‘Headhunter’ Survey : It’s Hard to Draw Executive Talent to the Southland
Southern California may be pricing itself out of the competition for top corporate talent, according to a survey on executive relocation released Wednesday.
More than 70% of personnel officers in large Southland companies surveyed by Russell Reynolds Associates, a headhunting firm, said it has become difficult to recruit executives to jobs in Southern California.
The biggest reason: skyrocketing housing costs, cited by 90% of the 129 personnel officers questioned. Traffic congestion and smog are the other big deterrents to putting down stakes in the Southland, the survey says.
“This is creating a real inhibition on getting executives and talent outside California to move here,” said Harry Usher, the former Los Angeles Olympic Organizing Committee executive who is Russell Reynolds’ managing director in Los Angeles. “It’s not just the cost of housing or the cost of relocating, but it’s also the concerns about the quality of life.”
The survey of firms with at least 500 employees and $50 million in annual sales offers further fuel for the economists, politicians and slow-growth activists who have been warning that Southern California may be choking on its own success.
Even as the region’s population continues to surge, they have worried that a shortage of affordable housing, jammed highways and polluted air eventually will make the Southland unattractive to migrants from elsewhere in the United States and from abroad.
That scenario--hinted at in the Russell Reynolds survey--could snuff out Southern California’s economic advances and send the region into a tailspin, these experts say.
“The question I would ask is whether we’re robbing ourselves of a needed skill base,” said David Hensley, director of California forecasting for the UCLA Business Forecasting Project, which has warned of a coming day of reckoning for the Southland’s booming economy.
“Just given the links between the pricing of homes and growth in the economy, we would expect there would be some dampening effect,” added Adrian R. Sanchez, associate economist at Security Pacific National Bank in Los Angeles. “But there’s no way of quantifying it or saying when, in fact, the other shoe will drop.”
The personnel officers questioned by Russell Reynolds said Southern California’s economic climate and weather still are viewed as attractive by top executives weighing job offers here. And nearly half of all top executives still are being recruited from outside the Southland--16% from overseas.
Nonetheless, recruiters say it has become common for executives from other areas to turn down jobs because of Southern California’s perceived problems.
“I’ve lost many candidates due to the fact the cost of living is too high or we couldn’t make a salary offer that matched the cost of living,” said John McFarland, senior personnel analyst for Executive Life Insurance Co. in West Los Angeles.
‘Postage-Stamp Lot’
Headhunters tell stories of spouses--wives, most often, of male executives considering a move to Southern California--who visit the area on a house-hunting trip and are stunned to learn how little their housing dollars will buy.
In other regions, Usher said, it’s not unusual for a well paid executive to be able to live on a half-acre or acre estate without having more than an hour’s commute to the office. Few areas in Southern California offer that opportunity, he noted.
“The cost, emotionally, of coming into a postage-stamp lot . . . can be great,” he said.
The National Assn. of Realtors reported only a day ago that median home prices in Orange County, at $231,200, are the highest in the nation. The Los Angeles area, at $191,200, ranked fourth. San Diego, at $157,200, ranked eighth. Prices have climbed 20% to 30% or more annually throughout the region since the mid-1980s.
Still, Southern California is not the only area where living costs may fast be becoming prohibitive. ESL Inc., a Silicon Valley defense contractor, said Wednesday that high land and housing costs and clogged freeways in Sunnyvale may prompt it to move nearly a third of its operations to less congested Livermore.
Companies have adopted a host of strategies to combat the Southland’s soaring housing costs--nearly all of them expensive. According to the Russell Reynolds survey, a majority of bigger firms pick up at least part of the cost of selling executives’ old homes and purchasing their new ones, while four in 10 pay for the services of a relocation consultant.
The bottom line: Over a third of relocations cost more than $40,000, according to the survey.
Most companies, however, have not yet responded to one of the major obstacles to executive relocation--helping spouses find a new job. Fewer than one in four offer such assistance, the survey found, though 81% of the respondents said it was at least “somewhat” difficult to recruit executives whose wives also are professionals.
Another growing problem, according to the survey, is convincing divorced parents to relocate to Southern California when the move means leaving children behind with a former spouse. The survey also reported that parents with children of high school age resist relocating.
WEIGHING THE DECISION Percent of personnel executives who say that a particular factor has a “major impact” on executives’ decision to relocate Cost of housing: 90% Climate: 64 Traffic: 56 Economic climate: 38 Smog: 33 Employment opportunities: 32 Crime:17 Cultural attractions: 16 Insurance rates: 12 Earthquakes: 8 Political climate: 2 Source: Russell Re nolds Associates GETTING EXECUTIVES TO THE SOUTHLANDPercentage of responses to question “How hard is it to attract executives to Southern California?” Somewhat Difficult: 51% Very Difficult: 21% Not Very Difficult: 17% Not Diffcult At All: 9% No Answer: 2% Source: Russell Reynolds Associates Los Angeles Times THE HARDEST TO LAND Personnel officers at Southland companies were asked how difficult it was to recruit executives with the following characteristics:
Very Somewhat Not very Married with spouse in professional career position 44% 37% 8% Parents of children of high school age 27 53 9 Married, female executives 23 35 13 More than 50 years old 8 40 24 Between 40 and 50 4 48 25 Divorced parents with children 4 37 30 Married with spouse employed outside home in non-professional job 3 42 37 Under 40 2 21 47 Single 2 5 50
Not at all Married with spouse in professional career position 0% Parents of children of high school age 0 Married, female executives 1 More than 50 years old 7 Between 40 and 50 6 Divorced parents with children 5 Married with spouse employed outside home in non-professional job 5 Under 40 12 Single 31
Note: Responses do not add to 100% because some firms had not tried to recruit individuals in all categories. Source: Russell Reynolds Associates
