Multiple home finding trips. Unlimited duplicate housing. No capped loss-on-sale. Two discount points. Who left the [money] faucet dripping at your company?
Corporations spend a great deal of time, money and thought into creating competitive and effective relocation policies. Two key objectives behind creating a great policy/program include:
- Designing a policy(ies) that will provide competitive benefits and services that help the employee move efficiently, stay focused on their new job, and create as little stress as possible for the family.
- Creating a policy and program that is a reflection of the company’s culture, and manages bottom-line costs without sacrificing benefits for employees while maintaining a competitive edge.
So here is an important question….why are policies shelved and forgotten after so much thought has gone into their development?
Economic conditions are causing corporations to evaluate true ROI, budgets, and finances more so today than in the past decade. CEO’s have felt the effects of watching revenues drop over the past two years; now causing them to make tough decisions on ways to save money (e.g. pay cuts, layoffs, reduced spending). But too often, one area that is overlooked is the hard-dollar costs within a relocation policy. By evaluating, updating, and benchmarking ones relocation policy on an annual basis, companies can keep costs in check, without losing the effectiveness and goals of the overall relocation program. It’s not about cutting benefits, it’s just being smarter about what the current program is costing, understanding what is driving the cost (is it service fees, interest fees, direct costs of services, etc.), and monitoring industry trends and swings that affect how dollars should be spent [or not].
A relocation policy should be a living, breathing instrument that is consistently updated, benchmarked, and compared to business competitors. It should be designed around ones company culture, business objectives, and goals. Without consistent monitoring, a company may not be prepared for the negative financial impact the economy may have on their relocation policy and transferring employee’s life.
With the downturn in the real estate market, a relocation policy that was written over 15 months ago, and has not been modified since; is probably obsolete. An obsolete relocation policy will cause a company to spend tens of thousands of unnecessary dollars for each relocation it authorizes.
Here are a few examples of high-cost drivers within relocation policies and programs that should consistently be monitored against economic shifts:
Program drivers:
- Service contracts with your RMC supplier(s) (e.g. service fees and interest rate charges if using a funded, RMC program)
- Tax assistance methodology
Policy drivers:
- Loss on sale assistance (no caps)
- Duplicate housing (unlimited time limits)
- Guaranteed Buyout vs. BVO assistance vs. Direct Reimbursements
- Mortgage discounts and subsidy programs
What is your relocation policy costing your company? Is it helping control costs? Or, it is a leaky faucet, that’s constantly dripping revenues down the drain?
What relocation components do you feel need to be monitored closely? In our next few blogs, we will be sharing important insights from relocation experts about how they are making changes to their relocation policy(ies) and providing ideas for you to consider with your program. If you have some great ideas to share, please add your comments below…
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