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Relocation Policy

Adaptability & Budgets — The Balancing Act

Nearly a decade after the Great Recession, the changes born from those economic challenges set the stage for all the ways “relocation” works today. Building in the capacity for relocation to be adaptable to employee needs while keeping costs contained is now a nearly universal policy stance across organizations. Assignment type versatility, candidate vetting and multiple policy types continue to provide methodology options and guardrails. Fixed/flex policy, additional incentives and cost containment strategies also allow companies to continue to flex the adaptive muscles developed during the Great Recession to keep their talent mobile.

Factors such as alternative assignments use and candidate assessments being performed prior to at least some relocations hit historic highs.

 

Multiple Policy Types & Practices Leveraged, Traditional Assignments Remain the Majority


Relocation programs remain quite diverse. Similar to the past few years, the majority of relocation professionals manage policies for domestic (83%) and international relocations (83%), along with policies for permanent international transfers (62%), short-term/temporary assignments (61%), and international localization (55%). Essentially half maintain intra-regional (international) (51%) and extended-business travel policies (53%) as well, and 43% have a policy for long-distance commuter arrangements.

Most firms continue to define levels, or tiers, within policies. The larger the firm, the more likely its overall domestic policy includes levels. Firms using levels manage essentially two or more such policies on average, across company size, for both domestic and international relocations. Levels are based on a variety of factors; however, the top two, domestically, across firm size, are job/grade level and position/job title. However, job/grade level is nearly equal in weight to position/job title at mid-size firms (56% vs. 54%), while position/job title outweighs job/grade level at small firms (63% vs. 45%), while the reverse is true at large firms (61% job/grade level, 47% position/job title). Domestically, homeowner/renter status is more likely to be a consideration at mid-size and large firms than small firms (31% & 41% vs. 15%), while assignment length and new hire/current employee status are more likely to be a tier/level consideration at large firms than smaller ones.

 
Question 17
Companies with a formal policy for the following relocation types
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Question 18-a1
Does your company have different tiers within its domestic relocation policy...
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Question 18-a2
Does your company have different tiers within its short-term/temporary assignments relocation policy...
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Question 18-a3
Does your company have different tiers within its extended business travel policy...
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Question 18-a4
Does your company have different tiers (or levels) within its long-distance commuter policy
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Question 18-a5
Average number of tiers (levels) within following relocation types
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Question 18-b1
What are your different tiers (or levels) based on...
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Question 18-b2
What are your different tiers (or levels) based on...
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Question 42-f
Companies with a formal policy for: International relocation types
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CANDIDATE ASSESSMENTS

Over the last six years, the majority of firms have used candidate assessments to support relocations. This year 79% of firms assessed candidates prior to making offers—reaching a historical high. This percentage is similar to most recent years and maintains a marked increase over the roughly half of firms that assessed candidates from 2012 to 2014. Usage nearly matches the highest level recorded last year for mid-size firms (83% vs. 85%) and remains well above other recent years (74%+). Candidate assessment matches the highest level recorded for small firms (78%), similar to last year (72%) and notably above 2018 (67%). Usage also attains the previous high recorded for large firms (76%), a dramatic increase over 2018-2019 (54% & 64%, respectively).

  • Around half of small and mid-size firms perform candidate assessments for all relocations; roughly four out of ten large firms do so.
  • One in five mid-size firms assess candidates for domestic relocations.

Overall, the most popular method continues to be assessments for all relocations (44%), similar to the past five years and more than double the 21% levels reported from 2012 to 2014. Usage among large firms increases over the past two years (37% vs. 32% in 2019, 29% in 2018), inching closer to levels reported in 2015-2016 (42%+) and remaining roughly double the percentages seen in 2012-2014. Around half of mid-size firms continue to perform candidate assessments for all relocations, similar to the previous five years and more than twice the historical rate. Among small firms, 50% performed candidate assessments for all relocations, a progressive increase over the past two years (43% in 2019, 39% in 2018) similar to 2015-2017 (44%-48%) and far higher than in 2012-2014 when essentially one-fourth did.

 
Question 34-1
Does your organization perform candidate assessments prior to relocation offers
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Question 34-2
Does your organization perform candidate assessments prior to relocation offers
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FIXED BENEFITS/FLEX BENEFITS LIST-DRIVEN POLICY

Over the past decade, companies have gained a fundamental understanding that relocation policies must have built-in flexibility. Many companies do this by identifying what relocation costs are considered “core coverage,” or by allowing relocation funds to be used on select services from which an employee can choose. Stipulations by employee level and/or policy are often built in, while many companies simply make these types of flexibility available to all relocating employees.

