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Amy Mergler

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Global Compensation Services (Part 3)

Posted by Amy Mergler on Thu, Apr 05, 2018

FormsA global mobility program can offer significant value to a company, not only because of the business opportunities it presents, but also because it helps to attract and retain quality talent. However, to remain in compliance with the rules and regulations of various countries, a well-run global mobility program needs accurate, timely administration and bookkeeping. Working with a global compensation services provider offers companies a cost-effective way to gain access to the expertise, manpower and resources needed to maintain centralized, organized payroll and tax reporting.

Today is the last post in our series of posts about the services offered by global compensation services providers. Keep checking back to learn more.

Global Statement of Earnings (GSOE)

The global statement of earnings (GSOE) provides a comprehensive, detailed overview of what was paid to (or on behalf of) each assignee. It is sent to the tax provider for ease of preparation of tax returns. In addition, it’s used as a data source for shadow payroll. The GSOE is reconciled to the U.S. Box 1 Form W-2 at year’s end.

The GSOE is critical to accurate reporting. It ensures that the company is in compliance both at home and in the host country, as well as that all taxes are properly recorded for reporting purposes. Furthermore, it makes sure assignees are paying taxes as needed and enables the employer to provide assignees with tax return preparation assistance, which can be an important benefit.

Shadow Payroll

Shadow payroll, also referred to as “ghost payroll,” reports compensation that is paid to an assignee from another country. Running a shadow payroll concurrently in the host location simplifies income and tax reporting and facilitates compliance efforts.

Compensation reporting can be complex, because the various components of an assignee’s total compensation may originate from different locations. The base salary and any bonuses are usually paid from the assignee’s country of origin, but many assignment-related costs such as housing allowances, dependents’ allowances and taxes are paid from the host country. Keeping records in both countries ensures timely and accurate reporting. For this reason, compensation services providers send shadow payroll reports that show all payments made to the host location and/or the company’s tax provider. They also send an “add to earnings” file to the payroll department in the home country for the payments made in the host location. This ensures that there’s a full and accurate report of all costs associated with an assignment in each location.

Balance Sheet Updates

Balance sheet updates are adjustments to the initial balance sheet that was created at the beginning of the assignment and affixed to the letter of assignment. Balance sheet updates can be performed during an assignment for a number of reasons, such as a change in salary or family size. They’re also required at regular intervals to revise the cost of living adjustment (COLA) as needed. Compensation service providers work with the company’s data provider to obtain updated COLA indexes and exchange rates.

Tax Equalization

The fundamental principle of tax equalization is that the assignee will not suffer financial hardship nor experience a financial windfall as a result of the tax consequences of a global assignment. Tax equalization plays an important role in helping employees make a balanced decision about accepting an global assignment. Without it, an employee might not want to go to Sweden, where the income tax rate is currently more than 57 percent, while others could be lining up for assignments in countries with low tax rates like Saudi Arabia.

During the tax equalization process, the company’s tax provider calculates what the assignee’s tax liability would have been in his or her own country for non-assignment compensation. That means that base pay is taken into account, but things like cost of living allowance, education allowance, relocation costs and other similar costs are not included in the calculation. The resulting sum indicates whether the assignee’s compensation needs to be adjusted up or down, and the tax provider prepares a settlement accordingly. Consequently, the compensation services provider processes the payment. If the employee owes the employer money, the compensation services provider will collect it and send the company the relevant reports.

Year-End Reporting

Year-end reporting involves the collection of all payroll and tax reports for all assignees, as well as the subsequent filing with all relevant national and state entities. A compensation services provider coordinates the tax eligibility list with the company and its tax provider. Throughout the year, it also provides preliminary reports to the tax provider to make sure any safe harbor (estimated tax) payments are being made. When all compensation data is collected, the GSOE is sent to the tax provider. This can be done in the currency of the home country, host country or the country where the company is headquartered.

 

The Value of Global Compensation Services

 

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

Upcoming Mobility Shows and Events - April 2018

Posted by Amy Mergler on Fri, Mar 30, 2018

 

Look for CapRelo at these Upcoming Events

We will be attending and/or sponsoring the following upcoming events. If you’re attending, look for us and say hi, because it's a great opportunity for us to stay abreast of the latest global mobility trends, as well as develop and strengthen trusted partnerships. 

