CapRelo Blog

3 Ways to Reduce Your Relocation Costs

Posted by Amy Mergler on Thu, Dec 10, 2015

savings-resized-600.jpgCost cutting has become a way of life in the corporate world. When relocation costs are reduced, the bottom line increases. Relocation expenses can drain other resource spending. Cutting back and controlling these expenses – without compromising the relocating employees’ experience – should be the goal of every human resource department. Unfortunately for many companies, this goal remains an enigma. However, simple changes to the relocation policy can equate to substantial savings without compromising employee morale.

Find out more about developing relocation policies in our free article.

Set Clear Parameters in Your Relocation Policy

Policy ambiguities can result in additional costs for the company. Your relocation policy should be written in easy-to-understand, simple language. Take into consideration what is needed to facilitate a relocation smoothly and efficiently, without allowing wiggle room by the employee.

Put Expense Caps on Some Relocation Benefits

You would be surprised at how many companies ignore capping expenses like loss on sale. Loss on sale clauses for employees who own homes can be a major expense that should be capped. Many homeowners have experienced depreciation of their real estate assets. This makes loss reimbursements a major expense for relocating employees. Your relocation policy should clearly define a maximum amount that will be reimbursed. Additionally, it’s critical to consider capital improvements to the property when calculating its value.

Change the Way Relocation Expenses are Paid Out

If you’re currently using traditional expense reporting to reimburse employee expenses, you may want to consider if a lump sum payout method is best for your company. Numerous expense reports generated by the transferee will result in time and costs to review, approve and issue payment for each report. A lump-sum method may eliminate the headaches and costs involved with multiple expense reports and save your company money. There are a variety of types of lump sum programs. Take the time to research and evaluate if this kind of program would be beneficial to your company.

 

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Topics: Corporate Relocation Costs, corporate relocation program, loss-on-sale relocation policy

[Video] A Cheat Sheet for HR Managers: 7 Keys to Employee Relocation

Posted by Brian D'Orazio on Tue, Jan 21, 2014

Please enjoy our video, "7 Keys to Employee Relocation: A Cheat Sheet for HR Managers."

Topics: Corporate Relocation Costs, attracting new hires, loss-on-sale relocation policy, House Hunting Trips

Avoid Five Common Errors in Relocation Policies

Posted by Mickey Williams on Tue, Jul 23, 2013

06012015_meeting_sq.jpgEmployers with multiple global locations need effective employee relocation policies to attract and keep the most talented staff available. Relocation policies can be designed in any fashion the company chooses, but many employers make some common mistakes that hurt the effectiveness of their programs.

Avoiding the most "popular" errors increase the competitiveness of relocation programs while also delivering employers better cost control. Senior management, HR personnel and others having input in relocation policy decisions should regularly evaluate their programs for cost management, attractiveness and administration issues to keep policies current and competitive.

Find out more about developing relocation policies with our free guide.

During evaluation periods avoid these mistakes, at a minimum, to keep your relocation policy under control and effective in reaching your goals.

Common Costly Mistakes

  1. Lack of coordinated and assisted home finding trips and allowances.
    Although necessary components of a competitive relocation policy, house hunting trips generate stress on your HR and accounting departments. Fortunately, careful planning and clear definitions of your home finding trip policy minimizes, or eliminates, most transferee and employer concerns. Clearly stating all facets of the policy eliminate transferee and HR personnel confusion. Capping the number of home finding trips at two and setting maximum dollar allowance limits get employers and employees on the same page.

  2. Open-ended temporary living arrangements and allowances.
    Providing temporary living expense reimbursements is good practice for relocation policies, however, the cost can be severe when program parameters are unclear – seemingly indefinite – for time and allowance limits. Many employers have found that 60 to 90 days is sufficient for most transferees. Employers also often prefer to make temporary housing arrangements for transferees to better control costs. Stating the maximum allowance amounts eliminates confusion and potential future misunderstandings between employee and employer.

  3. Vague policy exception language.
    Accepting that exceptions, at some intervals, will be necessary helps understanding of this issue. However, the conditions for potential exceptions should be clearly written and enforced. Employers who neglect to heed this suggestion often regret not doing so. Exceptions must be consistent with explanation of the conditions that trigger any consideration of altering the policy for one or more transferees. While it may be impossible to address every possible situation that opens the discussion of exceptions, covering as many as possible in your policy eliminates the lion's share of potential areas of contention.

  4. Home selling and loss-on-sale assistance not clearly defined.
    This mistake is very common to poorly designed relocation policies. This error can be very costly to the employer. To avoid problems, use simple English to define these benefits. It is much easier and less costly to address these issues before the start of a relocation.

