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Monthly Archives: June 2018

Thoughts on the State of Relocation

PuzzledRecently I attended the Worldwide ERC Americas Mobility Conference in beautiful Dallas, TX! Beautiful Dallas where we think of boots, cowboys, and yes, the Dallas Cowboys Football team! However, did you know Dallas is also the home of the notorious Clyde Barrow and Bonnie Parker, better known as Bonnie and Clyde – but that’s a story for another day!

 

During the conference I had the pleasure of sitting in on many sessions and my favorite was the Corporate Round Table Wrap-Up where I was able to listen to several corporate relocation experts talk about their views for the future of relocation.

 

One thing they shared with us was the results of the Peer2Peer Benchmarking Workshop Poll. It was amazing to learn that 84% of the respondents spend between 1 and 5 hours on their smart phones each day. Hard to believe when you think about an 8-hour work day. But then in the relocation business it’s all about the “people” and the “experience”. So staying connected is so important.

 

I was happy to learn that approximately 77% of the respondents anticipate their current US Domestic relocation programs will either remain or the same or slightly increase while 88% represents the same for their new hire programs. Looks like we’ll continue to see hiring and a need for talent!

 

When you think about talent mobility what one word comes to your mind? I can tell you this group had a lot on their mind with words like: growing, technology, automated, virtual, innovative, dynamic, diverse, complex, and disruptive just to name a few. Looks like the future will be filled with very positive changing times.

 

With one of the hottest topics in the industry stemming from the recent 2018 tax law changes one question comes to mind and that is if companies are going to gross up shipments of household goods since this cost was considered excludable in previous years. The response was an overwhelming 81% who said yes and only 8% said no.

 

And while we hear a lot of buzz around U.S. Domestic “core-flex” style programs where the transferee gets to customize certain options, 53% of this group said they do not offer this.

 

I was surprised to learn that 74% of this group felt their organizations use of technology to enhance the employees’ mobility experience was either fair or poor. Looks like we’ve got some room for expanding technology within the relocation industry!

 

There so much more to share with you but rather than write it all on this blog feel free to visit the Worldwide ERC website to see about getting a copy of these results. I’m sure you’ll find it very interesting.

 

What are your thoughts about these results and do they coincide with what’s happening at your organization? We’d be happy to hear from you!

How can your Relocation Management Company help you in the recruiting process?

While your RMC is most likely not recruiting on your behalf, there are many ways they can assist in finding the right fit, culturally and financially.

 

The Candidate Pool –  As you gather your list of candidates, especially in those, hard to fill positions, you will usually need to look outside the immediate market place for talent.  One aspect that needs to be addressed is the associated costs of bringing the desired candidate(s) to the position location.  Before making an offer, have your RMC prepare a cost projection, to include the anticipated needs and costs, including the specific tax consequences.  This will help you see your options in an economic light.  It will also enable you to tailor your benefit package to address needs, while keeping the costs under control.Right Fit

The Counseling –  A jigsaw puzzle piece needs to fit.  But, the puzzle must also fit the piece!  In other words, when you have a candidate that would work well in the position, the candidate also needs to determine that the move is right for them and their family.  Your RMC can play a pivotal role in helping the candidate make their decision.  First, the RMC can counsel the candidate on the relocation program and benefits and show them how the process would work from beginning to end.  If they have specific concerns the counselor can come back to the employer with recommendations and viable solutions.

The Resources –  Be it a single candidate, or a group move, the RMC can help gather on the ground, local resources, such as Realtors, lenders, inspection agencies and more to help the candidate(s) get the answers they need to make an informed decision.

The Discovery Trip- The RMC usually has reputable resources to line up options for local tours, previewing homes, schools and other points of interest. By getting your service partner to arrange these services, you are more likely to get actionable feedback to aid in your negotiations.

 

As HR departments have taken on more and more responsibility, with fewer staff members, they need the assistance of their service partners to cover all the bases.  Utilizing your RMC in the pre-offer/pre-decision phase, is a very useful tool to assure a right fit; a cost contained process; and a positive experience for the eventual transferee.

