Factors Impacting Relocation – External & Internal

Talent Needs Continue to Drive Relocation

For the past seven years, the lack of qualified local talent has been the key external factor driving relocation volumes. Company growth and expansion aren’t possible without the right people in place, so relocation’s function as the key-talent engine appears to be more crucial than ever.

The top factor affecting relocation last year was a lack of local talent. Company growth remains similar to previous recessionary levels, despite maintaining a substantial increase over 2009 (37% vs. 24%). However, 34% of firms report some kind of expansion (facility, new territories, or international) had an impact on relocation volumes last year, nearly equal to the impact of company growth. Only 21% of firms reported economic conditions as a factor; this is the first time in a decade this percentage has fallen into this range and is the lowest level in roughly 30 years. The impact of the real estate market on volumes continues to fall and is at a historic low also (11%).

Even with the twist of tax reform and a slight pullback internationally and by small firms overall, the industry appears to remain in good shape. The majority of firms report improved financial performances over the past eight years. Real estate issues and budget constraints are at or near historic lows. Relocation volumes and budgets continue to rise or remain stable. However, with a gap emerging between increased costs vs. increased volumes, after years of doing more with less, there appears to be an increasing recognition that budgets must finally catch up if relocation programs are to maintain or expand their volumes, especially with the shift in tax law. A shift in expectations for the real estate market may also play a role. While more than half of firms state the market was better in 2017 than in the previous year, and nine out of ten expect stability or improvement in 2018, the percentage expecting further gains drops compared to 2017 (45% vs. 55%). Still far above levels in the Great Recession and improved over early recovery years, this is a notable decline. Rising interest rates coupled with tax reform may be driving up costs.

The impact of factors continues to vary by company size. For large firms, the biggest impacts resulted from expansion efforts (48%), followed by corporate structure changes—acquisitions/mergers or corporate reorganization/restructuring (44%), lack of local talent (43%), knowledge/skills transfers (42%), and company growth (39%). Mid-size firms were similarly affected by their need for talent (40%) and company growth (38%). Small firms’ biggest issue was talent (49%), with company growth (35%) in second place.
The impact of available talent remains markedly above the level recorded in 2009 (31%) and far above much lower levels seen before 1996. Regardless of company size, talent shortfalls remain a key driver of relocation volumes overall.
Across company size, the impact of real estate falls near or to its lowest point since measurement began in 2007.
Roughly half of for-profit service, manufacturing/processing, non-profit service, and government/military organizations indicated talent needs as a main factor in their relocations last year. Nearly half of manufacturing/processing firms cited company growth, followed by roughly four out of ten for-profit service and wholesale/retail firms. More than a third of financial, for-profit service, manufacturing/processing and wholesale/retail firms cited expansion efforts. Roughly a third or more of manufacturing/processing, for-profit service, financial, and government/military organizations indicated changes in corporate structure affected volumes. Around a fourth or more of firms across type, with the exception of non-profits, cited growth in competition as a key issue as well.

Question 13-1

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Question 13-2

External factors having the most impact on the number of employee relocations in 2017

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Question 14-1

Internal conditions having the most impact on the number of employee relocations in 2017

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Question 14-2

Internal conditions having the most impact on the number of employee relocations in 2017

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