Short Distance Moves: A League Of Their Own

SHORT DISTANCE MOVES: A LEAGUE OF THEIR OWNJane F. Casey, Vice President & Treasurer

Blyth, Inc.

When companies undertake a long distance group move, they generally recognize the special needs of their employees and formulate a detailed plan to ensure the appropriate response to those needs. However, all too often, those same companies would initiate a short distance move with far less attention to those factors that could make the difference between a smooth transition and an employee relations nightmare. Companies must recognize that, while they may not be leaving the general area, any group move, whether long distance or short, represents a change in the “employment contract” with their employees and should be sensitive to their needs and issues during this transition.

COMPANY OBJECTIVES: In any group move, the company must ensure that the underlying reasons for relocating are both sound and clearly communicated to the employees. This is of paramount importance in the short distance move where the decision will be even harder to accept if employees believe the move is for the convenience of senior management. Within 24 hours of the announcement, employees can identify how close those executives live to the new facility and, for those employees who will be relocating, how far away is affordable housing.

EMPLOYEE OPTIONS: In a long distance move, employees have two distinct alternatives: relocate or resign. In a short distance move, the decision-making process is often more complicated because the short distance move offers most employees an additional option: commute to the new workplace. Employees who would normally not consider relocating due to personal considerations such as spouse employment or other family issues will seriously weigh any inconvenience in commuting to the new location against the benefit of maintaining their current employment.

In the current economic environment, companies find their employees are more willing to make the necessary sacrifice to remain employed and can achieve their targeted retention with a less generous benefit package. However, unlike in the long distance move, the company remains at risk of losing these employees over the 12-18 months following the move since they may be merely tolerating the inconvenience of a longer commute until they find suitable employment elsewhere.

PROLONGED TRANSITION: In a short distance move, it often takes a longer period of time to restore full productivity to the entire workforce.

Unlike long distance moves, employees who will be relocating need not move at the same time that their job moves. Since employees with children generally prefer to move during the summer, some employees may actually relocate before the job moves and reverse commute while others may remain behind and commute for a period of time in order to accommodate this preference. While this generally does not pose a serious problem for the company, employers should be aware of the difficulties in containing transition time.

COMMUTATION ISSUES: Introducing the commute option to the group move equation gives rise to a variety of related issues which companies must be prepared to address.

Develop commute maps that depict typical commute times surrounding the new work location to assist in identifying labor market boundaries, establish relocation eligibility, formulate relocation and commutation benefit policies and develop accurate cost projections by predicting employee action (i.e., relocation, commute or resign). Such maps should be available to all employees before conducting a survey of employee intentions and needs.

Decide which employees will be allowed to move at the company’s expense and, once relocation eligibility criteria are established, avoid making exceptions to the policy. Experience indicates that the employee’s perception of the fairness of any relocation policy is enhanced if he or she perceives that it is applied consistently at all levels of the organization. Recognize, however, that if eligibility is based on distance from the new work location, inevitably, some employees will “just miss” and the company should have previously identified them and be prepared to address their objections.

Decide whether or not the company wants to restrict the new home purchase decision in any way, such as requiring the employee to purchase within a certain distance of the new work location. While most companies prefer not to interfere in the purchase decision, recognize this could result in paying for a relocation that results in the same commute as the employee would have had from their former residence. Home finding counseling to the spirit of the policy rather than the letter can minimize difficulty in this area. Also, examine the company’s loss on sale policy to ensure it will not encourage employees to relocate who would otherwise commute.

Remember that most employees would prefer not to move so exploring other forms of assistance could result in lower costs for the company and less disruption for the employee. Take this opportunity to examine how well the company’s other employee assistance programs

meet the employees’ needs. Implementing programs such as flexible work hours, the compressed work week, telecommuting and child or elder care assistance may align better employee assistance programs with employee needs and eliminate unnecessary relocation expense. To support further the commuting option, allow employees to maintain their relocation eligibility while the try the commute; some will undoubtedly opt not to relocate after experiencing commuting first-hand.

Recognize that different modes of transportation have varying travel time tolerances for the employee when predicting employee action and developing policies to meet employee needs. Don’t assume that the employee traveling by train for 75 minutes into a major metropolitan area will be willing to drive that amount of time to a suburban location. Historically, travel time tolerance ranges from 45 minutes for a solo automobile commute to 90 minutes for train travel, with bus travel and various forms of ride-sharing in the 60-75 minute range. Also, don’t count on reverse commuting via public transportation for city dwellers as schedules are typically strictly local service and the frequency rarely sufficient to provide a feasible commute option.

A move to the suburbs may result in a change in work hours to alleviate traffic congestion. Remember that this may raise issues for employees with child or elder care needs, particularly if in conjunction with longer commute times.

In evaluating alternative commutation assistance options, companies should seek solutions that will facilitate compliance with the Clean Air Act. Working with the business and government alliances that have formed in many suburban communities, companies can find solutions that take advantage of various tax incentives and credits while addressing both their employees’ needs and environmental concerns.

A TAXING ISSUE: During the 1990’s, among the provisions of the Clinton deficit reduction plan that affected relocating employees, the most significant was the increase in the distance test (the distance between the employee’s new principal place of work and former residence) from 35 to 50 miles. This eliminated many short distance moves from favorable tax treatment and forces companies considering short distance moves to anticipate higher costs in the form of both lost deductions and increased tax gross-ups.

MANAGING THE TRANSITION: In any group move, companies must balance addressing their employees’ needs with controlling costs and ensuring business continuity. While most companies recognize the business risks of excessive attrition during a group move, many fail to recognize their

ability to manage that attrition. Short distance moves provide the company with commutation-related options which allow them to take advantage of the geographic proximity of the old and new locations. For example, by combining financial incentives with having company-owned apartments available, commuting can become an attractive short-term option for key employees whom the company needs to retain during the transition as they build bench strength in the new location. Thus, acknowledging the uniqueness of the short distance move not only better prepares companies to assist their employees in what, at best, is a difficult transition, but also facilitates meeting the business needs of the company in the most cost effective manner.