Rising Gas Prices Impact Recruiting and Retention

Jun 12, 2008
This article is part of a series called News & Trends.

Will flexible employers be the ultimate winners in the war for talent now that gas prices are in the stratosphere? Employers offering transportation subsidies, telecommuting options, and virtual office arrangements may be wooing the best and the brightest candidates right now, even without the highest salaries and biggest relocation budgets in the marketplace.

“It isn’t unusual to find employees driving 50, 75, even 100 miles each way to work and that can cost them $5,000 a year just in gas,” says Chuck Wilsker, president and CEO of the Telework Coalition, a Washington DC-based organization that supports telework options.

“When telecommuting is an option, it eliminates the geographic recruiting boundaries and increases the pool of prospective candidates. I have heard of specific situations where employers have been able to offer 15% less salary, simply because the employee will no longer need to absorb the daily commute cost.”

Employees who commute 30 miles or more to work are likely to turn-over at higher rates now that gas prices have sky-rocketed, according to Wilsker, and it will only get worse when the job market and the economy rebound. If more firms begin offering telecommuting options to appease employees, the competition for top talent will literally have no boundaries, since proximity to the office will no longer be a major recruiting criterion.

In addition, with no ceiling on gas prices projected anytime soon, Wilsker says that commute costs are starting to concern highly skilled employees, not just hourly workers. In the past, employees making $150,000 to $250,000 might not have considered long commutes when weighing an offer, now they are now thinking about it long and hard before accepting.

Fuel and commuting expenses are also making it harder to close offers made to relocating candidates says Mickey Matteson, account executive for Recruiter Relocation, a third-party relocation company. She says candidates are scrutinizing the cost of living in prospective urban areas, and in the past, most candidates would have accepted the offer, opting to live in less-expensive suburbs or outlying areas. Now, given the commute costs, more are either turning down offers or negotiating for higher salaries.

Matteson says relocation costs are also escalating and those increases are impacting recruiting. The average moving company fee is now $10,342, and many of the quoted prices have jumped so dramatically by the move date that some candidate deals are unraveling at the last minute. The total cost of relocating an employee or candidate is now $55,165, and given the steep price tag, Matteson says that 81% of companies are requiring relocating candidates sign repayment agreements, forcing them to repay the relocation costs, if they quit before completing one year of employment.

“Candidates are being more cautious and many are opting to rent out their existing homes rather than selling them,” says Matteson. “That’s making employers nervous because they don’t feel the candidate is committed, but at the same time, candidates want to try out their new employers and new surroundings. Some employers are allowing new workers to fly back and forth, but given what’s happened with the airline industry recently, I’m not sure that decision will make sense for very long.”

The Winners

Some employers are organizing car pools and offering employees the opportunity to purchase discounted mass transit passes, and the most progressive companies, are offering full or part-time telecommuting programs, which helps to attract and retain talent.

REI, the outdoor clothing retailer based in the Pacific Northwest and a perennial winner of Fortune magazine’s Best Places to Work Award, installed a customized work environment program (CWE) in some departments at its headquarters several months ago.

Initially, the program’s main goal was to help employees achieve greater work-life balance; now, the employees are saving money on gas. CWE allows employees to select alternate commute times to avoid traffic or the opportunity to work from home a few days a week, based upon each department’s need. CWE along with REI’s other subsidized transportation programs, such as van pools and paying 50% toward the cost of mass-transit passes, is a strong selling point with applicants, according to Bruce Bobzien, senior recruiter for REI.

So if telecommuting attracts applicants, lowers costs and increases employee satisfaction, what’s holding companies back from offering the option to everyone? Command and control. Employers are often reluctant to allow people to work remotely, beyond the constant watch of managers.

Jay Horowitz, CEO of Strategic Legal Solutions, a New York-based provider of outsourced legal services and staffing, recommends easing into telecommuting to get started, offering the arrangements on a case-by-case basis, perhaps a few days each week, to trusted workers. He also suggests employers make certain the telecommuting employee has a properly outfitted home office to assure effective communications.

Strategic Legal built a practice around experienced telecommuting attorneys who provide remote support for large cases and projects, such as class-action law suit discovery. Horowitz says that law firms are cognizant of all the indirect costs of employment including space, furniture, computers, and parking, so increasingly, the firms requested offsite attorneys for project work. Now, given the current gas prices, the concept makes even more sense.

“I wouldn’t hesitate to allow an employee to telecommute now that I’ve done it before,” says Horowitz, who allows the firm’s account executives to telecommute. “But I think you should have them come into the office for the first few weeks, train them, expose them to the culture and be very clear about the expectations. Maybe have them come into the office one morning each week after training, so you can stay connected. I think the more flexibility you show as an employer, the more likely it is you’ll be able to secure top talent.”

New Tools for Remote Supervision

Information technology has traditionally offered remote work opportunities, yet even the tech industry hasn’t had all the tools it needs to supervise telecommuting workers. Upwork, an online tool businesses use to build and manage remote teams, received $15 million in funding last week. The oDesk Web-based collaboration tools enable project managers to visually track and verify all work performed, both historically and in real-time.

This article is part of a series called News & Trends.