MOBILITY Magazine of Worldwide ERC ®
April 2011
The Big Squeeze After You Think You’ve Gotten It All: More Policy Savings
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MOBILITY
Magazine of Worldwide ERC ®
April 2011
The Big Squeeze After You Think You’ve Gotten It All: More Policy Savings
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With you when
Navigating the relocation mortgage process can be complex. At Wells Fargo, The Relocation Mortgage ProgramŽ provides an experienced team to present you with information about industry trends, legislative updates, and relocation policy recommendations. We’ll design a program that includes cost-effective options for you and your transferring employees. To learn more, call us at 612-312-4206 or visit www.wellsfargo.com/corporateprograms.
Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. Š 2011 Wells Fargo Bank, N.A. All rights reserved. #518493 2/11
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We’re American Relocation Connections. We know relocating your employees can be a hassle and that’s why we’re here to make it easy!
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Calendar
MOBILITY • Vol. 32 No. 4 • April 2011
APRIL 2011
EXECUTIVE COMMITTEE
Global Mobility Specialist (GMS™) Designation Program April 12, 13, and 14 Hong Kong, China Worldwide ERC® Learning Zone™ Speedsession™ Webinar Is Tokyo Still An Attractive Destination for Expats? April 19 2:00 p.m. to 3:00 p.m. EST Sponsored by Relo Japan Cost: Free Worldwide ERC® Learning Zone™ Speedsession™ Webinar The African Continent: Opportunity and Risks— What You Need to Know About Immigration and Compliance April 26 2:00 p.m. to 3:00 p.m. EST Sponsored by Fragomen Cost: Free
President SUSAN SCHNEIDER, SCRP, GMS, Plus Relocation Services, Inc., Minneapolis, MN Vice President PAMELA (PAM) J. O’CONNOR, SCRP, Leading Real Estate Companies of the World®, Chicago, IL Secretary/Treasurer C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN Chairman, Board of Directors MICHAEL (MIKE) C. WASHBOURN, SCRP, SGMS, Pfizer Inc, Peapack, NJ
BOARD OF DIRECTORS CORI L. BEAUDET, SCRP, SGMS, SC Johnson—A Family Company, Racine, WI ANITA BLANCHETT, BP, Sunbury-on-Thames, Middlesex, UNITED KINGDOM LISA CARAVELLA, CRP, Bank of America Home Loans, Plano, TX MARIO FERRARO, Deloitte Consulting Pty Ltd., SINGAPORE DAVID GAGE, SCRP, Federal Government, Baltimore, MD WILLIAM (BILL) GRAEBEL, SGMS, Graebel Relocation Services Worldwide, Denver, CO LARS LYKKE IVERSEN, Santa Fe Relocation Services, Wanchai, Hong Kong, CHINA CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ KAY KUTT, SCRP, SGMS, Asian Tigers Mobility Ltd, Hong Kong, CHINA
MAY 2011
EARL LEE, Prudential Real Estate and Relocation, Scottsdale, AZ
Global Mobility Specialist (GMS ) Designation Program May 16, 17, and 18 Las Vegas, NV ™
National Relocation Conference May 18-20 Las Vegas, NV Certified Relocation Professional® (CRP®) Examination May 18 Las Vegas, NV; Atlanta, GA; Chicago, IL; Dallas, TX; and Stamford, CT
JOY MORRISON, SCRP, SGMS, PepsiCo, Inc., Purchase, NY STEVEN A. NORD, Bainbridge, WA JOHN PFEIFFER, GMS, Mustang Engineering, L.P., Houston, TX GAIL H. PLUMMER, SCRP, GMS, Altair Global Relocation, Plano, TX PANDRA RICHIE, SCRP, SGMS, Long & Foster Companies, Chantilly, VA PAT SPARKS, Sprint Nextel Corporation, Lenexa, KS
EX-OFFICIO Chairman, U.S. Advisory Council AL BLUMENBERG, SCRP, NEI Global Relocation, Cedar Hill, MO Chairman, Foundation for Workforce Mobility KEVIN E. RUSSELL, SCRP, PHH Mortgage, Mt. Laurel, NJ
JUNE 2011 Global Mobility Specialist (GMS™) Designation Program June 21-22 Amsterdam, The Netherlands Global Workforce Summit: Focus on Europe, Middle East & Africa June 23-24 Amsterdam, The Netherlands
Correction In the February 2011 RAC Report, the chart labeled “Statistical Snapshot” contained erroneous information. A corrected chart is available at www.WorldwideERC.org/ Resources/MOBILITYarticles/Pages/0211-RAC-Report.aspx. MOBILITY regrets this error.
Chairman, Government Relations Council C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN Chairman, Global Advisory Council CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ
CHIEF EXECUTIVE OFFICER PEGGY SMITH, SCRP, SGMS, Worldwide ERC®, Arlington, VA
MOBILITY (ISSN 0195-8194) is published monthly by Worldwide ERC®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195, +1 703 842 3400. MOBILITY examines key issues affecting the global mobility workforce for the benefit of employers and firms or individuals providing specific services to relocated employees and their families. The opinions expressed in MOBILITY are those of the authors and do not necessarily reflect the opinions of Worldwide ERC®. MOBILITY is printed in the United States of America. Periodical postage paid at Arlington, VA, and additional mailing offices. Worldwide ERC® members receive one annual subscription with their membership dues. Subscriptions are available to both members and non-members at $48 each per year. Copyright © by Worldwide ERC®. All rights reserved. Neither all nor part of the contents published herein may be reproduced in any form without written permission of Worldwide ERC®. POSTMASTER: send address changes to M OBILITY , Worldwide ERC ®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195
2 MOBILITY/APRIL 2011
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Allied wins its 17th Quest for Quality award.
Orange-to-Orange Network
Quality moving and logistics services.
Nothing earns a customer’s trust like quality. That’s why we focus on the things that are most responsible for customer satisfaction during their move experience. And today we’re proud to be
Allied received high marks in 5 key criteria: On-Time Performance | Value | Information Technology Customer Service | Equipment & Operations
recognized for our efforts with the Quest for Quality award for
It’s what you can expect from one of the largest professional
“Q4Q recipients have consistently proven that they’re meeting ever increasing shipper demands in what is now a 24/7 global marketplace where actions and mistakes can be tracked down to the day, hour, minute or even second.”
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Perceptions
Not Our First Rodeo
T
ed C. Jones knows that nothing much has changed with the economy in more than 2,000 years. For evidence, he points to Roman philosopher and statesman Cicero (c. 55 BC), who said, “The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and
controlled... lest Rome become bankrupt. “We have had eight recessions since 1960, so this is not our first rodeo, and we recovered from each and every one of them-just as we are recovering from this one,” says Jones, senior vice president–chief economist for Stewart Title Guaranty Company and director of investor relations for Stewart Information Services Corporation, who will be a featured presenter at the Worldwide ERC® National Relocation Conference in May. Through his economist’s lens, he provides one of his basic guiding principles: “One thing we keep learning, over and over, is that jobs are everything to an economy. Period. People—except the very wealthy or retirees—do not make purchases beyond food, medicine, and basic transportation without jobs. And it’s clear there is no such thing as a national economy or even a global economy—every market is different. But the economy is just like the wind—as it picks up speed, it is felt everywhere-and that is what is happening today.” Economists have always been taught that unemployment of less than 5 percent is not sustainable in the long run, given that a percentage of people are always moving from one location to the next or changing from one career to the next. The good news is that global unemployment has finally stabilized, maintaining a relatively constant level from 2010 going through 2011—and it is that lack of variability that is reducing risk and positioning these economies to once again grow. The mobility industry watches unemployment figures with a keen 4 MOBILITY/APRIL 2011
eye. And at a time when we’re seeing headlines like this one just a couple of weeks ago—“Global economy recovering, but unemployment still an affliction”—we’re even more aware when additional challenges are added to the mix, like rising oil prices. “It’s when the pendulum swings out dramatically to one side or the other that we face the most challenges,” said Jones. “Boom and bust are both four-letter words... and economically are unsustainable. ‘Average’ is the attractive descriptor when it comes to the economy—and we again are heading back to average and sustainable economic growth.” Jones observes that globally, the most powerful impact on inflation, and generally on interest rates for 30+ years, has come from oil prices. “Think about it: what costs more when oil prices rise? Everything. Higher prices for commodities prompt inflationary strains that put central banks in a position to increase interest rates and slow down economies. And that means consumers and companies must spend more on consumables, which in turn shifts their ability to spend in other areas. Yet while oil prices are rising, new technology has seen the inflation-adjusted price of natural gas return to levels below that seen in the early 1980s. And here’s an example of change begetting good change
for the labor market: the conversion and manufacturing of vehicle fleets to run on natural gas will bolster jobs in the entire transportation sector.” Jones notes that “there is optimism that upswings in commodity prices won’t flatten the global recovery, and here’s why: commodity prices have been on the increase for several months, and the global economy is still gaining. That says that the world is getting healthier, and better able to absorb higher commodity prices than previously. Last year, global growth in the value of total goods and services was an estimated 4.0 percent, despite commodity prices acting as a drag on the economy. And the Business Monitor International forecasts a respectable 3.7 percent growth in 2011.” Jones noted that as an economist, it would be conspicuous for him not to discuss the ongoing political change taking place today, from the U.S. to Egypt and beyond. “Change is inevitable and constant, and instant information demands a transparency never before seen. But while all change is uncomfortable, just look at the results we gain in the long run. And though I hope it doesn’t happen for a long time, we’ll be ready for the next rodeo, too.” —Anita Brienza, GMS SVP, Communications and Marketing Worldwide ERC® Arlington, VA
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2010 Fragomen Mobility Mag Full Page Ad.pdf 1 12/17/2009 1:18:27 PM
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MOBILITY Magazine of Worldwide ERC®
Features
20
Perfect Partners: Trusted Advisors and Educated Clients
24
The Big Squeeze—After You Think You’ve Gotten It All: More Policy Savings
By Anita Brienza, GMS
32
By Ellie Sullivan, SCRP, SGMS, and Tim McCarney, GMS
32 41 46 52 63
46
Demystifying Personal Finance for American Expatriates By Andrew Fisher
Expats: the Pitfalls of Parting Company By Nino Nelissen, SGMS
All for One and One for All: an Examination of Lump-sum Programs By Marti Briney, CRP, SGMS
41
Destination Profile: Saudi Arabia By Mohamad Hadbaoui and Duncan Lawson
Skill Set Switch: the Challenges and Changes in the Higher Education Relocation Market By Helen McNeece, CMC, CRP,
52
and Jean Mann, GMS
68
Get on the Retention Train: Three Ways to Eliminate Complacency, Prove Competency (and Retain More Clients!)
63
By Jill Heineck, CRP
MOBILITY/APRIL 2011 7
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MOBILITY Magazine of Worldwide ERC®
DEPARTMENTS
2 CALENDAR 4 PERCEPTIONS Not Our First Rodeo By Anita Brienza, GMS
10 AROUND THE WORLDWIDE ERC®
MOBILITY STAFF
Vice President & Publisher Jerry Holloman
jholloman@WorldwideERC.org Managing Editor Frank Mauck
fmauck@WorldwideERC.org EDITORIAL ADVISORY COMMITTEE
12 EXECUTIVE SPOTLIGHT
Chairman
15 INDUSTRY SPOTLIGHT
Alex Alpert, Wheaton World Wide Moving, Los Angeles, CA
Jo Lay, SCRP, SGMS, Coldwell Banker Central Region Relocation, Northbrook, IL
Michele Bar-Pereg, Bar-Pereg Group, Amsterdam, THE NETHERLANDS
18 QUICK TAKES 74 SPECIAL ADVERTISING SECTION 80 RAC REPORT
Tamara Bianchi, CRP, Capital Relocation Services, Denver, CO Robert F. Burch, SCRP, Alexander’s Mobility Services, Baltimore, MD Christopher R. Chalk, CRP, GMS, Dependable Auto Shippers, Inc., Smyrna, GA Brenda Darrow-Fuhs, Bank of America, Longmont, CO Terry Baxter Davis, SCRP, SGMS, Ernst & Young LLP, Cleveland, OH Anne Dean, GMS, Living Abroad, LLC, Norwalk, CT Tim Denney, Stirling Henry Global Migration, Sydney, AUSTRALIA Marge A. Dillon, CRP, GMS, Bank of America Home Loans, Plano, TX Sean Dubberke, RW3 LLC, New York, NY Deborah A. Dull, CRP, GMS, Crown Relocations, Houston, TX Kari Hamilton, ABODA, Inc., Redmond, WA Nancy F. Harmann, CRP, GMS, Latter & Blum, Inc., Realtors, New Orleans, LA Gustavo Higuera, CRP, GMS, Prudential Real Estate and Relocation Services, Scottsdale, AZ Christine E. Holland, GMS, Massachusetts Institute of Technology, Cambridge, MA Ronald Huiskamp, GMS, Dwellworks, LLC, Kirkland, WA Rob Johnson, SCRP, SGMS, Altair Global Relocation, Plano, TX Jeff Knapton, SIRVA Relocation, Westmont, IL Anne-Claude Lambelet, SGMS, ACL Consulting, Geneva, SWITZERLAND Tacita Lewars, GMS, Globaforce Incorporated, Calgery, Alberta, CANADA Cindy Madden, CRP, Cartus, Danbury, CT Tim McCarney, GMS, Weichert Relocation Resources Inc., Norwell, MA Nino Nelissen, SGMS, Executive Mobility Group, Schlipol Airport, THE NETHERLANDS Constance Pegushin, Berry Appleman & Leiden LLP, San Francisco, CA Elizabeth Perelstein, School Choice International, White Plains, NY
Design/Production: Ideas, Communicated, LLC, Vienna, VA www.ideascommunicated.com Printing: CADMUS Specialty Publications, Richmond, VA Reprints: Katina Moaney, CADMUS Reprint Services ercreprints@cadmus.com +1 866 487 5625 ext. 3736 Advertising Sales: Glen Cox, National Sales Manager, The Townsend Group, Bethesda, MD +1 410 321 4723 gcox@townsend-group.com
Patricia Pollard, CRP, GMS, Coldwell Banker United Realtors, Houston, TX Maureen Bridget Rabotin, GMS, Effective Global Leadership, Paris, FRANCE Michelle Sandlin, CRP, John Daugherty Realtors, Inc., Houston, TX Stefanie R. Schreck, CRP, GMS, American International Group, New York, NY Scott T. Sullivan, Brookfield Global Relocation Services, Woodridge, IL Mara Terrace, Siemens Corporation, Global Shared Services NA, Orlando, FL Sherrie Tessier, CVS, Woonsocket, RI Jody Walstrom, Plus Relocation Services Inc., Minneapolis, MN Allie Williamson, CRP, OneWorld Relocation Services, Naples, FL Nick Woodhams, SGMS, Woodhams Relocation Centre, Sydney, AUSTRALIA
8 MOBILITY/APRIL 2011
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Prudential Real Estate and Relocation Services
Take the path to a Rock Solid Relocation ®
When you choose Prudential Real Estate and Relocation Services, you do more than secure the most comprehensive range of relocation services in the industry. You also realize the value of an organization that delivers satisfaction, savings and security at every step. It all leads to a better experience — for both you and your transferees. To learn more, call 1-877-418-0617. To download our complimentary relocation tools, visit www.PrudentialRelocation.com Benefit from the experience of our Prudential Real Estate Network.