From 2015 to 2019, more than 80% of firms used aspects of fixed/flex policy, a marked increase from 2013-2014. Usage jumps to 96% in 2020, and 95%+ across company size, indicating that offering some form of flexibility in how relocation benefits can be used is essentially universal practice. The option to cover specific items as fixed/core benefits or allow flexible use of all or a portion of relocation benefits can be made available to all employees, be employee level dependent, or—new for this year’s survey—policy dependent. Capturing this additional option presents an even clearer picture of how these benefits are being built into relocation programs. More than half of firms now say they offer the coverage of specific items in relocation for all employees, matching the high in 2015 (54%).

However, company size has an impact:

  • Across company size, more than half of firms indicate they offer coverage of specific items to all relocating employees. However, making coverage dependent on employee level is more likely to be done at mid-size firms (46%) than small (29%) or large (32%). Roughly one out of five mid-size or large firms say this can also be policy dependent, and one out of five small firms state it is not offered at all.
  • Four out of ten firms say flexible use of the full relocation benefit amount is offered to all employees or is employee level dependent. Small firms are the most likely to make the full benefit available to all (44%), rather than dependent on employee level (30%) or policy (14%). Larger firms are nearly evenly split between these two options. One in four mid-size and large firms say flexible use is likely to be policy dependent, while around one in five firms overall say it isn’t offered at all.
  • Having the option to flexibly use a portion of relocation coverage is offered by around four in ten firms across size. However, around one in three mid-size and large firms say this is likely dependent on employee level, and one in four say it may be policy dependent, compared to far fewer small firms. One in five firms don’t offer this kind of flexibility in any capacity.

COVERAGE OF CORE COMPONENTS REMAINS THE MOST POPULAR ASPECT OF FIXED/FLEX POLICY.

For a fifth year we dug deeper into what falls into this category. Overall, the top components are travel expenses–final move (53%), temporary housing (51%), travel expenses for home finding trips (48%), and household goods shipping (47%)—similar to the previous three years of comparable data. Across nearly all cost types, large firms are more likely than small or mid-size firms to consider a cost as a core benefit, with close to half or more of large firms doing so for all components. Two exceptions: roughly half of all size firms consider travel expenses for home finding trips to be a fixed benefit and mid-size and large firms share similar core coverage for one other item: real estate costs–origin/selling. Nearly half of these firms report real estate origin/sales costs as a fixed benefit in their policies.

 
Question 19-a
Companies whose formal relocation policy incorporates a fixed benefits/flexible benefits, list-driven policy
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Question 19-b1
Aspects of relocation benefit coverage of specific items offered
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Question 19-b2
Aspects of relocation benefit coverage of specific items offered
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Question 19-b3
Aspects of a flexible use of full relocation benefit amount
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Question 19-b4
Aspects of a flexible use of full relocation benefit amount
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Question 19-b5
Aspects of a flexible use of a portion of relocation benefit amount
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Question 19-b6
Aspects of a flexible use of a portion of relocation benefit amount
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Question 19-b7
Aspects of other types of structured flexibility offered
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Question 19-b8
Aspects of other types of structured flexibility offered
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Question 19-c1
Relocation costs that are considered fixed benefits within relocation policy
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Question 19-c2
Relocation costs that are considered fixed benefits within relocation policy
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Incentives continue to prove highly successful;
essentially nine in ten report incentives work almost always or frequently, consistent with historical levels.

INCENTIVES

In addition to having flexibility in policy, the ability to use additional incentives to convince a key employee to take a relocation assignment remains mission critical. Over the past six years, most firms across company size indicate they are offering additional, non-standard incentives or policy exceptions. Since 2008, the overall use of incentives/exceptions has grown 30% (90% vs. 60%: 2008).

  • Relocation/sign-on bonuses remains the number one incentive for a second year across company size. However, at both mid-size and large companies, extended temporary housing benefits and cost-of-living adjustments (COLAs) are close seconds.
  • Both extended temporary housing benefits and cost-of-living adjustments (COLAs) round out the top three incentives used across company size.
  • Even as housing/mortgage pressures lessened and the percentage of firms offering extended temporary housing benefits last year remains near the lowest levels since measurement began, extended temporary housing remains among the top three incentives offered over the past six years.
  • Six in ten firms offered relocation/sign-on bonuses across company size; while similar to 2018 for small and mid-size firms, this is a marked decrease among large firms (58% vs. 71%) comparatively.
  • Roughly half of mid-size and large firms used COLAs in salary; only 40% of small firms did so.
  • A telecommuting option (1-2 days a week) was flexed by around a third of firms and at similar levels across company size.
 
