Does Your Relocation Policy 'Win,' 'Place,' or 'Show?'
by Therese DeLorenzo, CRP
August 1996
This ERC National Relocation Conference session, moderated by Becky J. Oliver, CRP, manager, relocation services,
Yellow
Freight System, Overland Park, KS, used terminology from the horse racing industry to categorize relocation programs as
"win"--coming in "first;" "place"--coming in "second;" or "show"--coming in "third." The panel described relocation policies and
administrative processes that are being used by a variety of companies today to ensure that their programs are "winners."
Gammon
Vanessa Gammon, CRP, relocation specialist, Sun Microsystems, Inc., Mountain View, CA, discussed some recent policy
changes implemented by Sun Microsystems.
Gammon stressed that Sun Microsystems' relocation policy is driven by its corporate culture. Sun Microsystems is, she said, a
basic, no-frills corporation operating in a large, comprehensive and competitive industry with a mobile field sales force. In
1995, Sun Microsystems had 274 domestic relocations, which it accomplished under a three-tiered policy aimed at new
college graduates, experienced new hires, and internal transferees.
Sun Microsystems, said Gammon, has a flexible approach to relocation benefits. All internal transferees receive basic
relocation
benefits, including a househunting trip, shipment of household goods, en route travel expenses, temporary lodging expenses, a
relocation (miscellaneous) allowance, and tax gross-up.
The supplemental benefits are all stand-alone policies, and can be added individually to the basic policy provisions. They
include third-party buy out, homesale assistance (direct reimbursement) coupled with a mandatory home marketing program,
closing cost assistance, mortgage assistance, spouse employment assistance, lease cancellation, extended temporary living
assistance, return trips home, and duplicate mortgage assistance.
Supplemental benefits require line management and HR approval and are provided based on the employee's level within Sun
Microsystems, i.e., third-party home buy out and mortgage assistance are director-level and above benefits.
Gammon recently implemented a lump-sum program on a test basis for college graduates and experienced new hires. The
objectives of the lump-sum program were to offer flexibility within the policies, minimize the number of exceptions, save costs,
and reduce the number of administrative tasks such as expense processing and tracking and making arrangements for
temporary housing and househunting.
There are several provisions to the lump-sum program, said Gammon. First, it is an option, and the transferees choose
between
the full-service move and the lump-sum payment. Once the transferee accepts the lump-sum option, he or she cannot come
back for additional assistance.
The amount of the lump-sum payment is calculated by the relocation department based on the estimated cost of househunting,
temporary living, and miscellaneous expense allowances. The allowance is grossed up for taxes.
According to Gammon, the lump-sum program is a "success." Managers and recruiters wholeheartedly embrace the program.
In 1995, 33 percent of college graduates and 22 percent of experienced new hires used the lump-sum program. The average
cost was $2,500 to $3,100 for college graduates and $2,800 to $7,000 for experienced new hires. The program resulted in a
decrease in relocation costs of 23 percent for college graduates and 36 percent for experienced new hires, she reported. The
number of transferees opting for the lump-sum payment has increased substantially in 1996. To date, approximately 75
percent
of college graduates have selected the lump-sum program option.
Gammon indicated that she plans to implement the lump-sum option in Sun Microsystems' domestic transfer policy and to
develop a standard table of lump-sum amounts based on policy type, distance of move, and family size.
Ormand
Catherine T. Ormand, CRP, vice president, business development, Associates Relocation Management Company, Dallas,
TX,
said that the most important factor in reviewing a corporate relocation program is to understand the "objective of the policy,"
not just from a relocation perspective but from human resource, line/division management, and senior management viewpoints.
"Your collective objectives should be clearly defined and must compliment each other," she noted.
According to Ormand, a company that has a "show" policy reviews and updates its policy to remain competitive. To "place,"
companies review and update their policies to remain competitive while adding minimal and conservative innovations. In order
to "win," she said, companies must review and update their policies to remain competitive but add aggressive and leading-edge
innovations.
Ormand provided examples of win, place, and show programs. A "show" policy includes home marketing assistance, revises
or
removes the mortgage interest differential allowance, reduces temporary living periods, implements lump-sum payments for
temporary living and househunting trips, tiers the policy, and provides destination appraisals.
Ormand's "place" program includes home marketing assistance with a mandatory marketing period, contains a sliding scale for
payment of mortgage points, markets homes via the Internet, provides a miscellaneous allowance (up to one month's salary)
for
working spouses, outsources the expense processing function, and shares expenses with relocating employees.
"Win" programs, according to Ormand, include home marketing assistance with a mandatory marketing period and a selling
bonus, provide different loss-on-sale coverage for employee sale versus a guaranteed offer, offer a buyer value option
homesale program, use broker's market analyses to determine value, offer elder care/child care assistance, provide formal
repatriation assistance for both the employee and family, are cafeteria-style policies that the employee selects from a menu,
and
serve the well-defined strategic role of human resource departments.
Ormand stressed companies' need to review policy objectives early and understand the results implementation of these policy
components will have within the organization. Administrators must be consistent in program administration, she advised. Finally
program managers need to look at the long-term results the program will produce. If they can do this, they will have a "win"
relocation program for their companies, she concluded.
Sullivan
Ellie Sullivan, CRP, vice president, The Relocation Institute, Inc., Norwell, MA, reviewed "10 Steps to a Winning New
Policy."
Step 1--Establish a task force. "Why should you tackle this process alone, especially if relocation is just one of your
responsibilities?" asked Sullivan, who stressed the need to solicit help and secure buy-in from other affected departments.
Step 2--Audit your program. A program audit, said Sullivan, requires obtaining current transferee demographics and
surveying managers about problems they may have encountered. Do they get a lot of exception requests? Are employees
refusing to relocate and, if so, why? Also survey transferees about their biggest relocation problems. Ask them for
recommendations and possible solutions. Assure respondents that you will be using the survey results to develop new program
features.
Step 3--Define policy/program objectives. Sullivan stressed the importance not only of defining your objectives but
prioritizing them to drive future policy decisions.
Step 4--Benchmarking. You should compare best practices that are unique to your corporate culture and business
objectives. In addition, you need to compare your program with those of companies within your own industry, other industries,
and your competition. ERC or outside resources can help with this process, added Sullivan.
Step 5--What are your alternatives? There always are alternatives and you need to explore all available options. Some
program administration alternatives are implementing a lump-sum program, purchasing cost-tracking software, or outsourcing
the function. You need to weigh the pros and cons of each alternative. Sullivan recommended using models to project the cost
impact to assist in the decision-making process.
Step 6--Do you need new services? Sullivan suggested assigning members of your task force to solicit proposals and
select a partner. You should review the proposal with both management and your end users (division managers, line managers,
and recruiters). By soliciting their input now, it will be easier for you to sell policy changes to them later.
Step 7--Draft a policy. Sullivan emphasized the need to keep your communication "user friendly." Consider checklists and
a Q&A format. Sullivan suggested using the ERC Communications Award-winning policies for ideas.
Step 8--Develop quality communication vehicles. You may want to consider having both an employee and manager
guidebook, said Sullivan. Consider all types of communication media, print, audio, video, electronic, and telephone. A number
of companies today are using technology to make forms available and to transmit data.
Step 9--Educate management. Explain to management why the program is being changed and how the implementation
process will work, advised Sullivan. Recognize that these managers also are part of your mobile work force; therefore, this
education process has to be continuous.
Step 10--Measure effectiveness. Develop employee surveys and prepare cost comparisons. Most important, stressed
Sullivan, is implementing a process of continuous review and improvement.
According to Sullivan, if you follow these 10 steps, your relocation program will win the race.