The unfortunate certainties of life are death, taxes and, in the case of corporate mobility managers, the never-ending pressure to reduce costs. I am constantly asked by clients to help them achieve that delicate balance between maintaining benefits levels that keep employees engaged and productive while avoiding cost spiral.
Beyond the policy provisions themselves that account for 98% of all costs, clients should examine the processes they use to administer mobility. Every program I review is ripe with opportunities to improve their operational efficiencies. This can be difficult for mobility managers comfortable and familiar with their current processes to acknowledge or see, but often our “outside” perspective can shed light on improvements.
What follows are a number of time tested ideas that might lead to efficiencies and/or cost savings for you: Continue Reading →
Our 2014 Workforce Mobility Survey polled approximately 200 North American companies on the ways they deploy key talent.
In an effort to shed light how trends cascade across specific industries, we have created a series of infographics showcasing key findings filtered by sector. We believe this data provides good insight to how different industries use workforce mobility to achieve their business goals.
Our latest infographic focuses on an industry that has long used relocation to help land and develop the most highly-prized talent: the energy/gas/oil sector.
Give this infographic a look (you can click it to enlarge). As always, for more information and further breakdown, feel free to contact us.
Companies intent on post-recession growth need a mobile workforce agile enough to respond quickly to new opportunities and fill talent gaps across their organizations, according to the results of our latest survey.
Now in its eighth year, the Workforce Mobility Survey has become the definitive guide to emerging relocation trends and best practices. This year’s results reflect the input of approximately 220 corporate relocation managers and HR professionals at North American companies across all major industries.
The majority of survey participants acknowledge that workforce mobility remains critical to achieving business and talent development goals, with one-third expecting their mobility volume to increase over the next twelve months. Mobility is even more important among high growth companies, which, the study showed, not only relocate more employees (an average of 432 annual moves versus 280 for other companies) but are also more effective at leveraging mobility as a strategic tool to recruit, develop and retain key talent.
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If you spent a couple thousand on a new flatscreen TV and it short-circuited right out of the box, you’d want your money back. Same goes for your relocation program. With the cost to move an home-owning employee forever rising — $90,081 according to Worldwide ERC’s latest survey — companies are more eager than ever to see return on their relocation investment. In many cases, this means toughening up their payback agreements.
Payback agreements are “contracts” between an employer and employee that require an employee to refurbish the cost of their relocation if they decide to leave the company that moved them within a specified time period.
No company wants to be left empty-handed if the high-priced and highly prized talent they paid to relocate skips off for a competitor. Payback agreements deter this; they allow companies to recoup some or all of their original investment if the employee leaves prematurely. With the cost of relocation continuing to escalate, payback agreements (or “clawback” agreements, the far more menacing-sounding term to which they are sometimes referred) have become a critical component of any comprehensive talent management strategy.
They also make sense for employees because they communicate to the transferee population (particularly high-level moves that incur steep relocation costs) that the company expects long-term retention and mutual commitment. In a job market filled with uncertainty, this is a good thing.
According to the results of our 2011 Mobility and the Current Real Estate Market Survey, 82% of companies require current and new hire transferees to sign payback agreements. The amount of time covered by payback agreements has been increasing, too; 45 percent cover one year but 42% cover two years and 3% cover three.
But are payback agreements effective? And are they truly enforceable? It’s a question I tackled in an article in the most recent issue of Mobility, talking to some of our clients and other industry experts. Here’s an excerpt:
“With respect to legal ramifications, payback agreements, in general, are enforceable in all states based on the contract law of the state,” explained Peter Scott, tax counsel to Worldwide ERC®. “That said, they must be sufficiently specific about what the terms are and the amounts that are subject to repayment, be signed by both parties—including the spouse, if the transferee is married—and not be so onerous as to constitute a one-side ‘contract of adhesion.’ In some states, there are also issues as to whether the payback can legally be collected by withholding from a final paycheck or other distribution.”
For international assignments, enforcing payback agreements can be decidedly more complicated, according to Richard Mansfield, general counsel to Worldwide ERC®.
“In my experience, there are some payback agreements used for international moves, especially regarding lump-sum payments,” he said. “However, they are not as common as they are in U.S. relocations. They are generally considered a contract between the employer and the employee and are enforceable. However, the issue of withholding from a final wage payment is more complicated. For example, in EU countries, it may be against local law, requiring advance consultation with legal experts to be certain that withholding is permissible.In most EU countries, it cannot be done. That’s why most companies that I am aware of do not withhold, but rather make demands of payment from the offending employee.”
In any case, both Scott and Mansfield recommend that companies consult with their internal counsel or legal partners before developing or acting on a payback agreement.
Check the complete article here.
Worldwide ERC estimates the average cost of relocating a current employee homeowner to be approximately $90,081. So what are you doing to protect that investment? In the inuagural episode of “Ask the Relocation Expert,” WRRI’s Manager of Consulting Services discusses pre-decision services and payback agreements–two tools that today’s HR and corporate relocation managers can use to preserve mobility ROI.
With rising costs and decreasing budgets, protecting a company’s investments is more important than ever. One of the most obvious ways that companies can ensure that their mobile employees have a stake in the organization’s future is to require that they sign a repayment agreement before any relocation costs are paid to them, or on their behalf.
Whenever I’m asked to review a policy to see where the company’s program stacks up against their industry peers, I go directly to the repayment agreement. Payback agreements can often be an indication of how the company’s program reflects the culture–or at least it should be. Many policies are increasing the repayment terms from one to two years, a sign that the company views the relocation as a financial investment in the employee’s – and the company’s – future.
How do you determine the right timeframe for your company’s payback agreement? This can be a challenge without any method to measure the success of relocations. At the very least, keep track of the rate that employees stay with the company one to two years after the move. Beyond that, I’d like to hear your thoughts on repayment agreements. Does your company enforce them? Do you use the same one for new hires and current employees? Have you changed your agreement recently? Did it help?
Leave a comment below or e-mail me at email@example.com, and we’ll revisit this topic next month.