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Real Estate - Fixing the Sticker Shock

Last month I addressed the dilemma of interviewing out of town candidates who have concerns about your area’s shortage of affordable housing, which then affects their comfort zone with your salary offer.  In many Metropolitan Statistical Areas (MSAs) across the US there has in fact been a decrease in supply of affordable housing, which in turn drives up the demand and the housing prices. Your laundry operation may rarely have to recruit for a middle or senior management position, but if one of your key managers tended their resignation tomorrow would you have a large enough pool of local candidates to draw from?

What compounds this anxiety is the reliance on popular website “salary calculators” attempting to translate cost of living data into city-to-city salary comparisons.  While these calculators have some merit, often they create a knee jerk response from the candidate to lobby for a $ 20,000 to $30,000 salary “bump” in order for them to accept the job offer.

Unless the candidate (internal or external) is being considered for a position promotion, typically job offers create salary raises in the $5000 to $12,000 range.  Organizations need to take in account the salary equities of the current management team, and should keep some salary cap room for performance raises.   As a hiring employer you want to make the real estate challenge a relocation issue more than a compensation issue.   To accomplish this you will need to invest some time on the relocation aspect of the hiring process.   Strategically it is better to put extra money into relocation than the initial compensation.

If the relocating candidate currently owns a home they are dealing with two aspects of anxiety - can they sell their existing home within 30 to 90 days and will there be a good selection of comparable homes within 45 minutes of your location following their home sale?  As the hiring employer you want to be reassuring while maintaining realistic expectations.

There are three keys to helping the candidate get through potential sticker shock of your MSA’a housing costs.   First, do enough homework to confirm the general shortage of affordable housing within 45 minutes of your location.   Second, put a team together to include the hiring manager, a human resource manager and a local real estate agent.  The agent would be compensated on a per diem fee basis to escort a prospective candidate (and / or spouse) to apartment complexes, lease with option to buy houses, and homes for sale.  The ideal agent should be knowledgeable with the entire 30 to 60 minute radius, and perhaps even serve as an extra set of eyes and ears for the candidate’s character and personality traits.

The third key is to have someone on your team maintain an ongoing candid dialogue with the candidate to sense the bottom line concerns. Unfortunately housing questions cannot be part of the interview process since they do not relate to the candidate’s ability to do the job.  However, once you identify the individual as a leading candidate and can put a compensation figure on the table along with a projected start date you can then discuss relocation assistance needs in meaningful terms. It helps to know if the candidate would be transitioning from a home rental or a home sale to a home rental or to a home purchase. Also, if the candidate is a plane flight away you need to get a good read on the candidate’s degree of interest should you offer a house hunting trip costing two air fares (candidate and spouse), lodging, etc.

Be sensitive to the issue of public schools if the candidate has school age children, as some neighborhoods may have affordable housing but have a questionable quality of schools.  If appropriate, offer to help with spouse job search assistance.  Compare the candidate’s net cost of benefits, including the payroll deduction for family medical coverage.  

If you can minimize most of the anxiety regarding the relocation then you can approach the compensation topic in more rational terms.  If not, then try to put yourself in the candidate’s shoes and take a hard look at their bottom line concerns.  If you have pushed your organization’s envelope in regard to relocation assistance then consider a sign on bonus as a cost of living adjustment.  Another option is to guarantee a portion of the first year’s performance bonuses. 

Any relocation assistance or atypical bonus payouts should be connected to the candidate signing a repayment agreement committing them to repay a prorated portion should they resign the position within the first twelve months.  Last but not least, never overlook the discussion of future opportunity for the candidate. Without overselling be clear in the projected levels of responsibility available to the candidate within the organization.

Craig Lloyd represents, a management search firm specializing in the industrial / institutional laundry industry.  He holds a degree in Industrial Relations from Rider University and has been a Certified Personnel Consultant since 1979.

Quick Rinse - News From Around The World

Hamilton Engineering Awarded U.S. Patent For Companion Water Heater CWIS™ Design

LIVONIA, Mich. — Hamilton Engineering was recently awarded a U.S. Patent for their Cold Water Injection System (CWIS™) contained within their Companion™ Water Heater and optional on all of their hot water storage tanks. The CWIS™ insures the highest efficiency possible in the water heating system by ensuring all of the coldest water enters the heater first, while eliminating any flow restriction or pressure drop on the hot water being supplied to the laundry so common with other instantaneous or on demand water heaters.