Relocation

Ten Important Things You Need to Know about Relocation

Relocation presents a whole spectrum of challenges: cost containment, tax and legal compliance, the pressure to attract and retain the best talent and the stress of the employees involved. No wonder it's such a headache for so many companies—especially those that don't relocate people very often. While relocation is complex and ever-changing, there are a few points that can help ensure that you have a successful program without breaking the bank:

Relocation benefits can be a powerful tool to land must-have new hires and executives. Even if you don't relocate many people or don't offer the benefit every day, it's a big help to have a competitive relocation policy and a provider relationship up your sleeve. A few relocation companies have developed special programs for companies that have only the occasional need to relocate employees. Some of these solutions come complete with best-practice relocation policies.
For maximum versatility, develop a tiered relocation program. A tiered program—perhaps ranging from lump sums through Buyer Value Option programs to full homesale benefits— allows you to meet the needs of everyone from college grads to your CFO. With well-planned, tiered polices in place, you will eliminate last-minute fire drills and potentially costly ad hoc solutions.
Make sure your relocation policies reflect the current relocation environment. With home sales slowing, prices softening and mortgage rates rising in many locations, your policies might need a fresh look to make sure they're still supporting your recruiting and retention objectives. Policies should be structured to reward employees for considering all reasonable offers and completing the move as rapidly as possible; not to try to capture a price their house might have sold for at the peak of the market. If you offer, or are considering, mortgage interest differentials, cost-of-living adjustments or loss-on-sale provisions, the current best practice is to share relocation costs, not necessarily to make the transferee 100% “whole.”
Reduce your relocation program costs by making sure homes sell quickly. How? Make sure your program encourages employees to properly prepare their homes for sale and to price them competitively. Offer a quick-sale bonus for homes that sell within 60 days. Homes sell more easily, and for a better price, when they're still occupied and haven't entered inventory.
There's more to relocation than homesale, homefinding and transportation of household goods. Sure, these elements are the backbone of most relocation programs. But a capable relocation provider should also be able to assist with expense administration and tax compliance, policy benchmarking and development, and increasingly important support services, such as candidate assessment and spouse counseling.
If you're considering a fixed-fee program, evaluate the pros and cons carefully. Fixed-fee programs promise greater predictability of costs, simplified budgeting and billing processes and minimized risks. Interestingly, they almost always result in higher relocation costs for the corporation than a well-designed, conventional relocation program. The assumption of all risk by the relocation company isn't free: the costs are factored into the fee charged to the client. In addition, fixed-fee programs usually mandate strict conditions for transferees, including the price set and the real estate agent who can be used for home sales. This can make them a poor cultural fit for some companies.
For international assignments, technical competency isn't enough. Given the investment involved—which can total $1m or more for a three-year assignment—candidates for overseas assignments should be carefully assessed for their suitability. The brilliant, high-powered executive in New York might be impatient with the more relaxed business culture in Brazil, making him both frustrated and ineffective. Once a suitable candidate is identified, cross-cultural training will help him or her to function capably in the business arena while easing the family's social adjustment. Similarly, language training will do much to ease isolation and smooth business transactions.
If you relocate employees globally, don't overlook repatriation programs. Companies invest a great deal in overseas assignments but frequently give little consideration to how to manage the employee's eventual return. The irony is that many employees find re-entry more challenging than living abroad. Companies that don't assist with the transition lose more than half of these employees—and a substantial investment—within three years of their return.
A full-service, outsourced relocation program might cost less than you think. If your relocation program is best described as “catch as catch can,” you might think a full-service program is beyond your company's reach. In fact, it could cost less than buying individual services on an ad hoc basis. Today, most relocation companies earn the bulk of their revenue from a portion of the real estate referral fees, reducing or even eliminating service fees. At the same time, you can benefit from their experience�possibly even reducing your costs.
Selecting the right partner for you is critical. Service partners should meet minimum qualifications: documented service capabilities, verified financial stability, proven technology, and favorable references. Your RFP should include questions that allow you to assess these qualifications and also get a sense of the cultural compatibility. Finalist presentations and site visits will allow you to make an informed decision.

There are many other issues to consider in developing a competitive and compliant relocation program. A capable provider should be able to apply relocation best practices to your company's particular human resources objectives and budget and ensure that your company is as competitive as possible.

Article by Jerry Manchester is a Sales Manager for Mobility Services International, from https://www.nehra.com/