Building and managing a relocation program that aligns with corporate culture and supports business objectives
A relocation or assignment is a significant investment for a company — about $55,000 for a domestic move in Canada, according to the Canadian Employee Relocation Council, and $76,000 US in the United States, according to the Worldwide Employee Relocation Council — so having procedures in place to assess both the cost and benefit to the company and employee are key to measuring the return on investment and ensuring the move’s success.
By following a standardized process, anchored by a philosophy statement that articulates the corporation’s objectives, HR practitioners can successfully build and manage relocation and assignment programs that are consistent with corporate culture, administer components of the policy in a seamless, consistent fashion and truly support business objectives.
Business justification
The first step should be the development of a business justification for the move. Determine the business need and necessity of relocation versus a local hire or promotion. When it is agreed a relocation makes the most sense, it is imperative HR and payroll immediately be included. The benefits and compensation package of the assignment must be fully defined to ensure there are no surprises and avoid employee dissatisfaction, which could escalate into the employee quitting during the relocation or upon arrival at the new location.
Candidate assessment
The failure to conduct a candidate assessment can be a significant contributor to a failed relocation. An employee may have the skill set required for an assignment but not have the ability to adapt and adjust to a new culture or new language. This assessment becomes even more critical if a spouse or family will accompany the employee during the assignment.
An international assignment should also be contingent upon an employee’s ability to obtain appropriate work permits. The employer should be aware of any limitations in the employee’s (or spouse’s) life that could prohibit an employee from working in the host country.
Relocation policy
A standardized relocation policy is the best way to avoid non-compliance issues and costly, precedent-setting exceptions to policy. Additionally, it is common for relocating employees to connect with other expatriates and assignees and discuss the terms of their assignments. To ensure the employer is viewed as fair and equitable, a standard policy and consistent application of the policy are necessary. The employee and spouse, when applicable, should have time to review the policy, and have any questions answered, prior to accepting the relocation.
It is also critical to outline the purpose of the policy. What are the company’s strategic objectives related to domestic and international assignments? Is this a necessary step for advancement in the company? Or is the purpose to transfer knowledge and technical skills? The answers lay the foundation for the components of policy, including compensation, allowances and relocation support.
These responses also help determine the need for tiered policies (which can vary by position, type of relocation or assignment) or regional policies. For example, some companies develop distinct policies for career development relocations or assignments, stressing the importance of the move for an employee’s long-term career path. Therefore, policy components, such as compensation, might be established with a long-term incentive approach.
Compensation
A payback agreement (usually pro-rated over a 12- to 24-month period) is common for domestic moves to provide an employer with some assurance the employee is accepting the assignment to support a business need and recognizes the investment the company is making.
In considering the compensation package, an employer should create a preliminary cost projection and financial worksheet, and partner with the payroll department, international tax provider and relocation service provider to determine the best means of calculating the compensation and taxable benefits. Other items to be determined include: where compensation will be paid from (at the home or host payroll entity); what the appropriate tax treatments are; and how to handle the reimbursement of expenses.
Preview trip
Before final acceptance of the move, a preview trip gives an employee and her family an opportunity to assess the new community. The employee should feel comfortable with the cost of housing and a reputable realtor or destination service provider (DSP) can help provide enough information for an educated decision.
Once the relocation is definite, next steps can include:
Departure property: It is customary for an employer to bear the costs associated with the sale of a property, to reimburse the employee for a portion of the lease cancellation fee or provide financial support for management fees incurred during an assignment.
Destination home: A company’s relocation service provider should be involved with the employee and realtor or DSP to make sure the employee is aware of any benefits the company is providing and to provide advice on contract or lease negotiations. It can also assist with matching the housing allowance to the availability of suitable properties.
Financial assistance: Many employers financially assist relocating employees by reimbursing non-recurring costs associated with the purchase or leasing of a property in the destination location.
Household goods: An employee may require temporary storage until her destination property is available or require long-term storage if going on a longer assignment.
Education consulting: This helps parents ensure schools are screened and previewed so they can make a proper decision about a child’s education.
Language and culture training: Language training allows a family to learn the host location language so they can hold a conversation in social settings and better fit in. Cross-cultural training may be the most critical requirement of an assignment to ensure success.
Spouse and family assistance: A spouse may need assistance in restarting his career or finding a social network in a foreign country. Spousal assistance includes resumé preparation, continuing education, training or maintenance of work qualifications.
Settling-in services: Escorted assistance with local registrations, educational systems and medical facilities, along with the introduction of available leisure activities, will help a family with the transition.
Finally, careful planning and thought should be put into the repatriation of a relocated employee, both at the onset and during the assignment as the attrition rate for valuable expatriates is high.
Scott Sullivan is the executive vice-president of global sales and marketing at Brookfield Global Relocation Services in Woodbridge, Ill. He can be reached at scott.sullivan@ brookfieldgrs.com or (630) 427-2062.
