2006 Corporate Relocation Survey

Results 39: Corporate Relocation Survey - Year 2006 Results 39: Corporate Relocation Survey - Year 2006
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Who Responded?

Atlas is pleased to present findings from its 39th annual survey of corporate relocation professionals. Respondents, invited via e-mail to participate, completed 421 online questionnaires between January 25 and February 28. To qualify for the survey, a respondent must have relocation responsibility and work for a company that has either relocated employees within the past two years or plans to relocate employees this year.

  • Most respondents (75%) work in human resources or personnel departments for
    • service (43%)
    • manufacturing/processing (41%)
    • financial (8%)
    • government and military (2%)
    • and other sectors (6%)
  • Close to half (49%) of the companies surveyed this year are international firms.
  • Based on the number of employees, responding firms are categorized by size for analysis:
    • 50% have less than 500 salaried employees (small firms)
    • 29% have 500-4,999 salaried employees (mid-size firms)
    • 21% have 5,000+ salaried employees (large firms)

Highlights of Results

Will relocation volumes continue their upswing in 2006? Are companies shifting to lump sum and partial reimbursement plans for transferees? How is international relocation changing?

The annual Atlas Survey of Corporate Relocation Policies brings insights on these and other issues. A few of the findings from this year's survey are presented here.


Relocation Volume and Budgets —

Expectations for Increases

Over a fourth (28%) of responding firms expect their relocation volumes to increase in 2006 and 31% expect their relocation budgets to increase (previous surveys noted similar expectations for 2004 and 2005). As in 2005, firms of all sizes expect increases and more large than mid-size or small firms expect increases. Similar to findings in 2004 and 2005, around half of all firms, regardless of size, expect relocation volumes and budgets to stay the same.

  • While still above the expectations of small and mid-size firms, fewer large companies indicate increased expectations in relocation volume for 2006 over 2005 (38% vs. 47%) and the majority expect volumes to be at the same levels as last year. However, despite a dip in expectations for increased volume, similar numbers of large firms expect increases in their relocation budgets as did in 2005 (44% vs. 44%).
Question 12: Relocation Volume
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Question 13: Relocation Budget
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External Factors —

Lack of Qualified People Locally, Economic Conditions, Competition, Natural Disasters

Seventy-six percent of firms indicate at least one external factor affected their number of relocations in 2005, with "lack of qualified people locally" cited most often this year, regardless of company size. The impact of this factor increased for companies of all sizes, and for large firms it eclipsed "economic conditions" for the first time in the four years this question has been asked (51% vs. 42% in 2005).

  • While "economic conditions" (mentioned by 28% of respondents overall) continues to rank second, the percentage of firms that said this factor had the most significant impact on volumes decreased significantly in 2005 (down from 40% in 2004, 51% in 2003, and 46% in 2002). This decrease may be linked to the belief shared by roughly half of all size companies that the U.S. economy was better in 2005 than the previous year.

Some differences by company size continue. Small and mid-size companies are still somewhat more likely than large firms to indicate "lack of qualified people locally" as their top external issue (even though it is the top one cited by all size firms for 2005). "Economic conditions" are still cited more often by mid-size and large firms, but these percentages are down overall from previous years.

  • Significantly more large firms than mid-size and small firms indicated domestic natural disasters impacted their relocation volumes in 2005 (21% vs. 8% and 3%, respectively).
  • Similar to last year, over a third of large companies indicate the growth of one form of competition (domestic or international) had a significant impact on relocation volume in 2005, significantly greater than small companies (16%).
Question 15: External Factors
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Internal Factors —

Company Growth, Promotions/Resignations, Decreasing Impact of Budget Constraints

Over half of firms indicate "growth of company" as the top internal factor affecting their relocations in 2005. While "promotions/resignations," "knowledge/skills transfers," and "corporate reorganization" rank second, third, and fourth respectively, the percentage of firms indicating "budget constraints" dropped regardless of company size for the second straight year.

  • "Growth of company" is more likely to be the driving factor for mid-size and large firms than small firms in 2005, and the percentage of large firms indicating this is significantly above 2004 levels (69% vs. 52%, respectively).
  • For mid-size and large companies, there is an increase over 2004 in the percentage citing "promotions/resignations" as a factor in relocation volume in 2005 (51% vs. 42% and 57% vs. 45%, respectively).
  • There is an increase in the percentage of large companies citing "expansion into new territories," and "expansion of facility" as impacting 2005 relocation volumes compared to 2004 (38% vs. 27% and 33% vs. 26%, respectively).
Question 16: Internal Factors
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Relocation Policy —

Most Firms are Involved in Household Goods Carrier Selection; Department Responsible Varies by Size

Seventy-four percent of firms indicate the company is actively involved in selecting the household goods carrier for an employee's relocation, whether as the sole selector or in conjunction with the employee. This percentage is similar regardless of company size, although mid-size and large firms are more likely than small firms to be the sole selector (52% and 61% vs. 28%, respectively).

  • Mid-size and large firms are also more likely than small firms to delegate carrier selection to a relocation firm (20% and 25% vs. 4%, respectively).

