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Webinar | Beyond the Plateau - Adding Efficiencies and Refreshments to Your Mobility Program

Relocating an employee, whether a new hire, existing member of staff or VIP can be a costly and complex process, making it more important than ever to understand the changing role of mobility within the organization and the impact to resources. Striking the right balance of investment and return is a vital element of any overall talent management strategy, so it is important to get it right – for the employee and the company.


Taryn Kramer
Vice President, Global Consulting
SIRVA Worldwide Relocation & Moving

Jill McDonald 
Vice President, Policy Consulting 
SIRVA Worldwide Relocation & Moving

Scroll to the bottom and click "Download" to access the slides.

Scroll to the bottom and click "Download" to access the slides.

VIDEO TRANSCRIPTION (starting at 5:00)

How Can You Enhance Your Mobility Program?

Taryn: You will find it very informative, and we welcome any questions that you may have. We're gonna go through a little bit of a few concepts and strategies with regard to mobility programs in terms of how you can create some efficiencies with your program as well as some enhancements to your program from both a customer and employee perspective. As I said, we welcome all questions. We will share both domestic and global perspectives as we go through some of these concepts and strategies, recognizing that our attendees come from a variety of different backgrounds and different responsibilities within the organization. 
We will kick off with Jill, leading off our first conversation.

Elements that Effect Cost: Policy

Jill: Elements that effect cost. So we'll discuss each element and then briefly get into the specific cost saving ideas or enhancements. So the first element we wanna talk about is policy. So as we know, relocation programs vary from company to company, and they take into consideration the move type and the culture of the organization. I can't express how much culture makes the difference.

Now, the move types may include, U.S. domestic, maybe it's domestic moves in Canada, assignments or international moves. And some companies are gonna use the segmentation approach and some are gonna use the tiered policy approach. And then, of course, there's the provisions or policy benefits. And these are provided based on the nature, the level of the employee, the delivery type, and you know, the structure of each different policy type.

Now, Taryn will go into the next two elements.

Elements That Effect Cost: Service Delivery Model

Taryn: The next component that really plays a factor in overall program cost is the service delivery model of the program. So service delivery models, it's a short term that refers to the people, processes, technology, and vendors that support the implementation of mobility policies and programs. All service delivery models will include elements of the following.

So organizational structure, where the mobility function or responsibility is aligned in terms of the overall org. structure. In some cases, and probably most prevalent, you will find that mobility sits under one of the HR functions or as an HR function. In some instances where there is a standalone talent function, mobility may fit under talent. Sometimes, a bit rare, but in some cases, mobility will fit under either the tax function or the legal function. But all of that contributes or can contribute to overall program cost in terms of how things are done with regard to mobilities in the organization.

There's also an element of geographical structure. Where are the mobility teams located? What responsibility do they have in terms of the overall program? Is it based on geography? Is it based on move type? All of that will impact cost.

And then there's the scope of services that the mobility function either provides directly as a service for relocating employees or indirectly in terms of managing either internal or external process partners.

Elements that Effect Cost: Payroll and Tax

The third category of cost is payroll and tax. And this can be a very significant one and one that sometimes gets lost when you look at overall program costs. Payroll delivery, how you structure that for your employees, can really play a role in cost. Just the administrative requirements around payroll which are driven in part by the origin and destination location can potentially contribute to overall program cost.

And then tax cost, you know, some of you may have heard when you're talking about long-term assignments, the easy sort of back of the envelope estimates for assignment costs for long-term global assignments is that those tax costs comprise a third of the total relocation costs. That's significant when you think about, you know, the different salaries and allowances that go into an individual's package.

On the domestic end as well, you know, really considering taxes and what the company is going to cover as it relates to relocation expenses can be significant. It's important that companies really get this right, not only from a compliance perspective but then also from an audit perspective as well. You don't want to have taxing authorities coming after your program because you're not withholding or reporting correctly when it comes to relocation and compensation.

Cost Containment Strategies Relating to Policy

Now we'll move into the strategy element of our discussion today. So all of these will tie back to the three categories—policy, service delivery model, and tax and payroll—that we talked through. These are some strategies that you may be able to implement as part of your program to minimize or rationalize costs for your overall move. The first category, as we said, is gonna fall under policy. Then we have a list here that will pop up.

