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IT moves beyond the U-Haul

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The Hunt
IT moves beyond the U-Haul
In today’s tight IT labor market, relocation benefits play a larger role in recruitment. Companies are even considering pet relocation packages.
By Natalie Engler

December 1998

In this article:
IT people on the move
Bag o’tricks
Relocation, relocation, relocation

“We were stuck in Hawaii and we couldn’t get out.”

Now, there’s a sentence you don’t hear every day. The question, posed to John and Sonya Smith (not their real last name), that prompted this response was, “How did you end up working for USWeb?”

Illustration by Daniel Guidera

The Santa Clara-based Internet consulting firm with 38 offices worldwide was the only company that offered to pay for the couple to move to the East Coast last year, they explained.

This was not their first move. About two years ago, the Smiths relocated from England to near Honolulu so that John, a then 24-year-old UNIX engineer and security specialist, could take a position with GTE Government Systems. But all too soon the couple came to hate their new home.

Hawaii may have blue skies and beautiful beaches, but it’s also congested, expensive, isolated, and unfriendly to newcomers, according to John. “It’s great to vacation in, but it’s an absolute horror to live there,” he says.

So, within six months of arriving in the island paradise/prison, John posted his resume on the Web. Although he received four or five job offers a day, he says, no one would pay for the couple’s flights to the mainland.

IT people on the move

“Over the past three years, the volume of technical people relocating around the U.S. has been up between 10% and 12%,” says Jan Nelson, director of strategic intelligence at Mobility Services International, a worldwide employee relocation company based in Newburyport, Mass. A 1998 report by Runzheimer International, a Portsmouth, N.H.-based management consulting firm, confirms Nelson’s observations. Of the 65 organizations surveyed, 56% said they transferred “engineers/scientists,” compared with only 42% from the year before.

Then, a year ago, he got a call from Luther Garcia, the cofounder of Gray Peak, a company later bought by USWeb. Garcia asked John a few questions and gave him a rudimentary technical evaluation, and then offered to fly him to the company’s offices in New York for an interview.

John, who had impressed Garcia on the phone, made an even better impression in person. He was offered a job and a full relocation package on the spot.

USWeb said it would pay the Smiths’ airfare, moving costs, and for a room (which turned out to be a suite) in a Manhattan hotel until the couple found a new home (which ended up taking six weeks). The total cost: around $10,000.

Even with all of this John had two additional requests. First, he wanted to have the option of moving closer to Virginia Beach, where he is originally from, in six to 12 months. And second, he asked that the company “pay for not only [moving] me and my wife, but also [moving] our two cats.”

The company complied with both requests.

Using relocation as bait

“But what does an upstart Internet firm have to do with my company?” you might ask. For one thing, USWeb and its brethren may be coming after your employees.

At press time, USWeb was scouting the country for Internet developers, UNIX system administrators, network engineers, creative designers, and strategic consultants. In many cases, says Kevin Holt, the company’s managing partner of corporate resources, “they are recruited right out of Fortune 100 company IS departments.”

Jeff Taylor, executive vice president of Interactive, TMP Worldwide, which owns The Monster Board, an Internet career site based in Maynard, Mass., has spied an alternative approach. Some customers, he says, are creating an entire team of developers located in, say, India. “Instead of relocating a team,” he says, “you’re relocating a team leader.”

Early in its interview process, USWeb asks candidates whether they would consider moving to another city. “Often they’ll say, ‘I grew up in Atlanta [or another city], and I’d like to move back,'” says Holt. “We say, ‘We have 38 offices and we’d be happy to move you,'” to any city in which USWeb has an office.The company has moved people from San Diego to New Jersey; from the Carolinas to Boston; and from Canada to the western United States. “We even moved someone from Seattle to Hong Kong,” says Holt.

Mobility may be appealing to young, unencumbered developers–or to people like John and Sonya, who are working their way back to John’s hometown. But more important, using relocation as bait is a tactic that may be important to you.

Extending the bait

Bag o’tricks

A lot of companies realize that they have to get creative in their recruitment tactics, says Larry Thompson, branch manager for CNC Global Resources, an IT staffing company headquartered in Toronto. “Beyond relocation, we’re starting to see valuable IT professionals being courted like college athletes. “To nab your favorite candidate, he says, consider the following incentives:

Permanent options such as bringing IT people in on a contract basis for a period of time with the option to convert them to regular, full-time employees at the end of the contract.

