September 16, 2022
Managing Your Global Mobility Program by Exception Can be Okay With the Help of Your RMC
There used to be a truism in the relocation management industry that the best global mobility programs embrace consistency, offering the same benefits and treating employees in an identical manner within a policy tier, helping to ensure total program costs are predictable and treatment of employees is equitable.
While cost predictability is important, employee satisfaction is also an integral part of the equation for successful relocations. To that end, organizations had little choice but to approve an increasing number of exception requests, some due to macro-economic circumstances while others were driven by employee needs. Here we’ll examine some of those justifications and how tracking exceptions can provide useful data to analyze your relocation program for the future.
Why Global Mobility is Managing by Exceptions Today
Since the pandemic started in 2020, many companies chose to increase exceptions, whether the exception focused on supporting new Work from Home (WFH) arrangements or were in response to the trickle-down effects of the housing market with little availability and a rapid surge in rental rates and housing prices.
WFH and hybrid work arrangements have compelled employees to ask for an additional room when staying in temporary housing, and international assignees have requested larger homes to allow for working from home when not in the office.
In addition, the impetus to recognize DEI as a substantially important element of a corporation’s Duty of Care responsibilities resulted in added flexibility to ensure that the company can meet the specific needs of individuals asked to transfer. The “Great Resignation” also influenced how Human Resources utilized exceptions to retain valued employees and attract new talent.
Recently, concerns about the effects of inflation on the costs to relocate as well as the potential need to adjust cost-of-living allowances (COLA) provided to expatriate assignees have contributed to a rise in employee requests for an exception to policy. As we watch mortgage interest rates rise, some companies are thinking about reinstituting dormant policies, such as a housing subsidy, mortgage interest differential, and reimbursing discount points to take the sting out of higher rates.
There are reasons to wait before revising policies, even for those companies eager to avoid exceptions. There has been nothing “normal” about the past two years, and the rapid change we are experiencing today may be short-lived. In many companies, gaining approval for policy adjustments can involve multiple layers of stakeholder and management review, which is often a lengthy process. Indeed, when global mobility professionals were asked in a recent survey about the internal process for implementing changes to policy, forty-six percent indicated it is not an easy task.
Tracking Exceptions Can Lead to Change or the Status Quo
Here’s something global mobility teams can do. Your Relocation Management Company (RMC) should assist with tracking exceptions. There is a distinct advantage to recording the type of exception request and the cost of approved exceptions as this practice provides useful information for a multifaceted analysis. There may be no uniformity of exceptions, especially if flexibility is a goal. On the other hand, patterns may emerge that warrant review; some may be regional in nature while others may point to a failure in meeting the needs of a certain category of employee.
Tracking exceptions is the first step in having data to analyze for informed decisions on policy adjustments.
Understanding the cost implications of exceptions can be crucial when considering permanent policy changes. For instance:
- Additional time in temporary living and allowing for an extra bedroom during the stay will increase the cost of this phase
- The total cost of an international assignment will grow when company-paid housing, which is usually determined by family size, allows for larger accommodations; likewise, if COLA is adjusted upwards, the annual cost will also increase
Streamline Exceptions with Expert Guidance
Sterling Lexicon can assist in evaluating exceptions and whether a policy change is necessary. We can help you decide if an exception is caused by a temporary condition or a longer-term trend. We believe the employee experience will improve by shortening employee wait times for an answer, time spent by the global mobility team evaluating requests will decrease, and any internal process that requires additional approval will cease.
Benefit adjustments that may not require policy changes
- Analyze exception spend to determine if a pattern emerged
- Ask the local Destination Service Provider (DSP) to research expatriate housing price ranges
- Confirm the frequency of COLA adjustments in volatile markets
- Discuss whether lower cost temporary living accommodations can be sourced
- Explore creative ways to manage household goods transportation and storage to control costs
Benefit adjustments that may require policy changes
- Monitor the U.S. housing and mortgage markets to identify implications to homeowner benefits
- Re-introduce benefits already in policy but not currently utilized
- Ready new policy provisions to alleviate exception requests and determine eligibility by tier
- Decide if an additional allowance can address individual needs while maintaining privacy
- Explore whether a Core/Flex policy type would result in a positive employee experience
When change seems constant, there is an understandable urge to reduce concerns by taking action. Just make sure that your choices to formalize policy changes are more deliberate than reactive.
Keeping an eye towards the future can help you avoid precedent-setting actions that may be difficult to justify long-term. Some minor changes, such as 60 days in temporary accommodations while household goods are enroute to an international location, can be easily implemented. Let your RMC facilitate analysis of your mobility program, and in partnership with you, support your organization’s business and talent management goals. And sometimes, saying “no,” to exceptions can strengthen your mobility program without changing anything.
Leah Johnson is Sterling Lexicon’s Director, Client Solutions, and has worked in the global mobility industry for more than 20 years. She has held management positions in business development, operations, account management, and consulting, and had the opportunity to live and work in Tokyo and Hong Kong for six years. She initiated destination services in Hong Kong for a relocation management company and directed global mobility for Goldman Sachs in the APAC region. She graduated from Colgate University, earned an MBA from the University of Alabama in Huntsville, and maintains a Senior Certified Professional (SCP) certification from SHRM.