Cost Containment Strategies Relating to Policy: Segmentation

The first one is a segmentation approach and it's prevalent mostly in global programs. What this refers to is really taking a look at your global program and understanding what is driving the move. Is it talent development? Is it, you know, career development for the employee? Are you looking to fill an immediate need in the host or destination location? And understanding that different move types have different values for the organization.

So beyond just looking at the intended duration of the assignment to then determine what package support is provided to that individual, the segmentation approach will consider additional factors, potentially employee level within the organization, performance history, that move driver. If it’s an immediate gap or skills-gap in the host or destination location, the profile of support provided to that individual may be very different than if you're moving someone for career development purposes.

Jill: Okay, in the U.S. and Canada I think tiering your policy by position level is still the most common. Some of the segmentation approaches Taryn mentioned have been talked about in the U.S. and Canada but I haven't seen a prevalent use of it. So tiering the program, whether it's based on, like I said, employee level or band level. Some like to tier it by homeowner and renter. Some companies don't because they’d rather reduce the number of policies, so they'll combine them. Others, they don't wanna a renter seen with a homeowner debt.

So four tiers are still the average. The first benefit to really differentiate is gonna be the home sell program. And you might also see policy tiers for interns, short, long-term assignments, rotational assignments. Seen a few now for commuters or business travelers. So that's in addition to the four. And the old aspect of really tiering your policies by new hires and current employees, there are some companies that still do it but that really has gone away. I think a lot of it has to do with the recruitment challenges and so they just prefer to do it by, you know, band level.

Cost Containment Strategies Relating to Policy: Capping Employee Benefits

Another one that's been around but I still see folks not doing it, but it's really provision or benefit caps. So in the U.S. or even Canada, you wanna cap certain benefits if you can. Certainly controls costs. Things like the lease cancellations being null, capping it at two months’ rent. Our rents will card to 14 days during temp housing instead of the whole maybe 30, 60 days. Meals, of course, and providing a flat dollar amount for the miscellaneous expense allowment, MEA. It used to be based on salary. In the U.S. it's not as common anymore and it's just a flat dollar amount.

But we really don’t want to see any benefits kind of open-ended in regards to cost. I think the one that's probably not capped the most often is actually spousal assistance. Now, it doesn't cost a whole lot to that but I would typically recommend a cap between \$1,500 and \$2,500, and that can control those costs. Internationally, caps are used, but it's mainly on the employee’s salary when they're calculating COLAs (cost of living allowances) or relocation allowances or miscellaneous expense allowances, those type of things.

Cost Containment Strategies Relating to Policy: Localization

Taryn: Localization is the next strategy. And what this could read is failure to localize because that's really where some additional or unnecessary costs get added to the program. The assignments that are intended to end after three or five years, at that point the individual really should be localized to the host location.

In instances where the employee continues to receive expatriate benefits well beyond that five-year mark really start to raise the cost of the program. And at that five-year mark it really is an opportunity for the company to revisit the individuals that have been out there for that duration of time, make an assessment of whether or not there's a good reason for the employee to continue in that location. The alternatives are to either repatriate them back to their home location, to move them to a different assignment in a different location or to localize the individual.

After five years, the expectation is that the employee is comfortable in that host location, they're you know, able to navigate that location as a local hire would and therefore some of the additional layers of support that are provided such as COLA and housing are not necessarily required. And removing those from the employee's package can significantly reduce program costs both from a, you know, direct assignment cost as well as from the tax elements associated with those assignment allowances.

Cost Containment Strategies Relating to Policy: Employee Contributions

Another area is really building in some employee contributions into your program. Some examples of where this works is when you're talking about housing allowances. Being able to apply a housing norm that, you know, recognizes that the employee should be contributing in some part to their housing costs even while in the host location. A housing normal serve as an offset to the housing allowance paid by the company.

Some sort of nontraditional ways that you can apply caps, one example is children's education. So in instances where the employee is contributing in part to the education costs of the child in the home location, replicating match for education costs in the host location. So for example, if the child is in private education or a fee-based education in the home location, you know, the education costs in the host location that are paid directly by the company would be offset by that. So a bit of an education norm if you will, while the employee is on assignment.

