Published on March 12, 2014
1 During the 8th annual Relocation Policy Summit, that was hosted by Graebel University at the Graebel world headquarters in Colorado, magic happened. Powerful energy among the 92 attending human resource and relocation management executives with more than 530 years of combined global mobility experience brought forth industry best practices and break-through ideas that many plan to enact in the coming year. Throughout the content-rich, two and half-day stretch to discuss all things mobility, the Summit was kicked off with three optional workshops: 1. Global Tax 2. Relocation Policy Development 3. Relocation 101 77-percent of Policy Summit participants attended one of these hands-on workshops which provided the opportunity to dig deep into their area of choice. The remaining two days were filled with sessions that were identified by participants and segmented into U.S. Domestic, International and Universal global mobility topics. In advance of the Summit, attendees selected their most desirable mobility topics to ensure the maximum takeaway value of the event. Five executives from the Fortune 500 offered their guidance as moderators of U.S. Domestic and International mobility sessions. In addition to their human resource background, the guest moderators averaged nine years of global mobility industry experience. Because the Summit is driven on all fronts by participants, this approach offered a unique perspective and flair in which their peers could easily relate. To further leverage their time in Colorado, some global mobility clients elected to take advantage of their trip to Denver and met with their Graebel team to conduct client business reviews prior to or after the Summit. Since its inception eight years ago, a principal goal of the Policy Summit has been to create an open environment where human resource professionals can gather, share and create innovative ideas. All came to the event with a mobility program wish-list of items to address and departed with answers and guidance from industry peers to help move their programs in a forward motion. This <XX-page> digest of the Summit offers the hottest topics and solutions from the lively discussions, vibrant keynote speakers and networking events that took place. Introduction APAC and EMEA Graebel University hosted Mobility Summits are planned in 2014
2 Professionals from a wide array of diverse industries collaborated during the Policy Summit. From new-to-relocation to seasoned veterans, the blend represented 22 different industries which made for thought-provoking discussions during the breakout and educational sessions. Nearly half of the companies represented the Fortune 1000 and one-third, the Fortune 500. 2014 Summit attendees are eligible to earn: 11 General credit hours for re-certifications through the HR Certification Institute: > Professional in Human Resources® (PHR) > Senior Professional in Human Resources® (SPHR) > Global Professional in Human Resources® (GPHR) Up to 18 re-certification credits for Worldwide Employee Relocation Council® (WERC) credentials: > 9 Certified Relocation Professional® (CRP) credits > 9 Global Mobility Specialist® (GMS) credits 36,266 Company average number of employees worldwide FORTUNE 250 34% 15% 46% Summit Participant Backdrop 92 Total attendees 61 Organizations - 6.3 Average years in global mobility 530 Combined years in relocation industry $14.9 Billion average annual company revenue Financial Manufacturing Healthcare Retail Energy, Oil & Gas Hospitality Consumer Goods Technology/Software Engineering Professional Services Communications Insurance Freight Services Automotive Non-profit Agriculture Utilities Pharmaceutical Aerospace Construction Mining Education Top 7Big Data Trends 1. The cloud Reduced IT and infrastructure costs 2. Mobile apps Increasingly competitive to access meaningful data 3. The infinite aisle Online purchasing and inventory management 4. Security and privacy Securing data in AND out of systems (i.e. immigration) 5. Mergers and acquisitions 27,000 M&As took place in 2013, complex to merge data/systems 6. Digital natives Millennial generation’s obsession with digital devices 7. Rise of the machines Imbedding technology needs (i.e. Amazon Drones) Industries RepresentedSummit Participant Backdrop
3 Global Mobility Staffing Staffing the most effective number of people to support each company’s mobility volume was noted as a figure that has been hard to nail down historically. For those represented at the Summit, volume varied from less than 20 and up to 1,700 annual moves per year. Companies in attendance average 365 U.S. Domestic and 54 international assignments annually and reported their overall staffing situations in a survey conducted onsite. Average Mobility Staffing 2.6 Full-time 4.6 Part-time Leading Discoveries Exception Requests DownException requests have dropped for most and there is evidence that this drop resulted from strengthened approval process steps, including instituting stronger policy language and enhanced internal communications within a company. 24-MonthPayback Agreement Most Common Payback agreements are used by the majority and the most utilized time-frame was 24-months. Only a few engage in an active collection process to recoup funds. Can Return on Investment (ROI) legitimately be Measured All agree that it is difficult to track and measure ROI for global mobility. Creative solutions were identified -and discussed in detail. Top ROI Measurements • Turnover rates • Employee satisfaction results • Successful project or assignment completion • Performance review scores • Promotion rates Locations Most Deliberated Africa Canada China France Germany India Japan U.S. Rise in 2014 Volume 66% U.S. Domestic 54% Rest of the World Executive Summary Annual Global Mobility Volume on the Increase More Fortune 500 employees will be asked to relocate or take an assignment worldwide in 2014.
