It's been nearly three years since the lethargic housing market began to create relocation friction in our industry and add to the hiring tension as employers and prospective employees struggled to make the math work. It's just plain ugly, and at least for now, there's not going to be any return to real estate normalcy. As a CIO, relocation can be even more difficult-considering the real estate you own. Since many CIOs fall into the upper end of the HCIT compensation range, this issue can make evaluating a new opportunity both costly and risky.
But there is good news: Both parties are starting to “get it,” and I've seen some creative solutions to the real estate problem (as long as the organization and the candidate think outside of the box). Here are the big relocation issues-and a few ways to get around them in the short term.
Depending on where the candidate is coming from and that area's current housing market, the relocation delay could be months or, in some cases, years, if the candidate is upside down on his home's value. Yes, having the needed leadership on the ground is important, but it can get really expensive.
Solution 1: Commuting may be a temporary option. Candidates increasingly expect to commute in order to secure a new job, and the hassle associated with being away from their families becomes the necessary trade-off (usually only when a home is “actively” on the market).
Solution 2: For employers who want a particular candidate leading their team, the extra cost associated with weekly or bi-monthly furloughs is just the new way of doing business. If you anticipate team disruption, incorporating video capability/allowing a new technology leader to meet via video will keep things running smoothly for the short term.
Solution 3: Allocating one day a week to let the new employee work remotely may be just enough to help the employee balance work/life options until they can sell their home. This also shows compassion towards the new hire and demonstrates that you do really care, which should pay off in increased loyalty and tenure (in a perfect world).
DEALING WITH NEGATIVE EQUITY
This problem is both challenging and complicated. The employer needs a new leader, but may not have the budget to write the check that will make the new hire's negative equity go away. The result can be very expensive and risky for both parties.
Solution 1: A larger signing bonus may be the remedy to help ease the pain of unloading the new hire's under-valued real estate. Employers are treating some signing bonuses as a loan with severe penalties if employment ends before the offer letter's allotted time runs out. Some convert the loan to a retention bonus after a certain period of time. The tax consequences are real (usually ordinary income) so consulting with your CPA would be wise and prudent.
Solution 2: It used to be commonplace for (large Fortune 500) companies to buy homes as part of corporate relocation (that changed a long time ago). But in some cases, I've seen employers really step up to the plate to help offset the real estate commissions and/or closing costs. This is a different world we live in and employers have to get creative with their relocation policies or these expenses can take a candidate out of contention. Some locations just make a candidate's risks too high; it's not their fault-just today's reality.
Solution 3: Short-selling is sometimes the only way out of an upside down real estate deal. Yes, it can affect credit scores, but employers are prepared to hire someone with less than stellar credit if the reasons for the low FICO score are due to the “short sell.”
After you've closed on your existing property and are ready to relocate, you'll probably be able to offset any losses if you take advantage of lower prices when you're acquiring your new home. In our market, hiring is on the rise and talent is scarce. Developing case-by-case relocation solutions may be the only way healthcare organizations can widen their candidate pool. I think they're prepared to bring their checkbook-are you ready for a change?
Tim Tolan is a senior partner at Sanford Rose Associates Healthcare IT Practice. He can be reached at [email protected] or at (843) 579-3077 ext. 301. His blog can be found at www.healthcare-informatics.com/tim_tolan. Healthcare Informatics 2011 July;28(7):40