Relocation Policy & Practice

The Juggling Act Continues - Flexibility in Form, Incentivizing Relocation, and Cost Containment

The industry was reshaped during the Great Recession through the redefinition of relocation assignments and reimbursement methods. Types of assignments expanded, new policies were formalized, and greater flexibility became standard, especially among firms managing high volumes of employee mobility. Cost-containment efforts, incentives, and reimbursement methods all broadened to meet challenges presented by an economic squeeze. Nearly a decade later, many changes remain in place even as different challenges emerge.

Multiple Policy Types & Practices Leveraged, Traditional Assignments Remain Majority

Corporate professionals continue to see more diverse relocation programs under their purview. Similar to the past few years, the majority manage formal policies for domestic (79%) and international relocations (77%), along with policies for permanent international transfers (62%), short-term/temporary assignments (53%), and international localization (57%). Roughly half maintain international intra-regional (50%) and extended-business travel policies (46%) as well, and 34% have a policy for long-distance commuter arrangements.

Mid-size and large firms remain more likely to maintain formal domestic and international policies overall. In recent years, mid-size and large firms were more likely to have specialized-arrangement policies outside general domestic and international policies. Last year saw differences emerge: firms across size that relocated internationally were similarly likely to use policies for permanent transfers, localization, and intra-regional assignments. Domestically, unexpected differences appeared across firm size. However, this year sees a return to the trend of mid-size and large firms keeping specialized arrangements in place, with a tapering of such activity at small firms (likely a function of decreased relocation activity among small firms overall).

Besides the management of a variety of policies, most firms continue to define levels, or tiers, within policies. The larger the firm, the more likely its overall domestic relocation policy includes multiple levels. Firms using tiers manage essentially two or more such policies on average, across company size, for both domestic and international policies. These are based on a variety of factors; however, the top two domestically, across firm size, are job/grade level and position/job title. Internationally, assignment length is nearly equal in consideration to these two factors at small and mid-size firms. Job/grade level, position/job title, and assignment length carry more equal weight in determining policy tiers at small and mid-size firms. However, job/grade level eclipses all other factors at large firms by a notable margin.

Question 20-1

Companies with a formal relocation policy: for domestic relocations

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Question 20-2

Companies with a formal relocation policy: for short-term/ temporary assignments

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Question 20-3

Companies with a formal relocation policy: extended business travel

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Question 20-4

Companies with a formal relocation policy: long-distance commuter

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Question 21a-1-1

Does your company have different tiers within its domestic relocation policy...

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Question 21a-1-2

Average number of tiers (levels) within domestic relocation policy

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Question 21a-2-1

Does your company have different tiers within its temporary assignments relocation policy...

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Question 21a-2-2

Average number of tiers (levels) within temporary assignments relocation policy

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Question 21a-3-1

Does your company have different tiers within its extended business travel policy...

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Question 21a-3-2

Average number of tiers (levels) within temporary extended business travel policy

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Question 21a-4-1

Does your company have different tiers within its long-distance commuter policy...

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Question 21a-4-2

Average number of tiers (levels) within long-distance commuter policy

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Question 21b-1

What are your different tiers based on...

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Question 21b-2

What are your different tiers based on...

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Question 46f-1

Companies with a formal policy for: International relocations

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Question 46f-2

Companies with a formal policy for: Permanent transfers

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Question 46f-3

Companies with a formal policy for: localization

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Question 46f-4

Companies with a formal policy for: intra-regional assignments

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Question 46g-1-1

Does your company have different tiers within its international relo policy?

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Question 46g-1-2

Average number of tiers within international relo policy

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Question 46g-2-1

Does your company have different tiers within its permanent transfers policy

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Question 46g-2-2

Does your company have different tiers within its permanent transfers policy

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Question 46g-3-1

Does your company have different tiers within its localization policy

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Question 46g-3-2

Does your company have different tiers within its localization policy

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Question 46g-4-1

Does your company have different tiers within its intra-regional assignments policy

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Question 46g-4-2

Does your company have different tiers within its intra-regional assignments policy

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Question 46h-1

What are your different tiers based on?

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Question 46h-2

What are your different tiers based on?

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Candidate Assessments

Over the last few years, many firms have used candidate assessments to support successful relocations. This year, nearly two-thirds of firms assess candidates prior to relocation, down slightly from around three-fourths over the past three years, but maintaining a marked increase over the roughly half of firms that performed vetting from 2012 to 2014. Interestingly, usage held steady at mid-size firms (74%) compared to recent years (74%-84%), dipped only slightly among small firms (67% vs. 73%-78%), but saw a notable decline at large firms (54% vs. 68%-76%), closer to 2012-2014 levels.

