Following on from Re:locate’s recent Relocation: moving the goalposts event, Sue Shortland considers some key current issues that are of particular relevance to HR practitioners and service firms involved in both domestic and international relocation.

Britain remains a nation of home-owners. Reflecting the old saying that an Englishman’s home is his castle, some 70% of us today own our own home. Over the decades, house price inflation has increasingly outstripped earnings. In order that this can be supported, the debt for which we individually remain accountable has increased significantly. As the gap widens between buyer and seller expectations, so low levels of property sale transactions and increasing rental supply with falling rents represents the picture of today’s housing market.  

In terms of housing supply, the picture is distorted – an over-supply of certain types of property (small flats in city centres) provides no compensation for an under-supply of family homes. Strong demographic pressures suggest that the increase in single-person households should well match this profile, but changes in lifestyles indicate a shift from traditional aspirations of home ownership to a growing preference to rent rather than buy.  This might well be reinforced by Generation X and Y no longer wishing to follow their baby boomer forefathers into the Englishman’s castle if high levels of debts and a corresponding lack of lifestyle are the result.  

In the short term, house prices are predicted to bottom out before beginning to rise; but if, when this happens, a flood of property is released on to the market, then a further dip in prices, reflecting simple supply and demand economics may result. So the current situation of doom and gloom may or may not be followed by boom.

In relation to relocation, the £8,000 cap on tax-free relocation expenses remains in force, providing some tax relief for relocating employees. However, this figure has failed to keep pace with inflation (if it had, it might be around £12,000 today) and is certainly way short of the typical cost of a relocation package, especially as relocation now involves funding relatively lengthy periods between property marketing and sale and additional costs involved in potentially making good losses from negative equity and in boosting saleability through increasing kerbside appeal.
    
The impact of the housing and tax situation

Reflecting the current situation in the housing market and the woefully inadequate tax relief position, relocation specialists need to ensure that they make best use of tax efficiency – considering, for example, where legislation can be used to reduce costs such as through use of such arrangements as beneficial loans, salary sacrifices to aid NI efficiencies, and tax relief available on detached duty payments for those unable or unwilling to relocate. Although there are some tax efficiencies to be had, these are increasingly few and far between and the focus therefore must rest on cost management of relocation.

Managing costs can be achieved in various ways. For example, Waitrose focuses effectively on the management of employee expectations, the presentation of property to ensure it will sell quickly and regular review of guaranteed house price arrangements. The company institutes best practice in ensuring a personal touch in managing its relocations. Using a different strategy to manage each move pays dividends in employee motivation and can also be very cost effective if managed within the parameters of a well-written relocation policy. For example, each move is considered for its cost viability at Waitrose, with locations selected to ensure maximum benefit, both to the company and to the long-term career development of each employee who is asked to relocate.

With costs becoming a key issue for every company, the time is right to ensure a firm hold is taken over managing exceptions. This can result in the simplification and standardisation of policy, but it is still important for individuals to feel they have control over their lives. Where possible, flexible benefits arrangements applied to relocation – but set within a clear and cost defined policy framework – can work wonders for employee motivation. Enabling a choice of benefits gives individuals a sense of control over their destiny – but if this is managed effectively, cost and tax efficiencies, together with equitable treatment, can still be achieved.

In terms of use of suppliers, it is important to remember that cost cutting can be a false economy – continually renegotiating contracts to reduce prices will impact on service provision: relationships will fail to be built; there will be a lack of trust; and service standards will fall. Of course, prices have to be keen, and pain points in service provision addressed. However, this should be done on the basis on improving long-term relationships, building trust and rewarding success. corporate relocation specialists should be looking to their suppliers to keep them up to date with property sales, to explain what is working well and what is not so that adjustments to strategy and policy can be put into place. Sharing the problems and reaching joint solutions can be very helpful strategies for moving forward together.

Strategy and HRM implications

Organisations are required to take a strategic approach to relocation, and to do this requires careful planning. It is notoriously difficult to measure the return on investment of a relocation exercise, but an excellent starting point is to consider exactly what performance targets are expected and to measure against these. Key performance indicators are critical if added value resulting from the move is to be identified.

Strategy must be kept under regular and frequent review. As part of any strategic approach, it is critical to remember that human resources management underpins company success and if HR practices cannot attract, motivate and retain talented individuals, then any strategy is doomed to fail. Relocation therefore hinges on successful implementation of four key pillars of HRM: resourcing; communication; training and development; and remuneration and benefits.

Resourcing positions domestically or internationally requires the management of both talent and diversity. A recession has a major impact on diversity in particular – generally speaking, it impacts negatively on women as the business case so readily trumpeted for diversity in boom times tends to wither away when labour shortages decline.  Interestingly, the ethnic mix tends to widen particularly in international mobility. As organisations reduce the use of expensive home-country nationals to run overseas operations, the desire to train up locals by bringing them to HQ for training so they can be repatriated to run local operations increases, widening the diversity of the expatriate profile. This has a particular impact on cultural awareness and the need for training in this regard.

As regards communication, the recession tends to generate an HQ focus and an introspection that can aggravate the ‘out of sight, out of mind’ syndrome so frequently experienced by relocatees. Care must be taken to ensure communications are maintained by ensuring that reporting lines stay open and that channels of communication underpin the talent and performance management processes.  

Training and development are typically cut back in a recession, but it is a short-sighted policy to engage in full-scale cutbacks. These interventions are crucial for employee engagement and motivation and to position the organisation to be ahead of the pack when recovery finally comes.

Although money is tight and cutbacks in policy are the norm, remember that targeted support (which need not be expensive) can ensure assignment or relocation success.  Throwing money at a problem does not help people get through relocation productively; support does. Continuing with such interventions as language and cultural training and in providing both training and support for families can prove to be very sound investments indeed.

Benchmarking policies and keeping up to date are vital. Yet it is important to remember that in so doing, a ‘copycat’ approach may prove unwise, if not dangerous.  Any policy review undertaken must reflect the strategy and culture of your own organisation, not that of a competitor or a comparator. Ideas can be helpful as starting points but not necessarily as gospel to be followed slavishly.

Where HR come in

A final point concerns HR’s role. As the emphasis continues to grow on the value that an expensive relocation can bring to corporate success, so the need for HR to have an input into the selection process becomes ever stronger. Technically talented employees may very talented at what they do, but they may be disastrous in a people context. While line managers are always keen to offer roles to those people they see as performing exceptionally in a particular domestic role, this does not necessarily mean that they will perform well in another cultural context. HR should therefore not be content to sit back and manage the relocations once selection has taken place; they are better placed to understand people’s strengths and thus should have an input into any selection decision.

There are a myriad of issues, ever-changing in the world of relocation. There are always choices to be made and no magic answers. However, today is not the time to use outdated solutions. Current issues change quickly and the role of the relocation professional is to keep on top of them, think smartly and ensure that they maintain their role at the forefront of their organisation’s strategy for future success.

Don’t miss Sue Shortland’s feature on International Policy Design and Review in the summer issue of Re:locate Magazine

© 2009 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.