businessnecessity and companies are using incen-tives, cost containment, and reimbursementcreatively to keep the wheels turning.

Jack Griffin, president and chief operating officer of Atlas Van Lines, Inc., and AWGInternational, Inc., brings more than 15 years of industry experience to his current posi-tions. Prior to joining Atlas, he worked in various senior-management roles within thedomestic household goods, special products, and international segments of the industry.In addition, he has served in a professional capacity with the International Association ofMovers (IAM) and the American Moving and Storage Association (AMSA). For moreinformation or to view the full report of Atlas’s 2010 survey as well as past results, visitwww.atlasworldgroup.com/survey.

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Measuring a moving world

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