Question 8-a
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Question 8-b1
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Question 8-b2
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Question 8-c
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COST CONTAINMENT

However, even with built-in flexibility and high usage rates of incentives/exceptions, cost containment measures are also nearly universal. The use of cost containment reaches another historical high, which essentially proves the last six years of near-constant elevated usage of these tactics to keep relocation budgets within scope is the “new normal.” Prior to 2014, far fewer companies indicated using these types of measures, and those that did were far more likely to be large companies. Company size no longer plays a notable role, as overall usage is now similar across firms of all sizes. So, even while companies flex to move talent, they are also flexing to keep costs down.

The top cost containment method continues to be using lump sum payments for relocations, with 40% of companies indicating they use lump sum payments for this purpose. In 2019, roughly one out of every four moves by firms participating in the survey was estimated to have been entirely paid for by lump sums. Additionally, while most firms use lump sum payments for domestic relocations, this year lump sum payments for international long-term assignments jumped to 40% and usage for short-term, temporary assignments remained above 40% for a second straight year (44% & 42%).

  • Roughly one-third of firms capped relocation benefits to contain costs in 2019, which was similar across company sizes.
  • Large firms were the most likely to review/renegotiate supplier contracts last year (38%), followed by mid-size firms (24%). Small firms were much less likely to have done so (16%).
  • Large firms were roughly three times as likely to offer pre-decision counseling than smaller firms (33% vs. 13% small, 11% mid-size) to contain costs.
  • Mid-size and large firms were more likely to have restructured policy tiers/eligibility for benefits last year compared to small firms (25% vs. 17%).
  • One in four firms across size say they offered short-term/extended travel/commuter arrangements rather than relocating employees in 2019 as a cost containment measure.
 
Question 21
Did your company use any of the following cost containment measures in relocation policy/practice in 2019
Chart Q21
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Question 21-2
Did your company use any of the following cost containment measures in relocation policy/practice in 2019
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Nearly half of large firms use alternative assignments to meet strategic business goals (43%), far more often than smaller firms.

ALTERNATIVE ASSIGNMENTS

Over the last six years, most firms have come to rely on other arrangements to supplement traditional relocations. This year, 71% of firms state they use alternative assignments, reaching a historic high and an increase over the past five years (61%-67%), as well as far more often than during 2012-2014. The percentage of large firms using such arrangements nearly reaches the highest level measured (77% vs. 78%: 2018) and jumps markedly over last year (68%). However, usage remains similar to 2015-2017 (72%-74%) and far above 2012-2014 (60%-66%). Usage among mid-size firms jumps to a historic high (78%), roughly twice that of 2014 (37%) and surpassing 2015-2019 levels (64%-75%). Increasing for a second straight year, usage among small firms also jumps to match the previous historic high of 2017 (59% vs. 53%: 2019, 40%: 2018), which is above 2015-2016 (48%-54%) and roughly three times that of 2014 (19%).

The methods for incorporating alternative assignments into policy vary widely. Such arrangements were birthed to meet strategic business needs geographically without incurring the costs of traditional relocations. In the past, the overwhelming policy driver was accomplishing strategic business goals. Most policy reasons show similar usage levels overall in recent years, indicating that they are being used to solve specific challenges at individual firms. While one-fourth or more of firms use nearly every potential policy method, a few differences emerge by size.

  • Four out of ten large firms use these in addition to short-term assignments, far more often than smaller firms.
  • More than one-third of large firms use them to develop internal talent, more often than smaller firms.

Overall, the top factors in determining whether alternative assignments are brought into play are business need (60%), followed by assignment purpose (44%), cost (42%), employee requests (41%), job function (39%) and career development (34%). However, while business need is the clear top factor across size, the weight of other factors varies.

  • Among large firms, business need (63%) and assignment purpose (54%) are the clear top two considerations. Assignment purpose carries more weight at large firms compared to smaller ones overall.
  • At mid-size firms, the top factor is business need (57%), with cost (45%) and employee requests (43%) as closely-rated secondary factors, and around one-third rate every other factor as pivotal.
  • At small firms, the top factor is business need (58%) by the widest margin. Roughly four in ten say employee requests (42%), cost (40%) and assignment purpose (40%) are important factors—nearly equally weighted for second place.
Question 27-1
Is your company utilizing "Alternative Assignments"...
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Question 27-2
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Question 27-a1
How are "Alternative Assignment" arrangements incorporated into your organization's overall employee mobility strategy?
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Question 27-a2
How are "Alternative Assignment" arrangements incorporated into your organization's overall employee mobility strategy?
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Question 27-b1
Key factors determining "Alternative Assignment" use
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Question 27-b2
Key factors determining "Alternative Assignment" use
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Summary Statement

As pressures mount from a variety of places, companies continue to utilize the lessons learned during the Great Recession and the following recovery. With a global pandemic and the corresponding economic contractions and expansions that will inevitably follow, it is assured that companies moving talent will continue to find ways to balance both employee needs and company budgets to keep the world moving.

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