A pre-decision program has long been an integral part of international relocation. However, for domestic relocations, most employers left it up to the employees and their families to determine if the relocation was a good idea, leaving them to consider:
The results of this hands-off approach were not surprising: many domestic relocations either never got off the ground or failed, resulting in job dissatisfaction, attrition, family issues and wasted business opportunities. The Great Recession and an uncertain U.S. real estate market further aggravated the situation, spurring more employers to extend pre-decision services for domestic relocations as well.
Prior to a domestic move offer, a pre-decision program provides an employee with services ranging from in-depth needs counseling, broker market analyses (BMA) or appraisals to establish the value of the departure home, destination mortgage pre-approval and a pre-decision familiarization trip.
Modern Approach to Pre-Decision Assistance
Today, many U.S. employers have recognized that successful relocation depends on more than an employee’s technical competence. In fact, Worldwide ERC® data shows that more than half of U.S. employers currently provide at least some level of pre-decision assistance. These employers are taking a more holistic approach; employees and employers are more likely to have frank discussions regarding the costs and expectations of a proposed relocation.
Benefits of Pre-Decision Programs to Companies
As the name indicates, the pre-decision program occurs before the company makes a firm relocation offer. Properly managed, it allows the employer and employee alike to estimate the costs and other impacts of the move and for each side to decide if it makes good business sense. A well-structured pre-decision program can help companies to:
- Manage talent more effectively
- Identify candidates who are unwilling or financially unable to move
- Reduce the risk of failed domestic relocations
- Increase employee acceptance rates
- Assess the financial impact of the relocation and budget
- Reduce the number of domestic relocation policy exceptions
- Speed cycle times due to more realistic departure home pricing
Benefits of Pre-Decision Programs to Transferees
While supporting the company’s goals, a pre-decision program can also help prospective transferees to:
- Determine whether the transfer makes career and economic sense
- Gain a more complete understanding of the financial impact of the move
- Become more comfortable with, and invested in, their decision
- Pinpoint a realistic market value and asking price for the departure home
- Avoid unpleasant surprises
Potential Pitfalls of Pre-Decision Programs
Pre-decision programs have a few potential disadvantages for companies to consider. For the company, these programs add another layer of administrative process that can delay the start of an assignment, while for employees, some may find the process intrusive. Pre-decision programs can also bring extra costs, including charges for third-party pre-decision counseling services and additional services offered to meet uncovered needs. And if the typical BMA home valuation approach is used, your company (or your relocation management company) will need a pool of qualified and willing real estate agents, who may or may not charge for the service.
In part 2 of this blog, we’ll go into more detail about the pre-decision planning process, including an initial needs assessment and real estate considerations.
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