 

Southern California Relocation Council Lunch & Learn Spring Program

Date: April 5

Location: Wilshire Loft, Los Angeles, CA

Attendee: Patrick Cacho

The SCRC Spring Program will feature an interactive "Ask the Experts" panel discussion with talent mobility representatives from Adidas, Square, Allergan and Blizzard Entertainment. 

Learn more and register for the program here

 

Midwest Relocation Conference 2018

Date: April 10-11

Location: The Sheraton Westport, St. Louis, MO

Attendee: Christopher Bloedel

The 2018 Midwest Relocation Conference will include corporate and peer-to-peer roundtable discussions, keynote addresses and educational sessions on domestic and global topics for all levels of mobility professionals.

Click here to find out more about the conference and to register

 

Global Business News Global HR Business

Date: April 11

Location: ROAM Buckhead, Atlanta, GA

Attendee: Scott Williamson

The Global Business News event will include presentations on achieving ROI with mobile talent, employer branding, talent and mobility life cycle, tax law changes and their implications on global mobility and more.

Register for the event and learn more here

 

Tennessee Relocation Council 2018 Spring meeting

Date: April 12

Location: Nissan Stadium, Nashville, TN

Attendee: Christopher Bloedel and Robert Brizuela

The TRC's spring meeting features a corporate roundtable, an introduction to DISC Assessment, the second annual TRC Knowledge Hop and a keynote address on vendor partner relationships.

To register for the meeting or to learn more, click here

 

Arizona Relocation Alliance 2018 Annual Conference

Date: April 19

Location: Marriott Courtyard Salt River, Scottsdale, AZ

Attendee: Patrick Cacho

The ARA's annual conference's educational sessions will include a corporate panel on General Data Protection Regulation moderated by CapRelo's Patrick Cacho. The conference will conclude with a networking happy hour and silent auction to support the Melonhead Foundation, an organization that provides for the needs of children with cancer and their families. 

Learn more and register for the conference here

 

North Texas Relocation Professionals April Breakfast Panel Meeting

Date: April 19

Location: Omni Frisco Hotel at the Star, Frisco, TX

Attendee: Scott Williamson and Rick Bruce

The NTRP panel meeting will discuss "A Relocation View from the RMC Lens" and will feature CapRelo's Rick Bruce as a special guest panel member.

To find out more and register, click here

 

Rocky Mountain Relocation council 2018 Spring Conference

Date: April 24

Location: Arvada Center for the Arts & Humanities, Arvada, CO

Attendee: Patrick Cacho

The RMRC will host its first full-day event, featuring a keynote address by motivational speaker Brad Montgomery, who will discuss how fulfillment in the workplace translates to bottom-line increases in profits and employee satisfaction.

Click here to learn more and register.

 

Forum for Expatriate Management Dallas/Fort Worth Chapter Meeting

Date: April 24

Location: CapRelo Dallas Office, Dallas, TX

Attendee: Scott Williamson

Details for the FEM Dallas/Fort Worth chapter meeting are not yet available. Please check back, as information will be added when it becomes available.

 

New Jersey Relocation Council Spring Conference

Date: April 26

Location: Galloping Hill Golf Course, Kenilworth, NJ

Attendee: Pete Larkin

The NJRC spring conference will focus on what's new and what's next in global mobility with presentations on key industry trends and changes, diversity and inclusivity and tax reform.

To register, click here.

 

Pacific Northwest RELOCATION COUNCIL 2018 SPRING Meeting

Date: April 26

Location: Museum of Flight, Seattle, WA

Attendee: Patrick Cacho

The PNwRC spring meeting includes networking activities, an industry update and a session on lessons from 2017 and what it means for 2018.

Register and find out more about the meeting here.

 

If you can’t attend, please be sure to follow CapRelo on Facebook and Twitter for updates.