Trust The Rock®, where promises have been kept for more than 130 years.
Increase transferee satisfaction with our caring relocation professionals.
Minimize home sale costs, thanks to our revolutionary eValuator SM Market Intelligence Tool.
© 2011 Prudential Financial, Inc., and its related entities. Prudential Real Estate brokerage services are offered through the independently owned and operated franchisees of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc., and its related entities, used under license. Equal Housing Opportunity.
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Around the Worldwide ERC®
‘Applicants with CRP® and GMS™ Designations Are Preferred’
T
his is not just a headline… it’s a direct quote from a recent listing on our Worldwide ERC® Career Center (jobs.WorldwideERC.org) from a company looking for qualified counselors! And they’re not alone—within the last few months, a preference for people who have earned Worldwide ERC® designations has been cited by several of those who listed positions, with one company indicating that candidates without the CRP® designation “must be able to obtain it in the future.” Holding the Certified Relocation Professional® (CRP®) designation, which just celebrated its 20th anniversary in 2010, and/or the Global Mobility Specialist™ (GMS™) designation, launched in 2003, communicates to clients and current and prospective employers that you are committed to excellence in employee mobility and to ongoing education and professional development. Says longtime recruiter Isabelle De Leonibus Tranchina, “Hiring managers take candidates more seriously if they have a top designation. They see the candidate’s willingness to
study hard and pass a demanding exam as a positive statement about the candidate’s self-discipline, commitment to the field, and ability to multitask.” Perhaps you are, or know, a CRP® designee who has been one of the weary but satisfied people departing a May CRP® exam site! If so, you are familiar with the commitment that goes into preparing for the exam, the butterflies that one feels before taking the test, and the excitement when a passing grade is announced about four weeks after the exam. To earn the CRP® designation, candidates must study for and pass a comprehensive live exam that covers six topics in the specialized field of U.S. domestic relocation: corporate relocation policies and procedures; residential real estate; relocation appraising; relocation tax and legal issues; family mobility issues; and mobility strategies. This year’s exam will be held on May 18, and the weary but satisfied test-taker could be you! For more information, visit www.WorldwideERC.org/Education/ CRP or, to speak with a CRP® counselor directly, please call
+1 703 842 3430 or e-mail crp@WorldwideERC.org. Because it is training-based, the GMS™ designation is earned differently than the CRP®. Candidates for the GMS™ designation attend a three-part education program, and the outcome for the mobility professional is a powerful new set of business tools: extensive global mobility knowledge on practical topics affecting industry professionals. They include Module 1— Applied International Assignment Policy Development; Module 2— Policy Alternatives, Strategies, and Tactics for Global Workforce Mobility and Module 3—The Intercultural Challenge: Doing Business Globally. Upcoming training will be held on May 17 through 18 in Las Vegas, NV, prior to the National Relocation Conference, and on June 21 through 22 in Amsterdam, the Netherlands, prior to the EMEA Global Workforce Summit®. For more information, visit www.WorldwideERC.org/Education/ GMS, and to speak directly with one of our GMS™ counselors, please call +1 703 842 3430 or e-mail gms@WorldwideERC.org.
National Relocation Conference Exhibit & Sponsorship Opportunities Now Available!
G
et ready for one of the workforce mobility industry’s largest annual events. Exhibit and sponsorship opportunities are now available for the 2011 National Relocation Conference at Caesars Palace in Las Vegas, NV, on May 18 through 20, 2011. Now more than ever, it is critical to take advantage of this opportunity to boost your company’s visibility, showcase your services, and connect with your clients and prospects. If you provide relocation and workforce mobility services, exhibiting at this event is a MUST for your company. Exhibit space and sponsorship opportunities for the National Relocation Conference are limited and selling quickly. Booth space is available on a first-come, first serve basis, so sign up today! For more information and to sign up, visit the National Relocation Conference online at www.WorldwideERC.org/nrc11/Pages/nrc11-Sponsors-Exhibits.aspx. 10 MOBILITY/APRIL 2011
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Bringing new opportunities within reach. When new places promise new heights for your business, trust Cartus to know the path. Delivering services from globally integrated Cartus offices around the world, we have successfully guided hundreds of organizations and thousands of individuals into markets worldwide – replacing complexity with predictability, and providing a helping hand to everyone your program touches. For a clear path to your goals, call on Cartus at trustedguidance@cartus.com.
www.cartus.com Primacy Relocation is now a part of Cartus. ©2010 Cartus Corporation. All rights reserved.
58410_Cartus_ts 1
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Executive Spotlight
H
ouston Relocation Professionals, Houston, TX, has announced its 2011 board of directors. Piper Sheffield, CRP, Stewart Relocation Services, was named president. Norma Chaney, CRP, Heritage Texas Properties, was named vice president; Larry Matthews, SIRVA/Freeman Moving Group, will serve as treasurer and head of the sponsorship committee; Michelle Sandlin, CRP, of John Daugherty, Realtors, will serve as secretary and will be responsible for communications; Marian Sauers, Weichert Corporate Housing, will serve exofficio and will serve on the events committee; Lana Bergeron, GMS, Transocean, will serve as charity liaison; Charles Ameno, CRP, Chevron Services Company, will serve as corporate liaison; Paul Crouch, CRP, GMS, BP America, will serve as corporate liaison; Meredith Morris, Brook Furniture, will serve on the membership committee; Laurell Cunningham, Weichert Relocation Resources, Inc., will serve on the events committee; Mark Roussy, CRP, The Graebel Companies, will serve as Worldwide ERC® liaison; Steve Rogers, SCRP, SGMS, Citibank, will serve as golf tournament chairman; Brian Smith, CRP, JP Morgan Chase Bank, will serve as board member in charge of the website; Luke Carlisle, Roadrunner Moving & Storage, will serve on the sponsorship committee. The Metro Atlanta Relocation Council (MARC), Atlanta, GA, has announced its 2011 board of directors and advisory council. Mark Zittrouer, CORT Furniture Rental, was named president. Jan LeQuier, CRP, The Home Depot, was named vice president. Arnold Schwartz, SRA, SCRP, Arnold M. Schwartz & Associates, was named treasurer. Wallace Hitt, Post Corporate Apartments, was named secretary. Peter F. Hiro, CRP, GMS, Capital Relocation Services, was named membership chair; Gina Haesloop, GMS, 12 MOBILITY/APRIL 2011
United Parcel Service, was named membership committee co-chair. Leigh Massey, Atlanta Fine Homes Sotheby’s International Realty, was named chair of the programs and sponsorship committee. Rob Kreiling, CRP, SGMS, Bank of America, was named community outreach chair. Jill Knicely, Nelson Westerberg/Atlas, was named chair of the newsletter and PR committee; Teresa Palacios Smith, Prudential Georgia, was named co-chair. Marlene Adams, Rental Relocation, Inc., was named assistant treasurer. Ginger Merrick, CRP, SGMS, Coca-Cola Enterprises was named chair of website/historian. Chris Chalk, CRP, GMS, Dependable Auto Shippers, Inc., was named chair of the regional groups committee. Jeff Morris, CRP, GMS, TRC Global Solutions, was named sponsorship advisor. Cindy Standard was named MARC administrator. Members of MARC’s 2011 advisory committee are Jeff Morris, CRP, GMS; Teresa Palacios Smith; Carolyn Cherry, CRP, AT&T Relocation; Chris Chalk, CRP, GMS; Ginger Merrick; and Connie Stinson, SCRP, SGMS, Intercontinental Hotels Groups. Arpin Van Lines, West Warwick, RI, has named Melanie O’Connor director of agency web services. Arpin International Group, East Greenwich, RI, has promoted Scott Balint to GSA operations manager. Joyce Zhou has been named immigration specialist in Pro-Link GLOBAL’s, Shanghai, China,office. Sentry International, Wayne, NJ, a division of The Suddath Companies, has named Louis Alaimo sales manager for the New Jersey and New York regions. Coldwell Banker United, Realtors, Columbia, SC, has added several new agents to its offices. Myra Conder has joined the Camden office. Debbie Capko has joined the Lexington office. Nancy Nelson has joined the Irmo office. Retta Sanders has joined
the Sumter office. Carolyn Green has joined the Midtown office. Katelyn Sweeten has joined the Lexington office. Julie Londo and Jeffrey Londo have joined the Aiken office. Wilburn Hutto, Jr. has joined the company’s Summerville office in Charleston, SC. The company also named Kimo Esarey branch manager of its Goose Creek office. NuCompass Mobility Services Inc., Pleasanton, CA, has named Dave Marron regional vice president of business development. Marriott ExecuStay, Bethesda, MD, has named Michelle Lopez sales manager for the Southern California market. Sally Davis has been named general manager of the Chicago, IL, market. Victoria Cohen was named general manager of the South Florida market. Susan Weeks has been named general manager of the Atlanta market.
Join Us Online for Announcements Executive Spotlight highlights the job changes and achievements of employee mobility professionals. E-mail your hiring and promotion announcements, as well as your regional group communications, to mobility@WorldwideERC.org. Not only will the releases appear in Executive Spotlight, but also will show up in Names in the News on the Worldwide ERC® website, www.WorldwideERC.org. Please visit: www.WorldwideERC.org/Pages/ NIN-MOBILITY.aspx for regular updates on mobility industry professionals. Does Worldwide ERC® have your most up-to-date contact information? If not, let us know at www.WorldwideERC.org/pages/ update.aspx.
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Industry Spotlight
Worldwide ERC® Releases New Hire Survey
M
uch has changed about the world since 2007, the last time Worldwide ERC® published a survey of the policies and practices affecting new hires. Based on the responses of 184 Worldwide ERC® members collected in September and October 2010, the 2011 “New Hire Survey,” sponsored by SIRVA, examines how companies are responding to the challenges created by the worldwide economic downturn, as well as the decline in housing markets and home values through their mobility policies, and provides information on mobility assistance offered to newly hired employees relocated within the United States. The report covers a range of topics, including policy delivery, types of mobility assistance provided, payback agreements, and use of mobility assistance in the recruiting process. According to survey findings, 71 percent of companies today have a tiered mobility policy, representing a 7 percentage point increase over 2006. According to Worldwide ERC®, the number of tiers or policies within new hire programs also has risen. The percentage of organizations that have three or more policies continues to grow, from 12 percent in 1990 to more than 60 percent today. With regard to mobility assistance, the lump-sum approach continues to be popular, with 42 percent of respondents offering a lump sum to at least some new hires to cover the entire cost of the move. For organizations with a tiered program, 46 percent offer at least some entry-level new hires a lump sum to cover all mobility expenses. Significantly fewer companies with tiered policies offer lump sums to some or all experienced or executive-level new hires— 11 percent and 5 percent, respectively. For organizations that have a single policy for all new hires, 36 percent offer a lump sum to cover the entire cost of the move to at least some new hires. These companies said that they often provide a lump sum as an alternative approach to their assistance plans (Editor’s note: For further Worldwide ERC® resources regarding lump-sum policies, please see the sidebar on page 50 of this issue.). With regard to mobility assistance and recruiting, only 5 percent of companies surveyed in 2006 said that talent was available and easy to find. According to the new survey, more than 25 percent of organizations reported the same sentiment. Respondents said when difficulty locating talent
was experienced, greater challenges were seen in recruiting experienced and executive-level technical positions than for non-technical positions. The biggest challenges concerning recruitment are competition between organizations for talent, an inadequate supply of qualified candidates, and cost-of-living/housing concerns. More than two-thirds of survey participants use mobility assistance in their recruiting efforts. Approximately 40 percent said their companies’ mobility function has involvement in the company’s strategic plans for recruiting. Almost half of companies bring the mobility function into the recruiting process at the pre-offer stage, while 43 percent do so during the offer period. For more information, and to order a copy of the Worldwide ERC® 2011 “New Hire Survey,” please visit www.WorldwideERC.org.