4 66% Preference 105% Most common home listing cap . Contributing Causes for Recent Changes Made to U.S. Domestic Policies • Increases in Exceptions • Company budget restraints, cost containment and relocation costs • To improve transferees’ relocation experience • Company growth through footprint expansion, acquisition, merger • Shift in company culture Workforce Security Security measures and protecting workforce health was top of mind for most mobility professionals, and among the extreme measures enforced in high-risk locations such as Afghanistan, Africa and Brazil. Trending International Policies Expat-Lite Local Plus Rotational (AKA Backpack policy) Return of Foreign Nationals Discussions revealed that a select number of mobility executives have taken steps to create specific policies that will address the return of foreign nationals from these locations: China India Japan Localization 36 vs. Historic 60 Months A sliding scale approach to localizing expats has been paralleled with a timeframe that has shifted from 3 to 5 years since 2013. Home Leave Most allow assignees to travel anywhere for their home leave, however creative ways have surfaced to incentivize expatriates otherwise. U.S. Domestic Topics to Note Costly and tight rental market coast-to-coast, plus finding suitable rental properties for families was acknowledged as an added difficultly among the 2014 Summit participants. Focus on the Rest of the World Buyer Value Option (BVO) leading home sale program Some have been forced to build or buy temporary living units in rural counties in states such as Colorado, Texas and Wyoming Exception overall identified as temporary living #1
5 WEF Global Leaders’ Segment Mix The Summit attendees were treated to a dynamic presentation featuring Carol C. McMullen, chief innovation officer for the Crossland Group, presented an overview of the World Economic Forum (WEF) that took place in Davos, Switzerland in January. At the annual WEF participants gather and discuss global issues and discover what matters most to the world for the coming year. McMullen was among the 2,500 global leaders and dignitaries invited to the Forum. In her keynote address at the Policy Summit, McMullen presented the primary topics and her biggest takeaways from the Forum. Because McMullen identified the U.S. economy as the key driver for what is happening around the world, her presentation focused on the country’s role within the shifting world. McMullen also opened the audiences’ minds about the centuries’ old and present day conflicts between China and Japan; the Middle East tension and the critical state of worldwide data security. Continuing State of the U.S. Economy Business 80% Government 11% Academia 7% NGO/non-profit 2% Top 10 Global Issues for 2014 Identified at the WEF 1. Rising Social Tensions in the Middle East and North Africa 2. Widening Income Disparity 3. Structural Unemployment 4. Cyber Threats 5. Inaction on Climate Change 6. Diminishing Confidence in Economic Policies 7. Lack of Values in Leadership 8. Expanding Middle Class in Asia 9. Growing Importance of Megacities 10. Rapid Spread of Misinformation Online Unemployment rate dropping Workforce productivity rising at 5% vs. world average of 3.5% Consumer debt is below levels in 1983 Cash on corporate balance sheets is stockpiling and needs to be deployed in order to grow the economy Fewer worldwide large scale mergers and acquisitions due to waning U.S. economic power U.S. expected to have little reliance for crude oil from Saudi Arabia per year
6 U.S. Manufacturing on the Horizon With 22-percent of the 2014 Graebel Summit attendees representing the manufacturing sector, McMullen pointed out that industry is expanding significantly within the U.S. and wages have increased 4-percent since 2006-2011. The U.S. is on pace to have lower manufacturing costs than both Europe and Japan by 2015. Many manufacturing jobs that were previously sent offshore are slated to return to the U.S. in 2014 and 20,000 new jobs are expected to surface nationwide. Additional relevant information was shared in a comprehensive thought leadership hand-out to participants. Next shares a few of these documents:: Africa Transforming Technology in 2014 Latin America: Transforming the Future of Technology Will Africa be the Next Hotspot for Business? Offshoring? Reshoring? Nearshoring? The very scope of manufacturing is mounting with the growth of digital technology, which is causing increasing difficulty for companies to find and hire talent in this competitive arena. Plus, with the digital technology increase, cyber-threats have targeted manufacturers making their industry the highest hit sector at 19-percent. It was no surprise that Summit executives actively sought out McMullen for the best approach to create the most attractive, competitive global mobility program in lieu of the WEF forecast for employment increases. Outlook on Mobility and Talent Management McMullen outlined her stance on what was relevant to the world and talent management: > 70% of newly appointed CEOs come from internal appointments 25% of which worked for the respective company for their entire career -Devote career paths and extra care for these potential leaders > Respect talent and labor -Value employees, diversify -Offer career paths, apprenticeships > Differentiate suppliers who are truly global versus a U.S. company that has gone international > Trust and partner with companies that act with a fiduciary responsibility to set an ethical, trustworthy standard > Institute a conscious data strategy -People are moving away from jobs that can be replaced by apps continued:
