Classic domestic relocation policies clearly distinguish between renters and homeowners. Renters are assumed to be younger, more junior employees, often single or married without children. Since the classic renter has no home to sell at the departure location, no home to purchase at the destination and significantly less in the way of household goods and other encumbrances, he or she typically received a modest package of benefits relative to homeowner transferees.
In part one of this series we discussed a new type of employee relocation situation: homeowners who are able to sell their home but cannot afford to buy another one. (more…)
Part 1: Recognizing a Reluctant Renter
In the past, relatively few homeowners became renters. When they did, it was often a lifestyle choice, such as empty-nesters who sold their large suburban home and moved into a city apartment. Today this situation is much more common — and too often an effect of the current housing market and economic conditions.
Why Homeowners Choose To Rent
In the domestic relocation services industry, some transferees cannot sell their departure home and end up renting it out and finding a rental property at the destination. Others expect their time at the destination to be limited. Still others may have been spooked by the volatile housing market in general. The most delicate employee relocation situation centers on what we call “involuntary renters” or “reluctant renters”: homeowner transferees who manage to sell their home but cannot afford to buy another one. Overall, 67% of surveyed companies in Worldwide ERC’s 2010 Transfer Volume and Cost Survey are seeing a “somewhat” to “significant” increase in the number of homeowner transferees who are opting to rent at their new location. (more…)
Part 2: Cafeteria Relocation Benefits – Cost Savings
The Potential for Relocation Cost Savings
As we mentioned in the prior blog, a desire for flexibility is the most common reason for companies to embrace a cafeteria approach. However, the potential for cost containment can be another powerful motivator.
In a typical relocation program, companies might be providing “one-size-fits-all” benefits that employees neither want nor use. In a cafeteria program or a hybrid tiered/cafeteria program, benefits tend to be better aligned with actual needs, frequently with a cap on the total benefit amount. According to the Worldwide ERC® survey, Relocation Assistance: Transferred Employees, 45 percent of companies using a cafeteria approach place a ceiling on the value of the selections made. That figure has increased from 39 percent in 2004; the ceiling typically depends on the job level of the employee.
For companies more focused on cost containment, cafeteria menu items often are tied to the core home selling and home finding processes, with limited “soft service” options. An example would be a self-move package for a new hire.
Who Selects the Benefits?
A cafeteria approach does not necessarily mean that the transferee has the deciding vote. In fact, the Worldwide ERC survey, Relocation Assistance: Transferred Employees reports that in 84 percent of organizations with cafeteria plans, the business unit or division selects the specific benefits. This helps balance the employee’s wishes with the competitive environment and allows the company to tailor benefits to attract the best candidates for the position.
Expanded Eastern Operations Center and added relocation professionals to serve longtime and new clients –
Shelton, Conn. (November 7, 2011)
To support current and future client needs and to house its growing Northeast region staff, TRC Global Mobility has relocated its Eastern Operations Center to a spacious new facility in Shelton, Connecticut. This full-service office now includes professionals in operations, inventory management, expense administration and marketing.
“We’ve grown at a brisk but manageable pace in the Northeast region”, said Doug Berto, TRC’s President. “This has been particularly gratifying given the still-dicey economy and the downsizing that many other companies are experiencing. We’re looking forward to continued growth in the coming year.”
TRC’s expanded Eastern Operations Center is located approximately 1.5 hours from New York City and 2 hours from Boston. The office is easily accessible from the Merritt Parkway, Interstates 95 and 84 and airports in Hartford, Westchester County, New York and New York City. The almost-new space was built out with state-of-the-art technology and telecommunications and is now fully operational.
TRC’s Eastern Operations Center is located at 6 Corporate Drive, Suite 444, Shelton, Connecticut 06684.
With so many impediments to relocation today, from traditional issues such as spouse career concerns to more recent problems such as “upside down” homes, companies, employers and relocation management companies are clamoring for a more creative, flexible approach. Without creativity and flexibility, many moves simply won’t happen.
This is where “cafeteria”-style relocation benefits come in. A cafeteria approach can help meet employees’ needs for flexibility, control overall program costs, and most importantly, enable companies to achieve their business objectives in a challenging environment. Cafeteria relocation benefits had a flash of popularity in the 1980s and 1990s but faded from the spotlight as more structured, tiered polices gained favor. (more…)
Careful cultural assessment and training can mean the difference between a successful assignment and a costly, failed one. Companies commonly invest $1 million or more in an international assignment, yet about 30 percent of assignees end up returning early – and an alarming 70 percent fall short of the goals established for the assignment. Too often, these failed international relocation assignments are blamed on poor housing choices, unhappy spouses and children or misdirected emotions, when in fact the real reason is cultural disconnection.
