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The Low Down on Temporary Living Expenses

Temporary living can be a doozy of a line item in a relocation budget.

Don’t Trust Temporary Living Lease Terms

Yep, we said it. At times, temporary living is a necessary evil, as opposed to a relocation benefit. Semantics, to be sure, but nothing turns us off more than landlords or property management companies who pack their lease agreements with fine print clauses designed to “trap” distracted transferees into a longer lease term and/or additional fees. It’s a shame and it’s bad business but, unfortunately, it happens.

Free Whitepaper: 10 Temporary Living Rules to Live By

We’ve been talking a lot about temporary living lately – and with good reason. As we know, temporary living is one of the bigger line items in the relocation budget.  Employers, capped-budget transferees, and even those who really do care how much their move costs their company (yes, some really do!) can find themselves sticker shocked from temporary living totals.

Temporary Living Must-Do’s

We’ve talked a lot about the real estate market lately and it’s no secret that rental prices are skyrocketing. Given this trend, and my own experience in temporary living, I thought it was due time for a post about what transferees (and companies) should know about temporary living.

Solutions for Managing Temporary Living in Remote Areas

We manage a wide variety of relocation programs for firms in a wide variety of industries. Sometimes, we are charged with moving employees to very remote locations with few relocation resources. With a little creativity and patience we can always make it work, but there are some relocation benefits that present a greater challenge than others. One of the most common issues we deal with (as well as a frequently asked question) is finding adequate and budget-friendly temporary living in remote areas with few options and high prices. So, how do we solve the temporary living problem?

The Low Down on Temporary Living Expenses

Temporary living can be a doozy of a line item in a relocation budget.

Employers, capped-budget transferees, and even those who really do care how much their move costs their company (yes, some really do!) can find themselves sticker shocked from temporary living totals. Occasionally, we are confronted for overcharging for temporary living arrangements we have made. The reality, however, is that temporary living charges are directly passed through to our clients with no markup.  Here’s what’s happening.

Expert Interview: Temporary Corporate Housing

Everybody within the relocation industry knows that temporary corporate housing plays a major role in transferee Kelly Reganexperience. Finding a new home at destination isn’t always a cake walk and for many, temporary housing is a vital benefit. A couple of weeks ago, I had the privilege of picking the brain of Kelly Regan, Executive VP of GO Furnished Housing. It’s so valuable to gain insight from our trusted vendor network here at XONEX and I knew that her experience in the corporate housing world would be valuable to not only those on the RMC side, but also those of you in HR and procurement.

Lump Sums… A Moving Target

So, you just hired two great candidates for two new assistant manager positions in headquarters.  New Hire 1, we’ll call him Jim, is married with 2 kids.  New Hire 2, we’ll call her Mary, is single.  They both have about 800 miles to travel to their new location.  Your relocation policy for their job level allows for a lump sum of $6,000.

 

How’s that working for you? How does that make the transferee feel about their new job?

Analytics and the Review Process

Reviewing your mobility program requires more than an overview of numbers. It needs to include a deeper dive into why those numbers may be changing.  In addition to helping you determine if exceptions are getting out of control, or one cost center is being more generous that others, sometimes, a statistical change can be misinterpreted if not looked at from every angle.

Recently, a client reached out, concerned that, although initiations had not increased, the year to date expense had taken a notable spike.  On the surface, their conclusion was correct.  While expenses increased over 16% over the same period last year, overall initiations were actually down almost 7 percent.

 

The first thing I did was break out the expenses by category.  Immediately, I could see the culprit.  While other category expenses stayed in line with the previous year, the homesale expenses increased significantly, mirroring the year over year expense variance. Additionally, while there was a small increase in average sale price, this uptick in homesale expenses was more due to the number of sales completed during the two periods.

 

This is where I found the good news.  Looking at the average days on market for each home that sold over the past two years, I was able to see a positive trend. Homes are selling faster.  In the past 12 months, homes sold in an average of 32 days on the market, verses 59 days in the previous year.

 

Additionally, I found the average program cost went down almost 30 percent over the same period!  Logically, this makes sense, if you think about it.  The biggest drag on a relocation program is the homesale piece.  In addition to typically being the biggest ticket item, it also impacts other benefits when the market is soft.  When transferees cannot sell their home, you find they need to use more temporary living, home trips, loss on sale benefits and exceptions.

 

analytics over review

 

So, in the example above, what appeared to be a negative program development, is in actuality a sign of an improving economy and an indication of future savings.

 

Should this positive trend continue, employers should look at those benefits used to entice potential candidates in a slower, uncertain market and grant them by exception, or remove them outright. By removing these benefits (which no longer make the difference between accepting or refusing the move), employers can cut costs further.

 

When you look at your historic program data, do you have a clear understanding on the cause of trends?

Why You Really Need to Review Your RMC

“If it ain’t broke, don’t fix it!”  That’s how the expression goes.  But, it’s time to evaluate the definition of broken.  I’m willing to bet that there are a number of factors why you have postponed reviewing the job your relocation management company is doing.

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RICK CALANNI
VP of Business Development Northeast Region

 

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