7 HR Big Data – Fact, Fiction, or Simply Hype? Keynote speaker Brad Cook, global vice president of talent acquisition at Informatica shared his experience with the Summit group about big data and its rapidly increasing role within nearly all industries and specifically the human resource landscape. A key takeaway from the insightful keynote address was the realization of how big data is being utilized now around the world and its current trends. Cook noted that every industry has the opportunity to leverage data to sell products and services and even more valuable, to hone in on business intelligence that can be aggregated to a single view. The Summit audience identified two functions that would be beneficial to leverage big data in the mobility space: >> Business travel and immigration >> Skillsets and resumes Based on Cook’s experience with big data, he has found that under the human resource umbrella, talent acquisition is where the most value can be realized by an organization. Cook’s DIY recipe for talent acquisition big data: >> Map processes >> Standardize protocol >> Add social data A comprehensive thought leadership hand-out was also provided to participants and next shares a few of the these documents. What is Big Data? Big data has been defined a number of ways and its definition changes according to who you ask. In general, Big data is a collection of data from traditional and digital sources inside and outside of your company that represents a source for ongoing discovery and analysis.1 According to Cook, big data is about complexity and incorporates three types of companies: Big data storage Big data consumers Big data platforms (integration) 1 Lisa Arthur. What is Big Data? Forbes, August 15, 2013 Top 7Big Data Trends 1. The cloud Reduced IT and infrastructure costs 2. Mobile apps Increasingly competitive to access meaningful data 3. The infinite aisle Online purchasing and inventory management 4. Security and privacy Securing data in AND out of systems (i.e. immigration) 5. Mergers and acquisitions 27,000 M&As took place in 2013, complex to merge data/systems 6. Digital natives Millennial generation’s obsession with digital devices 7. Rise of the machines Imbedding technology needs (i.e. Amazon Drones) Top Big Data Trends >> Segment data >> Build intelligence >> Target geographic shifts 1. The cloud Reduced IT, infrastructure costs 2. Mobile apps Increasingly competitive to access meaningful data 3. The infinite aisle Online purchase, inventory management 4. Security and privacy Securing data in AND out of systems (i.e. immigration) 5. Mergers and acquisitions 27,000 M&As took place in 2013, complex to merge data/systems 6. Digital natives Millennial generation’s obsession with digital devices 7. Rise of the machines Embedding technology needs (i.e. Amazon Drones)
8 Over a third of the Policy Summit attendees move more than 50 employees within the U.S. each year, and among all companies’ the volume ranged from less than 20 to more than 1,700. Annual U.S. Domestic Volume When reflecting on 2013, many people made changes to their U.S. Domestic programs in a variety of facets. The top drivers for policy updates: >> Increase in Exceptions >> Company budget restraints, cost containment and relocation costs >> Improve transferee’s relocation experience >> Company growth >> Shift in company culture U.S. DOMESTIC Chart A: Annual U.S. Domestic Volume Homeowner Under 20 20% 20-50 28% 50+ 36% Renter Under 20 18% 20-50 20% 50+ 18% 100+ 30% U.S. Domestic Lump Sum Annual Volume Under 20 24% 20-50 22% 50+ 8% 100+ 20% Chart B: Annual International Volume Long-Term Assignment (LTA) 5-20 34% 20-40 6% 40+ 20% Short-Term Assignment (STA) 5-20 30% 20-40 2% 40+ 14% Permanent Transfer 5-20 38% 20-40 4% 40+ 12% Chart C: Home Sale Programs Buyer Value Option (BVO) 66% Guaranteed Buyout (GBO) 19% Direct Reimbursement (DR) 34% Listing Price Capped Percentages 2014 2014 2013 2009 12% 8% 4% 40% 103% 104% 105%102% 29% 15% 365 Average U.S. Domestic annual volume of participants A glimmer of a positive economic outlook for the year ahead was solidified by 66% of Summit participants anticipating an increase in their U.S. Domestic volumes for 2014.
9 Nationwide Cost Saving Tactics Because cost was a major deciding factor that altered mobility programs, several successful suggestions were shared during the U.S. domestic breakout sessions: Set the Tone >> Educating recruiters, candidates and business managers will help set expectations and this may reduce exceptions >> Core-flex programs have helped some companies balance their core budgets and increase employees’ satisfaction by offering optional benefits within an allotted amount Cap, Cap and Cap >> Cap overall relocation costs based on employee level >> Cap home sale benefits and cap home listing percentage to the most likely sales price (MLSP) from the Broker’s Market Analysis (BMA) >> Cap Loss-on-sale (LOS) amount >> Cap household goods amount >> Cap gross-up on relocation expenses (some use a flat rate of 27% or 35%) Money Talks >> Offer a marketing allowance for home repairs and staging >> Provide a home sale incentive which may prevent inventory costs >> Incent with cash to rent versus buy at destination Take Control >> Manage the mobility budget within the HR department versus allowing business units the freedom >> When relocation exceeds budgeted amount, increase accrual >> Implement Buyer Value Option (BVO) home sale program to greatly reduce gross-up costs >> Running a Cost-of-Living Analysis (COLA) helps some companies identify eligibility for stipends by assessing the difference in costs between the old and new locations in their entirety versus focusing solely on housing costs Participant Cost Savings Successes One high-volume company recently experienced a major organizational restructure and this resulted in a major overhaul of its mobility program. The biggest cost-saving change was shifting the household goods management from a third party supplier to directly booking its business with the carrier. The company has calculated a potential savings of $2Million of their $30Million annual relocation budget. Another company faced attention on regional talent recruitment and allowing only regional-based versus cross country moves to save money. For example, this firm will allow a move from Florida to New Orleans, but not one from Florida to Washington state. The participant posed this question to the group: “Do we really need to find talent 3,000 miles away or can we find someone within the region?” One organization has been facing a serious talent gap and identified new competencies and determined which roles are required to be mobile. Its study led to implementation of a new parameter, and the company has seen a significant reduction in costs due to a fewer number of people who are actually relocated. For the marathon transferees, this company only helps with a LOS benefits once. U.S. DOMESTIC
