Experience the benefits – knowledge transfer, skills develop, cost savings – of short-term mobility approaches.
By Debbie Bolla
As global mobility becomes a more important part of talent management, organizations continue to look to leverage savvy strategies to help recruit and retain the right employees while containing costs. Relocation opportunities are playing a larger role in enhancing a company’s brand, culture, and reputation as an employer of choice. Valued employees are looking to relocation assignments as growth opportunities to gain job skills and global exposure.
“Relocation is a critical tool to help organizations meet succession planning goals, workforce planning needs, and employee developmental strategies,” says Tim O’Shea, vice president of consulting services for Graebel Relocation. “Any company that cares about talent management should care equally about the processes and programs to move those employees.”
According to Weichert Workforce Mobility’s ninth annual survey, 60 percent of companies say that relocation policy benefits are critical to recruiting talent. “Mobility opportunities are now recognized as a key element in attracting, retaining, developing, and engaging talent,” says John Brice, president of MSI Talent Management.
One approach that is helping talent management teams reach their goals is flexible relocation programs. These assignments—temporary, rotational, core/flex, lump sums, and extended business travel—are often less costly for organizations and more attractive to employees. By transferring employees only for the short term, they eliminate the need to deal with pesky home sales and uprooting families.
“Organizations want to demonstrate to employees that they are the right company to work for, and they are doing this by giving them the opportunity to work for six or nine months in different locations around the world,” explains Jennifer Connell, North American practice leader for Weichert’s Consulting Services group.
Short-term assignments have recently seen a surge in popularity. According to the 2015 Atlas Corporate Relocation Survey, over the past two years, nearly 75 percent of firms leveraged this approach. It also found that in 2015 thus far, nearly 86 percent of companies featured core/flex policies as part of their programs.
“Flexible programs allow businesses to meet employee needs while still remaining within budget based on long- and short-term business objectives,” explains Cecilia Franchi, director of MSI Global Consulting Services.
Organizations can address specific projects—like setting up an IT system in multiple locations—in a shorter time frame by leveraging flexible assignments. They also lend themselves to training and development of employees.
What are the most common flexible relocation approaches?
- Temporary/extended business travel. These type of assignments are typically very short-term – usually less than 3 months in duration – and very cost effective for organizations. Franchi says this is driven since they normally do not require a host country visa and may not trigger host tax obligations. They are effective for developmental projects, if a specific skill is needed in a host location, and if training or knowledge transfer is necessary, says Franchi.
- Core/flex policies. This approach offers a customized package of relocation benefits based on circumstance and budget. It is a great way for companies to offer the right level of benefits designed for specific assignments, says Connell. For example, extra budget for moving expenses may be more important to one employee, whereas another would appreciate additional time in temporary housing. Connell warns that organizations need to manage the level of benefits closely in order to stay on budget.
- Lump sums. Costs are key to this approach since lump sums help reduce the upfront fees that traditionally come with relocation and allow employees to use the funds in ways that meet their needs, says Franchi. Connell advises that organizations provide employees with the right resources and tool so that employees are allocating their lump sums in the best possible way.
- Rotational/commuter assignemnts. Connell says this approach should be very short-term in nature since employees are traveling back and forth. She warns that they can be costly if they exceed the original timeframe and corporate housing should be a consideration. Franchi says organizations consider this approach for a few reasons: moving one project assignment to the next; ease living in hardship location; and employees who turn down traditional relocation assignments due to family reasons.
Flexible assignments have a host of benefits, but are not without their challenges. “Flexible programs require more administrative attention and care than more rigidly defined programs,” say Franchi. Since their offerings can vary by employee level, organizations should ensure options are fair, appropriate, and reviewed on a regular basis to maintain relevance. “Counseling an employee based on static policies is far different than being able to ascertain employee needs match the right benefit mix to suit family and business unit goals,” she says.
Compliance with domestic and international tax and immigration rules can also be tricky, warns Graebel’s O’Shea. Organizations need to take into strict consideration length of stay in locations and its impact on tax and immigration laws. “Every country has rules about the duration of a stay and many have restrictions on what kinds of work can be done in that country,” he says. Compliance strategies should be included in the policy.
Connell also advises taking a step back and looking at the bigger picture to see if flex programs are a fit. “It’s important to understand your company’s culture and see if a flex program reflects your company’s approach,” she says. “Flex programs range from simple to somewhat complex, so be sure to examine each one.”
Present the relocation opportunity to an employee as an opportunity—but reinforce the program’s goals, says O’Shea. “(It’s a) great opportunity for an up-and-coming employee to be exposed to how colleagues work in another country. The trick is to find a way to promote the experiential aspects of these assignments but pay attention to the stark fact that it’s not a cultural exchange program and that real work with real results are paramount.”
When executed correctly, flexible relocation assignments are proving to be beneficial for both the employee and the organization.
Flexible Relocation Programs: Benefits and Challenges At a Glance
Savvy organizations looking to leverage relocation to help fill key skills and retain top talent are incorporating flexible mobility strategies into their overall programs. In fact, the 2015 Atlas Corporate Relocation Survey, finds that in 2015, nearly 86 percent of companies feature flex policies as part of their programs.
- Reduced costs compared to long-term or permanent relocation
- Knowledge transfer
- Employee development and training
- Employee retention
- Compliance needs stringent attention
- Tax risk
- Immigration risk
- Budgets can run over if employee stays need to be extended
Best Practices: Flexible Programs
Considering a flexible relocation program for your organization? Weichert’s How Flexibility Can Control Your Workforce Mobility Costs offers this advice:
Pair your core/flex program with in-depth counseling to help employees understand how to take advantage of their benefits, learn about their destination, and fully utilize all the tools available to them.
Prioritize your organization’s needs for a flexible approach. Benefit structure will differ depending on whether the intent is to support more diverse employee demographics or cost containment.
Companies concerned with consistency of benefits need to accept these programs may not match their culture. Centralizing program administration and allowing global mobility to recommend flex options ensures a more consistent way of making decisions within a flexible framework.
Evaluate all costs when developing a program. Look at your exception history as a guide to determining flexible benefits.
Core benefits are considered necessary for mobility and should not be capped. If home sale assistance is provided, it should not be capped to preserve the favorable tax status.
When developing a menu of flexible benefits, consider provisions that will support your recruitment and talent development objectives.
Document processes for developing a budget, approval of benefits, and governance framework for selecting the appropriate tier of core-flex benefits.
Core-flex is not a catchall or one-stop-shop alternative to traditional programs. Some see it as cost effective and an easy way to reduce costs. However, if the employee doesn’t receive a sufficient level of assistance (cap is too low), the program will be ineffective.