Relocation Has a New Look
The firm, in all its paternalistic glory, took care of most of the messy details. Jack headed out, confident that all would be right. And indeed, it usually was. As Jack settled into work in his new location, his wife, Jean, (back then, of course, the trailing spouse was almost always a woman) took care of setting up the house, finding new doctors and dentists and enrolling Jack Jr. in school (after all, few women worked outside the home). It wasn't long before the whole family was feeling cozy, and Jack was socking it to them at work. (And they all, naturally, lived happily ever after.)
Ah, the good old days. Now, things aren't quite so cut and dried. First there's the question of whether Jack will relocate at all—with the economic recovery, there are plenty of opportunities, and job-hopping certainly is no longer an anomaly. If he does accept the transfer, the newly lean and mean company won't have the time to do all Jack's relocation chores for him—which places added pressure on Jack, cutting into his work performance. He's no relocation expert, so he muddles through as best he can, which isn't necessarily the best solution for the company. Meanwhile, there's the problem with Jean, Jack's domestic partner. She has a great job where she is, and is tired of waiting while the firm hems and haws about just how much assistance a domestic partner receives. If she does agree to move, she'll be too busy looking for a new job to find Jack Jr. a doctor and dentist, not to mention a decent magnet school specializing in computers—one as good as the school Jack Jr. will leave behind.
In the '90s, relocation is not as pretty a picture as it used to be. How can an HR professional balance the relocatee's needs and the company's needs? Is it possible to satisfy both? There are a lot of issues to juggle, but a successful relocation—for all concerned—can still be a reality.
A successful relocation is never just luck—the company must know exactly what it wants. Relocation is not a shocking concept. In fact, it's pretty pedestrian. Americans are an extremely mobile people. One in six Americans moves every year. In 1993, 42.8 million of us relocated. Almost every one of us has moved—and survived it. So the fact that many companies function with fairly informal policies isn't surprising. But that doesn't mean it's a good idea, either.
For one thing, look at the numbers. Organizations spend—invest—about $15 billion annually in company-generated moves, according to Washington D.C.-based Employee Relocation Council (E-R-C). The average cost of relocating a homeowning employee in 1993 was $45,263. So we're not talking pocket change here.
Yet it's difficult to know how to strike an appropriate balance in creating a policy. The Hinsdale, Illinois-based Relocation Compass newsletter asked 76 companies "What would be the motivation in designing a policy?" Companies were torn: 59% said "to meet the transferee's needs," while an only slightly smaller 41% reported "to meet the business objective." In truth, a good policy does both.
But first things first. Before debating the finer points of business vs. employee needs, companies need to sit down to thrash out a plan—and put it in writing. Steve Mumma, vice president of marketing and public relations for Evansville, Indiana-based Atlas Van Lines, says he's surprised by the number of companies that don't do this. "The consensus is that your plan must be in writing, and that sounds so elementary...but the simplicity of it has made it [escape] many," says Mumma. He says a lot of companies that have small relo volumes have only outlined their policies but never formalized them, or even worse, make them up as they go along. "But," he adds, "a plan really needs to be in writing and it must be clear and concise. If you have a former law student write the thing, nobody will ever understand it, so there must be an element of simplicity as well as clarity and conciseness." Mumma has seen 40-page policies and two-page policies—he says the shorter ones are more usable.
The Relocation Compass newsletter devoted an entire quarterly issue to "Creating the Perfect Relocation Policy," and suggested that companies use the following guidelines to create a user friendly policy:
- Give transferees bottom-line info in every policy segment
- Guide transferees through the process using number and color prompts, arrows, bullets, and reduced verbiage
- Tell them only what they need to know—don't confuse them with extraneous material
- Keep language simple and concise.
However, experts warn, don't simplify your relocation policy so much that it leaves out important information. A relocation policy must address issues before employees bring them to the bargaining table. "There should be no question about what the company will pay for and what the company will not pay for," says Mumma. "That way there aren't any unrealistic expectations built up by the person that's transferring."
