Internal audit relocation: should we stay, or should we go?
For over a century, Wall Street has been the epicenter of the US financial services industry. However, fewer internal auditors than ever are now located in the New York financial district, as a growing number of institutions look to increase profits and lower costs by relocating corporate departments to more affordable areas.
Relocation strategies are hardly a new phenomenon; The New York Times reported in 2012 that Wall Street’s financial giants were shifting jobs out of the eight-block street after the global financial crisis. Salt Lake City, Raleigh and Jacksonville were favored locations, and services such as accounting, trading, legal services and compliance found themselves among the most likely departments to move.
Nevertheless, relocation is a trend that has taken on a new urgency among many firms over the last few years. Our 2019 Internal Audit Market Report revealed relocation strategies are currently a major focus for internal audit teams. More than a fifth (21%) of our surveyed clients said they were in the process of moving functionality to another area of the US or had plans to do so in the future. Of these, an overwhelming 91% were relocating operations to benefit from lower-cost regions.
Many big names have built internal audit hubs outside Wall Street in recent years, including Goldman Sachs (Salt Lake City), Deutsche Bank (Jacksonville), Credit Suisse (Raleigh), AllianceBernstein (Nashville) and Citigroup (multiple sites across Florida and Texas).
Technology advances have played a key role in facilitating large-scale relocation strategies for internal audit departments and other functions. The world is now a smaller workplace, with meetings easily conducted via remote conferencing software when stakeholders are located in different areas of the country.
That’s not to say relocation is without challenges. In fact, both employers and candidates who are considering moving should consider the risks as well as the rewards before taking the plunge. Here, I will delve into the crucial factors that may affect your relocation strategy decision-making.
The benefits of relocating
Why would businesses and candidates consider moving from the hustle and bustle of Wall Street to a lower-cost center? I’ve touched on some of the benefits already, but let’s revisit the drivers behind relocation strategies.
Long-term cost reduction
The initial capital outlay for relocating departments and staff to another state or city may be considerable. However, many firms are confident the cost efficiencies of shifting non-revenue generating functions to more affordable areas are clear over the long term.
More stable environment
Businesses can enjoy greater stability and less market fluidity in areas outside New York due to less competition. As a result, there is less volatility in the careers of the workforce, which can limit staff turnover and reduce the costs associated with frequent rehiring.
Some of the world’s best financial services professionals congregate in New York, which means candidates often face stiff competition when trying to rise through the ranks. Auditors could find their career progression opportunities are improved when they relocate to areas with fewer job rivals.
Businesses aren’t the only ones that enjoy cost benefits from relocating outside Wall Street; candidates may also find their salaries go a lot further. This can free up valuable resources for investment, hobbies, family spending and property purchases.
A new challenge
The prospect of moving to another city can be daunting, but candidates also get the chance to inject a new lease of life into their career. Anyone who feels they have fallen into a rut in their current role may find a change of location is just what they need to rediscover their enthusiasm.
Aside from career prospects, candidates may find a new city provides them with better family benefits. For example, local schooling may be superior, properties could be larger and/or more affordable, while the commute to work may be shorter or less stressful. Employees could also have a better work-life balance outside of New York.
The challenges of relocating
The above benefits can prove very attractive to organizations and employees, but it’s also important to consider the potential hurdles of relocating, as the transition may not always run smoothly.
Initial capital costs
As previously mentioned, relocating staff and operations is an expensive endeavor in the short term. Many employees are offered enticing relocation packages, while key talent may also retain a relatively high salary that is above the market average in the new location. When staff are unable or unwilling to relocate, businesses may need to provide large redundancy payments.
Changing market or regulatory environment
In the ever-shifting landscape of financial services, regulatory and market changes are inevitable. Some of these changes, however, may require internal auditors to meet with or be closer to business stakeholders in New York. This could potentially lead to much higher travel and accommodation costs for the company, or the need to hire expensive contractors to plug any gaps.
Finding the right talent
A lack of competition may be beneficial for candidates, but a shallower talent pool usually makes finding highly skilled and experienced individuals more difficult for companies. Employers often take years to develop a strong local network of talent and relocating staff from other areas is time-consuming and expensive. Meanwhile, Chief Auditors face increasingly busy audit schedules and will still be expected to meet their annual obligations, even when staff shortages are impacting performance.
A drop in base salary
Employees may benefit from a lower cost of living outside New York, but there is also a reasonable chance their bottom-line salary will also fall. How will these changes impact an individual’s disposable income, savings and 401k/retirement contributions? CNN provides a useful Cost of Living calculator to help relocating staff better understand their financial situation when moving somewhere new.
I’ve covered the family opportunities, but there are also challenges worth considering when moving loved ones to a new city. Uprooting a family may not be a realistic prospect, particularly for children who may be at a crucial time in their education. Relocation can also adversely affect a partner’s career and progression. Making the switch is also likely to mean moving away from friends and family members, as well as potential problems selling a home.
Cultural and social drawbacks
New York is not only a financial services center, the city is also one of the world’s most exciting cultural hubs, offering citizens almost unprecedented access to some of the best art, entertainment, sports and cuisine that the US has to offer. Many candidates will no doubt be hesitant to leave these amenities behind unless a similar (or more suitable) lifestyle awaits them in a new location.
How Barclay Simpson can help
At Barclay Simpson, we pride ourselves on supporting both businesses and candidates as they embark on their relocation journey. We aim to facilitate the recruitment process at every step of the way to ensure relocation strategies encounter as few problems as possible.
For employers, we offer in-depth competitor analysis and an overview of the local talent pool. The results from our 2019 Internal Audit Market Report show 54% of departments currently feel under-resourced, with 63% of hiring managers citing a lack of suitable technical skills as their main recruitment hurdle this year. Our consultants can therefore provide key insights into regional skills shortages and strategic advice on how to overcome these challenges.
We also perform comprehensive research into new locations to better support candidates. This is underpinned by extensive cost-of-living analysis to help individuals compare how a job offer elsewhere in the country shapes up against current or previous roles. Furthermore, our team networks with local internal audit groups, as well as regional Institute of Internal Auditors (IIA) chapters and government bodies to identify the needs of professionals who are considering relocating.
Barclay Simpson can also organize conversations and meetings between prospective candidates and professionals who have relocated to a particular area. This gives applicants access to the first-hand knowledge and experience of those who have already made the transition, providing valuable information and much-needed peace of mind.
These are just some of the essential services we provide. So whether you are a business or a candidate, if you would like to discuss your relocation strategy in more detail, please contact me on +1-212-786-7486 or via email at firstname.lastname@example.org.