Category: Relocation Policy

The economy has recovered and job-hunters have more leverage than they’ve had in years. They are much more willing to relocate for the right opportunity if the employer is willing to offer relocation assistance that meets their unique needs. Gone are the days of strict, one-size-fits-all policies. Instead, the modern corporate relocation policy structure includes several tiers and offers flexibility to the employee to make the relocation as comfortable and simple as possible.

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by Jerry Funaro, CRP, GMS
Vice President, Global Marketing, TRC Global Mobility, Inc.

With so many impediments to relocation today, from traditional issues such as spouse/partner career concerns to real estate complications and unique family needs, companies, employers and relocation management companies are all seeking creative ways in which to move the process forward. Economic recovery is helping to overcome some of today’s obstacles. In the meantime, a core-flex approach (explained in part 1 of this blog ) can help control overall program costs, meet employees’ needs for flexibility, and enable companies to achieve their business objectives. In this installment I’ll go over some of the advantages of core-flex programs and – so you can anticipate and minimize their impact – some of the potential disadvantages.

Advantages of core-flex programs

A carefully considered core-flex program can help companies to:

• Tailor relocation benefits more closely to employee or candidate needs
• Empower hiring managers, business units, regional locations, etc.
• Gain a recruiting edge
• Make employees feel more valued and invested in the process
• Control costs, offering only those benefits that are meaningful to the employee
• Eliminate or dramatically reduce exceptions

Flexibility is key

For most companies using a core-flex approach, flexibility is the most compelling advantage. As employees’ real estate and family needs become more complex, corporate relocation managers administering a traditional tiered program can find themselves inundated with exception requests.

The core-flex approach allows a more direct and personalized alignment of benefits and needs. In some cases, it allows relocations and international assignments that otherwise might be stalled to proceed. Moreover, incorporating a flex element is faster and more efficient than a bureaucratic exception process. A core relocation benefit can also help ensure that there is parity and predictability among relocating employees and that all employees receive the basic benefits needed to get the transfer done.

The potential for cost savings

Cost containment can be another powerful motivation to use a core-flex program. In a typical relocation program, companies actually might be providing some “one-size-fits-all” benefits that employees neither want nor use. In a core-flex program, benefits are better aligned with actual needs, and in many cases, companies impose a cap on the total benefit amount.

According to the Worldwide ERC® survey, Relocation Assistance: Transferred Employees, 45 percent of surveyed companies using a menu approach place a ceiling on the value of the selections made. This figure has increased from 39 percent in 2004.

For companies more focused on cost containment, the core-flex menu items would be tied more directly to the core move processes, with more limited menu options. An example is a self-move package for a domestic new hire, or an “assignment-lite” package of travel, household goods transportation, immigration and tax services for a global assignee.

Disadvantages of core-flex programs

Core-flex programs have some potential pitfalls:

• Program/policy administration is more complex than for strictly defined, tiered policies
• Budgeting can be more challenging due to variable policy elements
• Continuing management involvement is crucial to ensure that the package includes all of the elements essential to a successful relocation/assignment
• Employees communicate with each other, and there is always the possibility that an employee will feel entitled to a benefit another employee has received

Parting thoughts on managing a core-flex program

Core-flex programs undoubtedly require more administrative attention and care than more rigidly defined tiered programs. An overarching goal is always to ensure that the program remains as fair as possible. Menu options must be carefully considered relative to employee needs, and should be revisited regularly to ensure that they are still relevant. The costs of these provisions must be estimated with some care as well, to ensure that menu items are interchangeable from a budget standpoint.

Particularly where managers negotiate specific provisions with employees, it is critical that they are well-versed on the program rationale, options and costs. They should be armed with modular communications pieces, such as one-page descriptions of available services, which allow them to present only the applicable benefits to the employee.

About TRC

Since 1987, TRC has delivered creative, cost-effective relocation and international assignment services across the United States and in more than 150 other countries around the world. TRC partners with its clients to develop competitive, best-practice relocation programs, drawing from a comprehensive range of relocation services, including U.S. home selling, home finding and consulting services and complete international relocation services. TRC’s client base represents a wide variety of products and services and ranges from startup firms to Global 1000 companies.

by Jerry Funaro, CRP, GMS
Vice President, Global Marketing, TRC Global Mobility, Inc.

The last 10 years have been pretty challenging for companies that relocate employees. Companies that relocate employee s have had to contend with collapsing home values, a more stringent mortgage approval process, and employees who are “upside-down” (they owe more on their mortgage than their home is worth). Increased costs have made international assignments difficult to manage. And more recently, companies and their relocating employees have had to adjust to rapidly increasing home values and even a return to bidding wars. In the meantime, traditional relocation concerns such as spouse/partner career issues and schools are as important as ever.