Overall, the most popular method continues to be assessments for all relocations (38%), similar to last year (40%) but down slightly from 2015-2016 (46%+). Yet it remains close to double the 21% levels reported from 2012 to 2014. The marked decrease among large firms universally, compared to 2015-2016, remains an entrenched trend over the last two years (29% & 29% vs. 42% & 44%), although still roughly double the usage levels of 2012-2014 for such firms. Around half of mid-size firms continue to perform candidate assessments for all relocations, similar to the past three years and more than twice the historical rate. Among small firms, 39% performed candidate assessments for all relocations. While still far higher than in 2012-2014 when essentially a fourth performed them, it trends below the nearly half of small firms that did so during the three years prior.

Question 37-1

Does your organization perform candidate assessments prior to relocation offers

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Question 37-2

Does your organization perform candidate assessments prior to relocation offers

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Fixed Benefits/Flex Benefits List-Driven Policy

The incorporation of fixed/flex elements into policy remains nearly universal. From 2015 to 2018, more than 80% of firms used aspects of fixed/flex policy, a marked increase from around two-thirds of firms doing so in 2013 and 2014. However, the reduced activity in relocation by small firms over the past year has had an impact. From 2015-2017, fixed/flex policy was used at similar levels across company size; in 2018, it is much more likely at mid-size and large firms than at small ones, similar to previous historical norms.

Coverage for core components remains the most popular aspect across firms of all sizes (either across all employee levels/categories or depending on employee level/category). However, there is a shift away from coverage for all employee levels/categories to criteria-dependent coverage. Large firms more heavily favor criteria-dependent coverage for specific or “fixed” items over coverage for all employees (53% vs. 39%) while penchants for “fixed” aspects as universally available or criteria-dependent are essentially evenly split at mid-size and small firms. Also, fewer firms appear to allow flexible use of the full relocation benefit or a portion of it (either for all employee levels/categories or dependent on such factors). Flexibility of benefit usage has returned to levels close to 2013 and 2014 from the peaks of 2015, indicating a tempering in flexibility and a slight tightening in eligibility for core-cost coverage.

The coverage of core components remains the most popular aspect of fixed/flex policy, and for the third year we dug deeper into which costs fell into this category. Overall, the top components remain travel expenses-final move (52%), household goods shipping (51%), and temporary housing (50%). Across cost types, mid-size and large firms are more likely than small firms to consider a cost as a core benefit, with close to half or more of firms doing so for most components. Compared to last year, this is a shift among mid-size firms, with upticks for most components that are considered core, especially storage (46% vs. 37%). However, as core-cost coverage expands among mid-size firms, large firms pull back a bit, especially with real estate destination costs (36% vs. 51%), home-finding trips (48% vs. 60%), and storage (45% vs. 57%).

Question 22a

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Question 22b-1

Aspects of fixed benefits/flex policy incorporated into relocation policy

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Question 22b-2

Aspects of fixed benefits/flex policy incorporated into relocation policy

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Question 22c-1

Relocation costs considered fixed benefits within relocation policy

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Question 22c-2

Relocation costs considered fixed benefits within relocation policy

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Incentives

Employee reluctance and talent needs continue to challenge organizations, so policy tools are still necessary to encourage acceptance of relocations. Over the past four years, the vast majority of firms across company size have offered additional, non-standard incentives or policy exceptions. The impact of housing/mortgage pressures continues to lessen as seen in the percentages of firms offering extended temporary housing benefits in 2014-2017 compared to 2013 (56%-61% vs. 72%). However, it remains one of the top three incentives over the last four years. Relocation bonuses and cost-of-living adjustments (COLAs) continue to round out the top three across company size.

While around half of firms across size offered relocation bonuses, and half or more offered extended temporary housing benefits, COLAs in salary were more often used as incentives by mid-size (46%) and large (56%) firms than by small firms (37%). Large firms were more likely than small or mid-size firms to offer loss-on-sale protection (27% vs. 9% and 12%), guaranteed buyout options (29% vs. 13% and 12%), or buyer value options for origin homes (29% vs. 7% and 13%), similar to 2014-2016.
Mid-size and small firms continue to be more likely to offer a guarantee of employment contract (35% and 23% vs. 12%) similar to 2016 (31% and 29% vs. 19%). However, large firms were the most likely to sweeten offers by curtailing commuting costs through offering telecommuting 1-2 days/week compared to mid-size and small firms (35% vs. 23% & 21%).

Incentives continue to be highly successful: essentially nine out of ten firms report incentives worked almost always or frequently, similar to historical levels.

