Wednesday, July 20, 2011

HR: Ready to Relocate?

Guest post by Kim Urban, MSHR

In 2005, a company that had been located 38 years in the small town of El Cajon, California, made a decision to move out of state.

The company was the famous Buck Knives, known worldwide as one of the finest manufacturers of knives.  Besides employing over 250 employees, Buck Knives was the type of company a small town like El Cajon could use to lure other business into town.

No one guessed at the time that the Buck Knives departure would be just the start of an exodus, a trickle that turned into a flood of businesses leaving California. In fact, the year Buck Knives packed its bags, the Public Policy Institute of California issued a calming and reassuring report stating that business relocations cost California less than a tenth of 1 percent of all the state’s jobs.

But each year since 2005, the number of businesses leaving California has grown exponentionally. Today, a recent report by Joseph Vranich, an Irvine-based business relocation expert, indicates the exodus is 5 times greater than it was just two years ago.*

So what does this mean for a California HR professional? Well, it means, at the very least, you need to be aware there is a very real possibility your company might be considering a major move. And at the most, assuming you’re in the loop (and let’s hope you are), you need to start the huge process of transferring a company’s biggest asset—its people—to another state.

Each company will present its own unique challenges, of course, but it helps to look at what another company did, in this case Buck Knives, and perhaps get an idea of what could be involved.

Buck Knives had at the time of the move over 250 employees but only 58 employees - about 20% - actually ended up relocating. The remaining employees were laid off. When Buck Knives set up again in Idaho, it filled over 200 jobs from local applicants.

Naturally, one has to wonder about this. Only 58 employees relocated and the rest were laid off? What exactly happened here?

From what I gathered, Buck Knives was offering buy-outs and early retirement to the senior, long-term employees who didn’t fancy the idea of moving at this stage of their careers. Other employees, who worked part-time and sometimes had a second job that anchored them locally, simply could not afford to move. Some employees, married to a spouse who perhaps had a higher-paying job locally, refused to go; others didn’t want to leave the San Diego area or agree to a pay adjustment.

Local incentives may have also played a role in the decision process. Idaho, as part of its program to convince Buck Knives to locate there, offered to give Buck Knives $690,000 to train new workers. I have to assume that Buck Knives considered this when it accepted the money and that this played at least some part in the layoffs in El Cajon.

All in all, a challenging time for HR.  There was the relocation selection process, the layoffs before the actual move, the recruiting and hiring process that took place once the company arrived at its new home, not to mention all the training that needed to be done.

If I were to face a relocation task, I suppose I’d break things down this way:
  1. Find out if there is a limit of employees who will be allowed to relocate.
  2. Determine which employees simply cannot or will not relocate
  3. Of the employees willing to relocate, determine which of those will be allowed to go.
  4. Conduct the layoffs at the old location.
  5. Pack my bags and grab one last fish taco.
  6. Recruit and hire at the new location.
  7. Put in place any training plans needed for the new hires.
Having never undertaken such a project, I’m sure my list is woeful and incomplete but I’d love to hear from any HR professionals who’ve actually handled a company relocation project. What were your biggest challenges? What went right? What went wrong? What advice would you give?

*Besides my conversations with Buck Knives employees, I relied on Anne Krueger’s article, “Buck Knives enjoying a better business life in Idaho than El Cajon,” dated March 26, 2006, for the San Diego Union-Tribune; and also Tami Luhby’s article, “California companies fleeing the Golden State,” dated July 12, 2011, for CNNMoney at http://money.cnn.com.

2 comments:

  1. It is always an ugly piece of business shutting down a facility. I have not had to do it but I have been close to a couple of folks who have. The strangest thing I heard of was having to give yourself your own WARN notice. Nice piece Kim.

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  2. I've always viewed company relocations from the employee POV but behind all that human drama it's an enormous HR undertaking. I wonder if any HR team is ever prepared.

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