Relocation Cost Control: The Client Perspective
Cartus clients share their thoughts on challenges and best practices through a variety of ways—informal discussions, surveys, and meetings with other companies in Cartus’ client base. Below is a quick summary of some of the insights they have shared on one of relocation’s biggest challenges, controlling program costs.
Areas of Increasing Relocation Cost
The primary areas where companies saw costs escalating included housing, temporary living, household goods shipping, compliance, and schooling. While many of the drivers are external, some are internal as well, including a lack of firm budget approval limits during the authorization process, and failure to establish which business unit (in the home or host country) is responsible for assignment costs.
Many companies also point to a high level of exception requests and approvals—which generally means that the policy, as designed, is not matched to the needs of the employees, the company, or both. Many companies also struggle with a “one size should fit all” company mentality, yet also encounter issues with flexible approaches, including questions about how to structure core-flex policies and what type of employee is best suited to approaches such as developmental assignments.
Adjusting Your Relocation Program and Policy for Better Cost Control
Changes in both programs and policies can be effective in attacking costs in a number of areas. I’ll share some recommendations that have worked, or are being considered, by many companies.
- Manage exceptions better:
- Know your audience and who needs more money up front
- Set approval authority guidelines to speed up the process
- Review requests for root cause—is there a basic policy change needed?
- Look at all areas for potential cost savings, not only policy approaches, but specific areas such as negotiated travel, hotel, and shuttle buses for large groups, and setting limitations on home leave and travel.
- Set the approval/authorization process at VP or higher level, and/or ensuring that the CFO has final sign off in some cases due to tax implications. Consideration also needs to be given to situations involving additional legal and tax implications, such as permanent transfers. Have approval limits set by level of employee going on assignment.
Adjusting Your Relocation Policy
- Consider the purpose of the assignment when considering policy support.
- Consider a Voice of Customer survey to zero in on specific elements of the relocation policy that may be missing the mark.
- Consider core-flex type approaches that can help to target benefits and maximize spend.
- Utilize lump sum with core-flex benefits as a policy option, especially for short-term projects.
- Look at expat-lite type programs/local plus for self-initiated type moves.
- Consider adding temporary provisions to the policy—easier to gain approval than permanent policy changes, and can be used successfully for “one-off” situations.
- Make sure that your business travel policy matches your relocation travel policy.
- Be realistic when moving employees out of a low-cost country to a high-cost (tax) country (Dubai, Brazil, etc.); provide more money, but advise the business line in advance.
- Strengthen coordination with HR, talent acquisition, business lines, and travel groups.
- Continually educate the business—both up and down—on the value of corporate mobility.
- Focus on earlier and better identification of business travelers through implementation of mandatory time sheets or travel reports.
- Create business service center/center of excellence to centralize mobility functions.
For more information about how you can control your relocation costs, read our Mobility Insights: Achieving Cost Savings Through Policy Design or view our short video that illustrates just some of the ways we have helped companies control their costs.