MOBILITY/APRIL 2011 15
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Industry Spotlight
FYI Golden Eagle Nationwide Implementation Solutions, Placentia, CA, and McCollister’s Transportation Group, Burlington, NJ, an agent for United Van Lines and Mayflower Transit, have announced a merger. The newly formed division of McCollister’s will operate from the company’s Fontana, CA, office. Move One, Dubai, United Arab Emirates, has announced the opening of an office in Sher Khan Bandar, Afghanistan. It also announced the opening of a new warehouse in Ulaanbaatar, Mongolia. The Graebel Companies, Inc., Aurora, CO, has announced the launch of the Graebel Relocation app and the Move Management app for Android mobile devices. Cartus, Danbury, CT, announced the first anniversary of its acquisition of Primacy Relocation, Memphis, TN, on January, 21. ERA Insite Realty Services, White Plains, NY, recently celebrated its 25th year in business in Westchester County. In honor of the milestone, the company announced it will donate $25 from every closed sale in 2011 to The Bridge Fund of Westchester, a privately funded program whose mission is to prevent homelessness for the working poor. ERA Real Estate, Parsippany, NJ, announced the affiliation of Latter & Blum Residential Real Estate Companies, New Orleans, LA, consisting of Latter & Blum Inc./REALTORS, C.J. Brown REALTORS, and Noles-Frye Realty. The Apartment Service, London, United Kingdom, is celebrating its 30th year in business. Wheaton World Wide Moving, Indianapolis, IN, has added several new agents to its network: Get Moving USA, Medford, NY; Greenline Vanlines, San Bernadino, CA; K & E Moving & Storage Co., Bellingham, WA; Movers Plus, Moultrie, GA; Truman Transfer & Storage, Victoria, TX; and VBO Relo, Temecula, CA. Parker Real Estate Professionals, Vernal, UT, has become a franchised brokerage firm of the CENTURY 21 System and is now known as CENTURY 21 Parker Real Estate Professionals. Century 21 Real Estate, LLC, also has announced the launch of its official blog, @C21- Home Matters. PODS Enterprises, Inc., Clearwater, FL, has announced the sale of a new franchise that will serve Montreal and Quebec City, Canada. The company also announced the opening of a new storage center in Medford, OR. Michael Saunders & Company, Boca Grande, FL, has announced the opening of its newest branch office, the company’s third since last April and 24th overall. Mobility Services International (MSI), Newburyport, MA, has announced the launch of its first iPhone® application for client employees. The app provides smartphone access to the company’s GlobePointe™ information management portal. a la mode, Oklahoma City, OK, announced the JVI Appraisal Division, LLC, Lake Mary, FL, has enhanced its FNCbased appraisal management operations by integrating a la mode’s Mercury Network Vendor Management Platform. Arpin Van Lines and Arpin International Group, West Warwick, RI, have launched new websites, www.arpin.com and www.arpinintl.com. RE/MAX Results, Minneapolis and St. Paul, MN, has announced the acquisition of RE/MAX Associates Plus, Anoka, MN. The Council of Residential Specialists (CRS), Chicago, IL, has announced a partnership with Corcoran Consulting and Coaching that will give CRS members access to business planning tips and coaching services. Corcoran also will promote CRS membership and education to its clients.
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Bridging Continents & Cultures Chicago San Francisco
Houston Calgary
Los Angeles New York Toronto Vancouver London, UK
Philadelphia Hong Kong
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Quick Takes
Research Reveals Top 10 Needs of Relocating Families
I
t’s key for global mobility professionals to under-
It’s a given that every family will have its own unique needs, and IMPACT Group identified what they consider were the most important pieces of research in 2010 (Numbers in parentheses indicate the number of requests completed for each category during the year.):
stand what the top needs are of their relocating
1.
Demographic and Crime Reports (699)
employees and their families. IMPACT Group, St.
2.
Employers in a Specific Industry/Occupation (436)
Louis, MO, recently released its list for 2010.
3.
Physician/Dental Referral Services (393)
“Although the Internet is very accessible to most
4.
Recruiters/Temporary Staffing Agencies (373)
individuals in transition, most people: a) don’t know
5.
School Rankings (337)
what they need until they need it immediately, and b)
6.
Company Lists (308)
don’t have the luxury of time to research everything
7.
Driver’s License/Vehicle Registration Facilities (280)
that will make their family feel ‘whole’ again in their
8.
School District Reports (246)
new community,” says Justin Burnett, IMPACT
9.
Preschools and Day Care Centers (230)
Group’s research department team lead.
10. Fitness Centers (228)
Corporate HR Communities
W
orldwide ERC® corporate HR members constantly are exchanging questions, answers, and ideas online in our two eDiscussion: Policy and Program Benchmarking Forums. These are some of the recent topics discussed: In the Global eDiscussions Forum: “How strictly are companies defining ‘spouses’ for the purpose of an assignment? Legal spouses only? Are common-law spouses acknowledged and thereby receive the same benefits on assignment as a legal spouse would? Is the definition broadened to include ‘significant others?’” “If you have an assignee who had their children in private school before going on assignment and your policy offers international or private school fees as part of their package, would you require the assignee to pay what they would have paid had they stayed home, leaving the company to only cover the differential?” In the U.S. Relocation eDiscussions Forum: “My company is reviewing the U.S. domestic relocation program, which is currently in a tiered framework. We are considering structuring the program as a flexcore model. Has anyone had success or challenges in structuring their domestic program this way?” “I’m interested in finding out what other companies do to collect repayment of relocation expenses when employees leave the company. Is this handled by HR? Do you use collection agencies?” Read the answers solicited by these questions and add your comments and questions today. To get there, visit www.WorldwideERC.org/pages/web2.0.aspx or click on the white “Communities” hyperlink at the top of every page of www.WorldwideERC.org. Access to the eDiscussion Forums is provided exclusively to corporate and government Worldwide ERC® members who have no commercial interest in relocation. Not sure if that’s you? E-mail membership@WorldwideERC.org or call +1 703 842 3410.
18 MOBILITY/APRIL 2011
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Perfect Partners: Trusted Advisors and Educated Clients
Steve Harney, nationally recognized real estate “doctor,” is focused on the healing of his industry. He gave us a preview of some of the themes he’ll discuss at our National Relocation Conference in May. Following are a few of the topics we posed, and his responses.
BY ANITA BRIENZA, GMS We hear lots of conflicting information about the real estate market—it’s better, it’s not better, it’s flat, it’s gaining... what’s the real story? How can we parse out the news that we hear so that we get a balanced picture? It’s important to understand what news is being recordedand even if the reader or news viewer doesn’t recognize the nuances, the writers and reporters should. I feel that some news outlets are reducing their stable of experts who specialize in areas as critical as real estate, so when someone who is less educated on the industry tries to make sense of, say, the National Association of REALTORS® Existing Home Sales Report, they may only report that the year-over-year numbers are down, but miss that the month-over-month numbers are rising and that homesale momentum is building. That’s why we’re hearing some confusion in the market, and about the market. It’s the same with foreclosures—there are five aspects to foreclosure statistics, so if you’re only viewing one or two facets, you’re missing a lot of information. Speaking of foreclosures... you’ve said, “The greatest hurdle standing in the way of a complete housing recovery is the backlog of distressed properties that must be liquidated.” We’ve come through the eye of the storm, and foreclosures have actually slowed down-a lot of this was due to all of the paperwork that had to be straightened out. Over the next several months, you’ll see foreclosed properties 20 MOBILITY/APRIL 2011
starting to hit the market, and it will have an impact, but you will not see a flood of foreclosed properties hit the market all at once. The banks are smart enough to release these properties steadily and carefully, and to know their regional markets well enough to see where they can release more properties than others at any given time. Is this truly a great time to buy? Why/why not? And what advice do you have for people waiting to see if the prices are going to drop just a bit more? I have to say that from a strict buyers’ standpoint, people are nuts if they don’t buy now. Most buyers think about the price of the home, and unless they’re in the minority of buyers who pay cash, there’s a mortgage involved. So if people are waiting for a home price to diminish, and they lose the advantage of the lower mortgage rates, they’re passing up a significant and very real cost advantage for a perceived price advantage. Nationally, interest rates in the first quarter went up to almost 5 percent. If you do the math on a $170,000 house, for example, there’s a huge difference in money saved by having purchased last
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November at a lower rate, whereas for anyone who waited to buy, today, that house is about the same price... but will cost much more over the life of the mortgage. That’s the cost of waiting for prices to fall. And your best advice for real estate professionals? I try to get REALTORS® to understand that they are no longer salespeople, they are trusted advisors who help clients like your corporate members and their employees, buyers and potential buyers make the best decisions. They need to know their business and have such a deep understanding of their core material that they are completely consultative in their approach. And they have to be good teachers, too, because educated consumers will make better use of the kind of consulting they can offer. It’s like the example I just gave about the perspective on the price of a home versus the cost of the home. We are not order-takers and chauffeurs for home seekers. It is our responsibility to help—really help—our buyers realize an outcome that truly is best for them. For years, real estate specialists have been yearning to be seen as the professionals they are—and they deserve it, because the home is one of the largest investments anyone can make. Well, the good news is we are there...and the challenging news is—we have to live up to that standard! Do you have a message of hope about the real estate market? What’s the skinny on the financing front? I really believe that people are starting to catch on to the “it’s time to buy” message. And though financing is restrictive, and might get tighter, we have to look at the fact that if approximately 5,000 homes were sold yesterday; 5,000 will be sold tomorrow and 5,000 the day after that, and that most of those homes are being financed, then how difficult is it, really, to get a mortgage today? I encourage real estate agents and brokers to “go back to school” on mortgages for their clients, to sit with a professional mortgage specialist and get a deep education on financing. Will the market reach the level of supply anytime soon? No, but I believe that sales will pick up dramatically this year. There are more people looking to buy, fewer on the fence, and more are jumping in every day. The only insurmountable challenge our industry has is when people won’t buy a house at any price.
“People say: ‘It takes a village to raise a child.’ The realities of today’s life have extended a family to lean on others (neighbors, relatives, teachers, etc.) to protect and teach our young people about culture, history, and acceptable behaviors. Teams, because of their ability to provide specialized solutions to problems, have often proved to be more efficient deliverers of information. In real estate today (maybe more than ever), it also takes a team. As with a basketball team, each member needs certain skill sets and proper coaching on how to weave the different skills into a cohesive unit to achieve the desired outcome.” — Steve Harney Residential real estate expert and trainer Steve Harney is nearing 30 years in the industry. His history of success began as a top performing residential REALTOR® before he built his own 500-agent real estate firm. It was during that process that he established his method for raising average sales agents and managers to the level of top performers. Recognizing this industrywide need, he set out to help others achieve their true potential, and launched Steve Harney, Inc. He authors Keeping Current Matters, a subscription-based monthly report containing real estate advice and market information, as well as the KCM blog. Harney will join us at the Worldwide ERC® National Relocation Conference in Las Vegas, NV, as a guest on the “Industry All Stars” panel on Friday, May 20, from 10:00 -11:15 a.m. Facilitated by Worldwide ERC® CEO Peggy Smith, SCRP, SGMS, the panel also includes a corporate HR and mobility expert; Glen Dunkerson, chairman and CEO, Atlas World Group; Craig Selders, SCRP, SGMS, president, Relocation, Paragon Relocation and Jay K. Delich, SCRP, SRA, IFA, president, Arizona Appraisal Team, LLC.
Anita Brienza, GMS is Worldwide ERC® SVP of Communications and Marketing. She can be reached at +1 703 842 3404 or e-mail abrienza@WorldwideERC.org. MOBILITY/APRIL 2011 21
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The Big Squeeze After You Think You’ve Gotten It All: More Policy Savings
24 MOBILITY/APRIL 2011
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BY ELLIE SULLIVAN, SCRP, SGMS, AND TIM MCCARNEY, GMS Despite a general consensus that the Great Recession is now in our rear-view mirror, organizations still must attend to shrinking budgets and pressure to restrain costs. Sullivan and McCarney offer insight into what you should be doing right now to keep mobility costs at their lowest, and identify some cost-saving measures you never even may have considered.
O
ne of the more poignant scenes in the Frank Capra classic “It’s a Wonderful Life” comes when Uncle Billy admits to nephew George Bailey that he has somehow misplaced an $8,000 deposit meant to keep the family’s Building and Loan afloat. On hearing the news, George, with thoughts of bank fraud and jail time dancing in his head, grabs Billy by the lapels and demands, “Where’s that money, you old fool?” before tossing him aside and bounding out into the windswept snow. We evoke that scene because in today’s business environment, where the pressure to restrain costs is constant and unrelenting, it is easy for corporate mobility and HR managers to feel a bit like Uncle Billy, getting tossed around by upper management that is desperate to squeeze every last
ounce of savings from the company’s workforce mobility program. While your situation never may be as dire as George Bailey’s—at least we hope not—there could be times that you, too, are asked to mine further cost savings out of a mobility program that you feel you already have bled dry.
The Basics We will start by looking at the things you absolutely, positively should be doing to proactively control your total mobility costs. By now, almost everyone agrees that nothing affects the bottom line quite like real estate. When employee homes do not get sold quickly, carrying costs start spiraling and productivity can suffer, meaning even deeper losses. There are three proven ways to regulate the homeselling process: Mandatory broker selection. Brokers play a critical part in
1.
securing a timely sale and arguably play one of the most important roles in the mobility process for homeowners. The reality is that the recession and housing crisis have taken a toll on this segment of the supply chain, causing a lot of turnover in the ranks. As a result, the quality, training, and discipline around broker selection has never been more important to controlling costs in this spend category. Are the brokers on whom your employees depend Certified Relocation Professionals®? Are they members of the Relocation Director’s Council®? At a time when navigating real estate markets is more challenging than ever, requiring your mobile employees to work with brokers with proven relocation expertise can make all the difference. Mandatory marketing periods. Competition for the buyer’s attention in most markets has never been more intense. Under such
2.
