Effect of Sept. 11 on relocation negligible

By John Hobel
|Canadian HR Reporter|Last Updated: 12/30/2001

The world became a scarier place for North Americans after Sept. 11. Will this mean employers will find themselves providing larger incentives to get people to relocate internationally? Not likely, say experts — particularly in light of a slowed economy.

“It appears the impact of Sept. 11 on the relocation industry is relatively moderate,” said Phyllis Simon, executive vice-president of the Canadian Employee Relocation Council (CERC).

Gail Reinhart, a consultant in Runzheimer Canada’s Calgary office, agreed that neither the task of finding employees interested in relocating nor the incentives and compensation they require are likely to change dramatically.

What will change because of Sept. 11 is the cost of insurance for overseas relocation (including the greater demand for kidnapping insurance), as well increased spending on security and crisis intervention. And paperwork to move people across borders will become more complicated and processes slower and more involved.

“The planning process is certainly taking longer,” said Simon. “Moving companies are asking for a month’s notice. Whether you’re moving something by ship or plane, everything is being checked.”

The North American relocation industry is beginning to experience a slowdown, more so in the United States than in Canada, said Reinhart.

A fall survey of 44 American relocation administrators, by Runzheimer International, found one-third had reduced their relocation volume and only 20 per cent predict an increase in volume in the near future.

Historically, relocations drop in an economic downturn. Companies don’t usually view relocation spending as a strategic element to protect, even though it should be, said Reinhart.

CERC recently surveyed firms, asking specifically about Sept. 11. Of 50 respondents, five per cent cancelled foreign assignments and 12 per cent pulled people out of the countries they were working in (but Simon added it was unclear if such repatriations were permanent or temporary responses to the events of Sept. 11.)

Whether domestic, U.S. or international, the vast majority of Canadian firms projected no change to relocation volume because of Sept. 11, CERC found.

Of course there may be fewer takers for specific relocations — to a destination such as Islamabad, Pakistan — or large incentives may be required, but the industry in general will not likely see incentives rise or employee relocation interest drop as a result of Sept. 11, Simon said.

Companies may of course re-evaluate their own strategies based on higher security costs or the length of the economic downturn.

Nat Workman, senior editor of Runzheimer’s newsletter, said there’s no telling what the future holds for the relocation industry, particularly in light of Sept. 11. Workman added that heightened security in the U.S. and worldwide may still play a significant role in relocations.

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