RISMEDIA, March 12, 2008-As the mortgage crisis continues to cut a path of destruction far beyond its initial sub-prime victims, it is already beginning to create talent gridlock among once highly mobile professionals and executives. During the housing boom, companies and job candidates alike enjoyed the benefits of rising home values and quick sales that made it easier for companies to attract candidates beyond their local talent pools. However, today’s slumping housing market and mortgage crisis are forcing candidates to reconsider career changes — and companies to reevaluate talent planning — because of relocation concerns.
“This is something that has been gaining momentum since late last year and is starting to limit the talent pool for some companies in their recruiting efforts considerably,” says Tim Noble, managing principal of The Avery Point Group, a national executive search firm. “No longer are we limited to discussions about ‘golden handcuffs’; we are now also talking about ‘cement shoes’ as the impact of the housing slump is significantly impairing many candidates’ ability to relocate for potential career opportunities.”
Candidates who once readily accepted relocation as part of the career advancement process — but are now faced with substantially declining home values and the rising inventory of unsold and foreclosed homes – are opting instead to postpone career changes or cast their nets closer to home.
“Extracting talent from California, Nevada, Florida, Michigan and other hard-hit housing markets is proving to be especially difficult,” continues Noble. “Highly valued executives and professionals often get promoted internally or change jobs every two to three years, which increases the likelihood that they purchased a home at the peak in some hard-hit markets.” For companies seeking to attract the best professional and executive talent, this situation will mean some key roles go unfilled longer if local internal or external talent is not readily available, even with a looming recession.
“This is the definition of ‘talent gridlock,’ in which candidates are unable to relocate and companies cannot attract talent,” Noble explains. “To make matters worse, fallout from talent gridlock may further depress some housing markets as many communities count on a steady influx of transplanted professionals and executives to drive housing sales.”
With the end of the mortgage crisis nowhere in sight, companies will need to move quickly to reassess their recruiting efforts and relocation policies, as this crisis is not only having an impact on external hiring; it will also affect internal relocations and promotions.
“Companies will need to get creative if they want to hire the best talent under these deteriorating conditions,” Noble asserts. “Many companies are no longer willing to offer home buy-outs in this current environment, but to attract the best talent they will need to get creative with other tools such as bridge loans, loss-on-sale assistance, sign-on bonuses, extended temporary housing and travel allowances to ease the pain of relocation.”
In the end, Noble concludes, those companies and job candidates that take a realistic and long-term view of their individual circumstances stand the best chance for success under current market conditions. Today’s mortgage crisis is emerging as a major factor in career decisions for job candidates and in talent planning for companies across the board. Some companies, however, have only begun to make this important connection.
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