10 To Move or Not to Move… How are Pre-Decision Programs Administered? A third of the Summit executives incorporate a pre-decision program into their mobility models. Several successful methods were discussed that have helped transferees to determine if a relocation will suit their situation: >> Pre-departure home appraisals – helps with the home value reality check >> Home purchase pre-qualification >> Outline important relocation implications on intranet >> Pre-move trip >> Counselling to understand benefits, parameters – either by relocation management company or employer >> Self-assessment survey Home Sale Programs With the U.S. real estate market ticking upward in many cities coast-to- coast, some markets are still struggling and therefore adjusting home sale programs was a mainstream topic. The Buyer Value Option (BVO) tops the chart for the sixth straight year at the Summit with 66-percent utilizing this mode in 2014. In the past few years, many have been slowly backing away from the Guaranteed Buyout option (GBO) and on the rise is the Direct Reimbursement. Top of the List…Listing Caps Capping the home listing price at a pre-specified percentage above the Broker’s Market Analysis (BMA) price has undeniably increased since the Great Recession. Results show that 60-percent of Summit executives offer a listing cap, up nine-percent from just last year. 105-percent above list price owned the scene with 40-percent enforcing this ratio which is a whopping 45-percent increase since 2009. 30% Employ a pre-decision program 60% Enforce a listing price cap U.S. DOMESTIC lume Chart B: Annual International Volume Long-Term Assignment (LTA) 5-20 34% 20-40 6% 40+ 20% Short-Term Assignment (STA) 5-20 30% 20-40 2% 40+ 14% Permanent Transfer 5-20 38% 20-40 4% 40+ 12% Chart C: Home Sale Programs Buyer Value Option (BVO) 66% Guaranteed Buyout (GBO) 19% Direct Reimbursement (DR) 34% Listing Price Capped Percentages 2014 2014 2013 2009 12% 8% 4% 40% 103% 104% 105%102% 29% 15% Chart A: Annual U.S. Domestic Volume Homeowner Under 20 20% 20-50 28% 50+ 36% Renter Under 20 18% 20-50 20% 50+ 18% 100+ 30% U.S. Domestic Lump Sum Annual Volume Under 20 24% 20-50 22% 50+ 8% 100+ 20% Chart B: Annual International Volume Long-Term Assignment (LTA) 5-20 34% 20-40 6% 40+ 20% Short-Term Assignment (STA) 5-20 30% 20-40 2% 40+ 14% Permanent Transfer 5-20 38% 20-40 4% 40+ 12% Chart C: Home Sale Programs Listing Price Capped Percentages 2014 2014 2013 2009 12% 8% 4% 40% 103% 104% 105%102% 29% 15%
11 Housing Double-Dip Adopting a duplicate housing benefit was popular among the vast majority. The consensus was that this allowance has decreased the need to drum up creative home sale programs in lieu of the under- performing housing market. Pssst, Loss-on-Sale (LOS) Anyone? While 38-percent have LOS formally outlined in policy, a large number offer this expensive option on a case-by-case basis. Some agreed that when the LOS is offered, a good best practice is to outline the added benefit in the offer letter as it is a document that can be audited. For a large percentage that have LOS in their policies, it was added in only the last few years to reduce the amount of exceptions for this subsidy. According to the Graebel-sponsored Worldwide Employee Relocation Council (WERC)® 2013 Relocation Assistance: U.S. Domestic Transferred Employee Report, nearly 60-percent of respondents report that their companies reimburse duplicate housing expenses in instances when the employee purchases a home in the new location prior to selling the home in the old location. Most organizations impose a time limit on the assistance. Average costs for duplicate housing dropped from $3,742 in 2012 to $4,019 in 2013 according to the Worldwide Employee Relocation Council (WERC)® 2013 U.S. Transfer Volume & Cost Survey. U.S. DOMESTIC 38% Have formal LOS in policy up 2% from 2011 Top topics in 2014 Capping household goods costs is trending and many continue to cap shipment weight. Some suggested adding policy language that defines ‘reasonable’ household goods items Home Purchase Home Sale Even Deal? Some debated the idea that the playing field is leveled, when balancing the amount of loss experienced on a home sale in relationship to a lower cost home or when the employee buys a home that is under market price.
12 THE Exception to the Rule – Temporary Living Temporary living arrangements and the increasing number of excuses to extend stays led this benefit to top the exception charts for most. Best practices to move families and engage the employee as soon as possible were deliberated: >> Only release sign-on bonus or miscellaneous expense allowance after the family has moved - Some have found that a candidate may accept an offer and relocation package then choose to keep their family at origin, while the transferee stays in temporary living as long as possible to ‘test the waters’ (i.e. company culture, right position, etc.) >> Enforce a 12-month timeframe for the employee and family to fully transition >> Allow one trip home per month while in temporary living, per month >> Pay for a nannie to care for the children of c-suite employees Suggestions for meal provisions while in temporary living: >> Do not include when housing has kitchen >> Impose a per diem >> Reimburse on actual costs for breakfast and dinner only, lunch on own #1 Exception temporary living The Morphing Renter Population No doubt, the rental market is tight and tense from Florida to the San Francisco Bay Area and most cities in between. Finding affordable rental properties or even rental options at all has been a huge challenge for most. The group openly admitted that the days of finding rentals for single transferees are over and finding suitable rentals for large families has added to the obstacle. For one energy company headquartered in California, rental prices have been sky-high and scarce. To fill the void, the company has communicated internally to seek roommate options and available rental properties. The company’s culture lends itself to a high number of people renting spare bedrooms to their colleagues. Plus, because of the high- cost location, a cost-of-living allowance (COLA) is offered to its renters. These trends were captured during the Summit discussions: >> Two month lease break assistance benefit versus rental finding assistance >> Homeowners request to rent prior to purchase >> Not presenting home purchase assistance in the new location to renters U.S. DOMESTIC The lack of temporary living in rural communities has forced some human resource professionals to become creative and take extreme action in order to accommodate their transferees. The only option for most was to either buy properties or build new properties (condos, homes) and hire a property management company to manage.
