Increases in technology-oriented corporations, trade associations and service-related business in metropolitan Washington have helped to accelerate the arrival here of management personnel.
But as the number of relocations grows, so do the costs that companies must bear in an era of spiraling inflation lacking in acceptable housing mortgage rates.
"The costs involved in [executive changes] can be astronomical, even with a healthy economy, and are usually absorbed by either the employe or the firm recruiting or transferring personnel," said Stephen Harlan, managing partner of the Washington office of Peat, Marwick, Mitchell & Co., the big accounting firm.
Harlan's office recently completed a survey of businesses there, to which about 50 major firms replied, including Acacia Mutual Life Insurance, Allbritton Communications, Federal National Mortgage Association, Geico Corp., MCI Communications, Martin Marietta Corp. and Southern Railway. c
The heavy response was interpreted by Harlan as an indication that area firms are encountering increasing difficulty with management relocation. Where possible, "local recruitment is being emphasized," he added. Among the specific trends the Peat, Marwick study found are:
Purchase of an employe's former house by an intermediary sales agent and payment of interest rate differentials -- helping to make up the difference between a low rate in a former city and a higher rate locally -- were two relocation benefits that showed the greatest increase in utilization. In 1980, the number of firms using an intermediary sales agent or paying interest rate differentials for their new employes was, respectively, four times and five times greater than in previous years.
Reimbursement for income taxes showed a slight increase in 1980 and was the greatest percentage increase of proposed additional relocation benefits.
For new management and officer employes, the number of firms offering cash payments or bonuses for relocation soared 43 percent from the previous year; for transfers the increase was 39 percent.
When asked if relocation is a factor in salary determination, 54 percent of the companies responded in the affirmative. Some corporations are relying on the bonus system to cover relocation expenses so salaries aren't distorted.
There is much concern in the local business community about proposed government payroll cuts and the impact of such layoffs on the region's economy. The main question is whether the private jobs base here can absorb the people who may find themselves out of jobs.
The Greater Washington Board of Trade had begun to study the situation, and board President J. Pat Galloway, a Sears, Roebuck executive, has named a major task force to report on employment cutbacks in government. Geico Corp. Chairman John Byrne heads the group, whose goal will be to determine the facts "and then to assess in what ways the private sector through the Board of Trade might contribute a solution."
Galloway revealed the creation of the task force at one of D.C. Mayor Marion Barry Jr.'s regular prayer breakfasts. Galloway is the first business person to be the main speaker at such a session. The Board of Trade goal, he said, "is that greater Washington be a healthy and prosperous community, with the best interests of people as its first concern. Because if it's a good place for people, it's a good place for business."
According to a text of the Galloway talk, released by the BOT last week, the Sears official expressed concern about urban social, economic and racial tensions."The media report these tensions daily and few of us have not heard concern expressed privately. I fear that, left unchecked, such differences could dominate."
Galloway then went on to emphasize areas of agreement, rather than discord, between the business community and District policymakers. Pointing out that since 1917 the board has supported full voting representation in Congress for D.C. and made other contributions to the whole community, Galloway called the major's task of making budget cuts "a thankless one" but one deserving of applause for courage.