You might assume that a revived economy would accelerate the outsourcing of employee moves. Not so fast.
By Elizabeth Boudrie
As the economy swings back and forth between high hopes and low expectations, one of our perennial questions at the HRO Today Institute is this: How do economic trends impact HR outsourcing? We’re interested to explore how bullish or bearish views of the economy influence outsourcing activities in specific functions.
To that end, as part of our recent “Relocation Services Baker’s Dozen” survey, we asked HR practitioners about the number and complexity of their organisations’ relocations during the past couple of years and the anticipated number and complexity during the next couple of years.
Their responses surprised us.
The general consensus is that the global economy is on the upswing (that is, if sequestration hasn’t tanked the U.S. economy by the time this article is published). Our assumption: An improving economy leads to more hiring, which drives more mobility, resulting in more, and more complex, relocations.
But according to responses from our recent relocation survey, that’s not universally—or even generally—the consensus. What they told us is (1) more often than not, the number and complexity of relocations increased during the past couple of years, counter to what we’d thought; and (2) fewer anticipate increased numbers and complexity in the coming two years compared to what they’ve experienced in the past two. In other words, while HR practitioners don’t generally anticipate a decline in the number or complexity of their relocations, many expect less change than they’ve recently experienced.
We reached out to those who indicated they had experienced growth during the last couple of years but expected no change or decline in the next couple. We wanted to understand why their expectations are different from what we’d assumed.
Among those who said they’ve experienced an increase in activity, but now anticipate a decline, certain reasons were most often cited:
• Expansion or contraction now complete. “We have recently completed a major expansion which required a great deal recruitment and relocation. Now that the expansion is complete, we would expect to return to a more normal state.”
“We’ve been in a growth mode and expect that to level off a bit. Also, we are investing more in employee development and hope to have our own local employees ready for bigger jobs.”
• Site consolidation. “In the past two years, the growth of our operations in [one office location] caused us to offer relocation packages to a number of employees in [other office relocations], where our operations were slowing.”
• Merger/divestiture. “Our relocation volume in 2011 and 2012 was driven by our merger. . . . We set a goal of making the management side of our combined company as close to a 50-50 mix of our two subsidiary[ies]. . . . Therefore, we provided a very generous relocation policy to co-workers who accepted moves in the merger and as a result moved over 1,000 co-workers.”
• Aging employee population. “Over the last few years, many of our seasoned employees have retired and we have had to replace them—thus providing promotions and the need to relocate. Now our employees are at a younger age base, and there is expectation of a leveling off of relocations. We also are trying to hire more within local areas, possibly reducing relocations.”
Among those who said they’ve experienced an increase in complexity in the past two years, but anticipate a decline in the coming years, again, certain reasons were common:
• Expansion into new locations. “…the last couple of years have led to an expansion in the countries in which we do business as well as the quantity of assignees. We also had a decentralised method in handling third country nationals which led to more differentiation in applying our relocation policy as well as less economies of scale with network vendors. Since then, we have stabilised in terms of the countries in which we place assignees and have centralised third country nationals to help us in managing the complexities and adhering to our policy with fewer exceptions.”
• Closer/better engagement with relocation provider. “We revised our policies with the help of [our provider] and have implemented a core/flex matrix approach, so we expect [better] alignment. The past few years we have had many one-off, exception-based, complicated arrangements since we had a rigid, outdated policy.”
• The troubled economy. “The drastic reduction in home values significantly impacted employees’ ability to relocate. We had to come up with additional ways to counsel employees, screen external hires, management benefits, change assignment profiles—for example, instead of relocating, maybe we arranged for the employee to train for several months and then work remotely—in order to meet our talent needs and work objectives.
Elizabeth Boudrie is the executive director of the HRO Today Institute and the vice president of research for SharedXpertise.