Topics: CapRelo Employees

Global Compensation Services (Part 2)

Posted by Amy Mergler on Tue, Mar 27, 2018

PayrollsA global mobility program can offer significant value to a company, not only because of the business opportunities it presents, but also because it helps to attract and retain quality talent. However, to remain in compliance with the rules and regulations of various countries, a well-run global mobility program needs accurate, timely administration and bookkeeping. Working with a global compensation services provider offers companies a cost-effective way to gain access to the expertise, manpower and resources needed to maintain centralized, organized payroll and tax reporting.

Today is Part 2 in our series of posts about the services offered by global compensation services providers. Keep checking back to learn more.

Certificate of Coverage

When an employee of a company is sent on an assignment to another country, he or she may be required to pay social security taxes both at the home and host locations—unless those countries have entered into totalization agreements. These are bilateral social security agreements that eliminate dual taxation by assigning coverage to only one of the countries, which is usually the one where the work is being performed. As a result, employees on global assignments and their employers are exempt from having to make social security payments in the other country. Currently, the U.S. has totalization agreements with 26 countries. The certificate of coverage is the document issued by the country that is assigned coverage of the employee’s work.

It’s important to understand social security coverage implications for global assignees. Employers need to be aware of the exact social security regulations of a country before sending employees on assignment, and if applicable, apply for a certificate of coverage before the assignment starts. This will protect both the company and its employees from dual taxation, preventing potential problems with employees who are relying on their employer to manage (or at least inform them about) these matters on their behalf. Moreover, it will safeguard the company from compliance issues.

In general, a certificate of coverage has a duration of five years. However, a country’s social security administration may grant extensions, although there is usually a processing period of four to six weeks involved. Compensation services providers can apply for certificates of coverage on behalf of their clients. In addition, they can help them track expiration dates so there isn’t a lapse of coverage.

Payroll Instructions

For each global assignment, payroll instructions must be developed based on the financial data as detailed in the assignee’s letter of assignment and initial balance sheet. The first objective of these instructions is naturally to ensure that all elements of the assignee’s compensation are accurately incorporated into payroll. The second objective is to make sure that all components are accurately recorded and that necessary withholdings are made and the funds sent to the appropriate governmental bodies—something that can be extremely complicated, depending on the location.

The payroll departments both at home and in the host locations need to receive and understand each assignment's payroll instructions. Some compensation services providers not only prepare payroll instructions, they also provide training on what the content of payroll files should be, as well as what data will be needed for payroll file returns. Instructions regarding payroll reporting can be flexible, with companies receiving instructions for full payroll details per cycle or only updates about any applicable changes.

Payroll Reconciliation

Payroll reconciliation is necessary to ensure that the payroll instructions are being carried out correctly. It verifies that the amounts are correct and for the appropriate time period, as well as that the monies are being directed to the correct accounts. When this is done by an external company, it’s an additional layer of protection against errors.

During payroll reconciliation, compensation services providers may also collect all payroll detail as a part of the compensation accumulation process.

Compensation Accumulation

Compensation accumulation is a critical component of a company’s global mobility reporting. Compensation accumulation is the collection of all assignment-related, off-payroll costs that are made to, or on behalf of, assignees through accounts payable (housing, for example) or finance (taxes). All reports are reconciled to the relevant assignee’s letter of assignment and balance sheet, as well as to company policy.

Compensation accumulation can be very challenging for companies that have assignees in multiple countries. Collecting the required data often involves interacting with multiple locations and departments. It can even involve interacting with service providers to whom a company has outsourced business processes. Nevertheless, it’s important to report all of these expenses accurately to remain compliant.

A compensation services provider collects the reconciled payroll data needed for compensation accumulation on a monthly basis and stores it in a central location. This keeps the process streamlined; plus, it organizes and eliminates the issues that can arise from decentralized, untimely data collection.

 

Check back next week for Part 3!

 

Managing Global Assignment Costs

 

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

Global Compensation Services (Part 1)

Posted by Amy Mergler on Thu, Mar 22, 2018

Global CompensationA global mobility program can offer significant value to a company, not only because of the business opportunities it presents, but also because it helps to attract and retain quality talent. However, to remain in compliance with the rules and regulations of various countries, a well-run global mobility program needs accurate, timely administration and bookkeeping. Working with a global compensation services provider offers companies a cost-effective way to gain access to the expertise, manpower and resources needed to maintain centralized, organized payroll and tax reporting.