MOBILITY/APRIL 2011 25
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conditions, requiring employees to spend a minimum amount of time marketing their homes before they can accept the guaranteed offer just makes sense. But equally important is what happens during that marketing period. Do you provide your employees with incentives, counseling, repair and improvement allowances, or advice on tactics such as staging their homes? In today’s market, a home must have zero deficiencies to get sold quickly. List price guidelines. The best thing a relocating employee— or any seller, for that matter—can do to capitalize on the market upswing is to be realistic with both the asking and selling price of their home. This is the hard part, because sellers have agendas that can get in the way. The agenda usually starts with, “I have to get back what I paid for the house (regardless of how long ago or what the market has done since), plus the investment I’ve made improving my home, plus a little more.” As a result, some sellers want to reach for the sky on asking price, and it only results in extended marketing
3.
26 MOBILITY/APRIL 2011
time and a lower selling price. Even in a stable market, a home that is on the market longer likely will sell for less because the market is waiting for the price to come down. Given the small window of three months (on average) to sell a home for a relocation, mandating guidelines under which employees must sell their homes—no more than 105 percent of the appraised value, for example— is valuable for both the employee and the bottom line. You even may consider an additional mandatory marketing period of 30 to 60 days at 102 percent of appraised value with the option to extend temporary living if the employee agrees to list no higher than the appraised value. While these three strategies may seem like no-brainers, the results of Weichert Relocation Resources’ 2010 benchmarking research study, “Mobility and the Current Real Estate Market,” indicate that roughly 30 percent of employers have no such provisions in place. To those employers we must ask: what will it take to get you on the bandwagon? Even Uncle Billy would tell you that
by not adopting such measures, you could be unnecessarily leaving money on the table.
Beyond the Basics So you have implemented the tried and true strategies and still need to carve out more savings? While your program may seem to be the stone you cannot draw any more blood from, there are always new ways to circumvent losses. Align the mobility program with talent management goals. Today, an increasing number of HR professionals are rallying behind the concept of “talent management,” which, according to The Hackett Group, is the “activity by which organizations identify talent needs and acquire, develop, manage, and measure talent.” Beyond the buzz, research shows a distinct correlation between exceptional talent management and financial performance. As The Hackett Group notes in its 2009 “Performance Study on Talent Management Maturity,” “those [companies] that really get the purpose of strategic
1.
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workforce planning, workforce development, and organizational effectiveness posted earnings before interest, taxes, depreciation and amortization [EBITA] that are 18 percent better than peer group companies and a 54 percent greater net profit margin.� When you think about all of the ways that relocation plays into the talent management cycle—especially in the development of talent—and consider that the cost of talent acquisition and the impact of losing talent keep escalating, these numbers justify aligning your mobility objectives with corporate talent management goals. They also serve as further proof that relocation belongs at the strategy table in practically every organization. Segment your mobile workforce to drive ROI. Today, employers are placing their mobile employees into non-traditional tiers and assigning mobility benefits accordingly. For example, college recruits and new hires who prefer self-service online tools may sit in the “development� tier, while the high-
2.
Technology also can be a recruiter’s best friend. Online relocation costestimating tools or budget calculators can help recruiters establish if mobility benefits should be offered with a position they are posting. est quadrant receiving the most generous benefits would include the top 20 percent of employees who help drive your business. This is one way to protect your top performers like valuable trade secrets while minimizing the possible financial impact of losing them via attrition. Give your recruiters the right tools to expedite the process. Cost efficiency often is tied to making the right mobility decisions. This is why relocation pre-decision services have become so popular, as they not only help link career development with corporate needs, but also give the candidate and the employer more insight into the financial impact of the move much
3.
earlier in the process. Specifically, it helps to provide critical pieces of knowledge up-front, including the realistic price that an employee can expect to receive for his or her home, the current market conditions in the destination location, and the amount that the employee can afford to finance. Armed with this information, both the employee and employer can make an informed decision and increase the likelihood of a successful move. In this regard, pre-decision services can reduce attrition among key hires after significant investments are made in relocating and on-boarding them. Studies indicate that turnover can cost an employer anywhere from 25 to 150 percent of an employee’s annual salary. Reducing turnover by even a few employees a year can amount to significant savings. Technology also can be a recruiter’s best friend. Online relocation costestimating tools or budget calculators can help recruiters establish if mobility benefits should be offered with a position they are posting. This should be determined up-front so
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they can advertise the position with or without relocation benefits. Savings among renters. If your transferees cannot afford to sell—or choose not to—then renting presents a viable option, far less costly than funding loss-on-sale benefits. Across renting populations, there are a number of ways to achieve additional savings. For example, negotiating better security deposit terms (including a lease break clause— sometimes called a “diplomatic
4.
clause”—that lets renters out of the lease if they are relocated again) can save lease-breaking expenses. For meal allowances, instead of paying actual costs, pay a per diem or lump sum, which is calculated to reflect adequate coverage but to discourage employees from dining at Ruth’s Chris Steak House every night. Renting furniture or going into temporary accommodations instead of a hotel also can save money; in fact, renting furniture in the new location can gen-
erate a cost savings of up to 50 percent for one-year assignments. Outsource/centralize your program. Outsourcing allows HR professionals to do a lot more than simply slip out of the harness of administrative duties. By freeing up valuable internal resources to focus on core competencies, it can help them achieve the strategic roles they covet. It also delivers the confidence that their mobility programs are being handled by those who understand what is at stake with every move and who can offer assistance in such areas as policy benchmarking, consulting, risk avoidance, and compliance. Centralizing program administration through one single channel also will help drive consistency and allow your company to take advantage of your provider’s stringent supply chain management. Providers that maintain their own supplier network do the heavy lifting of selecting, screening, and monitoring suppliers, and these vendor partnerships typically pay the added dividend of volume-leveraged discounts.
5.
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30 MOBILITY/APRIL 2011
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6.
Become a better buyer. Selection of a relocation management company (RMC) ultimately reverberates throughout your entire company: when your employees and their families are unhappy with the services they are receiving, productivity drops, affecting costs, recruitment, and retention efforts and your ROI. Such thoughts do not make the vendor selection process any easier, but they do underscore the need for extensive due diligence of all suppliers under consideration. Make certain that any RMC you choose to work with has a deep bench of talent, sufficient resources, and the financial stability to handle your program. What sort of valueadded services, such as in-house tax and consulting expertise, exist? What kind of technology does your provider employ to support service delivery and reporting needs? Assemble a task force to involve such stakeholders as procurement, compensation, IT, and accounts payable in the decision-making process, and establish a detailed road map that encompasses three steps—deciding what you want, discovering what is available in the marketplace, and developing the program you require. Do not forget the family. There is plenty of evidence to suggest that family issues represent a primary roadblock to successful relocations, both domestic and international. The tragedy is that in most cases, the loss of a sizable investment in your employee could have been prevented with a little more planning. If you want to get the best return on your investment, you have to ask yourself if you truly are doing all you can to make your employees and their families successful. Spousal
7.
assistance and family counseling (destination services) can go a long way toward overcoming resistance, increasing acceptance, and replacing a spouse’s income, giving the employee more purchasing power in the destination location to ensure that the family selects a new neighborhood/home where they will be successful. Are you providing spousal assistance? What are you doing to coach employees to use the assistance available to them? Do you have content on your website to help familiarize assignees with their destination locations? If the root cause of employees not taking advantage of offered spousal/familial assistance is that they do not want the company to know their personal business (or have it reflect negatively on their employment status), what are you doing to overcome it? Taking a proactive stance instead of waiting for the employee to come to you literally can save you hundreds of thousands of dollars. Focus on the metrics that matter. In the post-recovery world, controlling mobility costs means paying attention to the right metrics, such as total relocation cycle time, time to productivity, attrition rates, and acceptance rates. Going forward, the new way the industry should be thinking is “what is the return on investment for each relocation?”
8.
Ellie Sullivan, SCRP, SGMS, is director of consulting solutions, Weichert Relocation Resources Inc., Norwell, MA. She can be reached at +1 781 982 5017 or e-mail esullivan@wrri.com. Tim McCarney, GMS, is manager of marketing communications, Weichert Relocation Resources Inc., Norwell, MA, and a member of the MOBILITY Editorial Advisory Committee. He can be reached at +1 781 982 5017 or e-mail tmccarney@wrri.com.
welcome home and let one-group be your qualified partner for allinclusive relocation services. To make your employees feel at home from the first day.
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BY ANDREW FISHER Fisher addresses some of the most critical financial considerations for American expatriates, including banking and asset administration, investment management, taxes, and real estate, and discusses how the growing trend toward localized employment contracts further complicates matters for Americans.
verseas assignments have many wonderful benefits, although they also can be uniquely challenging. The complexity of managing one’s financial wealth often tops the list of these challenges. This is particularly true for American citizens. To properly guide Americans through the process of expatriation, global mobility and HR professionals must have a working knowledge of the financial challenges their American assignees face.
Banking and Asset Administration The seemingly simple task of managing one’s cash and banking needs can be surprisingly difficult while living abroad. Often, employees have financial obligations left back in the United States in addition to lifestyle expenses and new financial obligations in their host country. To make things easier and less costly, American expatriates should maintain bank accounts in both countries. The U.S.-based account should offer features like credit and debit cards, and convenient web access to services such as online bill-pay and wire transfers. This will make meeting those U.S.-based financial obligations much easier to manage. The host country account should be at a prominent local bank and should be used for day-today expenses—this account should hold a minimum
reserve of three to six months of living expenses. Some foreign banks also offer U.S. dollar-denominated accounts; these are a wonderful option for assignees as they can simplify foreign currency exchange while also lowering the cost.
Investment Management As with banking and cash management, many Americans find that managing their investments while living abroad is a difficult and time-consuming burden. Simply finding a suitable U.S.-based brokerage firm willing to hold their assets can be challenging. Recent IRS crackdowns on potential tax evaders have led to onerous restrictions on international financial institutions that deal with Americans, as well as stricter IRS reporting requirements for foreign bank and investment accounts. These new restrictions, combined with bad publicity, have led many institutions to close or severely limit their services for American investors. Further complicating matters, there are very few advisors qualified to give financial advice to American expatriates. Most advisors do not understand the unique tax and investment implications American expatriates face. While living and working abroad, it also is important to consider the currency and regional exposure of the investment MOBILITY/APRIL 2011 33
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The same problem may arise in reverse for an assignee’s balance in a U.S.-based qualified retirement plan. These assets may not be considered qualified by the tax authority of the host country.
Taxes
portfolio. For Americans planning a move abroad, it is wise to find an advisor who specializes in advice for American expatriates prior to leaving the United States. Fee-only investment advisors who operate in the United States as Registered Investment Advisors (RIAs) are the best choice, as their compensation is not tied to product commissions. Also, RIAs are held to a fiduciary standard that requires them to always act in the best interest of their clients. American expatriates also should be aware of how the various taxadvantaged savings programs offered around the world (such as a 401[k]
34 MOBILITY/APRIL 2011
in the United States) are treated by the IRS. While Americans generally should take advantage of these programs, it is important to consider the “worldwide” tax implications (both the United States and the foreign country), especially if the plan is not a “qualified” plan for U.S. tax purposes. Because of the complexities surrounding the tax deferral elements and future taxation of such accounts, it is wise for American expatriates to get advice from a qualified U.S. tax advisor who specializes in expatriate taxation prior to participating in such a program.
Taxation is another area with many layers of complexity for expatriates. When Americans move abroad, they often are uncertain about what effect their move will have on their annual U.S. tax liability and reporting requirements to the IRS. All U.S. citizens are required to file an income tax return every year regardless of their country of residence. This is because the U.S. imposes a worldwide tax, based on citizenship, not residence. As mentioned previously, the United States recently has been very public in its war against offshore banking and tax evasion, driven partly by the effort to disrupt terrorist funding and also by a need for increased tax revenue. Governments everywhere are stepping up enforcement, raising aware-
fischer_new_MOBILITY 3/2/11 9:46 PM Page 5
On the Web ness of this issue. Recent requirements imposed by the U.S. government on its citizens, which include more strict reporting of foreign bank accounts and more onerous rules related to the international movement of funds, have only further complicated tax matters for Americans living abroad. Though Americans abroad are obligated to pay taxes both at home and in their host country, IRS does offer a “Foreign Earned Income Exclusion” (up to $92,900 for 2011) for Americans living and working abroad. There is a misconception that this exclusion eliminates the need for Americans to file taxes if their income falls below this amount. This is not the case. Generally, all U.S. citizens working abroad must file a tax return each and every year. This causes concern among some that they will be double-taxed on their income—once by the United States, and again by their host country. American assignees need not worry, as there is a system of exclusions and credits in place to avoid double taxation. The four pillars of this system are: the Foreign Earned Income Exclusion, the Foreign Housing Exclusion, the Foreign Tax Credit (General Limitation) and the Foreign Tax Credit (Passive). Because every individual’s circumstances are unique and regulatory and tax regulations vary substantially country to country, it is wise to seek the advice of an expatriate tax specialist, even if you do not have substantial income or assets. Further adding to the tax burden for Americans moving abroad is the trend among large multinational employers away from offering taxequalized expatriate assignments,
For further resources concerning expatriate finance and administration, please visit www.WorldwideERC.org The Role of Credit in Financial Service Packages for International Assignees www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/1109-mitchell.aspx The Global Economic Crisis: What It Means for the International Assignment www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/0609-mitchell.aspx Protecting Assignees from Foreign Currency Fluctuations www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/0609-naughton.aspx which protect employees from the responsibility of arranging and filing their own taxes. Traditional taxequalized contracts promise a tax structure “as-if” the employee still works and resides in their home country. An emphasis on cost control has led many employers to offer more localized contracts. This often dilutes the financial benefit of a foreign assignment for the employee. It also has shifted the burden of tax filing onto the employee. Americans fare somewhat worse than citizens of other countries under the local contract scenario because Americans must deal with multiple tax authorities and a worldwide tax, making their financial picture much more complex.
