Managing the mobile employee has become exponentially more complex recently due to shifting demographics, increased globalization and tighter competition for talent across all industries. Our research indicates a recent phenomenon: companies pursuing greater agility and flexibility to accommodate rapidly-changing business goals and seize opportunities.
An “optimized” workforce mobility program equips HR and hiring managers with the flexibility they need to accelerate decision-making, meet the needs of businesses and provide opportunities that sync their mobile employees’ personal and professional desires.
When developing a menu of flexible benefits, consider provisions that will support your recruitment and talent development objectives.
Relocation benefits have evolved by the increasing negotiations and excessive expectations required to meet the needs of the more diverse workforce and budget constraints. Companies initially responded to their employee’s needs by tiering benefits through employment classification (i.e., new hires/ middle managers, senior executives). We found that, 41% of companies support flexibility through multiple tiers; 69% of companies have three or more tiers.
Tiered benefits have become too costly because they are providing the full set of benefits, implying that the employee is entitle to all benefits, including the ones that go unused. For the unused benefits, employees may feel entitled and seek a cash equivalent or other benefits.
A common problem we discovered through tiered programs is that companies are addressing employee’s demographics instead of their unique situation. Companies are seeing a rise for requests for policy exceptions and this is causing mobility managers more time to examine a more efficient way to provide benefits.
The challenge is ensuring the employees are being offered the “right” set of benefits for both the needs of the individual and the business. Through our survey, we have seen that many companies have hit a sweet spot by embracing a more flexible approach to their relocation benefits.
Additional factors play a role in the success of a program, and while a lump sum can be efficient, it doesn’t always meet the needs of the employee and business. Lump sums are the most common approach used by organizations to support flexible mobility arrangements, as reported by 71% of companies in our Mobility Survey. Employees left to their own devices to manage mobility funds, may utilize them poorly and look to their company to cover the costs that should be covered by allowance.
Prioritize your organization’s needs for a flexible approach. Benefit structure will differ depending on whether the intent is to support more diverse employee demographics or cost containment.
Capped (or “budgeted”) programs are another approach for cost containment. According to our Annual Mobility Survey, 86% of companies will “cap” or place a hard limit only on certain benefits. In our experience, overall caps have been set aside for new hires and entry level programs.
Capping mobility benefits will impact the overall program costs, if the amount is too low, however the program will not meet the needs of the employee. They will have to stretch their budgets over only a few benefits and feel like they are not being given sufficient assistance. This can bring negative feelings, a bad move experience, loss of productivity and in the worst case loss of investment if the employee leaves the organization.
Our Mobility Survey Found:
- 39% Cap only provisions, not costs (example 30 days of temporary living)
- 37% Caps/Maximum on certain line item benefits (example loss-on-sale, home sale incentives)
- 7% Total cost caps by policy tier
- 5% Only certain tiers have cost caps
- 12% No cap on expenses or provisions
There are a number of components that can significantly impact the cap, when evaluating at a capped approach it’s important to consider these factors: list all of the benefits that are intended to be included in the capped amount, calculate the cap based on a realistic cost estimate, homesale types impact costs and should be excluded from the cap, consider tax gross-up treatment, cap only provisions for more equitable treatment and evaluate different levels/tiers of as well as homeowners/renters and current employees/new hires.
Companies concerned with consistency of benefits need to accept these programs may not match their culture. Centralizing program administration and allowing global mobility to recommend flex options ensures a more consistent way of making decisions with a flexible framework.
Used correctly, flexible mobility programs can be useful in controlling costs and responding to different business needs, provided there is a consistent and defensible way to administer benefits.