Of the companies involved in carrier selection, the majority indicate the Human Resources department is responsible for selection and that only one department is involved in this decision. However, this varies by company size.

  • Human Resources at small or mid-size firms is more likely to be responsible for carrier selection than at large firms (89% and 73% vs. 36%). The majority of large firms (67%) indicate that the Relocation department has this responsibility.
  • Mid-size and large companies are more likely than small firms to have more than one department involved in selecting the carrier (20% and 23% vs. 8%, respectively).
Question 17: Carrier Selection
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Service Still Key, Reputation Growing in Importance

"Service" is still the most important attribute among corporate decision makers when evaluating or selecting a carrier (nearly 9 of 10 respondents rated this "critically important," or a "9" or "10" on a 10-point scale). When selecting a carrier, this is by far the highest rated "critically important" factor, regardless of company size. However, when comparing other attributes, differences in importance appear by company size.

  • This year, "Reputation" significantly increased in importance for large firms, and is in second place to "Service" overall.
  • For mid-size firms, "Reputation" remains slightly more important than "Price."
  • For small firms, the importance of "Reputation" has increased slightly, but did not overtake "Price" in importance. "Price" is more critically important to small firms than to mid-size or large firms.
  • "Reputation" is significantly more important to large companies than "Price."

2005 Outsourcing Declines from 2004

Fifty-five percent of companies outsourced relocation services during 2005, down from levels seen the past two years (63% and 66%, respectively). The drop appears to be driven by decreases among small and mid-size firms outsourcing in 2005 compared to 2004 (30% vs. 39% and 74% vs. 79%, respectively). The percentage of large companies outsourcing relocation-related services remained mostly steady (88% vs. 87%).

  • Small and mid-size firms indicate decreases from 2004 in every outsourcing category (real estate services, household goods carrier contracts, counseling, etc.).
  • Large firms held steady in the outsourcing of real estate services and household goods carrier contracts in 2005. Outsourcing levels for all other services (counseling, orientation tours, etc.) fell from 2004, though many are still outsourced by a fourth or more of companies.

However, even with this trend:

  • As in previous years, real estate services continue to be the most popular item outsourced.
  • Mid-size and large companies continue to outsource a significantly greater variety of their relocation services than do small companies.
  • Small companies are still much less likely to outsource relocation services than are mid-size or large firms.
Question 21: Outsourcing
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Relocation Reimbursement/Payment —

Transferees and New Hires: Reimbursement Policy Changes

The percentage of firms offering full reimbursement of relocation expenses to transferees and new hires decreased significantly from last year. Corresponding to these changes, increases are also seen in the percentage of firms offering lump sum payments or partial reimbursement for relocation costs. The majority of firms responding still offer full reimbursement of moving expenses as an option for transferees. However, this is no longer true for new hires, as the majority of firms now indicate they offer partial reimbursement to this group.

  • Mid-size and large firms are more likely than small firms to offer full reimbursement to transferees or new hires and to offer lump sum payments to transferees or new hires.
  • Small companies are more likely to offer partial reimbursement than lump sum payments or full reimbursement to new hires.
  • Mid-size and small companies are more likely than large firms to offer partial reimbursement to transferees and new hires.

As in last year's survey, most firms report that carrier transportation expenses are "paid directly by the company" regardless of company size. However, the percentage of small firms paying these expenses directly for transferees decreased significantly from last year (59% vs. 71%). Small firms are more likely than mid-size or large firms to have moving expenses paid by the employee and then reimbursed.

Questions 25a & 26a: Transferee and New Hire Expense Reimbursement
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Majority of Companies Have Tiers/Levels within Policies

Most firms have different tiers (or levels) within their relocation policies. However, mid-size and large firms are more likely than small firms to have these in place. Overall, most tier level policies appear to be based on position/job title or general job level (i.e. staff, management, professional, etc.), and most are also based on more than one factor.

  • Mid-size and large firms are more likely than small firms to use new hire/current employee or homeowner/renter status as a qualifier for their policies.
  • Small companies are more likely than mid-size and large firms to base tier level policies on just one factor.
Question 27a: Relocation Policy Tiers/Levels
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Question 27b: Relocation Policy Tiers/Levels
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Cost Coverage Changes

With the increased popularity of partial reimbursement and lump sum payments, it would be expected that relocation items once covered are now less likely to receive automatic coverage. While 87% of companies indicate they reimburse or pay for some relocation costs for transferees or new hires (similar to last year's 89%), an overall slight decrease in coverage appears across all company sizes.

The majority of all companies indicate they reimburse/pay:

  • To pack all items (71%, down from 81% last year)
  • To move an automobile (68%, same as last year)

Overall, coverage of core relocation expenses dipped from 2003 and 2004 levels with decreases in the percentages of overall companies responding indicating they offer to reimburse/pay for these items (i.e., to pack all items, move unlimited weight, etc.). The exception is automobile relocation expenses, which held steady. The percentage of companies offering "non-core" relocation benefits (e.g., picking up belongings from a secondary residence, moving a boat or satellite TV dish, etc.) held mostly similar to last year's levels.

