Bending the Relo Rules

Applying flexibility to mobility policies requires careful oversight and case-by-case review, but the effort pays dividends down the road.

Thursday, February 7, 2013
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Last year, a manager at Stryker Corp. was being relocated to another city in the United States. According to the company's relocation policy, he and his spouse were allowed one trip to the city to purchase a house.

But the couple made an unusual request. Instead of flying directly to the city, they wanted to drop off their infant at the home of one of their parents -- in a different city -- who would watch their baby while they house-hunted. That meant the couple would need an additional round-trip flight -- from the parent's house to the city and back.

"The grandparent's house wasn't on the way, but really wasn't that much of an additional cost," says Jack Jampel, manager of U.S. domestic mobility at Stryker, a global manufacturer of medical devices and equipment based in Kalamazoo, Mich. The couple's request was granted.

The Stryker scenario could serve as an example of rule-bending at its best. Whether moving people across the country or ocean, relocation policies can't possibly cover every detail. This means employers need to be flexible with the benefits or services they're offering. Consider past examples of two employees at Xerox. One requested that his extensive marble collection be moved, which added nearly $1,000 to the cost of the move. The request was granted because the employee's value in the new role far exceeded the cost. The other employee requested that his barn and farming machinery be moved, including a tractor that he claimed as a second vehicle. The company obliged, except for the tractor.

The bottom line here is that no two moves are alike. The key to bending without breaking is to connect the needs of both the business and employee, develop clear policies, establish cost-containment goals and enable employees to manage their own relocation budgets.

In Stryker's case, relocation policies are tiered. The higher the position, the bigger the benefits package. Jampel says this approach helps HR offer flexibility while controlling costs. Consider a high-level executive who opens an overseas market that generates millions of dollars. It would make sense to compensate him for any losses related to a home sale. But the same would not apply to a low-level manager who accepted an overseas assignment for professional development.

"The way I look at relocation is no different than how we do compensation," Jampel says, adding that, while the company supports 20,000 global workers, he domestically relocates between 300 and 400 employees each year. "Not everyone gets the same thing. We can't treat relocation like people are just widgets."

When the company consolidated and modified its relocation policies two years ago, Jampel says, HR did not create a process for exceptions. All requests or hardships are evaluated on an individual basis. He says the business rationale for granting exceptions boils down to one question: What's different about this situation that would make me approve it and not everybody else who asks for the same exception?

Another way to deliver flexibility and control costs is to offer employees a lump sum of money to manage their own relocation. An assignee, for instance, can choose how to spend $10,000 for temporary living, selecting modest accommodations, an upscale hotel or anything in between.

"It makes them more accountable when you provide them with [a lump sum], rather than saying we're going to give you two months of temp living . . . ," says Jampel, who addressed the topic of applying flexibility to mobility programs in October with Carol Joy and Marti Briney (see below) at Worldwide ERC's 2012 Global Workforce Symposium in Washington. "It provides them with that flexibility."

Secret Sauce

At Xerox, the company's mobility policies include core benefits, such as household-goods transportation, and flexible elements, such as paying closing costs on a home or loss on a home sale, the cost of breaking a lease, storage costs, spouse job search and cost-of-living allowance, says Viktor Reznicek, vice president of Xerox Relocation & Assignment Services in Dallas.

Roughly 250 employees out of Xerox' 140,000 global employees are reassigned each year. He says the process starts with developing a clear picture of the company's goals, sharing them with others involved in the decision-making process and exploring options to relocation, such as hiring local talent or using extended business trips.

But if relocation is the best alternative, his team assesses the value employees will deliver to the business in their new roles. Are they building a sales team in a new market or maybe redefining product-development efforts? Their level of responsibilities should determine the richness of the flexible benefits offered, which, in turn, controls costs.

"If you look at the total expense pie, 98 percent of all costs are in the actual delivery of services," Reznicek says. "Only 2 percent is in the administration of those services. So the first place to look [to control costs is] relocation services such as home sale, household-goods transportation or temporary housing."

The company's global mobility team, which is part of HR, works with relocation and assignment services, a division of Xerox, to fully assess the employee's situation, develop a realistic cost of the move and determine if relocation makes sense for the business, adds Amy Glynn, senior manager of global benefits and global mobility at Xerox in Norwalk, Conn.

However, flexibility can have a downside. Employees, she says, can develop misperceptions about equality, that flexible benefits are inconsistently applied. But, so far, that hasn't happened at Xerox.

