Why Cafeteria Relocation Benefits Are Making a Comeback Part 1: Flexibility
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.
The Rise of Tiered Policies
The recent Worldwide ERC® survey, Relocation Assistance: Transferred Employees estimates that 73 percent of U.S. organizations use tiered policies, compared to only 10 percent in 1988. Yet even the most carefully considered tiered policies will not necessarily meet the needs of today’s highly diverse workforce. If a company holds rigidly to benefits as defined in the tiers, it will control costs, but it 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 rather than the exception, benefits become inequitable and costs can spiral.
Cafeteria Approach Gains Popularity
Many of today’s cafeteria plans are really hybrid programs: the structure and logic of tiered policies with a flexible cafeteria element built into each tier. Like pure tiered policies, a hybrid tiered program allows companies to segment overall benefit levels and expenses by job description, salary range and other internal factors. However, by allowing an element of choice and personalization within those tiers, the hybrid program builds in flexibility and minimizes costly exceptions. Such a hybrid model can increase employee satisfaction and acceptance rates and give the company a leg up in recruiting and retaining talent.
Flexibility is Key
For most companies using a cafeteria approach, whether as a stand-alone program or integrated into their tiered program, flexibility is the most compelling feature. As employee real estate and family needs become more complex, corporate relocation managers administering a traditional tiered program can find themselves inundated with exception requests. The hybrid approach allows a more direct and personalized alignment of benefits and needs.
Hybrid Policy Options
In a hybrid program, each policy tier would include a list of policy options that can be matched to the transferee’s requirements. According to Worldwide ERC’s Guide for Managing the Mobile Workforce, these might include:
- Homefinding trips
- En route travel
- Temporary living
- Shipment of household goods, autos and pets
- Home purchase assistance
- Homesale assistance
- Spouse career transition assistance
- Mortgage assistance
- Child/elder care assistance
- Miscellaneous allowance
Cafeteria Benefit Options
Traditional global assignments almost always include a comprehensive benefits package by necessity. However, with the rise of short-term assignments and other creative assignment alternatives designed to reduce costs, cafeteria options might be appropriate, such as:
- Cross-cultural training
- Language training
- Settling-in services
- Pet transportation
- Property management
- More liberal household goods allowances/terms
Specific menu options included should reflect the company’s culture and objectives. For example, companies that are employing a cafeteria approach to better meet transferee needs might include not only core homesale and home purchase assistance, but also a selection of services to meet the needs of spouses/partners, children and elderly family members.
TRC’s Corporate Relocation and Consulting Services
Through our strategic consulting services, TRC Global Mobility can help review your company’s relocation policy and help you develop a program that is flexible, fair and fits your corporate culture.
In our next blog, we’ll discuss in more detail how cafeteria plans can save your company money.