Relocation Policy

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

The Great Recession reshaped the relocation industry. Firms expanded assignment types and formalized new policies. Greater flexibility became the norm, especially among firms managing high volumes of relocations.

The use of cost containment, incentives, and reimbursement methods expanded in answer to the economic squeeze. Nearly a decade later, most of the changes remain in place as organizations flex to meet new challenges.

Multiple Policy Types & Practices Leveraged, Traditional Assignments Remain Majority

Relocation programs remain quite diverse. Similar to the past few years, the majority of relocation professionals manage policies for domestic (80%) and international relocations (78%), along with policies for permanent international transfers (66%), short-term/temporary assignments (59%), and international localization (57%). Essentially half maintain intra-regional (international) (50%) and extended-business travel policies (49%) as well, and 44% have a policy for long-distance commuter arrangements.

Most firms continue to define levels, or tiers, within policies. The larger the firm, the more likely its overall domestic policy includes levels. Firms using levels manage essentially two or more such policies on average, across company size, for both domestic and international relocations. Levels 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 weighted closely to job/grade level at small. Position/job title, job/grade level and assignment length are more equal in weight at mid-size firms. Internationally, assignment length is weighted closely to job/grade level at small firms. However, job/grade level eclipses all other factors at large firms by a notable margin, both domestically and internationally.

Question 21

Companies with a formal policy for the following relocation types

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Question 22-a1

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

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Question 22-a2

Does your company have different tiers within its short-term/temporary assignments relocation policy...

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Question 22-a3

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

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Question 22-a4

Does your company have different tiers (or levels) within its long-distance commuter policy

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Question 22-a5

Average number of tiers (levels) within following relocation types

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Question 22-b1

What are your different tiers (or levels) based on...

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Question 22-b2

What are your different tiers (or levels) based on...

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Question 46-f

Companies with a formal policy for: International relocation types

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Question 46-g1

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

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Question 46-g2

Does your company have different tiers within its permanent transfers policy?

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Question 46-g3

Does your company have different tiers within its localization policy?

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Question 46-g4

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

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Question 46-g5

Average number of tiers within the following international relocation types

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Question 46-h1

What are your different tiers based on?

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Question 46-h2

What are your different tiers based on?

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CANDIDATE ASSESSMENTS

Over the last five years, the majority of firms have used candidate assessments to support relocations. This year, nearly three fourths of firms assess candidates prior to making offers, on par with most recent years and maintaining a marked increase over the roughly half of firms that did so from 2012 to 2014. Usage is at the highest level recorded for mid-size firms and well above recent years (85% vs. 74%+), is slightly higher among small firms compared to last year (72% vs. 67%) yet below previous highs (78%), and is up at large firms (64% vs. 54% last year) although lower than previous highs (76%).

• Around half of small and mid-size firms perform candidate assessments for all relocations; one in three large firms do so.
• 1 in 3 mid-size firms assess candidates for domestic relocations.

Overall, the most popular method continues to be assessments for all relocations (43%), similar to the past four years and more than double the 21% levels reported from 2012 to 2014. However, its usage among large firms is similar to the past two years (32% vs. 29%). Although below levels reported in 2015-2016 (42%+), it remains roughly double the percentages seen in 2012-2014.

Around half of mid-size firms continue to perform candidate assessments for all relocations, similar to the previous four years and more than twice the historical rate. Among small firms, 43% performed candidate assessments for all relocations, similar to the past four years and far higher than in 2012-2014 when essentially a fourth did.

Question 38-1

Does your organization perform candidate assessments prior to relocation offers

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Question 38-2

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 2019, more than 80% of firms used aspects of fixed/flex policy, a marked increase from around two thirds of firms in 2013 and 2014. After falling in 2018, its usage rebounds among small firms (78% vs. 65%), so the vast majority of all firms now have it in place. 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 are some notable shifts:

• Mid-size firms more heavily favor coverage for specific or “fixed” items for all employees over criteria-dependent coverage (57% vs. 41%) while coverage of “fixed” aspects as universally available or criteria-dependent are about evenly split at small and large firms.
• After decreasing the past two years, a shift occurs back to larger percentages of firms allowing flexible use of the full relocation benefit or a portion (either for all employee levels/categories or dependent on such factors). Flexibility of benefit usage approaches the peaks reported in 2015-2016, indicating an expansion of flexibility and eligibility for core-cost coverage options.

COVERAGE OF CORE COMPONENTS REMAINS THE MOST POPULAR ASPECT OF FIXED/FLEX POLICY.

For a fourth year we dug deeper into what falls into this category. Overall, the top components are travel expenses-final move (54%), temporary housing (53%), and household goods shipping (50%), similar to findings from the previous two years of comparable data. Across cost types, 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 all components. Mid-size and large firms share similar core coverage only for real estate costs-origin/selling; nearly half of them report it as a fixed benefit in their policies.

Question 23-a

Companies whose formal relocation policy incorporates a fixed benefits/flexible benefits, list-driven policy

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Question 23-b1

Aspects of a fixed benefits/flexible benefits, list-driven policy incorporated into relocation policy

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Question 23-b2

Aspects of a fixed benefits/flexible benefits, list-driven policy incorporated into relocation policy

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Question 23-c1

Relocation costs that are considered fixed benefits within relocation policy

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Question 23-c2

Relocation costs that are considered fixed benefits within relocation policy

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INCENTIVES

Employee reluctance to relocate and family considerations continue to place downward pressures on mobility, making incentives for relocation necessary. Over the past five years, most firms across company size have continued to offer additional, non-standard incentives or policy exceptions.

