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Sharpen Your Policy, Reduce Your Relocation Costs 11.13.2018 | Jennifer Connell

Sharpen Your Policy, Reduce Your Relocation Costs

When you consider the factors that influence your company’s workforce mobility spend, there are the “usual suspects” that come to mind.

These include service fees; the real estate market; your supply chain; employee home values; tax, payroll and visa regulations; the types of assignments you send employees on; and inability to fill critical open positions, to name a few.

Yet the true driver of mobility spend is your company’s policy, which can dictate as much as 98% of the costs you incur.

A strong policy is the bedrock of any successful workforce mobility program, impacting not just spend, but your ability to remain competitive, attract the best talent, and keep them agile and productive.

We have seen that companies who understand how their policy is administered and the way in which it is have a greater influence on their direct and indirect costs. This is a critical part of your mobility program, which will radiate your success and help you achieve critical balance between keeping your mobile talent engaged and retraining your overall spend.

Most companies only move their “A” players and their relocation benefits are a highly visible, material expense. The average domestic relocation cost can easily accumulate upward of $80,000 (for a current homeowner employee).

These direct costs are driven by your policy, how your policy is administered and what services support your program. Your indirect costs can hit the bottom line through excessive noise, costly overhead to administer the program, lost productivity, attrition and replacement costs. Typically, service fees constitute less than 3% of total spend.

You want to ask your mobility team, what are the biggest line items within your policy?

Home selling expenses are one of the most material cost components – and that’s why program demographics; location and employee home values have such a significant impact on costs.

Costs are a function of policy and here are some questions to ask your team:

  • Do you offer Loss on Sale assistance of not?
  • Do you choose to gross-up non-deductible relocation line items, impacting transferees liability?

Taking advantage of tax deductible expenses and leveraging home sale programs that comply with tax avoidance strategies can minimize the tax bite.

So you might be asking, what is an obvious solution to reduce your spend on your workforce mobility?

Reduce benefits.

However, you do not want to jeopardize your ability to move the best people for the job. Reluctance to relocate, whether because of the high cost of living or the reservations of a spouse/partner is a challenge for Talent Management.

Just be careful to not reduce your benefits too much or your workforce mobility will come to a screeching halt.

So then how can you reduce your costs when most of them are “passed on” to your company by the relocation service provider responsible for managing the supply chain? Costs such as brokers, appraisers, inspection companies, van lines and more. By having an effective program and supply chain management can yield savings through volume discounts. With an integrated triad of system, service and procedures is key.

Clearly, the perfect balance involves aggressively supply chain management, a competitive policy and relentless attention to the details like accurate tax gross-up and monitoring expectations.

To learn more great ideas for cutting costs, request our Whitepaper, Reducing Your Spend on Workforce Mobility.

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Written by Jennifer Connell

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Jennifer Connell, SCRP, SGMS-T, is North American Practice Leader with Weichert’s Consulting Services group. She has over 23 years of experience in the workforce mobility and employee benefits industries and received Worldwide ERC’s Meritorious Service Award in 2010. She has also spoken on workforce mobility topics at industry conferences throughout North America.

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