13 One Lump or Two or Three? Lump Sum Program Variance While 54-percent offer a lump sum policy within their respective company’s U.S. Domestic program, the majority expressed concern that a lump sum only program was not sufficient. Most shared that a monitored, more robust program has a higher success rate. For the individuals who do offer a lump sum only program, cost control and easing the administrative burden were cited as the top two reasons to embrace this one-size-fits-all approach. Lump sum amounts varied widely from company to company, and benefits were typically tiered and ranged from $5,000 to $45,000. There was very little similarity of when funds were released to transferees, but one best practice was unanimously defined: Paying out as close to the start date as possible provided the least amount of risk to the company: Lump sum amounts that were provided as a part of a core-flex program or within policy varied greatly too, here however most included household goods, a home finding trip and temporary living respectively. A few allow their relocated employees the alternative to select specific benefits in lieu of a lump sum. One Fortune 500 company prefers to provide its employees a budget and permits them to manage a select portion of benefits on their own. This company offers a lump sum tier. Other tiers include benefits plus a $5,000 miscellaneous allowance to cover incidentals or “hush money” to quiet exceptions. A lump sum is also provided for the final trip for the entire family and the house hunting trip which is calculated by Runzheimer. Flexing Core-Flex Many were intrigued, but only a few in the group conduct a U.S. Domestic core-flex program which was recognized to offer options to some and, especially the millennial generation. Some who utilize this method take advantage of online tools in which their transferees can select optional benefits within their allotted amounts that best meet their circumstances. U.S. DOMESTIC Chart A: Annual U.S. Domestic Volume Homeowner Under 20 20% 20-50 28% 50+ 36% Renter Under 20 18% 20-50 20% 50+ 18% 100+ 30% U.S. Domestic Lump Sum Annual Volume Under 20 24% 20-50 22% 50+ 8% 100+ 20% Chart B: Annual International Volume Long-Term Assignment (LTA) 5-20 34% 20-40 6% 40+ 20% Short-Term Assignment (STA) 5-20 30% 20-40 2% 40+ 14% Permanent Transfer 5-20 38% 20-40 4% 40+ 12% Chart C: Home Sale Programs Buyer Value Option (BVO) 66% Guaranteed Buyout (GBO) 19% Direct Reimbursement (DR) 34% Listing Price Capped Percentages 2014 2014 2013 2009 12% 8% 4% 40% 103% 104% 105%102% 29% 15% Two weeks prior to start date Before or after background check complete Start date On payroll for two days Top topics in 2014 Capping household goods costs is trending and many continue to cap shipment weight. Some suggested adding policy language that defines ‘reasonable’ household goods items $100,000 Valuation was common among the group Pre-made boxes are acceptable versus crates for flat screen TVs Discard and donate Home Purchase Home Sale
14 Gross-Up Summit conversations revealed that most employees do not worry about relocation taxes until Uncle Sam or foreign country’s tax deadlines roll around. Many receive numerous questions regarding taxes and the topics of gross-up and true-up tend to surface from their employees, and in the eleventh hour. For one publicly-held company, its executives’ relocations are audited by people unfamiliar with the relocation industry which creates a constant need to explain items like grossing-up gross-ups. The group chatted about best practice suggestions: >> Add methodology (i.e. flat supplemental rate) into policy to reduce the number of questions. If preferable not to add to policy, create an amendment to policy that can be shared on demand when questions arise >> Gross-up only the necessary benefits i.e., temporary living, house hunting trips. Do not gross-up bonuses or miscellaneous expense allowances. >> Do not gross-up if transferee does not follow policy parameters >> Do not gross-up an exception granted outside of policy Supplemental rate gross-up calculation is the most common Peek into a Fortune 500 company’s gross-up strategy: > Gross-up at a flat supplemental rate of 25-percent - 90-percent of employees have received a windfall > Case-by-case true-up - Majority are higher tax bracket executives, and only 3-4 exceptions per year U.S. DOMESTIC The Goods on Household Goods Household goods exception noise has quieted in recent times, many in the Summit expressed very few recent exception instances. Top topics in 2014 Capping household goods costs is trending and many continue to cap shipment weight. Some suggested adding policy language that defines ‘reasonable’ household goods items $100,000 Valuation was common among the group Pre-made boxes are acceptable versus crates for flat screen TVs Discard and donate programs Two weeks prior to start date Before or after background check complete Start date On payroll for two days Top topic Capping ho costs is tre continue t weight. So adding po defines ‘re household $100,000 V common Pre-made acceptab for flat s Discard Home Purchase Home Sale
15 UNIVERSAL and the list goes on and on… UNIVERSAL MOBILITY TOPICS To remain current and competitive, many essential elements should be identified, considered and ultimately implemented in order to run a successful mobility program. These elements weigh on the minds of the Summit attending executives and mobility professionals alike constantly. This section touches on the most prevalent universal mobility items shared by peers in the intimate sessions. StaffingProperly Training Polices Compliance Escalations Volume Projections Budget Managing Suppliers Reporting
16 A high-concentration was placed on working with talent management and other stakeholders within the participants’ respective organizations. The fusion and cooperation (or lack thereof) of such a variety of departments was top-of-mind for many. Many expressed concern about incorporating talent acquisition/talent management with mobility. Emphasis was placed on the importance of having mobility represented ‘at the table’ with the business in early stages of strategic planning so that aspects like cost, logistics, tax, and compliance could all be considered thoughtfully when companies plan for a talent strategy. For instance, a company that operates globally, but mainly in the APAC region had expansion plans for a division that projected talent growth by 20-percent. Because the mobility manager was present in the strategic leadership meetings, she was able to provide expert advice to decision makers about costs and compliance issues, therefore changing the tactic from strictly growing talent (promoting from within and relocating individuals) to hiring local talent to fill necessary and applicable positions. Communication and Education – By All Means Necessary Working across different groups within a company can be difficult. The Summit assembly agreed that communicating in various ways and properly educating is the golden nugget to getting buy-in and cooperation. Communication best practices: >> Use a hub and spoke model by designating a point person in each group (including HR) >> Hold regular meetings – monthly, quarterly >> Conduct annual review meetings to update on changes in policy, culture, processes, etc. >> Provide meaningful information to key stakeholders with metrics, reports UNIVERSAL Overall, with