April 9, 2007
Relocation Costs Chill Hiring Market
Having candidates for management positions refuse job offers due to housing costs used to be a problem strictly for law firms in the Northeast and the West Coast. But plummeting housing prices seem to be having an impact on law firms all over the country.
The problem is a common one. Upon accepting a job involving relocation, most senior administrators follow the conventional wisdom of buying as much house as they can possibly afford to benefit from the maximum appreciation leverage. Then, as their home value appreciates, many homeowners take advantage of home equity loans that allow them to borrow 100 percent or more of the appraised value of their home. The result, when it comes time to sell, is that the value of what the home will sell for is less than the amount owed on their mortgages. This may involve a cash payment to get out of their existing house as well as for a down payment on a new house.
Here are five things you should know about relocating senior law firm management staff members:
1. Go into the interview process with your eyes open. When interviewing a candidate in a situation that may require a move, don’t be afraid to ask questions about the individual’s housing situation. This is especially true if you are considering moving someone from a high cost of living area where the burst housing bubble has had the greatest impact. If relocation is going to be a sticking point you want to know that as soon as possible.
2. Large signing bonuses are becoming a fact of life. This is especially true where relocation is involved and cash may be needed for bridge mortgage payments.
3. Moving to a lower cost of living area rarely justifies a lateral salary move. There are situations where someone is not currently in a position and might be willing to consider a lateral move, but as a general rule, if someone is willing to work for a lower salary, ask yourself why.
4. Negotiate relocation allowances as actual expenses against a cap. After an offer has been made, especially if the candidate has been interviewed and approved by a number of partners, it is easy for a firm to get nickled and dimed for additional relocation costs during salary negotiations. Additionally, in situations where it may be difficult for the candidate to sell his or her existing home, it is easy to give up incremental increases in temporary living expenses that were not part of the original deal. Describe allowable expenses but always have a dollar cap.
5. Do your homework. Before extending an offer or even a second interview, investigate cost of living differences. Runzheimer International provides customized cost of living and salary level comparatives ( www.runzheimer.com); for more basic information go to www.bankrate.com/brm/movecalc.asp for a cost of living calculator. Benefit Match ups
CareerBuilder runs an ongoing survey asking job candidates to choose between benefit alternatives. As of last week, the results of head to head competition are as follows:
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A bigger paycheck (79%) vs. more vacation time (21%)
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Taking a full hour for lunch (69%) vs. having internet access (31%)
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A shorter work week (64%) vs. a shorter commute (36%)
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A flexible schedule (60%) vs. the option of working from home (40%)
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A casual dress code (84%) vs. nice office décor (16%)
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A private office (51%) vs. a better computer (49%)
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Transportation passes or allowances (59%) vs. free coffee and other beverages (41%)
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On-site cafeteria (57%) vs. on-site fitness center (43%)
CFO Attrition Rate
Much is written about the difficulty of recruiting technical staff but a recent survey supports what we have anecdotally observed -- Chief Financial Officers have the greatest turnover and are the most difficult to replace. Among the most significant reasons for turnover is the inability of new CFO’s to fit into a firm’s culture, which includes the ability to meet the requirements of managing partners and appreciate the urgency of working in a law firm environment. The survey, done by Right Management, shows that the time to replace a CFO is:
34% three to five months
26% six to 12 months
22% one to two months
11% under one month
7% More than one year
To us this demonstrates the importance of law firm experience when seeking a new CFO. Legal Resource Group LLC specializes in serving the executive and administrative recruiting needs of law firms. We maintain the largest data base of law firm executive and Administrative staff in the world. This allows us to immediately identify the very best candidates. We find the best people, complete searches faster and have extremely reasonable fees. For further information, visit our website at www.LRGLLC.com , contact us by e-mail at inquiries@LRGLLC.com or by phone at 1-800-688-4147.
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