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Core / Flex: An Innovative Approach to Relocation Policies

Relocation policies form the backbone of corporate relocations and international assignments, as they outline the available benefits and expenses for every employee embarking on a move. To ensure that policies continue to deliver the highest return and greatest employee satisfaction for the investment, Bristol encourages as a best practice that clients meet annually with their Director of Service Delivery for review and strategic consultation.

20 May 2014

46th Annual Atlas Corporate Relocation Survey (2013):  “A new question this year shows a more flexible relocation policy is now the standard. Over three-fourths of firms incorporate core/flex elements. Even though mid-size and large firms are more likely (82%+), most small firms (66%) have adopted aspects of these policies. Coverage for core components, either across all employee levels/categories or dependent on employee level/category, is the most popular choice among all firms.”

Flex Policy Overview

One increasingly popular option for relocation and assignment management is the core/flex policy, which the Worldwide Employee Relocation Council® (ERC) notes accounts for 25% of all relocations. It emerged during the recession as a way for companies to attract talent while limiting expenses, but its advantages go beyond cost savings. Instead of the traditional one-size fits all policies, which can include benefits that a particular employee might not need while excluding ones they do, flex policies allow companies to build customized relocation packages around a set of core benefits. As a result, they are both flexible and manageable while contributing to employee satisfaction and fairness.

Imagine a scenario where an employee does not require temporary housing, but would like to receive spousal assistance or cultural training. Under a traditional policy, managers could only either say no or approve an exception. Saying no to requests, especially when they are reasonable and do not cost the company extra money, fosters employee resentment. At the same time, approving exceptions generates a competitive atmosphere where employees ask for as much as they can, for fear of getting less than their peers.

With a core/flex relocation policy, managers can rearrange the pieces in a way that meets employee needs within the budget. By clearly outlining the core benefits and menu of options, as well as the expense constraints and service requirements (such as using a professional mover), companies enable employees to see the rationale behind decisions. Moreover, by empowering employees to express their preferences and make choices, companies demonstrate respect for them while also making them accountable as full participants in their own relocations. This approach leads to higher satisfaction and promotes feelings of trust and perceptions of fairness. It also makes sense to Millennials, who expect customization and place a high value on fairness and dialogue.

Advantages of core/flex programs:

  • Relocation benefits tailored more closely to employee needs
  • Empowers hiring managers, business units, regional locations, and relocation program managers
  • Provides a candidate recruiting edge
  • Employees feel more valued and invested in the process
  • Controls costs by offering only those benefits that are meaningful to the employee
  • Eliminates or significantly reduces exceptions

Disadvantages of core/flex programs:

  • Program and policy administration is more complex than for strictly defined, tiered policies
  • Budgeting is more challenging due to variable policy elements
  • Continued management involvement is crucial to ensure that the package includes all of the elements essential to a successful relocation or assignment
  • Because employees communicate with each other, there is the possibility that an employee will feel entitled to a benefit another employee has received

 

How Flex Works

A company using a core/flex approach first determines which of its benefits make up the core of its policies. These are benefits that most of its relocations would include, such as a household goods shipment or a home finding trip. It would then assemble a list of optional benefits, such as a rental car and destination services, which employees could choose as part of their packages.

The method by which additional benefits are selected and allocated varies by company, industry and global talent need. In some companies, each business unit is responsible for developing policies that work best for it. Other companies offer employees a menu of options according to a points system, where each employee has a set amount of points to “spend” and each benefit is accorded a certain number of points (typically by cost). Companies can also use core/flex policies to help employees efficiently use their lump sums or offer them in conjunction with a managed cap move in which an employee is offered a specific sum of money to distribute across certain benefits. It is also possible to use the core/flex approach to create policy tiers with distinctive clusters of benefits. For example, a tier for a homeowner could include home marketing assistance as a core benefit, with storage as a flex option, while a tier for a renter could include lease cancellation as a core benefit, with extended temporary housing as a flex option.

For US domestic moves, core benefits might include the following:

  • Shipment of household goods
  • Relocation and policy counseling
  • Travel to the destination
  • Rental or home finding assistance

Flexible elements for US domestic relocation might include the following:

  • Home finding trips
  • Home sale and home purchase assistance
  • Mortgage assistance
  • Spouse or partner career assistance
  • Child or elder care assistance
  • Miscellaneous allowance or lump sum assistance

Global core components might include the following:

  • Visa and immigration services
  • Travel to the destination
  • Shipment and storage of household goods
  • Tax equalization
  • Rental or lease services
  • Miscellaneous allowance

Flexible options for global assignments might include the following:

  • Decision or “look-see” trip to host country
  • Inter-cultural training and language training
  • Temporary living
  • Spouse or partner career services
  • Additional allowances (hardship, housing)
  • School search assistance
  • Home leave
  • Home property management

The Bristol Partnership

Because relocation is such a pivotal time for a company and its employees, it is worth taking another look at all policies to ensure that everything is designed and implemented as effectively as possible. Bristol offers strategic consulting to help clients refine their policies so that they are aligned with their company culture and goals. Our policy suggestions not only reflect the core and optional benefits which are most important to your employees, but also help you to control overall program costs and achieve your business objectives. Bristol will also help you to set up the new policies internally; by guiding you through key considerations and questions at the outset and outlining the necessary steps, we make the implementation as smooth as possible.

For more information, please contact:  Chris Morris, GMS, Vice President of Business Development:  cmorris@bristolglobal.com // Telephone: 610.650.0788 // Mobile: 610.608.3741

For additional information from Myrianthe Ewington, Forum for Expatriate Management, please see: The Telegraph:  Getting to the Core of Modern Mobility: http://www.telegraph.co.uk/expat/before-you-go/10819152/Getting-to-the-core-of-modern-mobility.html

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