an annual average of 2.6 Full-time 4.6 Part-time internal employees support each company’s relocation volume 40% International volume 52% U.S. Domestic volume 365 U.S. Domestic Moves 54 International Assignments Representatives’ and their teams’ time was dedicated to $50,000 Standard Employment Population Relocation or Assignment Population Termination Rate Comparison <<Callout/infographic>> Julie, please use an icon or image of Canada and design an inter- esting Q&A type infographic that shows the group asking questions of this person amid the group. India Africa GermanyCanada France Japan Who Does What, Why and How? Staffing a global mobility team can be tricky. For many people, relocation is not their sole responsibility. Participants were polled and with an 86-percent response rate, results revealed their company’s mobility staffing structure. Stay Tuned! A special report outlining the results of the extensive survey taken during the Summit will reveal details about corporate global mobility roles and responsibilities. Results will be further broken down on how much time is allocated to specific mobility responsibilities based on volume levels so that companies can benchmark how their peers compare in this arena. Have a global talent management practice that includes relocation 36%
17 Participant Examples One participating person recently took on ROI assessments and researched the termination rates of employees that had already relocated or taken assignments versus the Company’s remaining employment population and found that the termination rate for the relocation/assignment cluster was higher. A participant representing a Fortune 500 company recently hired an external firm to track and report ROI. Cost Estimate Data Extraction Most company representatives relayed that cost estimates have been performed upfront on most relocations. One company in particular has been rigorous about cost estimate reporting and analysis in order to keep average employee relocation costs current and competitive. With the help of their relocation management company, this person tracks and reports on: >> Employee level >> Policy type >> Homeowner or renter status Some have shared cumulative cost estimate data results with business units for budget planning purposes. When sharing this data however, the group stressed the importance of reiterating that the data provided is not a cap of relocation expenses, but merely an estimate. UNIVERSAL Overall, with an annual average of 2.6 Full-time 4.6 Part-time internal employees support each company’s relocation volume 40% International volume 52% U.S. Domestic volume 365 U.S. Domestic Moves 54 International Assignments Representatives’ and their teams’ time was dedicated to How long employee stayed with the company If employee was promoted Performance review results $50,000 Standard Employment Population Relocation or Assignment Population Termination Rate Comparison << ico es gro the France U.S. Germany Can each company’s relocation volume 40% International volume 52% U.S. Domestic volume Representatives’ and their teams’ time was dedicated to How long employee stayed with the company If employee was promoted Performance review results $50,000 Standard Employment Population Relocation or Assignment Population France U.S. Germ Return on Investment (ROI) Because ROI can be subjective in mobility, many find it difficult to measure and report. Attendees discussed ways that they have successfully measured ROI within their companies: >> Turnover rates (one company shared its 32-34-percent employee turnover with a rehire rate of 18-percent) >> Employee satisfaction results >> Successful project or assignment completion >> Performance review scores >> Promotion rates Many had reporting wish-lists and 33-percent of respondents in one Universal Mobility session stated that they would personally run ROI reports, if available, and the remaining 67-percent would request the data from the provider on a regular schedule.
18 Accepting or Rejecting Exceptions The vast majority of the Summit crowd experienced a decrease in exception requests and the top three reasons were attributed to: 1. Consistency with the approval process 2. Stronger policy language which deterred exceptions 3. Communication outlining policy and expectations upfront to: - Human resources - Recruiting - Business unit management - Transferee For international assignments, school and tuition assistance topped assignee exception requests. Nearly all agreed that executives are granted immunity for most exceptions. Extreme Executive Exception In one case, a company’s executive did not observe any of the rules of the relocation program and the company moved an airplane that cost the company $50,000. Many Summit-goers have experienced outrageous exception requests. A participant mentioned that an employee requested weekly maid service (the company does not allow maid service in temporary living). The request was denied and the participant recommended that the employee use the miscellaneous expense allowance for that type of request. Another representative had enough when the company accepted the exception of three truckload deliveries of household goods from California to St. Louis for a 1,600 square foot home with the weight equivalent to seven bedrooms of furniture, and eight flat screen televisions. A household goods weight limit was implemented into policy to avoid future abuse. To curtail these types of appeals, one company requires that the company’s ceo approve everything over $25K. In most instances however, a vice president or higher-level approval is required in order to move forward with an exception to policy. Some rely on the ability to point the requester toward the apportioned miscellaneous allowance to cover exceptions outside of policy. A few cited constructing an approval chain with as many as five required signatures to make it as difficult as possible to permit an exception. Sanctioning others to approve exceptions helps reduce the administrative burden of smaller-cost items: >> One firm handles up to $500 of exceptions within the mobility group, above $500 the approving power shifts to the business unit >> A large majority relinquish exception control to the relocation management company up to a certain amount, averaging $1,000 in the group Exception reporting was a top ranked cost-containment solution at the Summit offering the opportunity to map out trends which provide ammunition to change policy where applicable. UNIVERSAL
19 Payback Agreements Majority ruled on incorporating payback agreements within the mobility program and with a 2-year term on a varying sliding scale range. 12-Months was the second noted timeframe and for these few companies, plans were to expand their payback agreements to 24-months. Many at this year’s Summit have not attempted to recoup the money owed after an employee has left the company prior to the contracted term, but those who have, are steadfast about collections. Some payback collection approaches: >> Deduct as much as possible from final paycheck and/or PTO balance >> Employ a collection agency >> Utilize internal resources (i.e. payroll) >> As leverage, forgive amount as a part of the settlement agreement >> Involve legal department Collection has been halted in some U.S. states such as California and beyond the lower-48 due to legal restraints. A high-volume company participant chimed in on the topic and noted that its collection efforts are currently in the works for as far back as 2010. The collection push began with sending multiple letters and last year $86,000 was recovered. UNIVERSAL Top 5 best practices 1. Incorporate sliding scale payback amount (ranging from 100-percent to 25-percent) 2. Present within offer letter 3. No services ordered until agreement letter is signed 4. Commence effective date at either: a. Signing of the offer letter b. Hire date c. Position start date 5. Activate payback as late as possible at either: a. Date of last relocation expense b. When employee arrives in the new location c. Household goods delivery