Real Estate When it comes to residential real estate, the conventional wisdom that owning a home is better than renting is not necessarily true for American expatriates. While there often is a tax advantage to homeownership from mortgage-interest deductions (similar to in the United States), expatriates often can deduct certain rental housing expenses as well. This benefit diminishes the appeal of foreign homeownership.
Further lessening the appeal of ownership is a higher likelihood of mobility among expatriates, expensive sales fees, and transfer costs. American expatriates also may face a significant tax risk because of exchange rate fluctuations when owning real estate abroad, especially if the purchase is financed with a mortgage. It is possible to incur a significant tax liability due to either a capital gain on the sale of a home, or a currency gain on the retirement of a foreign mortgage. It should be noted that a currency gain can occur and result in a tax liability even if there is a real loss on the sale of the home. Finally, investors should not expect significant returns on real estate after expenses, and should be aware that ownership of foreign property can create complicated estate planning and tax issues. Because of these added risks and complications, Americans considering the purchase of foreign property should proceed with caution and only consider property purchases for the long term. Often, Americans moving abroad struggle with the decision of what to do with the home they leave behind. The decision to keep or sell their U.S. residence is often highly personMOBILITY/APRIL 2011 35
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al and emotional, and not purely financial. From a strictly financial perspective, it is generally wise to sell one’s home if planning to be abroad for more than two years. This is especially true if the employer offers reimbursement of selling expenses. When analyzing this question from an investment perspective, rarely does the net rental income provide a reasonable return on investment. An adequate return also would need to adequately compensate for maintenance costs and property management time. This rarely happens. Finally, the conversion of a home to a rental property can have negative tax consequences that should be thoroughly researched. The decision to hold on to a home and convert it to a rental property is quite complex and should be discussed in advance with a qualified tax advisor.
Complicated Decisions Americans moving abroad face a wide range of complicated financial decisions and concerns. To avoid costly mistakes, it is imperative that they have access to knowledgeable and experienced professionals to help guide them through the process of expatriation. This is true for all Americans, but even more particularly so for those accepting a localized employment contract in a foreign country. All too often, assignees’ questions are directed mistakenly to mobility and HR professionals who cannot be expected to have the answers. However, to best assist their American assignees, employers should have some understanding of the key issues and be able to guide assignees to the appropriate advisors. Andrew Fisher is president of Maxim Global Wealth Advisors, Portland, OR. He can be reached at +1 503 620 3600 or e-mail afisher@maximadvisors.com. 36 MOBILITY/APRIL 2011
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Expats: the Pitfalls of Parting Company BY NINO NELISSEN, SGMS The termination of an expatriate is a challenging proposition, but not uncommon in these times of tightening purse strings and laser-like focus on return on investment. Nelissen offers an overview of the tax and employment law issues that arise when parting company with an expatriate.
W
hat happens when the return on investment (ROI) for an employee is insufficient to justify continued employment? And what happens when that employee is an international assignee? This group— international assignees—may be the ones who suffer first from the increased focus on revenues. In fact, more than ever before, we see expatriates being made redundant during or immediately after an international assignment. But terminating expatriates involves unique complexities and can be a minefield, exacerbated by the fact that tax, employment, and social security laws of the home and host countries need to be addressed.
Employment Law Employment laws differ from country to country. When terminating an assignee, the first thing that must be determined is which employment law applies. Often, employers and employees opt for a certain law to apply. Such election typically is made in an assignment letter, and most often is made for the laws of the home country to apply. This election may have several reasons, most important of which is the fact that this law was applicable in the past, prior to the secondment, and will be applicable in the future, after the secondMOBILITY/APRIL 2011 41
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ment has been completed. Another important reason for electing home country employment law to be applicable is familiarity of the assignee. Assignees will be far less likely to sign an assignment agreement when it refers to laws in which they are unfamiliar. Electing the home country law to be applicable offers some benefits. In view of parties, it ends the discussion of which laws are applicable; for legal purposes it is assumed that nothing has been changed because of the assignment. Unfortunately, however, the legal reality often is much more complicated. Several international agreements apply when determining applicable law and competent court in case of international contracts and international disputes. An election for laws of a certain country to apply does not
42 MOBILITY/APRIL 2011
by definition exclude these international treaties, as a result of which certain or all rules of the jurisdiction that parties wanted to exclude may still apply. For example, when it can be determined that the employment agreement is more closely connected to another country, mandatory rules of that country do apply, and these rules can overrule the laws that were initially agreed to apply. Within the EU, specific rules apply. Under EU law, one is allowed to select the laws of a certain jurisdiction to apply. This election, however, may not result in an undermined legal position of the employee. The election will, therefore, be invalid when it leads to certain mandatory rules that protect the employee being overruled. European rules state that national law applies in the event par-
ties do not elect a certain right to apply. The starting point is that the national law should be applied in the country in which the employee usually works on the basis of his or her employment agreement. There are different levels of employee protection in employment laws, varying from “employment at will” to much more regulated employment. This “mismatch” in legal systems, combined with the complicated allocation rules to determine which law applies to a specific case, can make it quite difficult to provide certainty on the applicable employment laws; rules of a country that is very familiar with “employment at will” may, therefore, be set aside in favor of laws of a country with strict rules as to when and how an employment relationship must be terminated.
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An additional practical problem in this respect is that once it is determined which laws apply, the court that is eventually dealing with a case has a lot of freedom in determining what law to apply and how to apply it, which does often make it impossible to predict the outcome of a verdict. Another concern is how it is determined what court is the actual competent court on a certain dismissal case. Within Europe, for example, it is determined that an employee can, in principle, only be called in front of a judge in the country of residence, unless other arrangements have been made after the case was initiated. Experience shows that once a dispute has arisen, employees may want to use this rule in order to gain by postponing a discussion on the content of a dismissal case, but first fight a legal battle on the competent court; the time they gain by acting as such varies significantly from case to case.
Tax Law In many cases, assignees will be provided some sort of compensation when being made redundant. The tax treatment of severance pay in international situations can be quite complicated, and often exposure for double taxation may arise. This may have various reasons. First, the qualification of severance pay for tax purposes may vary. In most cases, severance pay is taxed as “employment income” and is governed by the equivalent of article 15 of the Organization for Economic Co-operation and Development (OECD) model tax convention (often stating that the income is taxable in the country where services have been rendered). However, when people close to their retirement age have been made redundant, it also can be argued that
On the Web Tax and legal compliance are key parts of mobility management. For further information, please visit www.WorldwideERC.org: Industry Spotlight: Improper Income Reporting Tops List of Compliance Concerns www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/1110-Industry-Spotlight.aspx Recruiting Foreign Workers in the United States—How to Remain Competitive and Ensure Compliance in a Climate of Increased Government Scrutiny www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/0810-Riberio.aspx It All Adds up—Expatriate Compensation Collection and Considerations for Consistent Program Compliancy www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/1010-Pardo.aspx
the severance pay should be qualified as a payment to compensate for loss until retirement. Tax treatment of such payment is governed by the rules that apply to pension distributions, as a result of which the country of residence is usually the competent taxing authority. Also, when an expatriate receives severance pay, the allocation of taxation rights may not be crystal clear. Not every country takes a very logical approach when it comes to determining the rules under which taxation rights on the benefit are allocated between countries. The Netherlands is an unfortunate example of this scenario. The Dutch Supreme Court ruled some time ago that for Dutch standards, it is in principle guiding where the assignee was working in the year of dismissal, as well as the previous four years. As no country in the world uses a similar allocation, there are many cases where there can be double taxation, or where a tax windfall may occur. Further complexity may arise when a tax deferral strategy is being used. Often employees prefer to defer paying tax on severance pay. This can be achieved by having the severance pay
paid directly into a trust, limited liability company, and the like. The rules under which taxation can be deferred in one country usually are not similar to the rules that allow such deferral in another country. As a result, there is, again, an exposure to double taxation.
Recommendation Making expatriate staff redundant can be quite complicated when approaching this matter from a legal perspective. In practice, in most of the cases an approach is followed where staff is first repatriated and then made redundant, and in many cases this results in an efficient procedure. However, given the many complexities, it always is advisable to be well informed of the potential consequences of an international dismissal prior to taking any steps toward an assignee. Careful planning can ensure a swift procedure, which usually is best for both the assignee and the employer. Nino Nelissen, SGMS, is managing director of Executive Mobility Group, Amsterdam, The Netherlands, and a member of the MOBILITY Editorial Advisory Committee. He can be reached at +31 20 405 4753 or e-mail nino.nelissen@executivemobility-group.com. MOBILITY/APRIL 2011 43
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All for One and One for All:
an Examination of Lump-sum Programs BY MARTI BRINEY, CRP, SGMS With shrinking budgets and smaller staffs, organizations continue to seek ways to reduce the administrative time of their mobility programs, and one method that has experienced a resurgence in popularity is the lump-sum benefit. Briney offers an overview of a recent survey that benchmarks how organizations administer their lump-sum programs and manage their mobility-related expenses.
B
y providing a lump-sum benefit, companies offer employees a cash payment for all or part of their mobility program rather than reimburse expenses. Lump-sum benefits include greater cost control, reduced administrative burdens, and increased employee flexibility while providing greater program consistency and fewer exceptions. The practice has been around for decades and is embraced by many organizations; and in light of the constraints created by tighter budgets and reduced staffing, it has enjoyed a resurgence as a valuable tool for today’s employers. For those organizations seeking to adopt a lump-sum benefit as a new practice, several questions need to be addressed. Managers want to be confident that their program is competitive by meeting employees’ needs without being overly generous. NEI Global Relocation, Omaha, NE, recently surveyed nearly 200 companies that provide lump-sum 46 MOBILITY/APRIL 2011
allowances in their mobility programs. Respondents ranged in size from those with fewer than 500 employees to those with more than 50,000, and span 12 different industries. This report compares the responses of those employers offering a lump-sum payment as the only source of employee financial support (lump-sum only) with those offering a partial lump-sum payment, intended to pay for some mobility expenses but not all. In this survey, 33 percent of respondents offer a lump sumonly policy and 57 percent provide a partial lump-sum program to all or some of its employees. The survey asked employers why they started using a lump-sum program. The reasons differed based on the type of lump-sum payment. Those offering a partial lump-sum benefit were most concerned with employee flexibility while those providing a lump sum-only policy cited cost control as their number one priority.
Expenses The most common expenses covered by lump-sum payments are the miscellaneous expense allowance (MEA), cited by 70 percent of survey respondents. Most employers cannot foresee every expense that employees may incur during their moves. So the MEA, in the form of a lump-sum payment, covers expenses not specifically addressed in the policy. This category includes expenses such as a new driver’s license, pet licensing, window coverings, and the like. Rounding out the top five are temporary living expenses, with 68 percent of respondents offering this benefit, 65 percent citing homefinding trips, 54 percent indicating return trips while in temporary living, and 46 percent citing final move expenses. Less common examples are 18 percent indicating lease break assistance, 18 percent citing duplicate housing, 17 percent noting rentalfinding assistance, and 12 percent
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MOBILITY/APRIL 2011 47
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offering selling expenses of the old home. Eleven percent noted home purchase expenses, and 6 percent cited the household goods move.
Who Receives Lump Sums? A majority of employers use a tiered approach for the types of benefits offered and the dollar amounts included for each benefit. Sixty-three percent of respondents use a multitiered program. Most tiers address titles or ranking of employees, from college interns who may only work for the company for a few months, to executives who are leading the organization. Many employers also differentiate between new hires— whether they are experienced or inexperienced—and recent college graduates. 48 MOBILITY/APRIL 2011
Payments—Fixed or Variable? Within each employee tier level, some companies offer fixedpayments—the same lump-sum amount for each tier level. Others
provide variable payments— customized payment amounts for each employee. The survey found that most partial lump sums are a fixed amount, whereas lump sum-
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Average Amounts Paid for Partial Lump Sum Programs by Employee Ranking and Homeowner/Renter Status Average Dollar Amount
Non-manager
New Hire Experienced
New Hire Inexperienced
Intern
R
H
R
H
R
H
R
H
R
10%
14%
13%
20%
12%
16%
21%
31%
42%
54%
28%
19%
34%
25%
38%
26%
44%
35%
41%
46%
35%
13%
14%
13%
12%
15%
17%
15%
12%
12%
15%
4%
4%
to $10,000
18%
17%
14%
16%
24%
15%
24%
15%
24%
7%
4%
7%
to $12,500
9%
8%
19%
11%
10%
6%
9%
6%
3%
1%
0%
0%
to $15,000
12%
6%
8%
8%
6%
2%
10%
5%
3%
1%
0%
0%
to $17,500
6%
3%
5%
1%
3%
0%
1%
1%
0%
1%
0%
0%
to $20,000
11%
8%
8%
1%
3%
2%
4%
0%
2%
0%
4%
0%
to $30,000
6%
3%
3%
3%
1%
0%
0%
0%
0%
0%
0%
0%
> $30,000
5%
0%
11%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Exec/Director
Manager
H
R
H
< $2,500
5%
9%
to $5,000
16%
to $7,500
Average Amounts Paid for Lump Sum Only Programs by Employee Ranking and Homeowner/Renter Status Average Dollar Amount
Non-manager
New Hire Experienced
New Hire Inexperienced
Intern
R
H
R
H
R
H
R
H
R
0%
4%
7%
13%
0%
7%
12%
19%
38%
44%
5%
4%
8%
20%
30%
18%
29%
44%
49%
38%
44%
14%
16%
12%
21%
13%
18%
29%
25%
15%
14%
19%
12%
to $10,000
0%
11%
12%
21%
23%
12%
11%
14%
5%
7%
5%
0%
to $12,500
4%
0%
12%
4%
3%
3%
7%
0%
8%
5%
0%
0%
to $15,000
0%
5%
12%
13%
3%
9%
3%
11%
5%
2%
0%
0%
to $17,500
0%
0%
4%
4%
0%
0%
0%
0%
0%
0%
0%
0%
to $20,000
23%
21%
12%
8%
7%
0%
11%
3%
3%
2%
0%
0%
to $30,000
9%
11%
8%
8%
17%
12%
18%
11%
5%
2%
0%
0%
> $30,000
50%
26%
24%
8%
7%
3%
3%
0%
3%
0%
0%
0%
Exec/Director
Manager
H
R
H
< $2,500
0%
5%
to $5,000
0%
to $7,500
only payments vary by individual needs or predetermined factors. As noted from the survey responses, fixed payments are used more frequently with partial lump-sum programs, are more prevalent with interns and inexperienced new hires, are as popular as variable payments with
experienced new hires and non-managers, and are not as widespread with managers, executives, or directors. In lump sum-only programs, variable payment amounts are used equally or more often than fixed amounts in every employee category except inexperienced new hires.
