Are You an Employee Relocation Realist?

According to historians the credit crunch started 2 years ago – August 2007. To some it seems like a lifetime and to others it only started yesterday. Whatever you feel, there has been a fundamental change in attitudes to risk and expectations. These deep-seated changes can be tracked through the employee relocation service industry; an industry that tends to reflect the macro economy at many levels. There are the obvious changes. Employee Relocation Specialists have seen assignment volumes crash. Most of the repatriations have taken place and now employers are looking at local hires at a third of the cost of an expatriate assignment. There have been substantial reductions in headcount and that clearly means less managers and specialist staff to relocate. International Relocation of the corporate talent is not what it used to be just over 2 years ago. The Employee Relocation industry and property are inexorably linked. Corporations that offered a Guaranteed Sales Price (GSP) scheme saw their loss on sale figures increase as property values rapidly declined. Housing stock held on schemes sat there far longer than usual. As the market started to realign, so the advantages for the corporate client began to appear. Rental property became more freely available and rents were reduced. Corporations restricted GSP schemes, capped guaranteed prices at 95% of value and the RICS valuers finally caught up with the house price curve – all of which started to stem the loss on sales. Housing Stock held on schemes started to move as the few buyers there were out there started to buy once again. However, there is a new realism throughout HR and Finance departments regarding assignments of any type and employee relocation in general. These are my Top 10 items for your reality check - 1) If you have not already done so, you need to rewrite your employee relocation policy. The chances are the one you use was written in the ‘boom’ times when cash was plentiful. 2) Some HR departments had relinquished their central employee relocation budget in favour of the local budget holder managing the relocation cost in the belief that if “they saw what it cost” then the chances are they would cut down on assignments. Now is the time to get control once again so you can manage the bigger picture. 3) The same old RFQ to same old relocation agents will produce the same old responses in the same tired old way. It really is not about the Management Fees – it is about the whole “Cost of the Employee’s assignment”, the most substantial element being the cost associated with employee occupancy. 4) Go rental – the deals for rental accommodation are out there and will be around for some time. Look for flexibility from your supplier. 5) Look at the broad spectrum of assignments, and not just the glamourous overseas assignments. If you have some staying in a £85 per night hotel for 3 nights a week for month after month, get them rented accommodation and probably save £2,500 a year. 6) Call your employee relocation services provider for a chat. Tell them all about your commuting policy, your expat policy, your inpat policy, family support, etc. and then ask them for ideas on how you can save money and deliver more. Use their expertise. 7) Relocation Service Providers can go bankrupt. When did you last check their credit status? How much of your money have they got? Some relocation companies have seen a 25% drop in cases and when compounded with high debts and high fixed costs and reducing margins, they will struggle in today’s environment. Like any industry, there will be casualties, just don’t get caught in the collateral damage. 8) Bank funding is a challenge, despite the Government & Banks assurances. This inevitably affects Guaranteed Sale Price funding because bank fees are going up and so are the interest rates. Expect to pay more for GSP Schemes, if you are still offering them, even though reality is that the loss on sales costs are diminishing. 9) Saving money is not necessarily value for money. Whilst saving hard cash is vital, the talent you have left still needs nurturing and developing – assignments are still necessary. Why not use some the savings you have made by restricting GSP, through improved negotiation for rented property or not paying rent deposits, etc. towards improved family support. Education Advice, Working Partner Assistance and Managed Sale all make the employee and their family feel wanted and cared for but they do not cost much. When times are tough, people like being cared for even more. 10) Information. Communicate, communicate, communicate – we see too many employee relocation policies (old & new) that do not explain what the employee can expect. Employees’ expectations have been lowered in this economic climate, some grateful for the job, but that does not mean they should be relocated in splendid isolation. Open and honest communications between the service provider, the employee and the corporate will ensure expectations are surpassed and loyalty generated. All too often organisations pay out big bucks for employees who have not a clue of the support they are given – how can they appreciate it? As Sergeant Esterhaus in Hill Street Blues often said, “Let’s be careful out there!” Be a ‘Relocation Realist’ - take time to assess all the risks, the benefits, the value for money and the relationships you need which will allow the relocating employee to make that successful assignment.