20 INTERNATIONAL INTERNATIONAL MOBILITY Is globalization treading water as the Summit keynote speaker, Carol C. McMullen, chief innovation officer for the Crossland Group, suggested? This year, 56-percent of the 61 companies at the Summit expect an increase in international transfer volume as compared to 92-percent in 2011. Volume of the companies present for the Summit spanned from less than 20 assignments or permanent transfers to 400 annually. Annual International Volume c Volume Chart B: Annual International Volume Long-Term Assignment (LTA) 5-20 34% 20-40 6% 40+ 20% Short-Term Assignment (STA) 5-20 30% 20-40 2% 40+ 14% Permanent Transfer 5-20 38% 20-40 4% 40+ 12% Chart C: Home Sale Programs Listing Price Capped Percentages 2014 2014 2013 2009 12% 8% 4% 40% 103% 104% 105%102% 29% 15%
21 During an international session, questions surrounded mobility practices in Canada. A Summit participant representing a company headquartered in Canada shared her knowledge on the following questions: Question: In Canada do you offer different benefits? Answer: We do not offer any different benefits in the different provinces. Question: Are documents available in English and French? Answer: In the provinces where French is spoken, documentation is provided in both French and English. We do not offer language assistance because there are plenty of bilingual and French immersion schools. Question: What do you do about assignments in Canada and transitioning assignees to a permanent status versus remaining an expat? Answer: Once assignees have worked 990 hours they can obtain their permanent status without an employer sponsor. The Canadian experience is Canada’s way to help build their workforce numbers. Question: Do you have any programs for global nomads? If so, what is the success rate? Answer: We have a program where assignees work 28 days in 12 hour shifts and then they are off for 28 days. Assignees’ do not accrue vacation time during the off days and their family stays in the home location during the assignment. This group is self-insured for health care. Initially when the program was launched it was tough to sell and now people find it works well. There have only been two unsuccessful assignees in this program and that was due to the poor location. INTERNATIONAL A great deal of focus was placed at the Summit on locations around the world that were causing the most concern or noise for global mobility leaders and their assignees. China was deemed a problematic location due to the visa and immigration process. It was identified as complicated due to: >> Provinces requiring separate work authorizations >> Constantly changing laws because processes remain in various stages of approval in the country’s system therefore execution is rare and even more changes result Many mobility managers uncovered that short-term or long-term assignees were sent by their company to the destination with the wrong visas in order to avoid the exhaustive process required to obtain the appropriate visas. This has provoked a red flag situation for most because the group has detected that China has begun verifying documentation and placing pressure on companies to file for the proper work visas. For India, the group shared their experiences of the same compliance issues as China and many other locations where companies have exposed their brand by continuing to take improper work visa and tax risks. Many mobility professionals have taken action to educate business unit managers regarding the high-risk practices. d ent on son <<Callout/infographic>> Julie, please use an icon or image of Canada and design an inter- esting Q&A type infographic that shows the group asking questions of this person amid the group. Germany India Africa GermanyCanada France Japan Where in the World was the Focus? 52% U.S. Domestic volume How long employee stayed with the company If employee was promoted Performance review results $50,000 <<Callout/infographic>> Julie, please use an icon or image of Canada and design an inter- esting Q&A type infographic that shows the group asking questions of this person amid the group. France U.S. Germany
22 Popular Policies Rotational programs (AKA Backpack assignments) are dominated by millennials and offer a culture-rich experience with fewer benefits. Many in this age group view overseas assignments as a rite of passage. Typically less than 90 days in one location, backpack assignments may include multiple locations in sequence: >> Intra-country >> Cross-border >> International The group discovered that many are in the process of exploring the creation of policies for returning foreign nationals to these countries: Expat Lite programs have gained traction with many of the attendees, because ultimately the tax impact can be minimized. Local plus programs have gained popularity, too. This movement shortens the length of time it takes to localize an assignee and reduces costs to the employer, because benefits are eliminated while keeping the assignee on the host payroll such as: >> No COLA >> No equalization >> Fewer allowances to assist with the initial settling-in services INTERNATIONAL An example was shared by an attendee of their intra-zone policy. This type of policy is designed to accommodate assignees in the company’s busiest locations The company’s intra-zone package features: >> Three year assignments >> Ongoing tax preparation assistance (no equalization) >> U.S. citizens remain on U.S. payroll >> Non-U.S. citizens transition to host country payroll >> Repatriation or full localization 2.6 Full-time 4.6 Part-time internal employees support each company’s relocation volume 40% International volume 52% U.S. Domestic volume Representatives’ and their teams’ time was dedicated to How long employee stayed with the company If employee was promoted Performance review results $50,000 Standard Employment Population Relocation or Assignment Population Termination Rate Comparison <<Callout/infographic>> Julie, please u icon or image of Canada and design an esting Q&A type infographic that show group asking questions of this person a the group. France U.S. Germany India Africa GermanyCanada France $50,000 Standard Employment Population Relocation or Assignment Population Termination Rate Comparison <<Callout/infographic>> Julie, please use an icon or image of Canada and design an inter- esting Q&A type infographic that shows the group asking questions of this person amid the group. France U.S. Germany India Africa GermanyCanada France Japan Not so popular: only 8% of surveyed respondents’ employ regional or country-specific policies