Question 10a

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Question 10b-1

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Question 10b-2

Additional incentives offered by companies to encourage employee relocations in 2017

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Question 10c

Frequency of incentives proving successful in convincing an employee to relocate

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Cost Containment

Even though most firms report continued optimism and improved financial performance and have done so for a number of years, cost-containment use remains near historical highs. Even as firms expect increases in relocation costs, controlling the impact remains a priority. So it is not surprising that cost containment runs high for a fourth straight year after declining in 2012 and 2013. Companies continue to flex creative solutions developed in response to the Great Recession to optimize financial resources for relocation while dealing with such challenges as rising interest rates and tax reform.

The use of cost-containment methods at large firms remains similar to levels recorded during the Great Recession and first three years of recovery (83% vs. 78%-84%) and 2016 (87%). Usage by mid-size firms remains elevated (82%) after rising significantly in 2016 (86% vs. 74% in 2015), similar to 2014 (84%) and well above historical levels. However, a dramatic drop in usage among small firms (67% vs. 80%) sees the return of this option to a level similar to 2014-2015 (70%-71%), although higher than previous years. Given last year’s overall pullback in relocation activity among small firms this is perhaps unsurprising.

Generally, lump-sum payments and capped relocation-benefit amounts were the most popular cost-containment methods across company size, although large firms were essentially just as likely to review/renegotiate supplier contracts, limit miscellaneous expense allowances, or even offer short-term/extended travel/commuter arrangements rather than relocation. The survey’s modification last year to include lump-sum payments as a means for cost containment revealed their importance; roughly a third of firms report they use lump-sums for this purpose.

Interestingly, compared to last year, far fewer large firms offered pre-decision counseling (18% vs. 28%), and far fewer mid-size firms limited miscellaneous allowances (18% vs. 31%). Fewer small firms used lump-sums (28% vs. 39%), offered alternative arrangements rather than relocation (6% vs. 20%), or acted to review/renegotiate supplier contracts (10% vs. 20%).
Mid-size and large firms use cost-containment more often than do small firms, although large firms appear to be the heaviest users of a larger variety of initiatives to accomplish their aims. Large firms are roughly three times as likely as small firms to use two-thirds of the options listed, while mid-size firms are roughly twice as likely to do so.

Question 24-1

Cost containment measures that could have been used in relocation policy/practice in 2017

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Question 24-2

Cost containment measures in relocation policy/practice used in 2017

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Alternative Assignments

Over the last four years, the majority of firms have come to rely on arrangements other than traditional relocations. This year, slightly less than two-thirds of firms use alternative assignments (61%), similar to the past three years (64%-67%) and far more often than during the previous three years. The percentage of large firms using such arrangements is at the highest level measured (78%), on par with 2015-2017 (72%-74%) after progressively increasing from 2012 through 2014 (60%, 62%, and 66%). Usage among mid-size firms remains almost twice that of 2014 (64% vs. 37%) and similar to 2015-2017 (68%-75%). However, like other aspects, usage among small firms tumbles compared to last year’s historical high (40% vs. 59%). This follows progressive increases from 2015-2017 (48%, 54% & 59%); however, it remains essentially double that reported in 2014 (19%).

The methods for incorporating alternative assignments into mobility policy vary widely. These unique arrangements were birthed to meet strategic business needs for staff to move geographically without incurring the costs of traditional relocations. In the past, the overwhelming policy driver was accomplishing strategic business goals. Most methods now show similar usage levels overall. However, while nearly every potential policy method is used by roughly a fourth or more of firms, differences emerge by company size.

Large firms remain more likely than mid-size and small firms to use these assignments for strategic business goals (47% vs. 24% & 31%) and this year are more likely to use them to maximize budget/corporate resources (35% vs. 23% & 19%) or in addition to traditional short-term assignments (27% vs. 14%).
Usage levels across organization size are more similar for use in place of long-term assignments (31%-38%), in place of short-term assignments (23%-30%), and for the development of internal talent (24%-30%).
Mid-size and large firms are more likely than small firms to use them in addition to long-term assignments (34% & 43% vs. 19%).

Overall, the top factors used to determine whether alternative assignment options are brought into play are: business need (61%) followed by assignment purpose (41%), cost (39%), and job function (38%). The substantial drop in weight of assignment purpose, cost, and job function compared to previous highs, and even last year, is worth noting. While other factors are often considered, business need has the biggest impact, hands down.

The weight of these factors varies widely by company size. Among large firms, business need (76%) continues to outweigh other factors by a wide margin, although cost (44%) and assignment purpose (42%) remain second-place considerations. At mid-size firms, the top two factors, business need and assignment purpose, are more equal in weight (44% & 46%). At small firms, job function carries more weight than at mid-size and large firms (48% vs 37% & 35%), is second to business need (60%), and is followed by cost (43%).

Question 30-1

Is your company utilizing "Alternative Assignments"...