Cost Containment Strategies Relating to Policy: Household Goods Reduction Programs

Jill: Great. Another one is the Household Good Reduction Program. And again, this is a little bit more in the U.S. but discard and donate program have become very popular, and these programs can be provided by the van lines, maybe it’s an outside company but the idea is help that transferee go through the stuff, the items within their home and let's donate some, let's serve some away before you pay to move all those goods to the new location and then have a garage sale. So discard and donate programs are becoming very popular and it is set up so that you will save money by the end by getting rid of items before you repeat the cost of shipping them. Another one might be just simply the food too. There are more programs out there, one of them is Move for Hunger. And again, you can give your food items to them.

I think the last thing I see with household goods is the small move assistance. These have become more popular and it's sort of the do it yourself portable storage units where the employee might load the goods and then a company is going to pick up that storage unit and bring it to the destination location. And of course, not everybody has a full van line move. We've never really recommended self-moves but this is kind of a good in-between and the cost can be obviously less than a full van line.

Cost Containment Strategies Relating to Policy: Exception Management

The next cost saving is exception management, and this, I think, is excellent. And it's funny because you see all different cultures with companies, some say yes all the time, some absolutely will not say yes. So it does depend on the culture of the company. But you wanna have a system to track this. Whether it be manual or automated, you wanna track how much money you're spending an exception. And when I say track, you know, let's track the employee name, their grade level, what policy they got, what was the exception, what's the cost of that exception and the taxability. That's important too. A lot of people forget that extra cost.

Maybe the relocation management company made a recommendation on their experience, what did they say about exceptions or not? And then, of course, the ultimate approver's decision. So, if you're granting a lot of exceptions, 15%, 20% of the time, you know, consider adding it to policy. And it sounds like an add on and add cost, but really, you can save a lot of administrative time as well to elimination of all those emails and phone calls and the whole process, But you definitely want to be sure that you have some type of process to keep track of that.

Cost Containment Strategies Relating to Policy: Core Flex Programs

The next is the core flex. And you probably also heard a lot about it. The core flex programs are becoming very popular and it’s, you know, companies say their challenges are, "Oh, we've got a changing workforce or I've got to control cost." Definitely, want the flexibility instead of the “take it or leave it” approach. They wanna empower those employees to make these decisions.

So the solution really was core flex programs. And the idea of the core is you're gonna give certain benefits to those employees to get them from point A to point B, everything they need. You know, such a house of goods or the final trip. And often your home sell program is gonna be up in your core. And then flex is really everything else. Maybe more benefits than you ever offered in the past, but the idea is you're offering more flexibility and you're trying to meet the needs of your employees.

So how do you control those costs with the flex benefit? That's where cost control can come in. Now, some like to provide a lump sum allowance and that amount can vary per tier, but they'll say, “Here's your lump sum. Here's your cash. Your policy will state what should use it on and you can still get help but that's what you get, don't come back.

Some of them, actually, I think it's a little more on the larger companies that they like to set a number of specific flex benefits the employee can choose. So they may say, "I don't care which ones you choose, but you can pick 8 out of the 12 benefits we have listed here." And the cost is the cost there but they're still doing some, you know, pre-work figuring out the cost of benefits based on their cost history.

And of course, the third popular way is capping those flex benefits. Again, now, you know how much you're gonna spend and you say, "You know, you can use any of these benefits but you can't go over X amount of dollars."

So they're becoming very popular, you know, they meet the company and the employees’ needs, they control cost. It certainly reduces the exceptions in there, having to say no factor, flexibility. It's an equitable way to provide flexible benefits, it engages the employee in the cost, it's good all through the relocation, not just at the beginning. But of course it is creating a new program, so that can take a little time. It is a little bit challenging for actually relocation consultants to talk about the various choices and we certainly don't want employees mismanaging any funds but that's also account of it.

So they're popular in the U.S. and international, but the international flex benefits do different from the U.S. and I have found it's not as popular in Canada, and I think that's more due to the taxability of relocation expenses up there. So the majority are not taxable so that makes the difference.

Cost Containment Strategies Relating to Policy: Lump Sum Allowances

The last one here we're talking about is the good old lump sum allowance. A lot of buzz around, everybody is doing it. I like to define the lump sum allowance, and you do want to. So it's a rather broad term because you may provide a lump sum allowance to just a couple benefits, like the home planning trip and temp housing. Or you may have a low level tier and you're providing a lump sum for all relocation benefits. That's kind of like your interns, college grads, that type of thing.

