The new reality for today’s employees who are asked to move and offered scaled-down relocation packages, is that the relocation package may barely scratch the surface of the full cost of the move. This presents a tremendous dilemma. The employee may swiftly accept the transfer to keep the job or he/she may want to relocate to the new location. However, once the economy improves, employees who had scaled-down, company-initiated relocations, may leave a company.

Companies should recognize that there are a number of overlooked effects to consider, including:

1. If the transferring employee has relocated with the company before, he/she is likely familiar with (or may expect) a standard relocation package which was offered on a prior move. This may lead to a lower acceptance rate, disgruntled employees, or both.
2. An employee with a family who owns a home may not be able to afford the move on a limited relocation package. The cost of moving household goods or selling a home may exceed the company-offered relocation package.

What is the alternative? Stay in touch with the new reality and be more innovative!

For example, employees may not be able to sell their home with current market pricing so packages can offer other services such as property management instead.

Another good idea is to focus on the move’s bare-essentials (IRS non-taxable items) such as the movement of household goods and final move expenses. These components maximize the net benefit to the employee and will save both on tax gross-up or withholding costs, which are due on other, taxable benefits.

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For our Spanish-speaking audience, check out this article from Spain’s Actualidad Económica featuring Soledad Aguirre, Managing Director of Paragon Relocation Spain. This article is titled “Expatriados Sin Brújula” or “Expatriates without a Compass”:

http://www.actualidad-economica.com/2009/10/29/expatriado.html

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HR and relocation professionals are finding ways to cut costs and tweak their offerings for potential transferees in order to ride out the recession.

By Jared Shelly

It’s no secret that The Great Recession has forced companies to make some serious cuts. From scaling back hiring to freezing salaries, it seems almost every facet of business has slowed — including relocations.

In a study of 180 senior HR leaders, Brookfield Global Relocation Services found 68 percent predicted an increase in relocation assignment activity for 2008, but only 37 percent actually reported an increase at the end of the year.

That’s a 30 percent drop from 2007, when 67 percent reported an increase in assignments.

And the numbers for 2009 don’t bode much better. A study by Atlas Van Lines found that more than half (52 percent) of 320 respondents predicted they will decrease the number of employees they move by the end of 2009. That represents the highest percentage of firms to predict a decrease since 1975, when 38 percent did so.

“Those numbers, compared to what we’ve seen in recent years, have been extremely, extremely [high], which is a concern for everybody,” says Ryan McConnell, senior director of sales development for Atlas Van Lines in Evansville, Ind.

The slowing of relocation is mostly a product of companies looking to make cuts in all areas of their budgets, says McConnell, and “one easy budget target” has always been relocation. In the Atlas study, almost six in 10 (58 percent) companies reduced relocation expenses in 2008.

Joe Benevides, former chairman of Worldwide ERC, an Arlington, Va.-based association for workforce mobility, estimates that corporate relocations have dropped 30 percent to 40 percent since the start of the downturn.

The lack of hiring is having “the most dramatic impact on the [relocation] industry right now,” he says. In the Brookfield study, only 11 percent of current expats are new hires, compared to 2003-2004, when 17 percent were new hires.

“A good percentage of the relocation industry’s moves are based on people newly hired into the organization that’s moving them, and, of course, most [companies] have, at a minimum, a hiring freeze, if not a reduction in staff,” says Benevides, who also serves as senior vice president of global relocation services for Paragon Global Resources Inc. in Rancho Santa Margarita, Calif.

Coupled with these realities, however, is the fact that companies still need to relocate people. Since budgets are smaller and money is tight, experts say, HR should be doing all it can to relocate in a cost-effective way.

For further reading please click on the link below:

http://www.hreonline.com/HRE/story.jsp?storyId=260329431

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