Laying it all down in writing has several advantages. First, it does a world of good in easing transferees' minds at a time when they don't want to be troubled by loose ends. Second, it gives the company qualifications by which it can measure performance. For instance, at Los Angeles-based Unocal, the relocation department limited its number of carriers to two. The company set up an agreement with the carriers that it would use them exclusively as long as they met the standards set up by Unocal. Unocal devised specific quality measurements and attributed numerical scores to them—scores that the two carriers must meet within 5% for each quarter. "Primarily, we've committed to some loyalty in maintaining business," says Ken Falcone, supervisor of transportation. "So they feel it's pretty valuable to keep us as a customer."
In addition, having pre-qualified carriers solves one piece of the relocation puzzle for employees—at a time when they're all too often overwhelmed with nagging decisions. "Employees are happier because it's easier for them to do the move," says Falcone. "And because we continually use the same carriers, they learn just as much about our relocation policy as we know."
Although narrow relocation guidelines work for many companies, an organization should never tie down so many details that it sacrifices its flexibility. Most companies are encouraged to give themselves room to maneuver. For instance, in a Relocation Compass survey, 76 readers were asked whether a policy should make allowance for exceptions—75% said yes.
However, when a company finds itself continually making exceptions, it may be time to take off the kid gloves and rework their rules. "A policy should be a living document," says Mumma. "The thing should constantly be reviewed, because needs change." Policies may require updating over the years to complement a new corporate culture or mindset. For instance, as companies lay more responsibility on employees' shoulders, many are pushing the change through in their attitude toward relocation. "Over the last couple of years, I don't know of a company that has not scrutinized their policy or is not planning on scrutinizing their policy," says Ellie Monty, president of Dotsero, the relocation education company that publishes the Relocation Compass. "[Instead of] revising old policies, which used to be the thing to do, now I see corporations literally saying: I'm not afraid to take it out and really rewrite—do a study and then maybe start from scratch."
Employee studies are indeed key to recreating a policy. Monty suggests seriously investigating what happens to employees in a typical company relocation. "Go back and ask relocatees," she says. "And I don't mean two weeks after they've moved. I mean go back to that employee and their family a year, 18 months or two years after the move." Monty says that a survey done from this perspective provides a true picture of a relocation's full impact—how much it affected the employee and company financially, emotionally and productivity-wise. This way the organization can make effective long-range changes.
Trying to change an existing policy is no easy task, however. In a Runzheimer Reports on Relocation survey, corporate respondents ranked "implementing a policy change" as the third most challenging relocation problem in 1993. It's a growing issue: between 1989 and 1992, fewer than 10% of respondents found implementing a policy change to be a challenge at all.
This could be due to the fact that companies are far more willing, now that they've passed the majority of the relocation burden onto employees, to hear what they have to say. Says Ellie Sullivan, vice president of Norwell, Massachusetts-based The Relocation Institute, "Clients seem to be much more focused on having a very flexible and fluid relocation policy and really delivering the kind of service at the transferee level that the [transferees] want."
Mumma hopes to see more of this solicitous attitude in the future: "I think one of the things that has to override everything when the policy is being built is: does it truly meet the needs of the relocating employees? And that comes only from the experience of the people. The users of the policy need to be in on the design."
Employees' relocation needs are changing.
We've all heard the buzz about the family-friendly '90s. Spouses, relatives and children are no longer considered appendages of the employee—they have a big say. Just because the employee gives the green light to a transfer doesn't mean it's time to head out—his or her family may still be idling in the driveway.
"For the first time in 10 years, more than 50% of our members cited employee and family resistance to move as a reason for reluctance," says Cris Collie, executive vice president of E-R-C. Collie says that this is a major shift away from the traditional reasons for turning down a relocation, which until now were primarily economic concerns, such as a depressed housing market.