Maybe you provide a lump sum along with household goods and temp housing and final trip. Or maybe you're providing that lump sum, as I just mentioned, for the flex benefits. Or maybe you're providing a lump sum where you say to the employee, "You can take all the benefits in this policy, but if you don't wanna use, it you can have a lump sum." And usually, that lump sum amount, of course, is not equal to the benefits in the policy, but it might be a third or a half of the dollar value of it ,but some will do that as well.

So there's a lot of different ways we can use it. There's mainly two ways you can provide it to the employee, obviously on their paycheck and some provide it on a debit card. So that way the employee and the company can see how those funds are being spent.

Let’s go on to the next slide here, just a little bit more about lump sums. Of course, the easy administration, that can save cost. It provides flexibility, use it how you'd like. It's a predictable cost without a doubt because now you know exactly what you're gonna spend. So there are cost containment ideas and value of giving a lump sum but I just want people to remember there are the cons as well, and that is the employee experience. You know, are they left on their own or do they still have a counselor to help them a little bit?

There still have been known to be exception requests a little bit on lump sums, they don't feel it's enough. Old saying where if you don't hear any noise after you give a lump sum, the amount is either too high or just right. But you're gonna hear a lot of noise if it's not enough. And service quality risks. Tax implications, of course, if you're throwing your household goods, especially household goods, maybe final trip, into that lump sum, you're most likely grossing this up because the majority of companies do, and of course a lot of the expenses would have been tax-excludable, and therefore you're paying gross stuff on certain dollars you wouldn't really need to.

So a lot of strong feelings about lump sums, but it is a way without a doubt to help control costs if used correctly and defined correctly.

POLL: What Percentage of Your Total Mobility Population Has An Approved Policy Exception?

All right, we get our first polling question here. So, what percentage of your total mobility population has an approved policy exception?

Over on the right-hand side of your screen, you should see the poll question, and then you can choose: a) under 10%, b) 10% to 25%, c) 26% to 50%, or d) over 50%. If we all take a moment and answer that question, we'll see what our results are.

Taryn: Okay, so the results are in. We have the majority following in under 10% which is good, followed closely by 10% to 25% of the population having approved exceptions to policy, 16% at the 26% to 50% mark, and then 13% at over 50%. That's a bit surprising to me. So, you know, for anyone that falls into that 26% to 50% or over 50% category, that may be a really good indicator that it's time to do a bit of a refresh in terms of your policy.

Some of the ways that you can cut that data is really looking at what the nature of the exceptions are. Potentially you're finding a lot of exception requests for housing allowances, in which case perhaps, you know, the normative data that's being used to calculate those allowances may not be appropriate. You may be signing that there are a lot of exceptions in a particular location or from a particular business unit. So it's a really good indicator that potentially there is a bit of a shortfall when it comes to your policy, and that you may be able to do a little bit of a refresh, as Jill said, to eliminate some of those exceptions which really add to some of the, you know, "hidden costs" of a program which tie directly to the administration around just managing these requests and, you know, getting approvals and coordinating with the employee.

Cost Containment Strategies Relating to Service Delivery Model

So we’ll move on to the next category of cost saving containment strategies in that service delivery model. You know, these really are some of the more administrative costs. You know, unlike policy where you can kind of see a direct impact to the bottom line or the cost of the program overall, the service delivery model costs really speak more to creating some efficiencies within your processes to really cut some of that out of your program to create some efficiency and timeliness in terms of how fast things can get done.

If implemented correctly, some of these strategies can really contribute to increased satisfaction from both the customer and the employee as it relates to the program. They're clear on what roles and responsibilities are, they understand where there are some potential delays within the process to get things done because of some proactive communication. And that really, again, contributes to overall satisfaction with the relocation.

Cost Containment Strategies Relating to Service Delivery Model: Vendor Management

So some ideas here, vendor management is the first one. You know, it's inevitable that all mobility programs will have to leverage vendors to some degree because mobility programs cannot necessarily deliver all of the services that are required to relocate someone from point A to point B. So really focusing on that vendor selection, making sure that you're reviewing your vendor supply chain network and how they manage suppliers to uncover any potential hidden costs that may not be transparent during that RFP process. So really asking some good questions there to make sure that you're aware of all the sort of downstream costs that may apply as you engage that vendor for services.

