Insights into the forces shaping our industry.

Per a report from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. in the first quarter of 2024, 2.4% of all job seekers relocated for new positions, and 3.7% of job seekers making over $200,000 moved for new jobs. The 2.4% relocation rate remains historically low, according to Challenger’s Quarterly Index. It is the third lowest quarterly rate on record, behind Q4 2023 and Q1 2023 (1.6%).

Our clients often tell us that they’re willing to relocate candidates for a given position, especially if the role is mid to senior level.  This then begins the conversation surrounding what does relocation mean today?

We can confirm Challenger’s report that candidates are more apprehensive than ever relative to relocation. There are several concerns to candidates about making a move:

• High interest rates / High rent prices
• Selling their existing home (including realtor fees) or breaking their lease
• Inflation / increased cost of living
  • Price of groceries
  • Price of utilities
  • Sales taxes (in certain states)
  • Cost of childcare, if applicable
• Cost of moving their goods
• Trips to finding housing
• Learning a new area
• Finding new friends / clubs / community
• Stress of packing and moving
• Finding good schools / clubs / extracurricular activities, etc., If applicable
• Finding a new job for their spouse, if applicable

Thankfully, selling a home is relatively easy today.  In most geographic areas, the real estate market is strong, and homes are selling quickly.  That said, currently a candidate may have a 2-4% interest rate on their mortgage.  In purchasing a new home, the interest rate may jump to 6-8%. While refinancing is an option if / when interest rates drop, the immediate impact to the candidate must still be addressed. For those renting, their current lease likely will have to be broken, at a cost of course, plus first and last month’s rent and a security deposit. 

On top of this, what does the new area offer relative to schools, amenities, attractions, recreation, food, culture, arts, sports, etc.  Why should somebody consider relocating to the area?  What are the increases the candidate will face in the cost of groceries, utilities, childcare, etc.?  Granted, no two geographies are the same and thorough research on the new area and the associated cost of living is required. 

Regardless of what the overall increase is, companies must be prepared to make an attractive and competitive / compelling offer.  This may include:

• Increasing the candidate’s salary offer or present a package equal to or above what the increases in mortgage interest will be. 
• Buying down the candidate’s interest rate. This can be over the entirety of the mortgage or offering funds towards a temporary buydown which would lower the interest rate for the first years of the new mortgage. 
• Rental stipends.  This works well for candidates with families that cannot immediately relocate with them. 
• An increased or flexible relocation package. Reimbursing candidate’s for their moving expenses and include things like the first month’s rent and/or security deposit, trips to visit the new location to find a place to live, realtor fees, etc.

This is in addition to the normal increase in the candidate’s current salary required to land them in the position alone. 

So, how does a company approach this?  In addition to traditional relocation packages (the actual cost of moving personal belongings), we’ve seen companies develop innovative compensation packages that now offer equity in the organization for senior level roles.  For individual contributor or mid-level leadership positions, we are now seeing companies offer profit sharing which is often a percentage the company’s gross sales annually.  This is on top of typical variable incentives / bonus packages.  Some companies are now paying employee health care costs (some in full, some to cover out of pocket expenses.  For younger candidates, another option is to assist with student loan repayment programs).  We are seeing increases in retirement plan contributions, flexible work arrangements, and unlimited paid time off.

As with any move, the employee value proposition must be addressed to land top talent, particularly in what is still a candidate driven market:

1. Opportunity:
   1. Career advancement, challenge and self-improvement, formal training, on-the-job learning, evaluations and feedback, personal development, company growth rate, emerging / differentiating technology in the product offering
2. People:
   1. Company culture, relationships and camaraderie, reputation of senior leadership, quality of management and coworkers, trust, collaboration, team spirit, team-building activities, and events
3. Organization
   1. Market position, company reputation, company mission / vision / values, diversity, social responsibility
4. Work
   1. Challenging / fulfilling tasks and responsibilities, work-life balance, quality of projects, innovation, intellectual stimulation, impact the role plays in fulfilling the company vision

When we begin speaking with our clients about a given search, one of the first questions asked is, “Do you see the talent level we are seeking in industry and are they open to making a move?”  The job market remains extremely competitive.  The electrical industry has always been and will continue to remain small.  Niche skills are required from a technical / product perspective as well as in go to market strategies.  So, to answer the question, “YES”, our industry’s talent is strong and seemingly growing stronger by the day.  Companies must look at creative compensation packages to attract the top 5% of the industry talent pool including competitive skills-based pay and customizable benefits packages including relocation offerings. 

When we recruit candidates who would have to relocate, we are not just matching their skills to the position specifications.  We are relocating them to a new home and community.  In some cases, relocating an entire family.  We must be prepared to engage and address all their concerns and truly inspire them to accept and embrace the challenges of relocation. Companies need to overcome inertia to get top talent to move!