  5. Lack of outsourced resources.
    Partnering with a proven third-party relocation firm is usually a wise, cost-effective decision. However, unless you have an existing relationship, be sure to obtain a complete list of services they perform and the charges for each. Asking for such information for every relocation provides for cost control and a smooth transferee – and HR – experience.

These are very common mistakes found in many otherwise sound relocation policies. Simply eliminating and correcting these errors in your own policy will save your company money and create happier, more productive transferees.

Free eBook:  A Guide to Developing  Relocation Policies

Topics: Home Selling and Purchase Assistance, loss-on-sale relocation policy

Turn Poor Relocation Policies into Competitive Programs

Posted by Chris Finckel on Tue, Jul 02, 2013

policy-manual-pagesMost multi-location employers realize they need relocation policies to maintain their ability to attract and retain talented employees. Unfortunately, some relocation programs are incorrectly designed. This situation often causes two problems:

  1. The policy does not address the primary concerns of relocating employees and new hires.

  2. The employer incurs costs without getting full value for money spent.

However, there are ways you can modify ineffective relocation policies to make them more transferee and employer friendly. Fortunately, it is not too difficult to accomplish these vital goals. Using forethought, understanding and some logical thought, you can create a budget-friendly, competitive relocation policy that will give you the talent attraction and retention levels you want.

How to Modify Your Relocation Program:

  • Eliminate single-tier and combined-benefit policies.
    One-size-fits-all policies often result in cost control but transferee dissatisfaction. There is little point in having outstanding cost control with non-competitive policies. Combined-benefit policies, offering lump sums to cover numerous relocation expenses, are equally confusing to transferees and your HR department. Keep your eye on the prize: Attracting and retaining talented employees.

  • Carefully plan and budget for home finding trips.
    Should you not practice pre-planning for home finding trips, your transferees often waste valuable time and your company wastes money. However, careful planning of home finding trips maximizes transferee time, while minimizing your costs.

  • Clearly state and cap your temporary living allowances.
    Temporary living expenses are an important component of relocation policies, but can become a "runaway train" of cost when not managed properly. Open-ended policies are expensive and offer little incentive for the transferee to accelerate the availability of the permanent home. For example, 60 to 90 days should be sufficient for transferees and control your costs.

  • Control and manage the transferee's efforts.
    Transferees can sometimes be overly conscientious, trying to solve too many relocation issues, costing them and the company money without achieving desired results. Clearly state both transferee and company responsibilities to minimize confusion and waste.

  • Be consistent with written policy exceptions.
    Relocation policy exceptions are inevitable. However, inconsistencies can damage an otherwise solid program. Not only might you face bloated relocation expenses, but you might create employee relations issues. Being consistent, with reasonable exceptions to published policies, will earn the respect of future transferees and new hires.

  • Clearly define loss-on-sale benefits.
    Executing quick sales of personal residences can be difficult. Incorporating reasonable loss-on-sale allowances in relocation policies are important components. To avoid employee confusion and unmanageable employer cost, be clear and complete in defining your policy's loss-on-sale benefits. Design fair and equitable benefits, with appropriate caps, to make your relocation policy more competitive and budget-friendly.

  • Choose third-party relocation firms carefully.
    Professional relocation firms accomplish three goals. First, they reduce administrative responsibilities of your HR department personnel. Second, they create smooth employee relocations. Third, they help employers manage and control relocation costs. Select your firm carefully to ensure an efficient, budget-friendly experience. Your accounting department, HR staff and transferees will thank you.

Relocation policies can help or hurt your staff and company budget. Use these suggestions to eliminate potential downsides and risks to the employer and employee. These tips will turn a questionable policy from a less-than-optimal feature into a competitive, cost-controlled and attractive program.

Free eBook:  A Guide to Developing  Relocation Policies

Topics: Low-Stress Relocation, Home Selling and Purchase Assistance, loss-on-sale relocation policy, House Hunting Trips

How does a loss on sale relocation work?

Posted by Nicole Overholt on Tue, Dec 11, 2012

money-for-mortgage.jpgLoss on sale relocation features are at the forefront of competitive corporate relocation policies. Transferring employees need and appreciate this relocation feature, so employers whose policies lack this provision risk higher turnover of valuable employees and increasing difficulty attracting talented new hires.

A recent survey by the Worldwide Employee Relocation Council® (WERC) indicated that loss on sale was a primary concern for the majority of transferees. Seventy percent of respondents cited the current home sales market as the most important reason many employees are hesitant to relocate.

Find out more about Real Estate Considerations for Your Executive Relocation Policy in our free article.

The financial risk of a home sale to the transferee and the benefits to the employer make loss on sale provisions vital to competitive relocation policies. Employers should consider the following for their loss on sale provisions.