 

Why Lump Sum is a Long Term “Slump”

Lump Sum Relocation PoliciesWith today’s new tax laws, the notion of cutting a check to a relocating employee to cover the relocation costs and reducing the amount of administrative work sounds like a reasonable plan. After all, now that just about every relocation expense is considered taxable income to an employee, you might as well cut a check and “gross it up” to help offset the employee’s tax liability.

However, there are three key reasons why lump sum programs will jeopardize your relocation program’s objectives.

Ongoing Administrative Adjustments

Once you figure out the amount that’s needed to move the employee, you just need to cut the check. Oh, wait a minute! That’s right, you need to figure out how to budget for specific transferee’s move. Then you need to research costs for the next regional move which is to a different location. OOPS! Don’t’ forget about the next move which is the same location as the first move, except now you are moving a family, and then the 4th move…. Ok, I think I made my point. If a company is using Lump Sum approaches, there needs to be ongoing research and adjustments to keep up to date on relocation costs so the company can distribute fair and reasonable amounts. Even if the corporation uses 3rd party services to provide the regional data, there is a significant amount of administrative work involved to update policies, manage the supplier relationships and consult with the transferees on the recommended use of their lump sum budget.

Loss of all Relocation Costs Data

Although Lump Sum programs give transferees full control of their funds and the flexibility to choose the benefits that are most needed, there is a price to be paid for not knowing how the funds are spent. As mentioned previously, understanding current relocation costs and trends help a company make future program adjustments. Without tracking systems or management of the lump sum spend, all knowledge about actual program costs will be lost.

In addition, as relocation programs continue to be evaluated in terms of performance, productivity and efficiency, there will not be enough adequate data available about how certain benefits may perform for different demographics of relocating employees. For example, did a certain benefit for relocating homeowners help make their transition easier than a renter population?  Understanding a deeper sense of how each benefit in a policy can impact a program will certainly give corporations the knowledge to make strategic decisions on policy development and cost containment. With a Lump Sum program, the ability to evaluate specific benefits across various move types is simply lost.

Lack of Support Equals Lack of Control

Now, for those who will argue with me that online Lump Sum services can help companies track costs, I will completely agree that this holds true. The use of online resources that may provide transferees with self-service options and a network of pre-selected supplier partners can certainly provide companies with accurate reporting on what services are being ordered and how funds are being spent.

However, as a long-time rule, the industry knows that just providing money to Transferees, and in some cases, Expatriates, is not going to make the relocation a success. Whether the transferee is a recent college graduate, middle management 1st time transferee or the current, typical industry profile (male, age 36-40, married, not a first-time transferee and moving for a lateral position), the use of relocation counseling is inherently the key to proving a full level of support for your employee.

As relocation administrators, we must all remember that the Lump Sum funds are still the “corporate dollar,” and as such, have a responsibility to make sure the funds are being used wisely and efficiently. The value of professional resources assisting them in understanding the relocation process, selecting service provider, raising financial considerations and simply offering best practices cannot be underestimated.

Taking a Higher Road

Although at first glance, the use of Lump Sum may offer both the employee and company  an easy solution for covering anticipated benefits, we have seen how “the grass isn’t always greener.” For companies who use Lump Sum or are considering the increase in this policy type, there is no opportunity to cut costs when projected need exceeds actual need.  Before going down this path, an employer might want to consider a managed cap approach.  While this type program is still flawed in determining an effective and equitable cap (typically by salary, job level, own/rent status or family size), it offers more structure and captures the actual expenses, which can be used for future projections.

 

So, if you are currently using or contemplating a Lump Sum approach, remember that it’s not a silver bullet. Don’t forget about the cost containment and efficiency that is realized through the utilization of a partner providing a vetted supply chain, real time reporting and best practices benefit auditing.  In the long run, through efficiency and reduced exceptions, their assistance will result in cost savings beyond that of simply writing a check!

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MIKE CANNING
VP, Client Services

RICK CALANNI
VP of Business Development Northeast Region

 

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