Mumma has also noticed the trend: "For the first time in five years, people are actually refusing to relocate based on family ties. For four years, it was cost-of-living factors [that caused reluctance]. The career path is maybe not as important anymore as it is to feel good about your family." This reluctance due to family ties can come from several different directions:
- A spouse or partner may have to sacrifice his or her job
- Children may be unhappy about the move
- The employee may be responsible for an older relative.
The primary issue is the dual-career family. According to an Atlas Van Lines survey, about 75% of all transferees are married. And of transferred couples, about 60% are dual-earners.
Beverly Roman, head of Hellertown, Pennsylvania-based BR Anchor Publishing, which specializes in relocation education, says companies have to pay close attention to family issues, particularly dual-career relocations. "Companies aren't addressing it, and it's not going to go away. Spousal assistance is the big one."
Roman estimates that effective spouse career assistance constitutes less than 10% of the cost of a relocation—and is worth every penny. "I don't think it should be considered a perk. It should be an integral part of a very effective relocation policy," says Roman, whose company publishes the "Relocation...2000" newsletter. Monty agrees: "The family assistance issue continues over and over again to emerge."
According to the E-R-C, about 50% of corporations currently provide some type of spouse employment assistance. Most companies with formal policies provide the service to spouses of all current employees, regardless of the transferee's level within the company. The assistance comes in many forms, although the most common, according to E-R-C research, is to pay the fees of an outside counseling/placement agency (three-fourths of responding E-R-C member companies provide this type of service). Other services provided (offered by one-fourth or fewer of companies) range from resume writing assistance to paid job-hunting trips.
Louisville, Kentucky-based UPS Airlines is one company that's taking an aggressive approach to spousal assistance. The airline, a division of United Parcel Service of America, is going to use its already existing technology to assist in spousal job placement. It's not that the company hasn't offered assistance in the past—but HR manager Patrick O'Leary thinks it's important to do more than informally spread the news of potential job openings. For instance, UPS Airlines currently has a resume exchange program with several other companies. If a firm called looking for an electrical engineer, the notice would just go on the company E-mail, and people would spread the word to job-hunting spouses.
The HR department thought it could do better than this haphazard approach, so it's going to begin to input spouse resumes on the company's already existing online resume database. A program called Resumix allows the company to scan in resumes and then tap them by skills or sources. Once all relocated spouses' resumes are input into Resumix, when a job opening is posted by another company, the HR department has only to scan for a match, hit a button, and fax the resumes to the other company right from its terminal.
O'Leary says the system will make spousal assistance much more cost-efficient: "There are resumes I want to share, but I don't want to spend a million dollars to share them. I don't want a member of my staff to have to quit work and look through all these resumes. If I have the resumes on my computer, I can find the resume, type in a company's fax number, and I'm done with it. I'm done in a few minutes, and two of my managers' spouses or dependents are on their way to a possible job interview and a possible job."
However, UPS Airlines is a company ahead of its time. Despite the growing area of spousal assistance, Monty says companies still have a way to go: "It never ceases to amaze me that companies are still talking about it, that all of them are not doing it. It's growing in use, but it should be a given and it is not a given, and that surprises me. That absolutely surprises me."
Although companies may hesitate to add spousal assistance programs, citing lack of funds, a look beneath the surface indicates that they aren't as expensive as many companies think. For instance, in a 1994 Runzheimer Reports on Relocation survey of almost 70 relocation administrators, nearly two-fifths of respondents said their companies offer spousal assistance at an average cost of $1,369. Yet, only 13% of relocatees qualify or take advantage of the program; so on a per transferee basis, the cost to add such a program can be as little as $178.
Still, the development of spousal assistance programs is light years ahead of partner assistance initiatives. Only 21% of E-R-C member companies provide employment assistance to partners, although this is an increase from 17% in 1990. According to the E-R-C, 11% of corporations have formal policies to provide assistance to partners (up from 5% in 1988); and another 14% usually will if requested.
