One of the unexpected consequences of the covid pandemic—now entering its fourth year—was a dramatic rethinking of how we work and are rewarded for that work, including benefits like employee relocation.
Programs like MIDAs, unknown to many of today’s relocation professionals, are returning. And companies are now offering benefits that were once reserved for VIP candidates to other employees to entice them to relocate.
Understanding talent mobility trends can help a company to reassess its current program and ensure it is fine-tuned for today’s marketplace and workforce.
- CONTINUED RISE OF INTEREST AND MORTGAGE RATES
Mortgage rates have also climbed sharply in a short period, significantly reducing the mortgage balance many borrowers can afford to carry.
What does this mean for the mobility industry?
Potential transferees who have existing mortgages at very low rates will be hesitant to give them up and, in some cases, will decline relocation without assistance.
- COOLING OF THE REAL ESTATE MARKET
Housing inventory in much of the U.S. remains tight, mainly due to years of underbuilding for a growing population. As a result, housing prices have not declined as significantly as some buyers had hoped. Adding to the problem, many homeowners with low-rate mortgages aren’t eager to give them up.
What does this mean for the mobility industry?
Companies must reconsider the benefits required to convince employees to accept relocation. Some companies are rethinking benefits they eliminated from mid-level policies after the housing crash in 2008, including guaranteed buyout homesale programs, loss-on-sale provisions, and mortgage assistance programs (subsidies, interest differential assistance, sliding scale benefits).
- TIGHT RENTAL AVAILABILITY AND AFFORDABILITY
The rental market continues to tighten. At the end of Q3 2022, the national rental vacancy rate was just 6%. According to iProperty Management, the national rental vacancy rate declined by 13.8% in 2021 and this decline continued through 2022. According to The Wall Street Journal, bidding wars have emerged in rental markets in large metro areas, including Chicago and New York.
What does this mean for the mobility industry?
Reduced inventory and high rental rates, particularly for single-family homes, can deter renters from accepting a relocation. Coverage for lease break penalties and rental broker’s fees and possibly adding rental deposit assistance to the benefits menu will make it easier for renters to relocate.
- GRADUAL IMPROVEMENTS IN HOUSEHOLD GOODS SHIPPING
The domestic and international moving industries are slowly returning to pre-pandemic norms. From an international perspective, assignment acceptance rates did not decline as much as many in the mobility industry expected, and international shipments faced markedly higher costs and extreme delays. However, this situation is also stabilizing, and international moves are anticipated to continue to rise in 2023.
What does this mean for the mobility industry?
The pandemic forced the moving industry to devise alternative ways of performing many of its standard tasks. Arguably, the most positive change is the adoption of automated processes. For those who need to quarantine or prefer to stay socially distant, virtual walk-throughs for the estimating and inventory processes have been a win-win for both the mover and the transferring employee.
- BUSINESS TRAVEL SLOWLY RECOVERS
The pandemic brought the travel industry to a grinding halt in 2020, bringing mass layoffs and furloughs to the airlines and the hospitality industry. As the crisis eased, businesspeople began to travel again on a limited basis. Still, it will be years before the industry fully recovers.
What does this mean for the mobility industry?
The virtual international assignments heavily touted during the pandemic as an alternative to on-the-ground assignments are not coming to fruition. However, companies use Extended Business Trips and Short-Term Domestic Assignments more frequently as alternatives to permanent domestic moves.
- HYBRID WORK IS THE NEW NORM
A study by Slack of more than 9,000 workers across six countries found that 72% prefer a hybrid work model, with half of their work time spent in an office and half spent working from home. Remote work will not disappear, and even companies that are unenthusiastic about hybrid or remote work have been forced to be more flexible with work arrangements.
What does this mean for the mobility industry?
Hybrid work, the favored model, requires weekly time in the office. This eliminates the early pandemic “work from anywhere” flexibility that many employees enjoyed, as they will need to live within reasonable commuting distance to the office. It also underlines the continued relevance of relocation.
From an international perspective, the hybrid work model supports the growing flexpatriate population because the global assignments are short and typically based on-site. The employee returns home and resumes the home country work model when the assignment is complete.
- INTERNATIONAL ASSIGNMENTS ARE GETTING SHORTER
Even before the pandemic, long-term international assignments were in decline. High costs, technology that made global collaboration easier and a preference to hire locally all contributed to their loss of favor. The pandemic intensified the downward trend as families were unwilling to move far away for several years during a crisis.
What does this mean for the mobility industry?
With better technology for virtual teams and workspaces, companies are focusing more on standard international business trips, extended business trips and short-term assignments of one year or less. This supports several goals: cost reduction, knowledge acquisition, in-person and virtual collaboration and less family disruption.
- SUSTAINABILITY IS ON EVERYONE’S MIND
According to a study published by KPMG, 80% of top companies worldwide officially report on sustainability. Moreover, this percentage will continue to grow as more consumers and investors weigh a company’s sustainable business practices (or lack thereof) when deciding where their money goes.
What does this mean for the mobility industry?
The mobility industry is positioned to make meaningful strides in sustainability by developing more adaptable programs for relocating employees, partnering with like-minded downstream suppliers and creating a culture of accountability within their organizations. There are many ways the mobility industry can reduce its impact on the environment, from using recycled/reusable packing supplies to adopting virtual tours, closings and document signing.
- DE&I INITIATIVES BEGIN TO REACH MOBILITY
DE&I has evolved significantly in most organizations, from being transactional and operational (tracking per government requirements) to becoming a strategic part of human resources and talent management initiatives. Successful DE&I initiatives can actively cultivate creativity and build stronger interpersonal relationships within teams and throughout the organization. In addition, they allow employees to feel valued and supported, encouraging them to perform to their maximum potential.
What does this mean for the mobility industry?
Even as DE&I initiatives grow across organizations, they often stop at the door of mobility. Awareness of and addressing the DE&I challenges that may face an employee (and their family if applicable) who is relocating can increase the likelihood of a successful permanent move or assignment and cultivate a more inclusive mindset and overall positive job satisfaction.
- CREATING A POSITIVE CUSTOMER EXPERIENCE WHILE CONTROLLING COSTS
Many components of mobility, including HHG shipping, airfare, and hotel rooms and meals, have seen particularly sharp price increases. With the threat of a potential global recession looming, all eyes are on fiscal responsibility, yet for those in service industries, the customer experience is still as crucial as ever.
What does this mean for the mobility industry?
Offering competitive relocation benefits is necessary from a talent acquisition and retention perspective, but program managers struggle to balance benefits and escalating costs. From now on, the mobility industry will likely continue to see a shift from traditional, full coverage policies to policies that allow more flexibility for the employee and cost control for the employer. Allowing employees to participate in relocation benefits decisions establishes accountability on all sides, discourages exceptions, and supports cost constraints—a win-win for the employer and the relocating employee.
