Where Relocation is Headed Now

Now, some companies are offering as many as three or four tiers of assistance.

May 29, 2004

W eichert Relocation Resources Inc. reports in a new study that the most significant relocation issues through the end of 2005 will be risk management and increased corporate governance; the conflict between global mobility and increased cross-border security; and the influence of procurement departments on human resources.

    Weichert, which is located in Norwell, Massachusetts, and other relocation firms identify the following industry trends:

    Procurement Takes Charge. With the cost of relocation now averaging $65,000 per homeowner, procurement departments are reducing costs by taking control of more relocation-service spending.

    "Companies want to handle relocation in a more formalized way, with requests for proposals that define the scope of the work," says Elle Sullivan, director of consulting services for WRRI.

    Shorter Assignments. In a 1997 survey, GMAC Global Relocation found that more than 80 percent of expatriates spent one to three years on an assignment. By 2003, that had changed significantly. As companies cut costs, 70 percent of assignments were for less than a year. This change raises issues including how well an employee can more quickly integrate with the workers in the host country.

    Aggressive Home-marketing Policies. Many companies are focusing on aggressive home-marketing policies of transferees to minimize inventory homes and reduce costs. These policies include mandatory list-price guidelines and marketing periods, mandatory broker registration and the ability to assign offers below appraised values.

    Multiple Policies. Historically, companies have maintained one policy for all transferees. Now companies are differentiating not only between new and current employees, but are also offering as many as three or four tiers of assistance depending upon the employee. According to WRRI, 30 percent of companies now have a single policy, 64 percent offer multiple tiers and 6 percent have a cafeteria-style menu of services.

    Lump Sums. Liz Portalla, vice president of client services for MSI Mobility, a relocation provider in Newburyport, Massachusetts, says that more companies are giving nonexecutive employees a single lump sum to pay for their housing and expenses as they get settled into a new job. This encourages the employee to stay in less expensive accommodations and to get settled more quickly.

    Watching the Feds. Federal laws like Sarbanes-Oxley have dramatically affected relocation, but companies should also keep an eye on systemic changes in federal policies that may affect relocation. For instance, Republican Sen. Charles Grassley of Iowa has criticized government agencies for spending an estimated $100,000 each to move transplanted nonmilitary federal workers each year and has raised questions about changing federal relocation rules.

    Upfront Projections. Timm Runnion, CEO of MSI Mobility, notes that more companies are asking for projections of relocation expenses in advance of offering a job or relocation assignment.

    "This includes soft factors like how quickly an employee can be up and productive," he says. Still, questions remain about whether human resources executives are sufficiently tracking spending.

The GMAC study found that 82 percent of companies prepare cost estimates before an overseas assignment, but only 46 percent compare their actual costs with those forecasts. Of those who do, only 41 percent found their original forecasts to be accurate.

    Settling-in Services. WRRI’s Sullivan finds that firms can sometimes be "penny-wise and pound-foolish" in their attempt to contain relocation costs. Pre-decision trips and global cross-cultural training, for example, are examples of questionable areas in which to count pennies.

    "If you help the transferee to adjust to his situation more quickly, that positively affects retention," she says.

Workforce Management, April 2005, pp. 52-53 -- Subscribe Now!