To many in the relocation industry, differentiating between domestic partners and spouses leads to a battle of semantics, not solutions. "The best way to handle it is to treat domestic partners as you would married people and just help them out," says Roman. "Companies that want a good comprehensive relocation package are going to have to, because half the unmarried men and women under 30 cohabitate before marriage—so there's a lot of them out there."
Companies can extend any number of services to spouses and partners—and they don't necessarily need to be sophisticated packages. For instance, a move can get anyone harried, and sometimes even the smallest gesture can be an inexpensive—but appreciated—token of goodwill. "What a lot of companies could do is help people with some of the maddening everyday problems of a move," suggests Roman. "Years ago, the man was the breadwinner and he moved, and the wife did all the little things like find new doctors and dentists. Now with both people working, no one has time to do his. So there's some practical things they could help with."
For other transferees, the move is not as difficult as the adjustment to a new locale. Here, too HR can smooth the bumps. Mumma says he's known companies that informally support "sponsorships" of newly relocated families. Similar to mentorships, a family at the current location agrees to ease the new family into the community—help them find cleaners, grocery stores, good restaurants. "The family makes it a point to take the new family around, have a cup of coffee or a glass of wine. You find out which people are willing to do it, are good at it, and that eases the transition immensely." Companies may also provide the relocated family with a list of things to do in the new city, or organizations and churches to which the family belonged at their former home.
Less conventional services pop up under special circumstances. Take return rights, in which a company agrees to pay for the family's move back home if the relocation doesn't succeed. Not usually an ideal situation, organizations may opt to use it only as a last resort for families extremely wary of a relocation. "I don't think you're going to see that offered very often," says Mumma. "I suppose the perceived value of the employee may move some companies to do some very creative benefits designs." A few companies also have been known to provide—in special cases—an extended commuting allowance for couples who choose to maintain separate homes for a period of time. Again, these are less relocation strategies than creative solutions for exceptional employees.
But spousal and partner issues, although serious, shouldn't take all the limelight. Other family members also fit into the picture—like the children. Sixty percent of all transferees, married and single, have dependent children, according to BR Anchor Publishing. In fact, of the many Americans relocating every year, 9.6 million are children between the ages of 1 and 14. Yet how often are their specific needs addressed? Not often enough, most experts will tell you.
In a study titled "Impact of Family and Relocation on Children's Growth, Development, School Function and Behavior," data collected from almost 10,000 6- to 17-year-old children led to these disturbing conclusions: Twenty-three percent of children who moved frequently had repeated a grade vs. 12% of children who never or infrequently moved. Eighteen percent of children who relocated frequently had four or more behavioral problems vs. 7% of children who never or infrequently moved.
And even one move can be traumatic for some children. For instance, Mumma provides a former co-worker's adage: "It is far more humane to shoot a teenager than to relocate one."
While an employer can't be expected to tame teenagers and coddle children, it can make a difference. For instance, Mumma mentions one relocation counselor who made a brochure from collections of teens' letters written to their friends about their relocations. She distributes the brochures to clients' teenagers to give them insight on what to expect in the moving process as well as to let them know they're not alone.
He also knows companies that provide a school match service to employees that will allow children to search for schools that will most closely fit their ideals—for instance, schools boasting strong remedial programs, respected drama departments or prep-school curriculums. Companies also can assist in finding rehab programs or schools for kids with special needs. "That may not be written into the policy, but it's probably the right thing to do, and I think companies realize that," says Mumma.
Some employers, like Clayton, Missouri-based paper packager Jefferson Smurfit Corp., have made changes to househunting policies to allow children to go along. Suzanne Hedger, manager of household relocation, says that this gesture makes the relocation seem more of a family effort than a forced march. "It's important for the children to go along because they're changing schools, meeting new friends," says Hedger. "It's hard for them, so this is a goodwill gesture."
