• Relocation: The Good, the Bad and the Ugly – Part 3


    The movie The Good the Bad and the Ugly has inspired us to provide our own take on the recent good, bad and ugly trends within the employee relocation industry from different perspectives: Part 1: Service providers, Part 2: Suppliers and Part 3: Policy design.

    Part 3: Relocation Policy Design

    The Good

    Flexible spending accounts are proving to be financially beneficial to corporations while allowing the employee to tailor the benefits to his/her own personal needs rather than having to function within a more rigid “average employee” program.

    Program design is leveraging technology to provide additional flexibility to relocating employees. Web-based platforms or apps offer a self-directed option allowing employees to select service providers, access information and documents as needed, and decide when and where they need assistance.

    International COLA and housing indices are changing from expat indexes to modified or informed purchaser models reducing costs.

    Equity loss protection is reduced or capped and definitions of what constitutes capital improvements are being tightened resulting in simpler management and fewer exceptions.

    An increased use of tiered policies is allowing managers to meet talent management goals while addressing employee needs.

    The Bad

    Long term employees who have previously been relocated under comprehensive legacy policies struggle with the concept of flexible spending accounts, reduced benefits and outsourced programs.

    Employees continue to question whether they will accept a relocation, particularly when it not a promotion and not part of a well defined career development plan.  Millennials are sometimes reluctant to relocate as their priorities are much different than those of their predecessors.

    Companies are making changes to a part of their policy to meet short term needs without looking at the impact on the whole relocation program; for example, eliminating home sale guarantees at the expense of longer temporary accommodation costs.

    The Ugly

    Despite the trend to Flexible Spending Accounts, some relocation companies are reluctant or unable to support these programs. When employers adopt these Flex programs and employees appreciate them, relocation companies should adapt and embrace them.

    High cost provisions of legacy relocation programs are being eliminated or reduced through limits, thereby placing more responsibility on employees and suppliers to successfully manage relocations.  Home sale guarantees and equity loss protection are being contained with maxima, tighter eligibility criteria, and guarantee prices based on shorter expected sale periods, vacant value, rigorous forecasting or 90% to 95% of the appraisals.

    Lump sum programs are becoming more prevalent requiring relocating employees to manage their own relocation and source their own suppliers.

    Knee jerk modifications are being made to policy while ignoring the need for employee mobility.