Making sure that you build in some SLA metrics with your vendors to ensure, you know, sufficient turnaround time, response time to any inquiries, as well as for the exception management there. So making sure that there are some appropriate protocols in place if and when there are any exceptions requested. And also just some quality metrics, you know, making sure that your vendors have the appropriate controls in place to manage any issues or quality considerations as they relocate your employees.

Cost Containment Strategies Relating to Service Delivery Model: Technology

Jill: Thanks, technology is another one. As we know, technology seems to be changing every day. I don't know if you've gotten the new Windows 10 upgrade but that can be fun finding all your programs again. Constantly changing. But it is great for relocation.

It is used from the authorization process, from the transferee learning all about the destination area like homes available, areas of interest. They can submit to reimbursement or view the cost they've already spent to the final reporting of that relocation. So you just wanna be sure that your technology, it's flexible, it's secure, it's global, and you've got 24-7 support, and it's connected to all access points for all users in the whole process and that you do have a couple of possible multiple methods of communication through technology like your laptop. So now the mobile phones are becoming the most common way to do that. But can save a lot of time having updated technology. The next…oh, go ahead.

Taryn: For technology as well, you know, often it makes sense to look at external sources for technology that will support the program rather than building your own technology internally. There are a lot of existing platforms and services available that really speak to the management of relocation populations, and are designed to support those very activities. So really looking at the cost of, you know, leasing or utilizing external technology versus an internal build is a really good approach when you look at what's best for your program.

Just process, right, how you actually facilitate the movement and all the moving parts. I think, for any relocation we're all aware that, you know, the process touches a variety of different individuals or functions internally as well as externally. Really taking some time to review that process, making sure that you are well documenting any roles and responsibilities so that people understand what their touch points are throughout the process. Understanding how long a task should take to complete, that really helps you to kind of map it out, set some expectations, and understand where there are any potential delays or inefficiencies that again may create some administrative burden or costs, as well as impacting the customer and employee experience.

Cost Containment Strategies Relating to Service Delivery Model: Cost Awareness and Reporting

Jill: And cost awareness and reporting is another way. A lot of times you get the reports but you really have to examine them to get a good idea and use that impregnation that you get. You know, provide it to stakeholders or the mobility teams and analyze where your costs are being spent and if it was wise or not compared to your company objectives.

And individually, if you're looking at a transferee and you're curious how much this relocation is gonna cost, maybe before you're up to the move, maybe during it. But remember, a lot of times, a cost estimate is an excellent tool. So it's not a budget, because budgets are really tied to the employee and their binding to the employee, but giving you an idea of the cost estimate to determine how much it's gonna cost and maybe think about exceptions, and then help determine if that employee's relocation costs exceeds the expected benefits of having the new employee at the destination location. And then when you're done, be sure to compare your cost estimate to what the actual figures are, whether they are in line or if they're out of balance.

Cost Containment Strategies Relating to Service Delivery Model: Scope of Services

Taryn: And then just reviewing your scope of services. So again, what the mobility function has either direct delivery responsibility for or just oversight for. Making sure that your internal process partners understand what they're delivering, what those, again, touch points are to make a smooth handoff, just to create some efficiencies there. Really understanding what your full-time equivalent or FTE requirements are.

You know, that takes into account the culture of the organization, whether it's high touch, whether it's more self-serve driven. Understanding what the scope of responsibility for that individual or that member of the mobility team is, what the anticipated turnaround time is for all of those tasks so that you can adequately staff your function based on your population size.

Insourcing Versus Outsourcing

Also within scope of services, you know, it's important to understand what should be kept in-house versus what should be outsourced. And we have a couple slides to do a bit of a deep dive. You know, so when you look at the mobility scope of services, you can kind of break it into four categories. You have planning or, you know, kind of pre-move. You have initiation, so what it takes to actually trigger that move. You have either on assignment or kind of post-relocation support. And then throughout you have the program management, so that would be your, you know, contact for all the individuals. And we have some sort of examples of activities that would fall under each of those different categories.

You know, when you look at that, there are some opportunities for outsourcing where you can leverage some external subject matter expertise. You can leverage external resources to really address, you know, where you have fluctuations in volumes. You know, if you have seasonal fluctuations then it doesn't make sense to staff internally for all of these activities on an annual basis. An outsourced vendor may be able to support that because they can adjust their staffing accordingly based on their client profile.

