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How to Reduce Mobility Spend: Focus on Domestic Direct Costs 04.16.2020 | Jennifer Connell

With questions and concerns swirling around the strength of the global financial markets as a result of the COVID-19 epidemic, cost containment is likely top of mind for mobility professionals, at least for the remainder of 2020 if not well into 2021.

Did you know that the most significant component of mobility spend is your company’s policy?

While many organizations cite cost containment as a key driver in their overall program objectives, policy review is often overlooked as an effective technique to reduce or contain costs.
A strong policy is the foundation of a successful workforce mobility program, impacting not just spend, but your organization’s ability to remain competitive, attract the best talent, and keep your employees productive.

However, mobility policy components can dictate as much as 98% of the costs you incur in a relocation. When organizations are looking to contain costs, a detailed policy review, is the best place to start.

For domestic programs, without a doubt the most expensive policy components are related to home sale/purchase. In addition to the obvious element of the type of home sale program offered to employees, organizations can also look at their supporting benefits such as: Loss-on-Sale Assistance/Equity Loss, Federal Tax Liability, Bonus/Incentives for Employee Generated Home Sale, and Purchase Closing Costs.

Taking advantage of tax-deductible expenses and leveraging home sale programs that comply with tax avoidance strategies can minimize the costs associated with this benefit. (See our Home Selling Assistance whitepaper for more information).

It might seem like the simplest and easiest solution is to reduce benefits.

Unfortunately, this is a great example of how the most obvious answer isn’t always the best one. Reduced benefits can result in a reluctance to relocate, whether because of the high cost of living or the reservations of a spouse/partner or because people are still nervous after a global pandemic.

In addition, it’s vital that you continue to have a macro-view of your program. When considering changes to your program, keep these in mind:

  • Additional factors such as program demographics (renters vs. homeowners), location, and employee home values can have a significant impact on costs.
  • Changes to your program should support the organization’s long-term strategies that need to be aligned with talent mobility, which may include mergers, divestitures, or skill transfer in certain locations.
  • In the end, the program should reflect the company’s culture and employee brand
  • Include other stakeholders (in talent acquisition, HR, or business partners) about proposed changes to your program. There’s little sense in making changes now if they conflict with the needs of your internal customers. Their support will also help you to communicate changes to the program.
As you focus on the remainder of your 2020 spend, look to balance a competitive policy – with benefits that are neither too rigid, nor overly generous – with a holistic view of your program. Developing a viable policy and then paying close attention to the details (such as accurate tax gross-up and exception requests), will help you, your mobility program, and your organization effectively navigate the months ahead.

For more information about reducing your spend on workforce mobility, download our whitepaper.

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Written by Jennifer Connell

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Jennifer Connell, SCRP, SGMS-T, is Vice President of Weichert’s Advisory Services group. She has over 25 years of experience in the workforce mobility and employee benefits industries and is a recipient of Worldwide ERC’s Distinguished Service Award. She has spoken on workforce mobility topics at industry conferences throughout North America and written for mobility- and HR-themed blogs and magazines worldwide.

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