WRRI was a proud sponsor of the Charlotte Metro Area Relocation Council meeting, held Thursday, November 15. We also had the opportunity to share our subject matter expertise, as our VP of Consulting, Ellie Sullivan, was a featured panelist at the event, leading a discussion on building a workforce mobility policy that reflects corporate culture. After the meeting, Ellie offered us some quick observations and advice gleaned from the mobility professionals in attendance.
1) Companies need to protect their lump-summers and renters! Many of the qualified brokers and destination service providers in attendance noted that fraudulent rentals are becoming more abundant on the Internet. Not only does this expose transferees to scams, it can also lead to service issues and dissatisfaction when the rentals they thought were available turn out to be non-legitimate. Their advice: prepare your renters, provide counseling and, yes, provide a guided (paid) rental search as part of policy. As rental markets shrink, renters need to be prepared to act quickly with deposit and references in hand!
Our recent Mobility and the Current Real Estate Market survey indicates that 82% of companies require employees and new hires to sign a payback agreement.
When it comes to short term domestic assignments, however, companies think differently. According to our recent short term assignment survey, only 31% of respondents require employees on short term assignments to sign an agreement.
Some possible reasons for this are that companies are still wrapping their arms around this type of relocation, and they may have concerns that a repayment agreement would discourage the employee from accepting the assignment
But it’s important to keep in mind that the costs associated with an assignment can be significant. As companies explore alternative programs to traditional relocation, payback agreements just make sense, particularly if the assignment is extended or if the employee is asked to go on a series of assignments (commonly seen in rotational programs).
Want more short term assignment trends? Attend our free ERC webinar on the topic on July 19. You can register here.
NJBiz ran a piece this week on the results of our 2011 Mobility and the Current Real Estate Market Survey, and interviewed Jennifer Connell, our Manager of Consulting, for more details. He’s a snippet of the piece; you can read the rest here.
Weichert Relocation Resources Inc. on Tuesday released its 2011 “Mobility and the Current Real Estate Market” survey, with results based on responses from 200 U.S.-based relocation and human resources professionals.
“The biggest takeaway from our survey this year was a remarkable slowdown in the number of changes that companies are making to their policies,” said Jennifer Connell, manager of consulting services at Weichert Relocation.
The survey found 61 percent of companies made changes to their relocation policies in 2011, down from 90 percent in 2010 and 92 percent in 2009.
That’s good news, Connell said, because changes in relocation policies often mean companies are buckling down and reluctant to move employees. The slowdown in changes suggests that companies are now looking to reinforce their growth, she said.
Those companies making changes to their policies are adapting to the real estate market by being more flexible in some areas, while also enforcing restrictions and payback clauses at higher rates, the survey found.
For instance, 88 percent of survey respondents said they now enforce a minimum marketing period before employees can accept a guaranteed offer, up from 75 percent last year. Guaranteed offer programs mean that the new employer promises to buy the new hire’s old home for a set price if the new hire can’t sell the home within a set period of time.
In addition, the survey found 82 percent of companies now enforce payback agreements that require employees to reimburse moving costs if they leave the company within a specific time frame after being relocated.
“Companies are very cost-conscious these days,” Connell said.
She said the time new employees are required to stay with the company under the payback agreements is also increasing.
“It used to be common to see 12 months — if you leave the company within 12 months, you have to pay back the costs,” she said. “We’re seeing that extended to 24 months in many cases.”
Considering the amount of time that companies invest in identifying the right mix of relocation benefits to attract the most desired candidates and the additional sweat equity being poured into such selection and assessment strategies as pre-decision programs — not to mention the actual cost of a move — it’s not surprising to see the widespread use of payback agreements.
Essentially, payback agreements allow employers and employees to share responsibility for the success of a relocation by requiring the employee to agree to repay all or a portion of the cost of the move is he or she leaves the company within a specific window of time after being relocated.
The results of our 2011 Mobility and the Current Real Estate Market survey show that 82% of companies require both current employees and new hires to sign a payback agreement, with roughly one half using a 12 month repayment window and the other half using 24 months (45% and 43%, respectively). About half of companies enforce the agreement by recovering all relocation costs, while a smaller number will recover partial costs only. An additional 32% evaluate costs on a case-by-case basis.
To get some additional, first-hand info on how payback agreements are being used, we recently held a roundtable session on the topic with some of our clients, representing the energy, consumer products, entertainment, retail, manufacturing, and food/beverage industries. Among our findings from this session:
– The majority of participants have payback agreements of two years. Repayment is typically at 100% for year one and at 50% or pro-rated in year two.
– One participant noted that in cases where the timeframe of the relocation is extended, the employee is required to sign a new agreement.
– The primary intent behind payback agreements, the majority of participants agreed, is not to recoup the costs of the move but to communicate to the transferee population (particularly high-level moves that incur steep relocation costs) that the company expects long-term retention. The message here is, “we’re making an investment in you, and we want to know that you’re committed to us.”