23 Mission Critical - Workforce Security is Serious Business Protecting the global workforce at the highest level was a major concern for all at the Summit. Many have regimented security briefings with departing assignees to provide: >> Detailed information about the location >> Expectations of the assignee >> Emergency evacuation procedures Completing a security form prior to an assignment was a key element for one attendee. On the form, three questions are asked that only a family member would know such as specific markings on their body. For high-risk areas, a few have tasked their risk management department with site visits and assessments of the location prior to sending their assignees onsite. This process prompted one participant to require that all assignees live in a compound. A zero-tolerance policy is enforced for another participant because a fatality took place after the assignee elected to take a quick break on the side of the road before entering the compound. Busing assignees to and from their designated compound with zero outside contact is now required in the dangerous country for the company. Most provide a hardship allowance in hazardous areas which is capped based on the location. INTERNATIONAL Ensuring the positive health status of employees was a top topic. For example, the dangerously poor air quality in China prompted the group to share a few techniques among their global mobility peers: >> Through a provider, conduct online health screenings prior to departure and while in the host country >> Pay for annual medical exams. While the assignees’ results are not provided to a company, one participant suggested that a company request health assessment medical results become a part of the terms of employment for new hires not affected by HIPPA-requirements. Removals Security is also critical when considering international household goods services and it is best to select a provider that is dedicated to anti-bribery practices and security-threat compliance worldwide. Common removal parameters determined by the mobility professionals were justified as: Many in the group authorize international household goods storage benefits based on projects. Assignees in one participant’s company have a fifty-fifty chance of receiving the benefit. And for a selection of projects, $150 per month of storage is apportioned. Long-term assignment allowances: Family - 40’ shipment container, +2 LDNs via air Single – 20’ shipment container, +1 LDNs via air shipment Short-term assignment allowance: Equates to excess baggage only 75%
24 Some shared a mutual resistance from assignees who have refused to localize, because their pensions would be surrendered. France and Germany were recognized as having rich pension plans and localizing people in those countries can be costly. One company participant offers a local premium in all countries that it sends assignees, and for three years offers: >> Local payroll >> Lump sum for healthcare >> School allowance >> Housing assistance A relatively few try to avoid localization altogether. One option shared was to incorporate language in the offer letter and within the assignment policy that states after five years the assignee must return home or move on to another assignment. INTERNATIONAL In Africa and other countries where expats are unable to reside on the local social program, enacting a Local Plus option was discussed as a favorable alternative. a air a air shipment timeline of three years with a sliding scale reducing the $ percentage from Adding a world map or somehow representing that this person is being detached from the home country and now permanent in the new country would be ideal. nt 25%50%75% Time to Localize, Now What? When many of the seasoned executives attended the international sessions at the Summit they discovered that all were on a similar path to realigning their programs approach to localization. Many have taken a more structured and regimented methodology to weaning their assignees to the host country payroll and benefits. Shortening the localization timeframe from five to three years and phasing out allowances (excluding COLA) on a sliding scale each year was a hot trend:
25 INTERNATIONAL Language training has been proven successful for assignees and their spouses. But, during an international breakout session this puzzling question was raised: “What is the proper age for children to attend intercultural training?” The session moderator sent an instant message to Dean Foster, president of DFA Intercultural Global Solutions, LLC who offered this response: “Evidence indicates that when a family is relocating abroad, the most important individuals to receive cultural training are the parents who will be responsible for the successful adjustment of the children, and not the children themselves. The younger the child, the less responsible they can be for the success of their own adjustment and adaptation to a challenging foreign environment. There may be occasional situations where children are uniquely curious, insightful, or need special attention to personal questions and concerns, and for these situations, a separate individual children’s training is advised. This often comes up when working with adolescents, who typically may have strong concerns about making an international move.” Some companies offer programs that are segmented by age groups and range from 8 to 13+ years old. Shifting Gears - Reverse Relocation Policy Failed assignments happen. One company has a policy in place for permanent transfers that are not successful within three years of the assignment start date. A household goods shipment is covered under their reverse relocation policy and travel expenses are reimbursed. Protecting assignees in this awkward situation was a concern for most. A similar policy offered by one firm includes assignees have been laid off by the employer. The repayment agreement is not enforced and this firm will only help relocate the assignees back to their home location if a job within the organization is available.
26 There’s No Place Like Home, But Vacationing Works Too The majority of the group allow their assignees’ to travel anywhere for home leave. Only a small percentage requires travel to the home country. A host of companies have gravitated to allowing a budget for home leave travel expenses rather than defining the number of times an assignee can return home. To increase success rates and to keep assignees connected to home, one company provides an incentive of 10 extra paid time off (PTO) days, if they travel to their home country. Speaking of travel… In a 21-person session, international travel guidelines flew about the room: GRSW-227 ©2014 Graebel Companies, Inc. All rights reserved. All trademarks are property of their respective owners. Can’t wait until 2015 to network and converse on mobility topics? Join one of the 2014 Graebel University U.S. Regional Roundtables or Mobility Summits in APAC and EMEA regions. Contact your Graebel represented for more details. Data throughout this document is based on survey results from the respective years’ Graebel University Relocation Policy Summit. The number of participants who were surveyed varied from year to year. INTERNATIONAL +2 LDNs via air +1 LDNs via air shipment timeline of three years with a sliding scale reducing the $ percentage from Adding a world map or somehow representing that this person is being detached from the home country and now permanent in the new country would be ideal. nt 25%50%75% Coach Business Class
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