Are Executives Treated Differently? The director/executive policy tier demonstrated the largest differential in how the payment was designed. Sixty-three percent of the respondents used the variable method in the director/executive category when a lump-sum payment was the only type MOBILITY/APRIL 2011 49
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of financial support. Forty eight percent of respondents used the variable method in the director/executive category when a partial lump sum was offered.
Factors for Determining Payment Amount
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The chart on page 48 indicates a mirrored decision process in determining amounts to be paid for a lump sum-only program and a partial lump-sum payment. Being a renter or homeowner had the least impact for partial lump-sum payments and the most impact for lump sum-only programs. This is a logical outcome because the partial lump-sum program generally is intended to pay for the costs of the temporary living period between moving out of the departure location and into the destination location. The lump sum-only program often covers this and all other expenses including the sale of the primary residence. There are additional factors that influence the partial lump-sum amount, the most commonly cited of which are homeowner/renter status and salary range. Destination distance, family parameters, and benefit param-
eters also factor into the amount across the spectrum of job titles, from executive director to intern.
Specific Amounts The tables on page 49 identify the average amounts paid for lump-sum programs by employee ranking and homeowner/renter status.
Discoveries Companies use lump sum payments to streamline the way employees receive funds for relocating, while offering a way to predict costs with certainty. The key to determining the amount to be paid is to clearly define the intended use of the lump sum payment, and to closely examine the transferee population by program tier or homeowner status to create a fair payment plan. Once in place, everyone will save time with the elimination of expense reports completed by transferees, reimbursements made by the company or service provider and estimating costs for the benefits the lump sum covers. Marti Briney, CRP, SGMS, is senior vice president of business development for NEI Global Relocation, Omaha, NE. She can be reached at +1 402 397 8486 or e-mail mbriney@neirelo.com
Worldwide ERC® Lump Sum Research and Resources
www.one-group.org Your relocation partner in Spain:
Phone: +34 91 671 06 08 Web: www.one-sit.com
50 MOBILITY/APRIL 2011
Research available from Worldwide ERC® identifies trends in mobility assistance, including data on lump-sum programs. The recently released 2011 “New Hire Survey” found that 42 percent of respondents offer a lump sum to cover the entire cost of the move to at least some new hires. A second survey report, the 2009 “Relocation Assistance: Transferred Employees,” offers a look at the method of reimbursement at the destination location, finding that about one-fourth of organizations “always” offer a lump-sum payment to cover the employee’s temporary living expenses. For a complete list of Worldwide ERC® research and reports, please visit www.WorldwideERC.org/Resources/ Research/Pages/reports-and-surveys.aspx.
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Destination Profile: Saudi Arabia BY MOHAMAD HADBAOUI AND DUNCAN LAWSON The Kingdom of Saudi Arabia is the largest country in the Middle East and home to both the worldâ&#x20AC;&#x2122;s largest oil reserves and the two holiest sites in Islam. Hadbaoui and Lawson offer Westerners considering assignments in Saudi Arabia these observations of expatriate life there, with all of the challenges, issues, and unique opportunities this remarkable region provides.
T
he Kingdom of Saudi Arabia is one of the most visited countries in the world, yet has only a small tourist industry. It is one of the most natural resource-rich nations, but has only small pockets of cultural mixing or cosmopolitan culture. It is subject to a conservative and total monarchy, but it attracts expatriates from all over the world. While it is home to bustling metropolises with breathtaking architecture, as well as the holiest sites of the Islamic World in Mecca and Medina, Saudi Arabia has for
52 MOBILITY/APRIL 2011
decades kept its traditions, cultures, and religious heritage to itself. Saudi Arabia occupies most of the Arabian Peninsula, connecting Africa and mainland Asia, bordered by eight other Middle Eastern states, none of which are as politically stable. Saudi Arabia continues to successfully balance its religious sensibilities with explosive growth in oil production and the sometimes radical views of its neighbors. The country covers an area of just under 2 million square kilometers, nearly all of which is desert. The pop-
ulation is estimated at around 17 million, plus around 5 million foreign nationals. Of the citizens, 90 percent are Arabs and all are Muslims. Saudi Arabia possesses about one-third of the worldâ&#x20AC;&#x2122;s petroleum, along with the most developed refinery infrastructure, giving it enormous control over worldwide supply and production. Limited distribution of wealth and a high birthrate keep the majority of Saudi Arabians in a state of poverty, with about 70 percent of adult males and less than half of females literate. Infant mortality is approximately the
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same as that of Tonga, despite having more than a million times higher national income.
History and Culture Saudi Arabia is one of only three countries still in existence that are named after their royal families, along with Jordan and Liechtenstein. The Saud family had been prominent in the region since around 1500 C.E., but did not gain control until the early 1900s when Abdul Aziz ibn Saud captured Najd and Riyadh. In 1932, the nation was renamed the
Kingdom of Saudi Arabia. The discovery of oil in the mid1930s prompted the rise of Saud wealth, and the negotiation of drilling contracts that today require energy extraction companies to pay more than 80 percent of their profits in tax to the royal family. The monarchy faces problems of a ballooning population, unemployment, aquifer depletion, and an economy vulnerable to energy price fluctuation. The majority of Western expatriates work in the defense, health care, energy exploration, IT,
and banking sectors. Nearly all domestic work and physical labor is done by Asian expatriates from India, Bangladesh, and the Philippines.
Riyadh and Jeddah Riyadh, once a small settlement valued for its palm trees and dates, is the capital and home to the largest concentration of expatriates in the Kingdom. Expatriates account for a large percentage of the total population, which has led to large enclaves being built within which foreign nationals are less bound by the rigors
MOBILITY/APRIL 2011 53
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of Islamic law. One of the largest expatriate enclaves is known as the Diplomatic Quarter, a 1,600-acre fortified neighborhood built in 1975 to host and protect Westerners and diplomats. Within the constituent compounds, even Riyadhâ&#x20AC;&#x2122;s stringent Islamic law enforcement is somewhat relaxed, with, for example, some compounds permitting men and women to use the same swimming pool at the same time. Downtown Riyadh is home to spectacular urban architecture and truly titanic shopping malls, but at the same time is traditionally unreceptive to Western concepts of entertainment. Riyadh is considered a city either for the accumulation of wealth, or for the immediate expenditure of it in a mall.
54 MOBILITY/APRIL 2011
Jeddah is the second-largest city and destination for expatriates. Less geographically isolated and more liberal than Riyadh, it is a popular choice for those accepting assignments with more than just financial gain as a concern. As the main port city and principle gateway to Mecca, Jeddah always has been familiar with visitors of other nationalities and ethnicities, even more so after the 20th century oil boom. Jeddah has enjoyed a comparatively cosmopolitan reputation, and has benefited from diverse commercial enterprises started by expatriates. There is notably more activity, diversity, and artistic flair on display, with public artworks strewn throughout the city. The added activity has not come
without a price, as expatriates often complain about the air quality in Jeddah, especially in the height of summer.
Tax and Finance The tax policies of Saudi Arabia remain its biggest attraction for expatriates or foreign businesses unassociated with the energy sector. Foreign employees pay no tax on any income or earnings that originate inside the Kingdom. Saudi nationals are taxed between zero and 30 percent of their income, depending on salary, but are given generous tax benefits and subsidies on the cost of living. Businesses are subject to a tax called zakat, stipulated by religious law, but foreign-owned corporations are also exempt from this, being liable only for income tax based on the proportion of equity in their business. This tax ranges from between 25 to 45 percent, although the list of deductible practices is extensive. Petrochemical companies are charged a flat rate of 85 percent of their net income. The Saudi finance sector can be unexpectedly underdeveloped as investment and intermediary banks are discouraged by tradition. Local citizens traditionally turn to relatives when looking for capital, and the larger clans already possess wealth in excess of many financial institutions, so these sectors have remained underdeveloped, a factor that has limited the capital available for expatriate enterprises. Saudi Arabia has tax treaties with the UK, Germany, France, the United States, Japan, and numerous other countries to prevent double taxation. Expatriates should consult a financial advisor to find out the current tax arrangements between their countries.
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Education State education is only open to locals and naturalized Arabs. Numerous international schools are available across Saudi Arabia, either governed by the host nation’s embassy or privately organized. They are typically of a very high level, and are adept enough to offer multiple curriculums in the same institution, meaning that children are not obligated to attend a school specifically for their home country. Entrance for the most prestigious schools is fierce, and investigations and applications should be made as soon as an employee and family seriously starts considering an assignment.
Visas, Permits, and Citizenship The Kingdom’s visa regime is tightly monitored and subject to
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strict bureaucratic procedures, most of which have no system of appeal. Saudi Arabia is open to non-Muslim foreigners, but sometimes its visa procedures might not make it feel that way. Fortunately, nearly every company or group that employs expatriates will have someone on some sort of retainer, whose sole purpose will be to do battle on the assignee’s behalf with the red tape. With luck, an assignee’s participation will be limited to receiving an immigration serial number and presenting it to a Saudi embassy where it will be processed into a visa. In addition to the standard documents of passports, photographs, and birth and marriage certificates, expatriates must obtain official certification showing them to be free of dis-
ease, particularly HIV/AIDS. Applicants also should be certain their documentation shows no relationship in any way with Israel. Passports with so much as an Israeli stamp for a connecting flight should be replaced and application made with the clean passport. Few tourist visas are issued, and there is as yet little tourist industry, although new programs are being introduced to entice international travelers. The massive annual migrations of Muslims on hajj are admitted on special religious visas. To obtain a tourist visa, it is necessary to either sign on with a tour group that will apply on one’s behalf, or be invited by a company or a citizen of influence and good standing to serve as a sponsor.
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welcome home and let one-group be your qualified partner for allinclusive relocation services. To make your employees feel at home from the first day.
www.one-group.org Your relocation partner in Germany:
Phone: +49 6174 929 400 Web: www.one-donath.com
58 MOBILITY/APRIL 2011
It is extremely difficult to obtain entry to Saudi Arabia for single females. Unless part of a tour group, the close relative of an expatriate worker, or in possession of an invitation from a particularly important corporation or a member of the Saud family, entry is unlikely. The process for obtaining a residence visa and work permit is extensive, and will take a considerable amount of paperwork that is processed over a couple of months. Residence will require an employment contract, academic qualifications, and possibly another HIV test. Once issued, the employer will hold an employee’s passport and issue him or her a permit (iqama), which must be carried at all times. At that point, departure from Saudi Arabia is only possible with an exit visa, which is dependent on the permission of the employer or sponsor. Only senior managing directors of companies are likely to obtain coveted multiple exit/re-entry visas, and they are occasionally given as rewards for several years of outstanding service to particularly dedicated employees. Foreigners will not be granted citizenship. The Saudi government is sensitive to threats to national identity posed by immigration. The King himself occasionally grants citizenship “for outstanding service to the state,” but otherwise, even Muslim foreigners who marry a citizen are not guaranteed more than a visa with indefinite leave to remain.
Accommodation The expatriate and indigenous populations tend not to live together or mix socially. Arab culture favors large family homes in villas containing three or more generations. Groups of more than one villa con-
taining extended arrays of the same family are not uncommon. Expatriates, on the other hand, stick to the compounds. Citizens generally are well provided with housing, and the turnover rate of expatriates means that there are rarely shortages of housing in the compounds. This has led to a healthy competition between landlords, resulting in the housing conditions being high and frequently meeting and surpassing Western standards. Different compounds will cater to or attract particular nationalities, social groups, and castes. Choosing the right compound is very important, as when not at work, expatriates spend the vast majority of their time and virtually all of their social lives within. One of the important features to look for in a compound is the provision of garages or carports. Saudi summers regularly hit 122° Fahrenheit (50° Celsius), and cars left in the sun for any length of time will become dangerously hot inside and will suffer accelerated corrosion. One of the more unusual features of the Saudi property market is that nearly all lease contracts will, in fact, be between the landlord and the employing sponsor. Because of the high turnover of expatriates, owners prefer to deal with permanent citizens, should there be any disputes. The rent often will be paid directly by the employer, and the amount deducted from the employee’s wages. The majority of property will be rented unfurnished, be it a grand villa or modest studio.
Health Care The health care standard of Saudi Arabia is generally high, comparable
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with the United States or Western Europe, staffed by expatriates drawn from around the world by the financial incentives offered. There is an abundance of modern, state-funded hospitals and clinics in addition to high-grade private health care. Facilities and trained staff are sufficiently abundant that waiting lists are effectively non-existent for all but the most specialized of treatments. Riyadh is home to the King Fahd Medical City, the best hospital in the entire Middle East, and the King Khaled Eye Specialist Hospital, which is probably the best ophthalmologic hospital in the world. Expatriates should be aware of restrictions on certain prescription medicines they may be using. Tranquilizers, anti-depressants, and certain types of sleeping pills are ille-
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gal, except in cases of serious mental illness. To carry such drugs requires a signed prescription as well as an explanatory letter from the issuing doctor. It will be difficult to refill such prescriptions, so arriving with a supply is advisable, but be warned that carrying too much runs the risk of being accused of narcotics distribution.