Some of the sort of opportunities for keeping some of these activities in-house, it's a really good way to, you know, kind of enhance some business partnering between the mobility function and the customer or the business that's relocating these folks. Often, you know, an in-house team will be able to kind of enhance the customer and employee experience. They are from the same company, they understand the culture of that organization and can reflect that culture in their interactions with both the customer and the employee.

There's also opportunities for strategic alignment with other functions within the organization. You know, we hear a lot about the mobility function aligning with talent priorities. So keeping some of these activities such as candidate selection in-house really provides a good way to kind of facilitate that alignment.

Some of the challenges, as I said, scalability. So being able to keep an in-house staff or an in-house function staffed adequately to address some of those volume shifts becomes a bit difficult. You may find that FTEs are either over utilized or under utilized at any point during the year or over the course of, you know, the program. There's some administrative burden that falls on the team, you know, particularly where this is not necessarily the team's full-time job. There are some mobility team members that also play additional roles within other functions within the organization. So having to kind of stop and start to manage their population becomes a bit of a challenge.

Knowledge updates is a big one. You know, if you think about just the landscape today and how quickly things are changing from an immigration and a compliance standpoint, staying up to speed with all of those is tough for someone where it's not their full-time job. So being able to look outside or to external vendors who have that subject matter expertise, that's their specialty, you really can benefit significantly from taking advantage of that relationship.

Economies of scale, again, just being able to kind of flux as programs change. And innovation, you know, there are obviously suppliers within the industry where their sole focus is just on making sure cost that they're staying ahead of the curve when it comes to technology, when it comes to best practices and policy and program support. Sometimes it's difficult when you're kind of in the weeds of managing relocation to really get out of that to start thinking in an innovative way, you know, despite best intent. So being able to look externally for that knowledge can really be beneficial to a program.

On the outsourced side, some of the kind of the opportunities or the positives there, obviously the knowledge and expertise. You know, typically a vendor will have or should have global reach, that's one of the things that you should look at. When you're engaging a vendor, make sure that they can serve all your employees in all your different geographies. The innovation that we talked about, third party efficiencies and, you know, buying power. Just being able to leverage the fact that the vendors have, you know, so many clients that are looking to purchase a specific service and being able to negotiate prices with that particular vendor based on the volumes of business that they're bringing into that vendor versus negotiating in-house for vendor services where you may have just a small population that requires specific services.

Technology, we talked a little bit about vendors. Outsourced partners typically will have technology and a focus on developing technology that’s specific to support the business. So being able to take advantage of that versus developing any technology in-house.

Process efficiency is just again tied to the fact that vendors, you know, are replicating a process for a large number of people and being able to have some operational efficiencies and excellence associated with those processes.

Strategic versus operational focus. You know, typically, if you leverage an outsourced vendor you are gonna leverage some of your more operational or administrative tasks which then frees up opportunities for the in-house team to really focus on that strategic alignment with different functions within the organization.

Potential cost reduction and consistency of service. Again, tying back to some of the standardized process and operational efficiencies that are built into a lot of the vendor programs. It provides for, you know, real consistency across the board for all moves which again, contributes to both the customer and the employee satisfaction.

Some of the challenges, you know, kind of the flip side of the end house opportunities. Culture alignment, it's sometimes difficult for a vendor to sort of step in and serve as an extension of your organization. So making sure that you find a vendor that really has the right fit, otherwise that may be a challenge. In some cases, it can be cost-prohibitive if you look at your volumes. If you're only moving a handful of people a year it may make more sense to keep that in-house versus outsource.

And then customer and employee satisfaction. Again, just not necessarily, you know, a lot of transparency around the process. Potentially, you know, having to go to someone outside of the organization to get some questions answered may be a bit of a challenge for both the customer and the employee.

POLL: What Technology Do You Use To Support Your Program?

So this second polling question, we'll do this kind of quickly. So what technology do you use to support your program? “A” is Microsoft products (Excel, Word), a relocation-specific technology, both, none, or I don't know. We'll give everyone a couple minutes here. You know, I think what we're expecting to see is probably that there's a combination of both. So probably “C” may be the most prevalent. But, you know, there are companies that really rely solely on Excel files to manage things. That may be appropriate given the size of the population. But, you know, it really is driven by the sophistication of the organization as well as the needs of the program in terms of determining what's the most advantageous.