Loss on Sale Provision Considerations

  • Homeowners fear losing equity on rapid home sales. Offering a promotion and compensation increase, including a loss on sale provision, will motivate current or new employees to relocate, if they fear losing equity on the sale of their homes.
  • Loss on sale provisions increase relocation program costs, but deliver long term returns to employers. Depending on local markets, your loss on sale provision could increase your relocation program costs. Designing a clear "loss on sale formula," that specifies benefit limits, can help you control the cost of the program. But the most positive result for employers is reducing turnover and having the best employees in the right jobs at the right location.
  • Clearly state all loss on sale features. This facilitates transferees’ understanding of how the process and features work. Clear communication also lowers transferee stress levels, an important company consideration. Less stressed transferees will lead to quicker productivity after relocation.
  • Types of benefits you offer to new hires as an incentive to relocate. Depending on your industry and the type of candidate you recruit, you should consider tailoring your loss on sale benefits to your specific needs. Become familiar with the relocation programs your competition offers. To help you attract the candidates you want, your loss on sale feature should at least equal the benefit your competitors provide.

How Loss on Sale Works

  • Reimburse transferees for loss incurred due to the sale price of their home. This helps assuage transferees’ fear or trepidation about losing money on a home sale. Your most valuable company assets, your employees, are worth this investment.
  • Employee payback provisions. This feature helps reduce turnover and protect the employer from transferees leaving the company after collecting loss on sale reimbursements. Set a reasonable time period that the transferee must continue working for the company after relocation, or pay back reimbursement monies. This feature helps control your corporate costs.
  • Have a maximum reimbursement amount to further manage employer loss on sale costs. Capping loss on sale reimbursements controls costs while still delivering the benefit your transferees and new hires want.
  • Your policy should clearly state which type of employees qualify for loss on sale assistance. Case-by-case implementation can cause administrative headaches or negatively affect corporate culture. Create specific guidelines for qualification. For example, you might offer this feature to all exempt employees or only those executives over a specific authority level or title.

Partnering with a professional relocation firm to design a custom loss on sale program can enhance your relocation policies, keep them competitive, reduce staff turnover, lower your administrative responsibilities and control employer costs. Loss on sale features are more important to transferees and often reduce costs associated with other relocation features.

Although loss on sale provisions create initial cost, the payoff is in lower turnover, better quality new hires, improved operational efficiency, and better financial management. Loss on sale features create cost only once, but generate positive returns over the long term.

 

Free All-Inclusive Guide  Relocation and U.S Taxes

 

Topics: Corporate Relocation Costs, loss-on-sale relocation policy, executive relocation package

How To Reduce Your Relocation Costs

Posted by George Herriage on Wed, May 30, 2012

v--crs-kristins-blog_posts-blog_photos-measurement_of_costs-resized-600-2.jpgIn a tight money environment, cost cutting becomes a way of life in the corporate world. When relocation costs are reduced, the bottom line increases for company shareholders. Relocation expenses can drain other resource spending. Cutting back and controlling these expenses, without compromising the relocating employee’s experience, should be the goal of every human resource department. Unfortunately, this goal remains an enigma for the typical company. Spending on relocation with just the goal of keeping the employee happy has become the ‘de rigour modus operandi’ of many firms. Whereas, simple changes to the relocation policy can equate to substantial savings without compromising morale.

Learn more about developing relocation policies in our free guide.

Lay Down Clear Parameters in Your Policy

The first step in reducing costs is to lay down clear parameters in the relocation policy. As you likely are aware, policy ambiguities can result in additional costs for the company. Lay out the relocation policy in easy-to-understand, simple language, and take into consideration what’s needed to facilitate the move smoothly and efficiently, without allowing wiggle room by the employee.

Establish Expense Caps on Some Benefits

The second step is to put expense caps on some relocation benefits, like loss on sale. This may seem like a no-brainer idea, but one would be surprised at how many companies ignore capping expenses like this one. Loss-on-sale clauses for homeowner employees can be a major expense that should be capped. In today’s real estate environment, many homeowners have experienced depreciation of their real estate assets. This fact makes loss reimbursement a major expense for relocating employees. The relocation policy should clearly define exactly how much of a loss, up to a maximum amount, that will be reimbursed. It's also critical to take into consideration capital improvements to the property when calculating value.

Change How Relocation Expenses Are Paid

Lastly, but far from least, changing the way relocation expenses are paid out can result in savings. Using a lump-sum payout method rather than the traditional expense reporting might reduce relocation costs, but damage the employee’s productivity, which impacts expenses negatively.