UPS Airline's O'Leary knows for a fact that paying a little extra attention to a relocatee's kids can make all the difference. He remembers several years ago when one transferee's daughter was devastated by the idea of having to give up ballet lessons at her former home. O'Leary took the time to call up the local ballet schools to see if any were good. It turned out they were, and now the girl is dancing semiprofessionally in Louisville. Says O'Leary: "When I see [the transferee] we always chuckle because it was such a big deal, it was almost a deal buster for us—but it ended up being a plus because she had a better opportunity here. So I'm sensitive to those types of issues. We're always looking for ways to lessen the impact of relocation."
In addition to children, there's the increasing number of babyboomers caring for elderly relatives. And the number is expected to continue to grow: the U.S. Bureau of the Census predicts that by the year 2030, the 65-and-older population will explode by 113%.
Companies are beginning to address this potential problem. For instance, 16% of 183 corporate relocation professionals responding to an Atlas Van Lines survey said that their companies currently are addressing in some way elder care issues.
Of those that do, 9.7% provide a list of nursing homes or daycare centers; 6.3% allow the transferee to use pretax dollars for outside care; 1.7% will move an older relative who doesn't live with the transferee; and 6.8% will move the older relative who doesn't live with the transferee presently but will in the new location.
Mumma is confident the entire area of family assistance will grow in importance. "Maybe some companies are thinking: We've been saying our most important asset is our people; let's take it off the letterhead and put it into practice."
Monty also feels the benefit of catering to employee and family needs can't be overestimated: "When I talk about relocation, I'm talking about your relationships—with your family and your loved ones and your friends—absolutely every relationship you have in your life. I'm talking about your job, your self-esteem, your prized possessions. What haven't I covered in your life when I've asked you to move?"
A successful relocation is about more than happy families, it's about money.
When it comes right down to it, companies relocate employees for one reason only: The move makes good business sense. If it wasn't best for the bottom line, they wouldn't do it. Yet extended househunting trips, elongated stays at temporary residences, exorbitant loss-on-sale payouts or inventoried homes can skew the profit picture tremendously.
But where to begin? Companies that focus on getting homes sold quickly are the biggest relocation winners. Moving homeowners is an expensive undertaking: A recent Runzheimer survey said that every single aspect of moving homeowners (from household goods shipping to househunting reimbursements to even spousal assistance) was more costly than moving their renting counterparts.
To keep a little money squirreled away, many companies are making adjustments to their policies, tightening their benefits. For instance, the Mortgage Interest Differential Allowance (MIDA) has been dropped from many plans. Originally introduced about 20 years ago to protect employees against that period's high interest rates—rates as high as 10%—they were a useful, even necessary part of a relo policy. But with mortgage interest rates currently hovering around 8%, companies that haven't looked at their MIDAs may be staring a cost increase in the face. Conversely, it's also important to note that while MIDAs should be reviewed, they shouldn't necessarily be dropped: Interests rates are again on the rise, up more than 2% since the beginning of 1994 and are expected to continue to rise in 1995. Most professionals say that an effective MIDA program will offer assistance only when the rate of a new mortgage is more than 1% greater than the previous mortgage.
Like MIDAs, loss-on-sale assistance is also being reviewed by many. In a loss-on-sale payout, companies reimburse employees for the difference, or portion thereof, if they're forced to sell their home for less than they paid for it. In the past days of inflated home values, these payouts were rarely necessary, and dollar amounts were relatively small. But in 1994, an increase in the Housing Affordability Index (HAI) made today's housing the most affordable in years—which also makes it more difficult to sell a house for its original value. Most companies with formal loss-on-sale programs are encouraged to link qualification for the program to a structured marketing assistance and homefinding program—which should keep employees from overpaying for a home. This can be a major money saver: A Runzheimer survey of almost 70 relocation professionals concluded that the most expensive single item that companies often pay homeowners during the relocation process is loss-on-sale payout, with an average cost of $10,259.
Although reviewing such policies is wise, the one thing that almost every relocation expert agrees on is this: The most critical factor affecting total homesale program cost is the ratio of employee sales to inventory sales. Consider this: A survey conducted by The Relocation Institute (TRI), a subsidiary of Relocation Resources Institute, found that employee sales cost 45% less than inventory sales, with the average employee sale costing $21,000 vs. $38,000 for the average inventory sale—a $17,000 difference.