  • The percentage of mid-size companies offering to pay for the packing of all items decreased significantly from last year (78% vs. 90%, respectively).
  • The percentage of small companies offering to pay for the movement of exercise equipment decreased significantly from last year (41% vs. 51%, respectively).
  • Significantly fewer small firms this year indicate they offer to pay for items to be carried down from the attic this year (27% vs. 39%), and fewer mid-size firms are offering to pay for unlimited weight (43% vs. 49%).
  • Although nine out of ten large firms still offer to reimburse/pay for the packing of all items and for moving an automobile, smaller percentages from last year offer to pay/reimburse for the moving of exercise equipment, a second auto, unlimited weight, recreation/lawn equipment, collections, pets and satellite dishes.

Eighty-three percent of firms offer specialized relocation assistance for employees who rent, and the majority of firms reimburse/pay for lease cancellation and offer home finding trips.

  • Mid-size and large companies continue to be more likely to offer specialized assistance to renters. However, while most of these benefits are still offered by the majority of large firms, the percentages offering many of these types of assistance decreased somewhat from last year.
  • The percentage of small firms that offer to move automobiles and the percentage that offer storage increased over last year (30% vs. 22% and 35% vs. 23%, respectively).
International Relocation Volume —

Some Increases Expected, Majority Expect 2006 Volume to Remain at 2005 Levels

Forty-three percent of responding firms transfer employees between countries. Thirty-nine percent of firms indicate that the number of employees they relocated internationally increased in 2005 compared to 2004. Mid-size and large firms were more likely than small firms to see increases in international relocation volumes in 2005.

  • Thirty percent of companies responding indicate they expect increases in international relocation volume in 2006.
  • Large firms are more likely than mid-size and small firms to expect increases in international relocations in 2006.
  • Over half of companies, regardless of size, indicate they expect 2006 international relocation volume to remain unchanged from 2005 levels.

Over half of responding firms, regardless of company size, indicate the duration of the typical international relocation assignment is greater than 12 months but less than three years. Close to a third indicate these assignments last three years or more. Only 17% of 2005 international assignments were temporary (less than 12 months).

  • Overall, 22% expect the number of temporary assignments to increase, but these expectations are driven mostly by large companies (34% expect increases). The majority of all firms, regardless of company size, expect unchanged volume in temporary international assignments in 2006 from 2005 levels.
Question 45b: International Relocation
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International Outsourcing —

Outsourcing Mixed in 2005

In 2005, a similar number of firms overall indicate outsourcing international relocation services as in 2004 (62% vs. 58%). However, more mid-size and large firms indicate outsourcing internationally in 2005 than in 2004 (75% vs. 67% and 83% vs. 76%, respectively). Over half of large firms outsourced securing rental property and destination services/orientation tours; however, the overall percentages of firms outsourcing individual international services were mixed.

  • The percentages of firms outsourcing the contract of an international household goods carrier, intercultural and language training, and monitoring of international shipment decreased significantly (23% vs. 34%, 18% vs. 31%, and 14% vs. 30%, respectively).
  • Mid-size and large firms outsourcing the securing of rental property internationally increased slightly (47% vs. 42% and 60% vs. 52%, respectively).
  • Large firms outsourcing the management of international relocation programs also increased slightly (35% vs. 28%).

Among companies that outsourced relocation services domestically, the percentage that did so internationally in 2005 increased (from 70% to 79%), although mid-size and large firms are still much more likely than small firms to outsource international relocation services.

Question 45e: International Outsourcing
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Question 45e: International Outsourcing
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International vs. Domestic Policy —

Majority of Firms Offer Additional Considerations, Service & Scheduling Key for Carrier Selection

Most firms indicate there are differences between their domestic and international relocation policies. Close to half or more offer the following: additional tax considerations, additional leave time with at least one visit back to the U.S./Canada, allowances for children to attend certain schools, intercultural and language training, and additional leave time. As expected, mid-size and large firms are more likely to offer additional considerations than small firms.

  • More small and mid-size firms than last year indicate having special considerations in their international relocation policy (68% vs. 57% and 93% vs. 81%, respectively).
  • More small companies indicate offering additional tax considerations, allowances for children to attend certain schools, increased allowances for permanent storage, higher relocation allowances, and higher rental allowances than last year.
  • A greater number of mid-size and large firms indicate offering additional leave time for visits back to U.S./Canada than did last year (68% vs. 50% and 72% vs. 65%).
  • Fewer mid-size and large firms are offering increased allowances for permanent storage (38% vs. 46% and 51% vs. 68%).

When selecting a carrier for international relocations, "Service" is of chief importance among decision makers (89% rate it "critically important").

  • Small companies put more weight on "Price" than do mid-size and large firms.
  • Small and large firms appear to put more weight on "Technology" than do mid-size firms.

Increasing over last year, a third of all companies offer employment assistance to spouses or partners relocating internationally and 63% report at least one failed or declined international transfer (vs. 24% and 53%, respectively).