Today is the first in our series of posts about the services offered by global compensation services providers. Keep checking back to learn more.

Cost Projection

A cost projection is a comprehensive, high-level estimate of expected costs specific to the global assignment. This is based on the client's mobility and compensation policies, as well as all additional assumptions that have been agreed upon for a specific assignment. In addition to the employee’s base compensation, which consists of his or her salary and any bonuses, it includes all estimated assignment expenses and hypothetical expenses. This can involve a range of expenses such as relocation expense reimbursement, cost of living allowance, home leave, housing allowance, expatriate premium, tax services and more, depending on the individual case. It also includes a breakdown of the projected domestic and host country taxes. Costs are assessed based on reliable data sources and projected for the duration of the assignment. For assignments that are longer than two years, inflation may be taken into account. However, it’s important to understand that actual costs may vary due to economic fluctuations that impact the cost of living, as well as other factors such as hardship, emergencies, changes to family size and more.

The main purpose of a cost projection is to create a data-driven estimate of costs that the company can use to make strategic decisions regarding its workforce needs in that location. With an accurate and comprehensive overview of the required financial investment, the company can determine whether the assignment is financially viable. If necessary, it can be used as a tool to consider alternative solutions that require a lower investment such as sending a less senior—and therefore less expensive—employee or working with a local staffing agency to hire short-term, local professionals.

Quick Cost Projection

A quick cost projection tool is a standalone tool that the company can use to plan and compare different scenarios. Whereas a cost projection is a detailed document that’s tailored to a specific assignment using the most current data, a quick cost projection tool uses more general data based on country-specific information. Based on the user’s input, it calculates cost of living, education costs, tax data, housing costs, health care expenses and more to create quick cost projections that can be used to compare the investment associated with various scenarios.

For example, a company might want to compare the costs of sending a senior manager with a spouse to Frankfurt for two years to the costs associated with sending a lower level manager who has a spouse and a child on the same assignment. Or a multinational company might want to compare the costs of sending an engineer from Detroit, Michigan on a 12-month assignment to London with the costs required to send an engineer with the same skills but who’s currently based in Milan on the same assignment.

Many quick cost projection tools are web-based platforms that companies can access themselves and use at any time. This makes them both easy to use and much more affordable than in-depth cost projections—although an in-depth cost projection will be required further on in the assignment process.

Letter of Assignment

A letter of understanding or letter of assignment outlines the details and benefits of the assignment. It’s a legally binding document that basically serves as an addendum to the assignee’s regular employment contract and lays out any varying or additional terms that apply for the duration of the assignment. As such, it must be signed by all parties. In addition to the start and end date of the assignment, job title and location, the letter of assignment must specify all contractual agreements, code of conduct, compensation and benefits, assignment-specific benefits such as moving expenses and repatriation allowance, tax equalization and other fiscal matters.

It’s important that the letter of assignment lay out all pertinent details of an assignment in a manner that leaves no room for misinterpretation. Any lack of clarity could lead to misunderstanding, which in turn could lead to costly and time-consuming problems. This can be a drain on resources, and it can create a distraction for the employee and impact the success of his or her assignment.

Initial Balance Sheet

The initial balance sheet is typically affixed to the letter of assignment. It provides details regarding the assignment allowances the employee will receive.

 

Check back next week for Part 2!

 

Global Assignment Guide

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

What Are Global Compensation Services?

Posted by Amy Mergler on Fri, Mar 16, 2018

Piled currency symbols in 3D isolated over white.jpegDue to increased globalization and cross-border projects, a growing number of companies are sending employees on short- and long-term global assignments. While this offers benefits for both employers and employees, it also makes payroll, as well as income and tax reporting, much more complex. This is further complicated because global assignments include relocation-related benefits that may or may not have to be reported. Nevertheless, employers are not only responsible for ensuring their employees are compensated adequately and in a timely manner, but also that all local income and tax reporting regulations are adhered to.

Compliance with regulations and timely, accurate tax reporting are vital to protect both an organization and its employees from potential issues with revenue services, regardless of whether they’re those of the host country or in the country of origin. This can become highly complex, especially for companies with multiple assignment locations, a range of assignment lengths and types, different pay scales and employees with varying nationalities.