Select the right candidate
One of the mistakes companies commonly make is to pick the candidate with the best technical qualifications, with little consideration of how he or she (and his or her family) will function in a different location and culture. For example, it’s typically assumed that a hard-charging, effective New York executive will be equally successful in Tokyo. In fact, taking an employee out of his or her comfort zone can disrupt both professional and personal rhythms, upsetting the family unit and compromising workplace effectiveness. To succeed in a markedly different environment, the candidate (and his or her family) must possess flexibility and a sense of adventure.
Before an offer is made, a certified cross-cultural training provider can use targeted tests and exercises to assess the family’s flexibility and adaptability for an international assignment. Human resources professionals and hiring managers can use this information to determine the likelihood of a successful assignment and even to build a pool of vetted, prospective assignees.
One of the things we’ve seen time and time again in our business is that the best relocation policies reflect current realities of the real estate market, with aggressive home marketing assistance programs and incentives to employees to price their homes realistically. Still, in today’s environment, it’s inevitable that some properties will end up in inventory. Here are a few of the best practices we recommend to help minimize total program cost and the amount of times homes spend in inventory.
It’s important to understand how a home value was determined as well as the current status of the listings that were used in the appraisal. Circumstances change over time. You may find that the home should be listed at the anticipated selling price — or even below — to gain the attention of buyers.
Are you a corporate professional looking for solutions to your employee relocation challenges?
Join TRC Global Mobility this September for a complimentary relocation summit! Network with fellow professionals in a friendly, stimulating environment.
September 14-16, 2011 at the Intercontinental Milwaukee.
Worldwide ERC® has approved the Summit for 9 CRP recertification credits!
Culturally Thriving…or Merely Surviving: Why Cultural Training is the Critical Determinant for Success on International Assignment
– Dean Foster, President, Dean Foster Associates
Relocation Tax and Legal Update
– Peter Scott, Tax Counsel, Worldwide ERC®
The Economy, Housing Demographics and the Housing Market
– Mark Eppli, Professor and Bell Chair in Real Estate, Marquette University
Trends & Topics: What’s Hot, What’s History and How it Will Affect our Industry and Your Program
– Moderated by Alan Trippel, CRP, President, Trippel Survey & Research, LLC
Today’s Mortgage Market: Strategies for Success
Tom Dempsey, Vice President, Relocation Program, Quicken Loans
Policy RX: An interactive discussion of policy prescriptions for your relocation headaches
John Sculley, SCRP, Vice President & Managing Director, RIS Consulting Group
Cathy Bauman, CRP, GMS, Account Executive, Global Mobility Services, Runzheimer International
Contact TRC Global Mobility to learn more!
How to Handle a Loss On Sale
As a result of real estate market declines of the past three years, many transferees now find themselves in a situation in which their home’s selling price is less than what they originally paid for it. This has made loss-on-sale provisions an important policy consideration. While only 40% or so of U.S. companies offer loss-on-sale assistance, most are aware of the issue and considering their options.
If your company needs to deploy critical employees across the United States or around the world, it may be time to implement a loss-on-sale policy or to evaluate the one you have.
Here are a few key questions that need to be answered when developing a loss-on-sale benefit policy, along with a few of our thoughts on the topics. (more…)
Navigating the Short Sale Process With TRC
TRC Global Mobility has worked with many companies and organizations to facilitate short sales. If a short sale is indicated, a transferee whose company is working with TRC should follow this process:
1. Contact the lender. The transferee must identify and reach the person who is responsible for handling short sales and who has the authority to make decisions regarding short sales. The transferee should try to determine whether the deficit will be forgiven by the lender. This part of the process can be time-consuming.
2. Submit a letter of authorization to the lender. To permit the lender to disclose personal information, the transferee must submit a letter with his or her name, the date, the property address, the loan reference number and the real estate agent’s name and contact information. This letter should introduce TRC Global Mobility as the third-party relocation company that will provide the transferee with a guaranteed buyout offer. The letter should give the lender permission to talk with interested parties about the sale of the home. (more…)