While recruiting a local executive is an ideal scenario, the perfect candidate might not be in your backyard. With the global talent pool, it is often necessary to conduct a nationwide search to fit your specific requirements. As the workforce changes and new technology enables different work styles, companies today are evaluating options for relocation, such as super commuting and working remotely one weekend a month.
Executive relocation is an expensive proposition for any organization; however, it’s especially so for organizations looking to hire into popular states and cities with a high concentration of businesses. For example, California and New York both dominate the Fortune 500, each with 54 of the top companies headquartered in their respective states. Specific geographies with an increased need for executive talent based on the amount of business conducted there require access to new candidates.
Along with high levels of economic development comes high cost of living for people who live and work in these areas. The San Francisco metro area—considered the technology hub of the U.S.—exceeds New York City in rental and apartment prices in the “city center,” according to a real-time cost calculator at Numbeo.com. A three-bedroom apartment’s average monthly rent in San Francisco is $6,409, while one in New York City is $5,864. The median price paid for a new or existing single-family home or condo in San Francisco hit an all-time high at $1 million for the first time in June of 2014, according to a report released by DataQuick. That said, overall, the state of California was recently listed as the fifth most expensive state to live, coming in behind Alaska, New York, Connecticut, and Hawaii as reported by CNBC in 2015.
Relocation—as an option for companies to offer to long-distance candidates—seems to be becoming less desirable across the board as executives are more focused on quality of life than in previous years. Candidates often do not want to uproot their families. The challenge of selling a home is another top reason candidates do not want to relocate. A study conducted this year by the market research firm, Barna Group, found that nearly 60% of adults never plan to move or are not sure if they ever will.
Candidates considering a move also have access to more information than ever about the quality of life in a prospective community. This may further dissuade an executive that is being courted to relocate. based on perceptions of the new area. For example, the cost of living, perceived crime, the reputation of local schools and the implications that come with it, or even newer developments, such as the legalization of marijuana in certain states, can dissuade candidates from relocating. On top of moving and real estate expenses, hiring organizations are forced to be competitive, offering additional incentives and perks to woo desirable candidates.
Super Commuting vs. Relocating
According to a research report by New York University, there are a growing number of super-commuters who travel weekly for work, often over significantly long distances. Long distance commuting is becoming more popular across the country. A few of the well-traveled routes are Boston to Manhattan, Dallas-Ft. Worth to Houston, and Northern California to Los Angeles. The study cited that these super-commuters accounted for the greatest percent of the workforce, 13%, in both Dallas and Harris (Houston) counties in Texas, as far back as 2009.
“People are more likely to be mobile in regard to their jobs and homes because of the collapse of the real estate market,” says Mitchell L. Moss, one of the co-authors of the NYU report. When people get a job in a new city, they can find it difficult to sell their home in their current city.
While some people have been forced to super-commute because of the real estate market, others commute long distances for work simply because they choose to maintain their family lifestyle elsewhere.
According to a more recent 2013 report from the U.S. Census Bureau, 600,000 people who commute to work are classified as “mega-commuters,” traveling at least 90 minutes or 50 miles to get into the office. This is in sharp contrast to the national average commuting time of 25.5 minutes. Workers living outside a principal city and working in a principal city show the highest rates of long commutes, at 12.5%, the report shows.
The definition of super commuting hits home with the story of JetBlue Airways founder, David Neeleman, who left his company and launched a new airline in Brazil in 2008. Running this type of business would appear to require living near the headquarters, but Neeleman commuted to his Sao Paulo headquarters every week from his home in Connecticut, taking the 10-hour redeye on Sunday nights and returning on Thursdays. His reasoning: he didn’t have to uproot his ten children.
The NYU study also states, “there’s more flexibility in the modern workplace” with ever-improving technology. Companies are getting more creative, embracing technology for increased communication with telecommuters and are less resistant to allowing employees to work from home.
Another recent trend has been corporate headquarter relocation. While there are many motives for companies to move their headquarters—mergers and acquisitions being one of the top reasons—organizations needing a better talent pool may use a change of venue to do it. Dallas, for example, is a hotbed for relocation at the moment, with the lower cost of living and a favorable regulatory environment. The Dallas Business Journal reported in January that four Fortune 1000 companies were considering headquarters moves to the Dallas area. What’s more, the Dallas area attracted 70 corporate headquarters over the past five years, including 35 from California.
Hiring a Retained Executive Recruitment Firm to Identify Willing Candidates
Targeting and identifying the best executive candidate is a challenging task. Working with a strategic partner who not only understands your requirements, but also knows how and where to identify top talent, is crucial to your process. Retained recruitment firms have the experience to identify candidates that are serious about relocating (or commuting) before getting too far along in the process. The added complexity of recruiting nationwide candidates into a state with its high cost of living truly warrants a long-standing, experienced firm with intimate knowledge of the market dynamics.
For more than 15 years, Executives Unlimited has been committed to helping our clients develop their strategic executive workforce planning. For information about our services, please call us at (866) 957-4466 or contact us online today.