Mobile benefits Relocating: In this era of downsizing, companies are scrutinizing the relocation benefits extended to transferees and new hires.

April 07, 1996|By Adele Evans | Adele Evans,SPECIAL TO THE SUN

John Hoey and his wife have finally settled into their Worthington Valley home after their sixth move in eight years -- but Mr. Hoey wouldn't be surprised to relocate three or four more times before he retires.

"It's a mobile society," he says.

Mr. Hoey is all too familiar with the dread, problems, and costs related to relocating. He's seen a variety of relocation benefit programs. When he transferred to Citicorp in New York, for example, the company bought his house. But when he and his wife moved here two years ago from New York, the communications firm that was hiring him did not buy his old house -- instead offering loss-on-sale coverage.

Their New York residence took a year to sell -- 12 months of negotiating over the phone, talking to agents and lenders over the phone, haggling with repairs over the phone -- all while trying to cope with a new life.

Mr. Hoey has plenty of company in dealing with narrower corporate relocation policies.

Today's corporations, battling their own budget woes and staff reductions, are backing away from writing the big check that it takes to relocate an employee or new hire. Tiered benefits are becoming the norm, as is more outsourcing of relocation counseling services. It all comes down to more homework and negotiating for the transferee.

Now vice president of human resources with Sylvan Learning Systems in Baltimore, Mr. Hoey finds himself on the other side of the fence, examining relocation issues for his company.

"Nine times out of 10 it seemed like the company lost money [on a home buyout]," he said. "The benefit is going away."

"People get unrealistic about the value of their home," Mr. Hoey says. "You need to work with employees to be sure they're realistic about the price."

Career-related relocations exploded after World War II, fueled by changing attitudes toward moving and by returning soldiers marrying or attending college many miles from their hometowns.

During the 1950s and early 1960s, booming corporate growth caused extensive relocations, but moving costs weren't usually included in benefits packages. Over the next two decades, corporate competition for increasingly specialized candidates forced employers to add relocation costs to their benefits packages. Those costs have been increasing almost yearly.

According to the Employee Relocation Council in Washington, costs to relocate a homeowner have spiked from $7,800 in 1973 to $31,000 in 1982. The latest figure is $44,920 for 1994.

The ERC, which includes 1,200 corporate relocation representatives and 11,000 others, such as brokers, appraisers, counselors and movers -- reports that member companies relocate a yearly average of 211 employees within the United States, about a quarter being new hires.

Those costs don't mix well with today's budget-cutting, pink-slip business climate.

"When the economy in the late '80s changed, we changed," said Roger Aylward, spokesman for Hunt Valley-based PHH Corp., one of the nation's largest third-party relocation companies. "Companies are less likely to spend the $40,000 to $50,000 to relocate someone domestically. Technology can slow it down, people can telecommute. "

The National Association of Realtors' latest data indicate that the number of homebuyers moving 100 miles or more has slipped from 20 percent of all homebuyers to 17 percent -- from the last half of 1988 to the same period in 1993.

"The number of employees a corporation will transfer within a company has decreased, but companies are buying others and dealing with new hires," said Coral Read-Emerson, vice president of relocations at Coldwell Banker-Grempler Realty in Baltimore. "Westinghouse closes a plant. They send the employees to an employment contractor. A person gets a job in Texas. That company needs to be in contact with a relocation company."

Coldwell Banker-Grempler reports slightly slower relocation activity over the last five years. Relocations account for 5 to 10 percent of the agency's sales volume, Ms. Read-Emerson said.

O'Conor, Piper & Flynn Realtors' relocation division sales made up 8 percent of its $2 billion volume last year.

"The numbers are going steadily upward," says Jim Piper, president of administration, who noted that even downsizing can generate relocation business because those laid off have to move elsewhere to find work.

A related effect of corporate downsizing is the subcontracting of relocation services.

The Maryland Insurance Group in Baltimore has outsourced many relocation services to PHH, such as its home-purchase program and property management services.

"We want a concentration on the core business," said Warren Reisig, an assistant vice president.

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