The average transferee takes 8 to 12 weeks to complete a relocation move. During this time 6 to 8 expense reports are generated by the transferee resulting in time and costs to review, approve and issue funds for each report. Switching to a lump sum method will eliminate the headaches and costs involved with multiple expense reports. Not to mention, potentially save money as the employee knows upfront the funds allocated to relocation costs, rather than an unlimited well of capital at the company.

Save Time & Money Using Tiered Relocation Packages

Topics: corporate relocation program, loss-on-sale relocation policy

Do Your Employee Loss-on-Sale Relocation Policies Need a Second Look?

Posted by Barbara Miller on Mon, Apr 23, 2012

The fear of losing money on a home sale is one of the key factors that keeps employees from wanting to relocate. It's a valid fear in today's market, especially if employees homes are already “under water” (that is, they owe more on the mortgage than the home is worth) due to increased interest rates, second mortgages or home equity lines of credit.

One way corporations are making the decision to relocate easier for homeowners is with loss-on-sale policies that help employees recoup some of the financial loss they may face when they sell their current home. If your company doesn't have any loss-on-sale relocation policies -- or if you have one that hasn't been effective in increasing your workforce mobility, it may be time to give your employee loss-on-sale relocation policies a second look.

Loss-on-sale policies can add as much as 33% to a company's relocation costs. But not having such a policy can make employee relocation difficult, if not impossible in some cases. The most successful loss-on-sale relocation policies share financial responsibility with the seller in a way both parties find equitable.

Download Our Free Article on Incorporating  Property Management

Capital Relocation Services has been successfully implementing consistent and equitable loss on sale relocation policies for its clients since the start of the real estate crisis, and will help your company keep from reinventing the wheel each time you deal with an employee with a home that faces a loss-on-sale.

Topics: relocation benefits, loss-on-sale relocation policy

Do Your Employee Loss-on-Sale Relocation Policies Need a Second Look?

Posted by CapRelo on Thu, Dec 23, 2010

Relocation Policies

The fear of losing money on a home sale is one of the key factors that keeps employees from wanting to relocate. It's a valid fear in today's market, especially if employees homes are already “under water” (that is, they owe more on the mortgage than the home is worth) due to increased interest rates, second mortgages or home equity lines of credit.

One way corporations are making the decision to relocate easier for homeowners is with loss-on-sale policies that help employees recoup some of the financial loss they may face when they sell their current home. If your company doesn't have any loss-on-sale relocation policies -- or if you have one that hasn't been effective in increasing your workforce mobility, it may be time to give your employee loss-on-sale relocation policies a second look.

According to a survey completed by ERC, 46% of companies have a loss-on-sale policy in place. Another 18% deal with loss-on-sale on a case-by-case basis.

Loss-on-sale policies can add as much as 33% to a company's relocation costs. But not having such a policy can make employee relocation difficult, if not impossible in some cases. The most successful loss-on-sale relocation policies share financial responsibility with the seller in a way both parties find equitable.

Capital Relocation Services has been successfully implementing consistent and equitable loss on sale relocation policies for its clients since the start of the real estate crisis, and will help your company keep from reinventing the wheel each time you deal with an employee with a home that faces a loss-on-sale.

Topics: workforce mobility, Corporate Relocation Costs, loss-on-sale relocation policy

4 Ways to Improve Retention with a Better Employee Relocation Policy

Posted by CapRelo on Wed, Nov 24, 2010

When employees sell their home, pack up their belongings, and move their family across the state, across the country, or even across the world in the case of an international relocation, you think that shows a level of commitment. You may think those employees are in it for the long haul. But that's just not true. Employee retention percentages often drop after a relocation, especially if the relocation process is not as stress free as possible.

There are ways you can protect your investment in your relocating employees when you take the risk of a generous employee relocation policy. Your employee relocation policy may include “loss-on-sale” provisions when an employee sells a home, down payment assistance to purchase a new home, and all the usual costs associated with relocation. Here are some ways to improve employee retention:

  1. Setting “repayment policies” as part of your employee relocation policy, which mandates your employees to pay back all or part of the relocation costs if they leave the company within a specified time frame, can improve employee retention.
  2. Careful employee screening prior to relocation can gauge your employee's commitment to success in the new location.
  3. Trips to the destination city for the employee and family members can help determine if the employee will be a good fit in the new location.
  4. A low stress employee relocation policy is yet another way to show your commitment to your employees. If you do everything you can to make sure the relocation process stays relatively stress free -- including hiring a relocation management company to help you with the relocation process -- you're indicating to your employees that they can expect the same level of consideration moving forward with your company.

Topics: employee retention, Home Selling and Purchase Assistance, international relocation services, relocation management company, loss-on-sale relocation policy

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