Social Customs Saudi Arabia is a very conservative country that strictly adheres to Muslim religious laws. Public environments are very different from those of Western society. Expatriates, especially women, should under no circumstances enter into public spaces without first being aware of the local customs and ensuring that they adhere to them. Violation of these
laws may not just be a social blunder but actively criminal. A full guide to adhering to Saudi social customs is beyond the scope of this article, but here are a few points for the assignee to keep in mind: • All women, even expatriates, must cover themselves head to foot when in public. The traditional Saudi garment is an abaya, which is anklelength, long-sleeved, high-necked, and covers the hair. Women with particularly religious husbands or of the Saud family also will cover their face and hands. Women displaying their shoulders, arms, or legs are likely to be regarded as of “easy virtue” or a prostitute. At best this will result in being accosted by the feared religious police; at worst, physical assault. • Foreign men are not expected to conform to national dress codes, but
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shorts or sleeveless shirts in public will be considered bad form and excessively casual. • Do not offer an alcoholic drink to an Arab. Do not drink alcohol in public. Do not appear drunk in public. If possible, abstain from alcohol while in Saudi Arabia. • Do not walk on or near a prayer mat, or in front of any person at prayer. Do not try and enter a mosque. Foreign nationals and nonMuslims are unlikely to be allowed entrance and may be expelled forcefully. • Avoid the holy sites surrounding Mecca and Medina. Public signposts will warn foreigners of the prohibited zones. Entering into these areas can result in violent physical assault by groups.
welcome home and let one-group be your qualified partner for allinclusive relocation services. To make your employees feel at home from the first day.
www.one-group.org Your relocation partner in Italy:
Phone: +39 011 73 64 08 Web: www.one-vinelliescotto.com
62 MOBILITY/APRIL 2011
Pets Bringing the family pet will require a veterinary health certificate and a letter from the issuing vet addressed to the Director of Customs, certifying the animal free of rabies, vaccinated, and clear of disease. This letter must be certified by the Ministry of Agriculture in one’s home country, and authenticated by the Saudi Arabian Embassy or consulate. Saudi Arabian culture considers cats and other domestic animals acceptable, but dogs are considered unclean and are not traditionally welcome. Dogs are officially only allowed in if classified as a “guard dog” or a “hunting dog.” However, these regulations have relaxed somewhat and there are now a fair number of Pomeranians and Chihuahuas that have been admitted as guard dogs. Keep in mind that any dog likely will not leave the compound for the duration of its stay, so consider how
well-equipped one’s living arrangements are for animals.
Assignment To Saudi Arabia Assignment to Saudi Arabia offers numerous challenges. But those willing to accept those challenges will be rewarded with a wealth of cultural experiences. Saudi Arabia is a powerhouse of economics, politics and religion in the Middle East. Conservative attitudes have meant that the Kingdom has yet to develop an infrastructure that allows visitors to fully access and appreciate the wealth of history and culture the region has to offer. As such, Saudi Arabia essentially remains a business destination, with the expatriate community focused on the financial interests that have brought them there. As social life is limited to the compounds, many expats do not favor it as a destination if they have families or priorities outside of the workplace. Saudi Arabia can pose a challenging environment for travelers accustomed to Western culture and standards of behavior, but perseverance is rewarded with stunning metropolises, a vibrant business environment, and great financial opportunities. Mohamad Hadbaoui is country manager for Move One Saudi Arabia, based in Riyadh. He can be reached at +966 1 288 4175 or e-mail mohamad.hadbaoui@moveoneinc.com. Duncan Lawson is PR coordinator in Move One’s European Coordination Center, Budapest, Hungary. He can be reached at +36 1 266 0181 ext. 6718 or e-mail duncan.lawson@moveoneinc.com.
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Skill Set Switch: the Challenges and Changes in the Higher Education Relocation Market BY HELEN MCNEECE, CMC, CRP, AND JEAN MANN, GMS Competing for talent in the academic world has some parallels to competing for talent in the corporate world. While higher education still may be a long way from instituting the standardized procedures and policies that underscore a mobility program,McNeece and Mann write that forward-thinking institutions are beginning to hire relocation professionals to help them accomplish their hiring goals.
C
hances are, you never have thought about going to work for a university, hospital, or research center. But consider these questions: Is your organization competing with these institutions for the brightest and best talent? Are your mobility budgets shrinking, and do you crave new ideas on how to cut recruitment and relocation costs? Have you considered marketing your mobility services to colleges and universities? Higher education often has been overlooked by relocation professional development organizations and service providers alikeâ&#x20AC;Ś and some might say, with good reason. There are several relocation service challenges unique to higher education. MOBILITY/APRIL 2011 63
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No matter which approach is taken, implementing a campus-wide policy and procedure change must include a well-developed plan for communication. Decentralized Responsibilities and Decision-making Determining decision-makers can be time-consuming and costly, whether marketing services, products, or organization benefits. The sheer number of decision-makers often is hard to manage. There could be a separate contact for every department. For those who may have relocation responsibility, it is only a very small part of what they do overall, so interest in meeting with a sales representative or involvement with a professional development group is minimal. At the procurement department level, overall mobility costs often are underestimated (and thus underprioritized) because of a lack of tracking and/or incorrect expense allocation. In addition, new hires are often responsible for all or part of the relocation cost, so they, too, become decision-makers in the process of service provider selection. An HR representative from a major university in New York confirms this decentralization in institutes of higher education, saying that relocation policies reside in the school or department and not in the human resources area. Moving and other relocation services vary from department to department, with flagship academic programs having the most generous salaries and relocation benefits. There is an understanding among those that work in academia that creating policy is not a part of their culture. It may not even be competitive to pool funding and allocate resources across schools because certain key programs would not be as competitive. Recruiting talent drives the process for the flagship academic programs. At many institutions, these 64 MOBILITY/APRIL 2011
decisions are made at the dean’s level, behind closed doors.
Lack of Consistent Broad-scope Policies and Procedures Many institutions have no formal mobility policy or one only loosely followed. Compliance often is unattainable because resources vary by school and endowment levels. Willingness to foot the bill for relocation expenses often is determined by the candidates’ credentials, rather than by need or policy, making it particularly challenging for the service provider to manage the program. Academia often is focused on the academics, and so candidates rarely inquire about relocation benefits in the pre-offer process. The “post-hire awakening” often is uncomfortable for both the new employee and the department administrators who either have to tell them no, or find funding for services they had not incorporated in the original offer. As a rule, faculty are given far more generous relocation benefit packages (and benefits in general) than staff or administrators, resulting in a two-class organization. Afterthe-fact reimbursement for relocation expenses, versus direct billing, also is a common practice. The consequential inconvenience of footing bills out-of-pocket aside, this often leaves the new hire with little direction in choosing providers and no leverage if there are poor service issues from providers that have no ongoing relationship with the institution.
Inconsistent Hiring and Relocation Cycles Attrition is far more unpredictable in academia than in the corporate
sector. Key faculty often are “kept on” as a professional courtesy and new positions frequently are endowed or grant funded, which, especially of late, has caused a tremendous slowdown of activity. Because of the way funding is allocated, a department may have a year where they have a new chair and 10 new faculty members joining their ranks… and then go five years without another new hire. To a much greater degree than the corporate sector, where status or responsibility changes often include a relocation, higher education status changes (such as associate professor to full tenure professor, a chair, or dean’s position) require none and often does not leave a vacant position to be filled. There are very few intra-institution transfers, with the exception of those institutions having multiple campuses or campuses abroad.
Unwillingness to Recognize Relocation Benefits as a Recruiting and Retention Tool Many institutions still have an “if they want to work here they can get themselves here” attitude, depending on the prestige of the schools’ name and abundance of candidates. Housing assistance, in some cases, is the exception. Where housing costs are extremely high or scarce, the availability of subsidized institution-owned housing (often on urban campuses, NYU and Columbia, for example) and/or mortgage assistance programs (typically in the Ivy League class of institutions), are offered. However, loss on sale, BVOs, mortgage differentials, and the like are almost completely unheard of.
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Soft Services Often Are Self-serve or Provided Within the Institution Service providers will not find much business in the area of “soft services” such as destination services, language and cultural training, and spouse/partner career or educational assistance. Many of these areas are
handled through internal “Work, Family, and Life” HR department programs on a self-serve basis or with the aid of a department administrator, and are available to all employees, not just those who are relocated. Higher education differs from the corporate world in that many times
the spouse/partner also is in academia and employment is guaranteed (with a highly sought-after candidate), or job-sharing networks with nearby institutions are used. With lead times for planning that generally exceed the corporate sector (offers typically are accepted a semester ahead of start date), and often the availability of on-campus quarters and off-campus housing databases, temporary housing is an uncommon need. Exceptions to the soft service/self service rule may be found in institutions with extensive international programs or at the highest administrative levels.
Change Is Bound to Happen, Even in a Sector Reluctant to Change
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Faced with increasing budget cuts and ever-increasing competitive markets, the need for talent has never been greater. Many institutions are recruiting high-level administrators from the corporate sector, where relocation expense compensation is a given and the value of those expenses recognized. While higher education still may be a world away from standardized procedures and policies that realistically cover relocation costs, forwardthinking institutions are beginning to hire relocation professionals. Audrey Longo, who manages New York University’s Abu Dhabi program, comes from a corporate HR background where she handled expatriate management. Her experience in the corporate sector has given clear and defined policies to those taking assignments in Abu Dhabi. In time, the availability of consortium and affinity agreements to cut costs and increase service satisfaction
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increasingly will be used at higher education institutions. At relocation conferences and events, there is an increased presence of those who work for higher education, proving that policy and expertise are becoming increasingly important.
mobility industry. Colleges and universities increasingly are going global, as seen by NYU in Abu Dhabi and China Carnegie Mellon, and this globalization will be sure to bring along its complexities and opportunities for those in employee mobility.
Helen McNeece, CMC, CRP, is president of HERS Higher Education Relocation Specialists, Katonah, NY, and director, higher education programs for Ace Worldwide, agents for Atlas Van Lines. She can be reached at +1 914 980 2412 or e-mail hmcneece@HigherEdRelo.com. Jean Mann, GMS, is director of client relations for School Choice International White Plains, NY. She can be reached at +1 914 328 3000 or e-mail jean.mann@schoolchoiceintl.com.
Considerations for Higher Education Institutions Any broad-scope program must be flexible enough to address the variety of needs and available resources campus-wide. The first choice is deciding if the institution itself will sponsor all or a part of the costs from general funds, sometimes with additional services authorized being funded at the department level. A tier-level policy approach can be successful and fairly easily communicated. If funding must come from individual departments, a menudriven program is more feasible to implement. In addition to general budget constraints, peer institution relocation benefits being offered must be taken into consideration to ensure competitiveness on individual recruiting projects. No matter which approach is taken, implementing a campus-wide policy and procedure change must include a well-developed plan for communication. Memos from the president, deans, and chairs, as well as inclusion in procurement and HR publications, are a start. Availability of web-based resources and service initiation forms make the programs more accessible. As the war for talent becomes an even greater challenge in higher education, new opportunities will arise for those in the employee
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Get on the Retention Train: Three Ways to Eliminate Complacency, Prove Competency (and Retain More Clients!)
Client retention is the foundation of business development for mobility service providers, where â&#x20AC;&#x153;what have you done for me latelyâ&#x20AC;? continues to be the clarion call with regard to future work. Heineck says the way to truly service a client is to fully understand its business objectives, as well as how employee mobility will play a role in future business growth. 68 MOBILITY/APRIL 2011
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BY JILL HEINECK, CRP
A
s mobility practitioners, our corporate clients look to us for guidance and expertise. However, the only way that we can truly service this client is to fully understand its business objectives, as well as how mobility will play a role in meeting those objectives. And while mobility is traditionally a function of HR, today’s companies are in desperate need of out-of-the-box thinking, to not only ensure workforce mobility is even required to meet their needs, but also to reconnect the function of relocation to the rest of the business.
One way to help our corporate clients do this is to demonstrate the need for forethought before relocating, from a strategic perspective. By asking thought-provoking questions, the client is compelled to identify the purpose mobility will play in future business growth. For example, what part of the business is planning to grow in the next one to three years? How do they plan to do this? What level of talent are they looking to attract? Are they hoping to hire from within, or will there be a need for special skill sets that will have to be sought after outside the company? If
so, are they planning to retain the services of an executive search firm? The answers to these questions are mission-critical to make appropriate recommendations. Remaining client-centric when consulting with clients is essential. “Getting the deal” and hoping they stick around has gone by the wayside. Each day is a new day to prove to the client that we deserve to keep their business. This requires unconventional thinking, ongoing education, and the general desire to continually improve the customer experience. The way we have done MOBILITY/APRIL 2011 69
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mobility business in the past is just that: the past. Our “new normal” calls for sharpened skill sets, a honed aptitude for listening, and an open attitude toward change. Another way to connect the dots within the client’s organization is to cultivate a genuine understanding of their expectations. Do they want to micromanage the mobility process? Do they want to hear from you only when something is not working? Do they want a status report weekly? Do they want executive decisions made on their behalf? Laying out a clear and concise communication plan from the start (in writing, of course) ensures that not only is the communication between client and mobility team meeting expectations, but also that between the mobility team and the candidates.