For companies with employees on global assignments, navigating the complexities of international regulations and reporting requirements can be a significant burden on their payroll and bookkeeping departments. Many do not have staff with the diverse, precise knowledge required. For example, a company might have seven employees on assignments in four different countries. If these employees are of varying levels of seniority, their wages and benefits will all be different. To enable accurate reporting, knowledge is needed of the regulations and employment tax laws of all four countries. If the employees also have varying countries of origin, the situation becomes even more complex. Additionally, the duration of an assignment has an impact on the taxability of compensation items associated with global assignments—such as household goods storage.

Even if a company does have professionals with the required knowledge on staff, the time and investment needed to ensure correct and comprehensive reporting may be a drain on resources that are needed elsewhere.

For this reason, a growing number of companies are outsourcing this business process to global compensation services providers. These are third-party service providers that assume the responsibilities associated with collecting, controlling and reporting all the compensation data of employees on global assignments on the employer’s behalf. They assist employers from the very beginning of an assignment, ensuring transparency for all parties, as well as correct and complete documentation. Furthermore, they provide accurate, comprehensive administration and reporting that complies with all applicable regulations.

The Value of Global Compensation Services

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

Upcoming Mobility Shows and Events - March 2018

Posted by Amy Mergler on Thu, Mar 01, 2018

 



We will be attending and/or sponsoring the following upcoming events. If you’re attending, look for us and say hi, because it's a great opportunity for us to stay abreast of the latest global mobility trends, as well as develop and strengthen trusted partnerships. 

 

New England RELOCATION Association March MEETING

Date: March 8

Location: Four Points Sheraton, Norwood, MA

Attendee: Pete Larkin

The NERA March meeting will address the 2018 tax reforms and their impact on the mobility industry.

Learn more and register for the meeting here

 

Texas RELOCATION Network Conference

Date: March 8

Location: Cascades Conference Center, The Colony, TX

Attendee: Scott Williamson

The TRN Conference will include panel discussions with industry experts focusing on innovation and collaboration.

Click here to find out more

 

Greater Washington Employee Relocation Council Membership meeting

Date: March 14

Location: Top of the Town, Arlington, VA

Attendee: Dan Keating

To register for the meeting, click here

 

Southeastern Regional Relocation council Spring Conference

Date: March 21 & 22

Location: Marriott Resort Fort Lauderdale Pompano Beach, Pompano Beach, FL

Attendee: Scott Williamson, SRRC Board Member

The theme of the SRRC Spring meeting is "Building On Change" with panel discussions on the tax legislation and the impacts to mobility programs, policy review and development and the RFP process. 

Learn more and register for the meeting here

 

Delaware Valley Relocation council Spring Summit

Date: March 27

Location: Desmond Hotel, Malvern, PA

Attendee: Pete Larkin

The DVRC Spring Summit will focus on changes in the mobility industry, including immigration, diversity and inclusion, and will feature roundtable discussions and presentations from industry experts to help attendees strategically address challenges.

Click here to learn more and register.

 

If you can’t attend, please be sure to follow CapRelo on Facebook and Twitter for updates.

Topics: CapRelo Employees

Tips for Designing a Core-Flex Policy

Posted by Amy Mergler on Thu, Feb 15, 2018

Team MeetingDesigning a core-flex policy takes time and work. Nevertheless, by committing to creating a comprehensive program from the start, making periodic updates and adjustments becomes easier. It’s advisable to establish several factors up front:

Competitive Core-Flex Policies in Specific Industries

HR departments and mobility managers should begin by researching what their competition provides in terms of mobility benefits. Because mobility benefits are critical to attracting top talent, knowing what competitors offer will provide some guidance about the services to include, as well as the average budget for each. Of course, it may be challenging to find this information, so consulting with an experienced global mobility company to gain insights about the components of the average core-flex policy can be helpful.

Core Components

As we’ve seen, household goods moving, travel costs and other benefits the company considers critical are standard core components. Depending on the company’s needs and budget, relocation counseling, visa and immigration services, tax equalization, lease services, temporary housing and home-finding assistance may also be included, especially for long-distance and international moves.