These difficult circumstances have demanded a great deal of flexibility and creativity from management and potential transferees alike. Today’s employees, especially “millennials” — those who were born between the early 1980s and the early 2000s — are skeptical of one-size-fits-all solutions. They expect their employer to appreciate their unique circumstances and to offer flexible solutions that address their needs. Without this flexibility, many relocations simply will not get off the ground.

Evolution of tiered relocation programs

Today, companies are more likely to increase their number of policy tiers, to better align relocation policies with job or salary level, homeowner/renter status and other criteria. Tiered relocation programs are used by 73 percent of surveyed companies, according to the Worldwide ERC® survey, Relocation Assistance: Transferred Employees. And 60 percent of surveyed organizations are now using three or more policy tiers.

Yet even the most carefully considered, best-practice tiered policies will not necessarily meet the needs of today’s diverse workforce: A single policy tier based on job level might include a younger, single employee who rents an apartment; an employee with a working spouse, young children and an “upside down” home; a single mother; and an empty-nest, middle-aged employee with elder care responsibilities.

A company that holds rigidly to the benefits as defined in the tiers will better control costs, but it also runs the risk of alienating its existing talent pool and potential new hires. On the other hand, if a company is too flexible in its tiered policy administration, exceptions become the rule, benefits become inequitable, and costs increase.

Enter core-flex programs

As the name suggests, core-flex programs typically include a core relocation benefit for which all of the employees within a tier are eligible and also a menu of flexible, a la carte options to round out the benefit and meet the specific needs of the employee and hiring manager. Like a pure tiered policy, a core-flex program allows companies to segment overall benefit levels and expenses by job description, salary range and other internal factors. However, by allowing some element of choice and personalization within those tiers, the core-flex program builds in flexibility and minimizes costly exceptions. Such a model can increase employee satisfaction and acceptance rates and give the company a leg up in recruiting and retaining talent.

Recent Worldwide ERC data indicate that 20 percent of surveyed companies have a core-flex policy in whole or in part, and an additional 11 percent are considering implementing a core-flex policy in the near future.

Core and flexible relocation benefits – domestic and global

For the other 69 percent of companies, here’s what core and flex benefits look like. But keep in mind that specific menu options should reflect your company’s culture and objectives. For example, companies that use a core-flex approach to better meet employee needs might include not only home sale and home purchase assistance, but also a selection of services to meet the needs of spouses//partners, children and elderly family members.

For domestic moves, core benefits might include:

• Relocation counseling
• Travel to the destination
• Shipment of household goods
• Rental or homefinding assistance

Flexible elements that could be matched to the employee’s requirements could include:

• Homefinding trips
• Temporary living
• Home purchase assistance
• Homesale assistance
• Spouse/partner career transition assistance
• Mortgage assistance
• Child/elder care assistance
• Miscellaneous allowance

Traditional global assignments almost always include a more complete benefits package: Global core components typically include:

• Visa/immigration services
• Travel to the destination
• Shipment of household goods/storage
• Tax equalization
• Lease services
• Miscellaneous allowance

Flexible options for global assignments might include:

• Look-see trip
• Cross-cultural training
• Language training
• Temporary living
• Spouse/partner career services
• Additional allowances (hardship, housing)
• School search assistance
• Home leaveProperty management

Who selects the benefits?

A core-flex approach does not necessarily mean that the employee has a direct say, or even any say, in the specific policy elements chosen. In many cases, the business unit or division selects the specific benefits, based on the employee’s needs and the competitive environment. In other cases, the manager negotiates the specific policy items with the employee or new hire, within the limits of the overall budget; though occasionally, the policy items are already pre-determined and tailored for everyone within the division or work group.

The manager/employee collaboration is truer to the spirit of a core-flex approach: it involves the employee in the decision-making process, demonstrates that the company is concerned about his or her unique needs, and facilitates employee buy-in to the resulting package.

Part two of this blog will go over the benefits and potential drawbacks of core-flex programs.

About TRC

Since 1987, TRC has delivered creative, cost-effective relocation and international assignment services across the United States and in more than 150 other countries around the world. TRC partners with its clients to develop competitive, best-practice relocation programs, drawing from a comprehensive range of relocation services, including U.S. home selling, home finding and consulting services and complete international relocation services. TRC’s client base represents a wide variety of products and services and ranges from startup firms to Global 1000 companies.