Ways to ensure organizations -and employees -get the most out of relocation.
It’s no surprise that the cost of relocation continues to plague HR executives. With assignments costing organizations up to $85,000 for homeowners, according to Worldwide ERC, the pressure to stay on budget and show return on investment (ROI) remains critical. According to Brookfield Global Relocation Services’ 2016 Global Mobility Trends Survey, 96 percent of respondents report the push to decrease spend has become more important or is the same as last year.
“Controlling mobility costs is crucial because many parts of our business are trying to work within limited budgets, and when they see how expensive it is to relocate someone or send someone on an international assignment, they often quickly change their minds,” says Jackie Blais, manager of enterprise mobility for global materials manufacturer Avery Dennison.
Eliminating mobility practices, however, does not make good business sense. Employee relocation has several advantages for both the organization and the workforce. Companies that leverage assignments can transfer knowledge and skills to a new location while employees earn leadership experience while living in a new region. And because assignments are often viewed as a perk, they can help increase talent retention.
Over the last few years, organizations and service providers alike have become more agile in their offerings to help curb costs. “We have designed mobility programs that are flexible and affordable for everyone while still giving the employee and family enough support,” explains Blais.
Blais and her team leveraged industry and benchmarking information in order to determine if the services Avery Dennison was offering were in line with other similar organizations and even competitors. “We went through in detail, looking at every service and benefit that we offer and we came up with a more reasonable -being cost conscious but still offering enough support -program,” she says.
Armed with information, HR leaders can stay competitive with their offerings. “Education to the business is essential for a successful mobility program. If the business does not understand the costs and the impacts of mobility on both the business and the employee, then the opportunity exists for inappropriate decisions to undermine or scuttle the success of the business undertaking,” says Cara Skourtis, CRP, GMS, vice president, knowledge and experience for NuCompass Mobility Services Inc. “Understanding what the required costs are, what the appropriate level of employee support is along with any ‘nice to have’ components, and how to balance these for a successful relocation or assignment should be the objective.”
Avery Dennison determined that offering employees the opportunity to select services most important to their circumstance was a good fit. “We now use a core-flex approach, which means that we can create a package that fits best for the employee while still working within a budget if necessary,” says Blais.
There’s growing interest in core-flex programs, as they tend to benefit both the employee and the bottom line. “Core-flex policies with tiers have proven to reduce cost for U.S. domestic relocations and we’re now starting to see companies adopt this concept for international assignments as well,” says Scott McCain, SVP of global growth and consulting for Paragon Relocation.
In addition to reviewing different programs to ensure they align with organizational culture and budgetary needs, companies should also keep a keen eye on expenses to help stay within the given cost parameters. Three approaches have a major impact:
Using cost estimates. Bill Graebel, CEO of Graebel Relocation, says cost estimates provide a pivotal preview of what scope of services the assignment calls for and what fees coming along with them. This sets the expectations for both the transferee and organization.
Having that detailed cost outline before and after the assignment paints a transparent picture for senior leadership. “It’s worth every penny because it eliminates costly mistakes and surprises,” says McCain. “It ensures that the most cost-effective assignment type and necessary benefits are utilized. This also improves assignee satisfaction and lowers failure rates.”
This approach can offer some insight into the potential ROI of the assignment. “A cost estimate allows the business to evaluate the expected business benefit of the relocation event, and determine whether the cost justifies approving the move,” says NuCompass’ Skourtis.
Conducting cost benefit analysis. HR needs a way to drill down to determine the value of each assignment service they offer. “A cost benefit analysis can be used to determine whether the advantages of specific actions outweigh its drawbacks,” says Jelena Katic, GMS, vice president of client management for MSI Global Talent Solutions. “A cost estimate can serve as a valuable tool for this, particularly when there’s a set budget for an assignment and decisions must be made around the policy provisions/benefits to be provided.”
A cost benefit analysis can also help provide a critical step in aligning mobility with talent management. “Unfortunately, very few organizations have clearly articulated the goals of mobility programs,” says Graebel. And respondents to Brookfield Global Relocation Services’ 2016 Global Mobility Trends Survey agree: Only 10 percent of respondents say that global mobility to part of the great talent agenda. But as talent becomes a central part of an organization’s relocation strategy, this is bound to increase in the coming years. “Cost benefit analysis enables the organization to evaluate the mobility spend in the context of the business results. This is an essential component of incorporating a mobility program into a talent management/workforce development strategy,” says Skourtis.
Tracking actual costs. Having these numbers at hand makes it possible for HR to see how the actual costs compare with the predicted costs. “Tracking actual costs allows the organization to understand the true financial cost of any mobility event,” says Skourtis. “(They) are also the starting point for the cost estimate. Actual past cost can be the basis for future cost estimates.” Skourtis does warn that organizations often need the help of tools and technology to capture and leverage this data.
Some of the most important feedback for proving relocation’s value is from mouth of the employee. “The transferee experience can provide a good baseline for evaluating assignments,” says Graebel. He advises sending out an employee survey to help gauge where the global mobility succeeded as well as opportunities for improvement.
By Valerie Dean
Any type of assignment, whether U.S. domestic or global, short- or long-term, temporary or permanent, brings value to an organization. To ensure that it is enough, however, it’s important to track several variables.
Some of these are intangible or difficult to quantify numerically, such as language and cultural challenges, the speed at which the employee is able to assimilate into a new location and role, or family issues that are creating distractions. Others are easier to measure: the cost of policy components such as home sale, home purchase, household goods shipment, temporary housing, language training, settling-in services, visa and immigration, compensation, and tax assistance, among others.
To obtain ROI statistics and understand an assignment’s true costs, program managers and senior leadership can establish metrics around these measurable components in advance and review them as volume and need dictate.
This can be done quickly and easily with dashboard technology that enables users to sort and filter metrics in a variety of ways, such as by cost center, division, policy tier, or new hire/current employee.
If there are many assignees, a best practice is to perform this review monthly or quarterly. If there are fewer assignees, the review can be done less often, although annually at a minimum.
It’s also important to track exceptions to policies to ensure consistency and identify trends. If the data indicates that a specific exception is continually being made, then policy revision(s) should be considered.
Valerie Dean, GMS, CRP, is vice president of client management for MSI.