Bonus structures such as project completion bonuses for Y2K conversions.
Nonfinancial perks such as day-care opportunities, healthcare, flexible work hours, massages, health club memberships, and pets in the office.

Good relocation benefits once were reserved for senior managers. That’s no longer the case. In today’s tight IT labor market, even Fortune 500 companies use relocation benefits to help lure engineers and developers with scarce skills. (See sidebar, Relocation, relocation, relocation.)

Nearly 80% of those companies surveyed by the Employee Relocation Council are using relocation assistance as a recruiting tool, and 43% are increasing their relocation assistance to new hires. Some companies are even extending these packages to contractors.

Relocation benefits may include anything from house-hunting trips to temporary living arrangements to job-hunting assistance for a spouse or domestic partner (see sidebar, “Bag o’tricks”). What’s more, these benefits don’t come cheap. It costs an average of $51,930 for companies to move a home-owning employee.

Relocation, relocation, relocation

Does your company’s relocation package include the following enticements?

(1) Moving household goods. This generally includes shipping, packing, unpacking, and storage.

(2) Providing temporary living. The majority of coverage is offered for the new location rather than the old.

(3) House-hunting trips. Over the years, it has become more common for employers to offer multiple trips. In 1997, 46% of companies covered one trip while 49% covered multiple trips. Most employers offering multiple trips cover two house-hunting trips.

(4) Closing cost coverage. Most companies will reimburse all normal, required costs associated with the purchase of a home at the destination location but generally restrict coverage to transferees that were home owners at the old location and/or that have attained certain job levels.

(5) Miscellaneous expense allowance. With no requirement to itemize or document expenses, this allowance is intended to cover incidental expenses related to the move, i.e., auto registration and appliance hookups. This allowance usually equals one month’s salary.

(6) Real estate sales assistance. Nearly all companies offer such assistance, under one of the following programs:

Third-party purchase program. The company contracts with an outside firm to purchase and resell the home at market value. Offered by 70% of companies, this is the primary form of assistance.
In-house purchase program. The company offers to buy the home at market value. This is offered by 13% of companies.
Direct reimbursement. The company reimburses selling expenses with no attempt to protect the home’s market value. This is offered by 13% of companies.
Guarantee against loss. The company does not offer to buy the home but guarantees the market value of the residence and reimburses selling expenses. This is the least common form of assistance.

(7) Spousal employment assistance. Just over 50% of employers offer some sort of spousal employment assistance, 34% via formal policy and 17% on a case-by-case basis. The most popular form of assistance for those with formal programs is paying the fees of an outside job counseling/placement agency. The average cost of providing spousal employment assistance in 1997 was $1,545.

(8) Partner employment assistance. Approximately one-quarter of firms extend employment assistance to the cohabiting partners of unmarried transferees via formal policy. This is a significant increase over 1996, when only 8% of firms did so. Another 19% of firms offer assistance on a case-by-case basis.

(9) Child care assistance. Approximately one-third of employers offer some sort of child care assistance, 30% via formal policy and 4% on a case-by-case basis.

Source: Employee Relocation Council

Some companies give new employees a lump-sum policy that covers temporary living and housing expenses. Others offer zero-interest loans to help cover moving costs and home-purchasing expenses. And just over half offer some sort of spousal employment assistance. (In the Smith’s case, USWeb hired Sonya, too.)

This is important to note if your company is among those that offer new hires and transferees the price of a U-Haul trailer and a night in a motel en route. These days your current and potential employees can probably do a lot better with some of the young Internet companies.

Of course, it isn’t necessarily the size of the package that matters most. At least it wasn’t for John and Sonya, or for many other young professionals USWeb attracts.

“Amazingly, we [convince people to relocate] without mortgage buy backs and all that nonsense,” says USWeb’s Holt. In fact, the Smith’s package was on the high end. Typical relocation benefits at USWeb average less than $2,500 per employee. But the company is flexible and willing to negotiate. And that’s what impressed John and Sonya.

Their last relocation experience, with GTE, was “complete misery,” says John. The couple was given a $6,000 allowance to move from one country to another and only 10 days to find a new home.” USWeb, he says, “was the complete opposite.”

John is well aware that the cost of flying a cat from Hawaii to New York is negligible. But when he asked for the additional incentive, “there was no finagling or haggling,” he recalls. “They said, ‘Yeah, sure. We want you out here.'” And that was the bottom line. //

Natalie Engler is a business and technology writer based in Arlington, Mass. E-mail with your companies innovative new strategies for finding and retaining valuable IT staff.

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