Support Services Not surprising, one of the aspects of mobility programs that business
leaders are most interested in improving is support services. According to the 2010 “Global Mobility Policy & Practice Survey: Navigating a Challenging Landscape,” co-sponsored by the U.S. National Foreign Trade Council and Cartus, this ranks fourth on the list, after candidate selection, performance measurement, and repatriation and career management. Here is our opportunity to blow them out of the water! Designate a member of your mobility team to regroup with the client every quarter, or every six months (this is how fast the world is changing!) to evaluate where the service delivery is, and to see if can be tweaked. This is being client-centric. According to Liz Portalla, vice president, strategic services for Mobility Services International (MSI), Newburyport, MA, her team often meets with the client’s corporate finance, procurement, HR,
compensation, and talent acquisition vice presidents and directors to achieve a deeper understanding of the client’s overall business objectives. “MSI offers customized solutions, and we truly work to partner with our clients,” said Portalla. “Our client relationships extend beyond HR into other key disciplines. This allows us to truly act as an extension of our clients’ workforce mobility departments.” In addition, Portalla says MSI’s client management structure provides director and VP-level support in the areas of strategic consulting. “Leveraging this model, we provide our clients with ongoing policy consulting, program analysis and process improvements, customized reporting and technology, while a team of client leaders oversee the day-to-day operations to ensure ongoing service quality with transferees and assignees,” she said. We all are busy. We are conditioned to get through our “to-do
On the Web To learn more about the service provider-corporate relationship, please visit www.WorldwideERC.org: Smaller Clients Still Need Big Service: Constructing Relocation Service Programs for Employers that Move Fewer than 50 Employees Annually www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0109utterback.aspx How to Excel at Managing Service Providers www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1008wagner.aspx The Mobility Supply Chain—Opportunities for Greater Collaboration www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0707mackenzie.aspx
70 MOBILITY/APRIL 2011
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list” on a daily basis. However, the quality of service delivery is suffering, and herein lies the issue of disconnect, on all levels, which leads to failed relocations, which leads to lost revenue, which ultimately leads to lost business. Too many times we are over-promising and under-delivering. What can you and your team do to improve the process? Informal surveys from transferees show that they cannot get the guidance and advice they need, on demand, during their mobility process. Because the full cycle of a professionally-executed relocation can take up to nine months, we must show the client via service delivery that we will be sticking around until the cycle is complete, for each occurrence. Once a “best practice,” this must be reintroduced as a cornerstone of our value proposition.
Choosing Providers Strategically An increasing number of employers are taking a more strategic approach in evaluating and choosing service providers. Some are diversifying their outsourced partners to have a better handle on what is happening at all levels, to avoid putting all their eggs in one basket. Sylkia Negron, CRP, SGMS, senior relocation coordinator with FMC Technologies in Chicago, IL, says that her relocation department provides coaching and counsel to HR and management to guide and influence decisions and to ensure overall business value of the assignment. “We are unique in that we have both an in-house function, as well as outsource pieces of our business,” says Negron. What does Negron look for in a service provider? “Exceptional service MOBILITY/APRIL 2011 71
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is the number one requirement we have with all of our partners,” she said. Because almost 33 percent of all FMC’s relocations in 2010 were new hires, and 20 percent were senior level management, FMC’s method of outsourcing to support a specific need is tactical, at the highest level. This way, Negron and her team can still connect with all the parties involved and keep the relocation intact.
The Good News The good news is that according to “Measuring a Moving World: 2010 Corporate Relocation Survey,” by Atlas Van Lines, Inc., Evansville, IN, one in four relocation budgets will either grow or stay the same. About 53 percent of companies say their budgets will stay the same, while 24 percent foresee an increase in their relocation budget. Fortunately, according to the Atlas survey, 55 percent of the companies that outsourced their relocation services in 2009 were generally mid-sized and large companies that will continue to outsource significantly more mobility services than smaller companies. And, as the research shows, the only significant differences between large and midsize companies among individual outsourcing categories are in counseling about company policy, real estate sales/marketing, real estate purchase, and property management. Here is an opportunity to justify to the client that the decision to partner with your organization was the right one. Get on the client retention train, and show your client how it is done. Jill Heineck, CRP, is the founder and chief [relocation] officer of Focus Relocation LLC, Atlanta, GA. She can be reached at or +1 877 550 7356 or e-mail jill@focusrelocation.com. 72 MOBILITY/APRIL 2011
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to determine a price in advance of the move, eliminating unexpected moving costs. There is no deposit or up-front payment. MoveBuilder works with a network of experienced movers who are pre-screened and approved by the company. The flexibility and freedom of choice offered by MoveBuilder provides simple solutions for those complex relocations—an executive who needs to be transferred quickly while the family stays behind selling the home and finishing the school year; a single female on a budget who can pack herself but needs loading help; lowcost relocation for a group of entry level college recruits. Whatever the scenario is, MoveBuilder has a service option that fits. With MoveBuilder it’s all about simplicity. It’s moving—evolved. Visit www.movebuilder.com for more information.
MoveBuilder P.O. Box 10048 Fort Smith, AR 72917 Tel: 800-940-9155 • Fax: 479-494-6925 www.movebuilder.com
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or over 46 years, Crown Relocations has been providing global mobility services around the world. Having organically grown their infrastructure from Asia Pacific, to Europe, the Middle East, and North America, Crown understands the complexities of international assignments and nuances of domestic relocations first-hand. 5 Things You May Not Know The Quality of People Of Crown’s 5,000 employees, 2,800 are fully dedicated global mobility professionals. Crown employees, diverse in culture, language and skills, coupled with globally consistent quality management systems allow them to serve corporations’ mobility activities with unmatched precision. Over 10 percent of Crown’s own workforce is on assignment, offering their international client base an extraordinary view of the world based on local experience. Unmatched Global Footprint Crown operates over 250 offices in more than 55 countries around the world. These offices are staffed with Crown global mobility professionals that provide true on-the-ground service delivery, reducing the number of touch points for an assignee. Crown’s state-of-the-art facilities are strategically located where their clients need them to be, from key locations such as Hong Kong, London, and Los Angeles to remote locations in Latin American countries, South Africa, and India. The Infrastructure Truly integrated, Crown’s clients, transferees, and employees have access to their information real time, anytime around the world. In addition
to relevant destination content, clients and transferees have online access to a world of information to assist them in their move whether across the state or the globe. Crown Provides Domestic Relocation Services Crown has been delivering domestic home sale programs since 1991 from their North American relocation service centers throughout the United States and Canada. Each housed with tenured relocation experts who excel in the delivery of domestic relocation programs. Financial Strength A continuously growing and profitable company, Crown is committed to reinvesting in its people, network, technology, communities and new facilities that are both purpose-built and conveniently located for their clients. It’s no secret, what sets Crown apart is the strength of its people, focus on quality-driven initiatives, the ability to provide flexible solutions, and the breadth of their services. Crown is one of the world’s best kept secrets...
Crown Relocations 5252 Argosy Drive Huntington Beach, CA Tel: (714) 898-0955 www.crownrelo.com
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With many service centers throughout North America and over 250 offices worldwide, Crown experts deliver an extensive range of domestic and international services with global perspective and local experience. With hundreds of Crown employees themselves on assignment, we fully realize the investment companies make in their own transfers in the US and out. At Crown, it is our business to understand our customers, develop flexible products to support their needs and deliver personalized services in a teamwork atmosphere of empathy, passion and fun. The result – successful assignments developed individually on-budget with the ongoing analysis you need to ensure a return on your investment. We call that strategy.
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Paxton, Naturally One of the first transportation companies to be ISO 14001 certified — we were green before green was cool. n order to keep improving on customer service and environmental stewardship, the Paxton Companies has chosen to invest energy and countless resources into achieving and maintaining ISO 9001 (Management System) and, since September 2000, ISO 14001 (Environmental System) international quality standards.
I
• Reducing pollution in the community through participation in the Adopt-A-Highway program.
This process turned out to be a good way to examine all of our company’s business practices accumulated over our decades-long track record so that we can continually discover ways to streamline and improve our operations as well as reduce our impact on the environment.
• Complying with all regulatory guidelines from various federal, local, and corporate agencies.
The entire Paxton organization has made a commitment to our environmental programs, including:
These are all part of our company-wide effort to pay attention to the small details — even environmental ones — so we can continually find ways to be a better business partner with our customers.
• Adopting our “Lighten the Load” program through local charities such as United Way and the Salvation Army, Paxton will arrange to remove gently-used household goods, clothing and/or furniture that a transferee would like to donate.
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• Receiving the Exemplary Environmental Enterprise (E3) recognition from the Commonwealth of Virginia.
Contact Paxton at 800-336-4536 or 703-321-7600 or visit us at www.paxton.com.
• Reducing our impact on the environment, through use of Pax boxes, oil-burning shop heaters, and cardboard recycling. • Using fuel additives in vehicles to help reduce emissions and burn cleaner.
Paxton Companies Tel: (800) 336-4536 www.paxton.com
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Paxton, Naturally
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ISO 14001 is an internationally accepted specification for an Environmental Management System (EMS). It specifies requirements for establishing an environmental policy, determining environmental impacts of products, planning environmental objectives, implementation of programs to meet objectives, and management review.
As one of the first transportation companies to be ISO 14001 certified, the entire Paxton organization has made a commitment to our environmental programs, including: • Reducing our impact on the environment, through use of Pax boxes, oil-burning shop heaters, and cardboard recycling • Using fuel additives in vehicles to help reduce emissions and burn cleaner • Reducing pollution in the community through participation in the Adopt-A-Highway program • Complying with all regulatory guidelines from various federal, local, and corporate agencies • Receiving the Exemplary Environmental Enterprise (E3) recognition from the Commonwealth of Virginia Call Paxton today at 800-336- 4536 or 703-321-7600 or visit us at www.paxton.com.
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RAC Report
Regional Market Summary: Columbus, OH
C
olumbus, OH, with a population of 730,657 covering more than 210 square miles, has one of the largest metropolitan areas in Ohio behind Cincinnati and Cleveland, and is the 16th-largest city in the United States. Columbus is centrally located within Ohio and is the state capital. Government jobs provide the largest single source of employment in the area. The largest private employers include JP Morgan Chase, Nationwide Insurance, Honda, and Limited Brands. The Columbus workforce gets a boost from the region’s 25 colleges and universities, which graduate 20,000 students each year and supply a young, welleducated workforce. The Ohio State University, with one of the largest campuses in the country is located in Columbus, and is an integral part of the community’s fabric. The Columbus economy and local housing market has been “weatherbeaten” by the recession since 2007, although the effects are somewhat less severe as the city’s diversified economy helped it fare marginally better than its manufacturingdependant neighbors. A fragile economic recovery began last year in central Ohio and is continuing into 2011, but it has been slow and wobbly. The housing market remains volatile this spring, with performance varying throughout the community dependant on supply. Consumer confidence has strengthened with increased job security and the rebound in 401(k)s and stock portfolios. Local retail traffic is up and consumer spending returned, rising 4.4 percent annualized during the holiday’s 4th quarter. Still absent is meaningful job growth. Unemployment levels, while moderating, remain high, and financial duress has not been selective and is exhibited in every neighborhood in Columbus. Bankruptcy, short sales, 80 MOBILITY/APRIL 2011
STATISTICAL SNAPSHOT TIME PERIOD
Unemployment Months of Supply Annualized Sales Volume Annualized Avg. Sale Price Average DOM
TODAY
1 YEAR AGO
CHANGE
7.8 9.93 19,676 $158,893 90
9.1 8.99 20,235 $159,840 97
-14.3% +10.4% -2.8% -0.6% -7.2%
and foreclosures dot the landscape throughout central Ohio and add a layer of competition in all locations. Housing supply, unemployment levels, and financing availability are considered the dominating factors to future housing stability and growth. Months of housing supply reached 9.93 at year’s end, up 10 percent from 2009. This is considered oversupplied. Ohio foreclosure activity ranked it 13th in the nation. RealtyTrac, Inc. reports the Columbus area had the worst big city foreclosure rate in Ohio last year. Some 19,958 properties in the Columbus metro area received a foreclosure-related filing in 2010, up 13 percent from the prior year despite moratoriums due to legal issues and procedures. This ranked Columbus as the 56th worst city in foreclosure volume in the country. While almost 20,000 homes sold in 2010 in central Ohio, by estimates 30 percent to 36 percent were distressed. Reports indicate many homeowners have negative equity positions and banks continue to hold nonperforming residential loans. There are urban neighborhoods in Columbus, where foreclosures dominate the market, that have seen cataclysmic value collapses where housing has become so inexpensive that the underlying land value would seem to exceed the worth of the asking price. Even in the well-heeled neighborhoods, a foreclosure or short sale can spark value declines even if only temporarily. A continued ramp up in distressed properties available for sale in the local marketplace will cap housing perfor-
MARKET AT Economic Climate New Construction REO Activity Supply Demand Market Direction Market Mood
A GLANCE Fair—Improving Low High High Low—Improving Stabilizing Fair—Improving
mance due to competition for the remainder of 2011. While there is no doubt the local economy is strengthening, unemployment remains relatively high. The effect of lower housing prices and the plunge in personal and sales tax revenues will limit the growth of state and local budgets. Weak state and local spending will weigh on employment in this sector. Many changes are on the horizon for residential lending. While credit loosened in 2010 for residential lending, it has once again tightened as lenders prepare for the DoddFrank Financial Reform Act starting this month. Stricter credit scrutiny of the borrower including higher related FICO scores and increased down payment requirements are being put in place. The economy is improving in central Ohio. Housing is stabilizing in many neighborhoods but volatile conditions continue to plague a full recovery, which will not materialize until unemployment levels contract and housing supply retreats. Ben L. Corcoran, SRA, CRP, is with The Appraisal Group, Inc., Columbus, OH. He can be reached at +1 614 464 4300 or e-mail BenCorcoran@RAC.net.
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With Altair, All the Pieces Fall into Place Financial stability is an important piece in partnering with a global mobility provider. For 22 years, Altair has maintained our stability and independence, with no mergers or acquisitions to dilute our culture and client-centric focus. We have the resources to support your funding needs and provide the personalized service that is our hallmark. We are also debt-free with an established reputation for fiscal responsibility that guarantees weâ&#x20AC;&#x2122;ll be here when you need us.
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Total costs should be transparent窶馬ot invisible.
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