• Relocation/sign-on bonuses jumps clearly to number one among incentives in 2018. Both large and small companies note this, while it essentially tied with cost-of-living adjustments (COLAs) at mid-size firms.
• As housing/mortgage pressures remain less pressing, around only half of firms offered extended temporary housing benefits last year, the lowest level since measurement began. However, it remains among the top three incentives offered over the past five years and was more likely offered by large firms than smaller ones in 2018.

Cost-of-living adjustments (COLAs) remain in the top three for incentives across company size.

Incentives continue to prove highly successful; essentially nine in ten firms report they worked almost always or frequently, similar to historical levels.

• Almost three fourths of large firms used relocation/sign-on bonuses last year; six in ten smaller firms did so.
• Six in ten large firms used extended, temporary-housing benefits last year; less than half of smaller firms did.
• More than half of mid-size and large firms used COLAs in salary; only 41% of small firms did so.
• A telecommuting option (1-2 days a week) was flexed by around a third of firms and at similar levels across company size.

Question 8-a

Companies indicating they offered non-standard additional incentives or exceptions to encourage employee relocation in 2018

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Question 8-b1

Additional non-standard incentives or exceptions offered...

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Question 8-b2

Additional non-standard incentives or exceptions offered...

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Question 8-c

Frequency of incentives or exceptions proving successful...

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COST CONTAINMENT

Even though most firms report continued optimism and improved financial performance, a sense of caution emerges for potential economic headwinds. Firms experienced—and expect further—increases in costs due to tax reform and other challenges. Controlling these impacts remains a chief priority.

The use of cost containment edges up again to near historical highs, elevated for a fifth straight year after declining in 2012 and 2013. Companies continue to employ creative solutions developed in the throes of the Great Recession to optimize financial resources for relocation.

Since first appearing, lump sums have consistently topped the list of cost-containment measures across company size. In 2018 more than half (54%) of large firms used this means to contain costs—nearly twice as often as most other options and nearly twice as often as lump sums were used by smaller firms. This is the highest percentage of large firms ever to leverage lump sums for cost containment since measurement began in 2016.

• Roughly a third of firms capped relocation benefits to contain costs in 2018, similar across company sizes.
• Mid-size and large firms were more likely to have restructured policy tiers/eligibility for benefits last year compared to small firms (25% & 32% vs. 15%).

Question 25-1

Did your company use any of the following cost containment measures in relocation policy/practice in 2018

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Question 25-2

Did your company use any of the following cost containment measures in relocation policy/practice in 2018

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ALTERNATIVE ASSIGNMENTS

Over the last five years, most firms have come to rely on arrangements other than traditional relocations. This year slightly fewer than two thirds of firms will use alternative assignments (64%), similar to the past four years (61%-67%) and far more often than during 2012-2014. However, the percentage of large firms using such arrangements falls from the highest level measured (78%) last year to 68%, but it remains similar to 2015-2017 (72%-74%) and slightly above 2012-2014 (60%-66%). Usage among mid-size firms remains almost twice that of 2014 (72% vs. 37%) and similar to 2015-2018 (64%-75%). After falling last year, usage among small firms rebounds to more normative levels (53% vs. 40%) within range of 2015-2017 (48%-59%) and far above 2014 (19%).

The methods for incorporating alternative assignments into policy vary widely. Such arrangements were birthed to meet strategic business needs geographically without incurring the costs of traditional relocations.

In the past, the overwhelming policy driver was accomplishing strategic business goals. Most policy reasons now show similar usage levels overall. However, while a fourth or more of firms use nearly every potential policy method, differences emerge by size.

• Nearly half of large firms use alternative assignments to accommodate employee needs (44%), far more often than smaller firms.
• Close to half of mid-size firms use such arrangements to replace long-term assignments (43%), more often than other sized firms.
• Nearly half of mid-size and large firms use these in addition to long-term assignments, more often do than small firms.
• Around one in three mid-size and large firms use these to develop internal talent; small firms do so less often.

Overall, the top factors in determining whether alternative assignments are brought into play are business need (60%) followed by job function (51%), cost (46%), and assignment purpose (45%). However, the weight of these factors varies widely by company size.

• Among large firms, business needs (83%) continues to outweigh other factors by a wide margin, although assignment purpose (55%), cost (45%) and career development (42%) are key secondary considerations.
• At mid-size firms, the top factor is job function (59%) by a small margin. Around half rate almost every other factor as pivotal.
• At small firms, the top two factors are job function (57%) and business need (55%), with cost (44%) a strong third-place contender.

Question 31-1

Is your company utilizing "Alternative Assignments"...

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Question 31-2

Is your company utilizing "Alternative Assignments"...

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Question 31-a1

How are "Alternative Assignment" arrangements incorporated into your organization's overall employee mobility strategy?

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Question 31-a2

How are "Alternative Assignment" arrangements incorporated into your organization's overall employee mobility strategy?

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Question 31-b1

Key factors determining "Alternative Assignment" use

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Question 31-b2

Key factors determining "Alternative Assignment" use

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