Flexible Services Offering

Flexible benefits can include home finding trips, home sale and home purchase support, property management, mortgage assistance, temporary living, spousal support and career services, child and elder care assistance, language training, cross-cultural training, school search assistance, pet transport, vehicle transport, lump sum assistance and tax services.

Note that whether a service is categorized as a core component or an additional service depends entirely on the employer. Companies in competitive markets that want to surpass the competition may decide to include more services in the core component to attract more talent.

Policy Tiers

This is determined by factors such as employee seniority, family size, relocation distance, international travel and homeownership. It should be clear that most companies will allocate a larger budget to senior managers than junior employees, that homeowners need more support than renters and that international moves have different core and flex needs than domestic ones.

Flexible Services Selection

Given the sensitive nature of these selections, a global mobility management company can be a key resource in these discussions and in providing recommendations and guidance to both the employer and employee. HR professionals and even supervisors may not have a full understanding of their employees’ personal lives and their corresponding responsibilities. For example, a manager might not know that a transferee cares for a disabled parent or that an employee wants his or her children to attend a specific kind of private school. In short, it’s essential to give employees a say in determining which services he or she receives and come to an arrangement that suits both employee and employer. The expertise and experience of a global mobility management company can be helpful in providing advice on which flexible services companies may want to consider including in their policy.

Guide to Core-Flex Policies

Topics: global mobility, employee relocation, core-flex policies, talent mobility

January 2018 Mobility Survey

Posted by Amy Mergler on Wed, Jan 31, 2018

Thinking about changing your relocation program or just curious about what other organizations are doing? Each month, we'll feature a short survey and share our findings of the previous month's survey. 

Below are the results for October's survey and this month's survey questions.

December Survey Results

1. Does your company process mobility-related tax matters in-house or do you out-source?

In-House: 67%
Out-Source: 34%
Don't Know: 0%

2. What is your top challenge associated with mobility-related tax matters? (Choose all that apply)

Calculating/handling tax gross-up: 67% 
Keeping current on changes to tax laws: 100%
Payroll taxes and withholding: 34%
Tax reporting/forms: 67%
Other (please specify): 0%

3. If your company provides tax gross-up as a benefit to your transferees, which method do you use for calculating gross-up?

Flat Method: 0%
Supplemental/Inverse Method: 34%
Marginal/Inverse Method: 0%
Unknown: 67%
Do Not Offer Tax Gross-Up: 0%

 

This month's survey addresses executive talent mobility programs.  

 

Create your own user feedback survey

Topics: relocation packages, employee relocation

Upcoming Mobility Shows and Events - February 2018

Posted by Amy Mergler on Tue, Jan 30, 2018

 



We will be attending and/or sponsoring the following upcoming events. If you’re attending, look for us and say hi, because it's a great opportunity for us to stay abreast of the latest global mobility trends, as well as develop and strengthen trusted partnerships. 

 

Corporate Relocation Council of Chicago Meeting & Annual charity Auction

Date: February 8

Location: McDonald's Hamburger University, Oak Brook, IL

Attendee: Christopher Bloedel

The CRC event will include roundtable and educational sessions, a Jenga tournament and a silent charity auction benefitting Chicago Run and Kaleidoscope.

For more information about the event and to register, click here

 

Forum for Expatriate Management Boston Chapter Meeting

Date: February 8

Location: KPMG, Boston, MA

Attendee: Pete Larkin

The February FEM Boston chapter meeting will update attendees on immigration and expatriate taxes for 2018, with commentary on recent U.S. immigration policy and tax reform changes and how companies are responding to the changes.

Click here to learn more and register.

  

Minnesota Employee Relocation council 34th Annual Conference 

Date: February 13

Location: McNamara Alumni Center, University of Minnesota, Minneapolis, MN

Attendee: Christopher Bloedel

The 34th annual MERC conference will bring together mobility industry professionals for educational sessions, networking and a mini golf tournament to benefit the Ronald McDonald House.

Find more information and register for the conference here.