So we're just tallying up the results here. So, yeah, so the bulk does fall exactly where we expected it to in answer “C”, which is both. And then there are a lot of people, 34%, that do use relocations specific technology with 17% using a Microsoft product like Excel or Word. So results sort of fall in line with what we would expect.

Cost Containment Strategies Relating to Payroll and Tax

We're gonna skip the next question just in the interest of time, and we'll move on to the final category which is payroll and tax in terms of strategies to implement. So tax planning is a big one. Obviously, being able to, you know, deliver compensation there are allowance elements in the most tax advantageous way that often requires looking at the home-host combination. You know, determining whether something is delivered either pre-move or post move may play a big role.

Cost Containment Strategies Relating to Payroll and Tax: Payroll Delivery

Payroll delivery, making sure that you're doing that correctly. Making sure that your withholding or reporting requirements are being met to ensure that you're not incurring any additional fees or penalties associated with that.

Cost Containment Strategies Relating to Payroll and Tax: Compensation Collection

Compensation collection, just making sure that you're, again, kind of feeding into the payroll delivery element. Making sure that you're in compliance with all the requirements. Making sure that you're capturing all compensation elements that you need to in your year-end reporting. And that compensation collection activity does become a bit of a challenge. You’re often talking to multiple different payroll contacts. You know, payroll, potentially has a decent amount of turnover in terms of resources so there may be some challenges in terms of consistency of service there. And then your year end reporting, just making sure, as I said, that you're capturing everything and really kind of gathering everything you need to ensure compliance.

Questions & Answers

So we have about 12 minutes left. So I think what we'll do is start to take a couple questions. So if you all have anything that you'd like to share, you can use the Q&A feature to go ahead and submit. So we have one and, Jill, I'll pass this to you.

“What's the general practice on taxation around lump sum?” 

Jill: Well, I can definitely say most companies are going to gross up the lump sum, without a doubt. Now again, in Canada, only the first 650 is tax excludable and the rest is taxable. So it falls suit up there as well. And most companies, like I said, they're gonna gross it up. I guess that's basically what you're looking for.

"Is the discard and donate program set up by the van line for removal and what's the average cost associated with those programs?"

Jill: Okay, well, the van line can set up a discard and donate program, they may have you know, something already set up. There are other companies who set up a discard and donate program so it's in their scope of services. A lot of time that can be arranged through your relocation management company. And the majority definitely save costs. I don't have the particular cost and I think it'll vary by companies, but it's certainly something to look into for your program. And a lot of companies that are going green really like adding this to policy.

"How many moves should a company be joined to consider this process versus in-house?"

There really is no magic number. You know, in part it will depend on what in-house resources you have, both from sort of a body count perspective as well as from a competency perspective.

You know, in some cases you may have 10 to 20 moves a year, but you don't necessarily have the infrastructure in-house to support those moves. It becomes administratively burdensome to recreate the process for each of those moves because they are so infrequent. You know, in that case it may make sense to go ahead and leverage an outsourced vendor who's used to or kind of comfortable working with smaller population sizes but can still give the benefits of those economies of scale as well as sort of some process efficiencies related to that.

There will always be an element of, you know, working with an in-house team as you manage any sort of relocation. There's no outsourced vendor that's going to take 100% of the roles and responsibilities on in-house. You know, there will always need to be at least one individual who is the contact person in-house. But outsourcing really can work for programs of all size from, you know, small to exceptionally large. There's no real magic number there.

"Do we recommend a managed core flex program whereby the employee submits receipts for reimbursement up to the flex amount cap?"

Jill: Okay, well, with the cap, you’ve got to remember, and this is whether it's core flex or you just capped your policy, you wanna be sure you don't have any direct bills. So temp housing stay or household goods, you want all those bills to go to the employee, that’s all under the flex. Because there's nothing worse than exceeding your amount and it's because a bill was coming in late. So, like you said, it's a great way to control cost but you do need to think about direct bills.

You never wanna put a home sell program in a cap ever. You're going against the ERC’s 11 Key Steps of Amended Sale. And you also need to decide if that cap is extended, you have excess amount submitted, whose responsibility is it? Is it gonna be the company's, the transferee's, the relocation management company’s? So there are a few things to think about when you see people cap flex benefits or like I said, even a policy.

"Is a household goods cap common? And if so, how is it typically handled if the transferee exceeds the cap?"