Employee sales are definitely being pushed by cost-minded companies. The survey reported that the employee sales ratio was up 13.5% from 1992—to 62%. The Relocation Institute sees the improvement in the employee sales ratio as a result of better market conditions and—just as importantly—relocation policies containing transferee incentives to sell their homes before the third party or employer has to buy them. Companies that encourage employee sales reap the benefits—average homesale costs among the survey respondents ranged from 13.1% (reflecting a 94.8% employee sales ratio) to 20.47% (reflecting an 11.7% employee sales ratio).
Monty predicts companies will continue to push for employee sales: "Pre-marketing is the norm, where it used to be the exception, that goes without saying. For years the industry fought [to encourage] employee sales, and now most companies have it written into their policy."
TRI says that employee sales are usually the result of three actions:
- Initially pricing homes competitively
- Completing repairs and maintenance before listing
- Marketing homes while they're still occupied.
- Of these three factors, competitive pricing is the most important and is usually the result of three factors:
- An effective homemarketing counseling program
- A policy that requires that homes not be listed until the homemarketing counseling is completed and the guaranteed price is established
- A monetary incentive based on the transferee's acceptance of initial price recommendations.
Companies that use these guidelines benefit greatly. Jefferson Smurfit's advanced marketing program has allowed costs on an assigned sale to be about 11%, whereas on a regular sale, they average 25%. With about 200 moves a year, this can make a lot of difference, so the company encourages employee sales by offering a 3% selling bonus.
Sullivan sees this aggressive encouragement of employee sales to be a norm for the future. "We see companies saying: You will qualify for these benefits [such as a percentage of the appraised home value], but you [must do something in return]. They make stipulations that give the transferee a variety of options, and similar to HMO programs, they're offering some contingency requirements."
To bridge the monetary transition from former home to new home, many companies continue to use lump-sum payments, though they are doing so a bit more carefully. Lump sums, employers are discovering, are not effective for every employee and every situation. "If it was so wonderful, every relocation administrator would say: Here's $40,000. See you in Dallas next week," says Monty. Monty says effective administration of a lump-sum payment can occur only when the relocation professional and the transferee sit down to decide exactly what the payment should cover. For example—Is the lump sum intended for temporary living, or does it also cover miscellaneous expenses? Is the lump sum intended to cover just the transferee's expenses or the whole family's? Obviously, lump sums can't just be arbitrarily doled out. "Unless it's done correctly, don't do it," says Monty. "It's like any other program. If any good thing is not implemented fairly, justly, you've got a mess on your hands, and more so with a lump sum."
But saving money doesn't stop on the departure end—companies need to focus on the destination end just as intensely. "We've seen a tremendous increase in the emphasis that employers are putting on the destination side of the relocation equation," says Sullivan. "They ask: How can we reduce temporary living? How can we get that transferee advanced information that can really benefit them instead of them just hopping on a plane and doing all the legwork onsite? How can we prepare them for a successful homefinding trip?"
Basic destination services are as simple as giving employees community match information and relocation cost differentials—two information sources that help relocatees focus their househunting efforts, and find a home more quickly. In a community match, relocation professionals give transferees information on a variety of demographic data (including an area's general home values, residents' median income and education levels) so they can zero in on the communities which most closely match their needs. Relocation cost differentials provide data on the cost of living and median home-value differentials in both departure and destination areas, so the relocatee may househunt more strategically.
Relocation in the '90s has become a partnership effort between companies and their employees. Although employers can no longer play Papa Bear for every tranferee, they can still give a hand—and keep a grip on the bottom line. With a little cooperation from the employee, a little understanding from the company and a some effort on both sides, Jack, Jean and the kids can once again make a pretty picture of relocation.
Personnel Journal, February 1995, Vol. 74,, No. 2, pp. 48-62.