    

Bay Area Mobility Management 2018 Annual Mobility Conference 

Date: February 15

Location: Hyatt Regency San Francisco Airport, San Francisco, CA

Attendee: Patrick Cacho

The 2018 BAMM mobility conference will focus on the top challenges facing the mobility industry, including tax reform, diversity, global program management and immigration changes. Attendees will learn the latest relocation trends, solutions and strategies and can network with more than 500 BAMM Service & Corporate Members.

Click here to learn more and to register.

    

Greater Pittsburgh Relocation Council February Meeting

Date: February 15

Location: Revel + Roost, Pittsburgh, PA

Attendee: Pete Larkin

The GPRC meeting will discuss tax reform issues for mobility and the impacts of the new law.

Register for the meeting here.

    

Wisconsin Employee Relocation Council February Breakfast Meeting 

Date: February 21

Location: TBD

Attendee: Christopher Bloedel

Details are not yet available for this event.

Click here to look for updated information about the event.

    

If you can’t attend, please be sure to follow CapRelo on Facebook and Twitter for updates.

Topics: CapRelo Employees

Core-Flex Policy Basics

Posted by Amy Mergler on Fri, Jan 19, 2018

Be Flexible sign with clouds and sky background.jpegWith an increase in global mobility, organizations are looking for ways to create flexible and affordable relocation packages. In fact, recent research shows that 88 percent of companies are incorporating aspects of core-flex policies into their mobility programs. But what are core-flex policies exactly, and how can they benefit both employees and employers?

What is a Core-Flex Policy?

A core-flex policy is a corporate mobility policy that consists of two core components. The first component comprises relocation benefits that all transferees need: travel costs, household goods transportation and other benefits that the company may consider critical. The second component includes a range of services that can be added depending on the individual’s needs, such as spousal and family support, home sale and purchase assistance, pet care and transportation, administrative and tax support, immigration services, language and cultural support, etc.

Advantages of a Core-Flex Policy

For organizations of all sizes, core-flex policies offer advantages over lump sum allowances and full-service mobility packages. There’s the potential for cost savings because both the core components and flexible service options can be designed to contain costs. Individual packages can be customized to specific employees’ needs, resulting in accurate expense allocation for every transferee.

Let’s say, for example, that a company needs to relocate two equally ranked managers to a new manufacturing plant. One is married with three children; the other is single. Due to the different makeup of their households, the first manager needs more benefits than the second to relocate successfully. With a core-flex policy, the employer has the flexibility to allocate more services and funds to the first manager’s relocation while still providing the second manager with all the services he or she needs—yet at a much lower cost.

By their very nature, core-flex policies reduce policy exceptions. When a company has well thought-out core and flex components, it becomes easier to ensure sufficient relocation support for the myriad of different transferee needs.

A core-flex policy is also a powerful recruitment tool. Millennials and Gen Z workers are among the most mobile generations in the workforce – and they want to be valued as employees. Customizable mobility packages – as opposed to a one-size-fits-all solution – align with their preferences and go a long way to attracting and retaining top talent.

All of this together empowers HR and hiring managers because they know exactly what level of support they can offer to employees and candidates without having to wait for additional authorization. This contributes to faster, more efficient processes, and fosters employee engagement.

Disadvantages of a Core-Flex Policy

There are also several disadvantages to a core-flex policy. First, it requires a more complex administration than strictly defined policies. While every transferee receives the core components, managing and accurately documenting the flex policy components in each case involves a lengthier, more complicated process.

Core-flex policies can also be more time consuming to design and support than other types of policies. HR teams will typically need to do more research when developing core-flex policies to be sure that the two components offered either match or exceed what the competition is offering. Failure to do so could result in the loss of top talent to the competition.

In addition, time is required during the implementation of the plan to do a needs assessment for each employee. Without doing these assessments there is a significant risk of not providing the best benefits to the employee or in overspending for unnecessary services.

Finally, another important drawback is the possibility for dissatisfaction among employees. If an employee learns that a coworker received a benefit that they didn't, there's the potential for resentment, which could lead to diminished employee engagement and possibly, attrition. There is also an increased likelihood for exception requests and negotiation. A well-designed and properly executed core-flex policy with clear policy language regarding flex options, management and intention, can reduce these problems.

Guide to Core-Flex Policies

Topics: global mobility, core-flex policies, talent mobility

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