"There is an understanding that one size doesn't fit all," says Glynn. "By having a policy that's very clearly stated and working with HR managers and the business unit to understand their needs, we're able to balance those approaches."

Once members of the relocation team understand talent needs and cost-containment goals, they're much more likely to provide a combination of flexible benefits that makes sense for the company and employee, says Reznicek.

However, he adds, what's often missing is a business adviser who understands both the employee's and business' needs and can add the right flex elements for that relocatee's circumstances.

"The business-adviser role is the secret sauce and is essential to a core-flex policy," he says. "If you're not investing the time to understand the employee's circumstance and needs, understanding the business needs [or] connecting those two . . . you're leaving a lot of either money . . . or employee satisfaction on the table."

Cuts, Points and Digging Deep

Because relocations can cost two or three times an employee's salary, some companies have clamped down on what flex benefits are offered in this area. Their goal is to eliminate as many policy exceptions as possible, says Carol Joy, global mobility manager at East Aurora, N.Y.-based Moog Inc., a global manufacturer of precision control components and systems with 10,000 employees. "Exceptions usually have a dollar value," she says, adding that each year, the company relocates 100 employees worldwide. " . . . There is a stricter adherence to cost management in terms of exception management."

One benefit some companies have cut without experiencing employee backlash is the issuance of mortgage discount points due to low interest rates.

Joy believes flex policies don't necessarily have to be cut or changed. Instead, HR needs to be smarter in how they're managed, partly by requiring relocation providers to shop around for third-party vendors. "When you talk about destination services, what does that mean -- orientation or home-finding?" she says. "It means many things to different providers. One will tell you we have an orientation package of two days . . . someone else will say here's our three-day program. You could have four providers in the same city and they have a different way of pricing their product, so you need to ask."

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Everyone who touches that relocating employee needs to be asked for cost-cutting ideas. One employer, she recalls, learned (by asking) that transferring an employee mid-month versus early in the month was cheaper and, therefore, paid a lower price for temporary housing.

To help employees make informed decisions, companies should also post relocation policies on their intranets, says Marti Briney, senior vice president of international services at NEI Global Relocation in Omaha, Neb., which oversees about 15,000 corporate moves a year.

Another idea is to assign points to every flex benefit, then invite employees to spend those points. Briney says costly flex benefits, such as paying the commission for selling an employee's home, might be worth 50 points, while temporary living may be valued at 20 points.

"It's very difficult to pinpoint costs for every benefit," Briney says. "The cost of temp living for 30 days in Dallas compared to New York City is a huge cost difference. But the company may still want to allot 30 days of temp living anywhere. The points equate to how many people need [that benefit] and how viable [it is] within all of the benefits that are being provided."

NEI recently created an online self-assessment tool to help employees determine if they're prepared to move and what they would need. After entering basic financial information, such as their mortgage balance and house value, they receive a score that often reveals problem areas.

Generally, Briney says, only 1 percent of employees are reassigned. Since moving is expensive, she says, flex benefits such as shipping freight overseas are the first to be scaled back during tough times.

When KPMG makes policy exceptions, there must be a very strong business case, adds Aidan Walsh, executive director of international services at the global professional-services firm in New York. The company relocates an estimated 2,500 employees each year to roughly 80 different countries.

A prime example is when a mother-in-law lives with the employee's family. In such scenarios, "We would go into that a bit more closely," Walsh says. "Does she provide babysitting? Why would you transplant her from where she's comfortable [to] where there's going to be a different language and culture? If she is elderly and living with them because she is not well ... those are all circumstances we would take into account before making a decision."

One common request that's typically not honored involves moving family pets overseas that end up being quarantined for months. On the other hand, the company is generous when it comes to children with special needs, or dietary or health issues.

Before anyone is assigned overseas, he says, a cost projection is done that's not initially shown to the employee. It's necessary to keep it under wraps, he says, because the estimate is padded, reflecting worst-case scenarios. If shown to the employee, he or she may expect that extra level of benefits, believing they're "locked in stone," versus a more realistic number.

Still, Xerox now offers more flexible benefits and services than in the past. Reznicek points to annual home leave as an example, something that was never given to assignees oversees who held lower-level positions. There are also now repatriation orientations for employees completing long-term assignments.

"At the end of the day, no matter how narrowly defined or strict your policies are, you have to remember that people are individuals," he says. "Each of them has differing needs and expectations. Any employer that does not take into account what those differing needs are, is working against [itself] and the whole objective of a having a global mobility program . . . ."


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