Taryn: On the global side...I'll let Jill take the domestic. But on the global side, typically, what's built into a policy, you know, is a standard sort of air shipment size as well as then a container size. The expectation is that there would be a pre-move survey done to understand, you know, what contents of the residence need to be moved.

At that time is typically when the vendor who is managing the move or the internal team member would be notified of any potential overages and can make some decisions. You know, in terms of a global policy, it's always best practice to make sure that you're including some excluded items in there. In most cases those are items of particularly high-value or items that are very difficult to move, which obviously may contribute to kind of exceeding any household goods cap. But there's not typically a dollar amount or a value cap. It's more based on air shipment size as well as container size. Jill, do you wanna give a bit of perspective on the domestic?

Jill: Yeah, could you repeat the question?

Taryn: Yes, so is a household goods cap common? And if so, how is it typically handled if the transferee exceeds the cap?

Jill: Okay, well, I can tell you on the U.S. domestic side it is very rarely capped. Occasionally I'll see it at maybe, you know, 18,000 pounds or something like that, but it is not common whether it's a dollar amount or poundage to cap household goods move. And if you do have it and it does exceed the cap, actually that amount, then it's COD (cash on delivery) for that employee, so they've gotta be ready to pay the difference. And I think that's one of the biggest reasons that companies don't cap it.

"Do you see the use of lump sum for international moves and if so, how do you determine the amount?"

Taryn: So yeah, this is definitely coming into play a bit more than it has in the past. You know, typically, it will follow more of kind of a core flex approach. There are some key elements, particularly when you think about international moves, that will still need to be delivered and you wanna make sure that the employee actually takes advantage of or utilizes the services. Most often those are tied to compliance or tax compliance and immigration.

We are seeing a bit of a move towards providing lump sums for employees so that they have some flexibility in terms of how their relocation dollars are spent. It also provides some, you know, customization for the package that's employee driven. You know, they can select be the benefits and support that they need specific to their situation, their family situation, and they're able to leverage that spend appropriately how they want to.

In terms of determining the amount, there's a couple different approaches. You know, some companies will just take a flat amount. There's always gonna be a bit of a challenge there. In some cases that will be, you know, kind of more than the employee needs, but I would say most often it's always less, right, than the employee needs or at least what they tell you. So doing a flat cap amount just kind of, you know, out of the air is a bit challenging.

Other companies will take a look at certain policy provisions or typical support that they would have provided historically and they will make a calculation of those items. So, for example, temp living, you know, education assistance, they'll do an estimate of that based on the employee's family size and calculate the lump sum that way. In those cases it's not typically a flat lump sum or a consistent lump sum across the board. It does consider employee family size and potentially home host combination, if you include an element of cost of living in there. So there is a bit of logic and rationale behind that lump sum.

In terms of actually delivering it, you know, it's best practice to communicate to the employee what that lump sum is intended to cover. Otherwise you end up, as one of the challenges showed, you run into some potential challenges around requests for exceptions because that lump sum was deemed inefficient for what the employee needed.

"Do we have any service agreement requirements should employees not stay the expected time at the new location but they must repay some or all of the relocation expenses?"

"So yeah, absolutely. I think on both the domestic and global side, you know, it's best practice to include a repayment agreement in those policies. The terms of those repayment agreements may vary from one company to the next."

The two most common approaches are either, you know, a kind of flat percentage based on duration or repayment of a pro rata portion of the relocation spend based on the intended duration of the move versus what was actually completed. In terms of what's included, and from a policy provision perspective when you go to recapture those amounts, that as well varies. You know, it's usually tied to the direct relocation expenses of household goods, expenses, temporary living expenses, you know, but really it's driven by the company and there's not a one size or kind of an off the shelf approach for repayment agreements.

Jill: I was going to say in the U.S. I think the two-year agreements have become very popular, where the employee pays back all expenses that they paid or paid on their behalf 100% the first year, and usually at 50% during the second year. And that's gonna include gross up costs as well.

Allison: So I'm gonna break in here because I think it's about time to finish up. Do you have time for one more quick question, Taryn?

Taryn: I don't know, I don't think so. I think they're too involved.

Allison: Okay, okay. Well, thank you very much for an excellent presentation. I definitely appreciate you sharing your insights with us. I would also like to give a big thank you to SIRVA for sponsoring today's webinar. If any of the attendees have questions, please don't hesitate to contact us. You've been a wonderful audience. I hope you've enjoyed today's program.