Relocation Policy Innovations

Cathy BaumanRunzheimer International

June 9, 2011

Runzheimer International

● Mobile – 45%● Concern:

Employee Productivity

● Benefit: Employee Satisfaction & Competitive Advantage

Mobile Workforce

Business Travel Business Vehicles/Fleet

Route Planning & Logistics

Relocation Virtual Office

International Assignments

• Mobility cost per employee—$7,350• Business Travel—32% expect spending

to increase• Business Vehicles—67% concerned with 24/7

liability with company-provided vehicles• Virtual/Home Office – need to develop policy• Corporate Aircraft—executive use dropped;

use by ‘managers of multiple sites’ increased• Relocation—43% expect increase in volume

Benchmark Key Findings

• What Changes Have You Made to Your Relocation Policy in the Past Year?- 40% None

- Remainder Various -- Increased Loss on Sale -- Offered Pre-Decision Counseling -- Reduced Mandatory Marketing Time

and Increased Temp Living Assistance

DOMESTIC MOBILITY

15%

39%

24%

15%

Policy Updates

5 Years2 Years1 Year6 Months

RELOCATION POLICY UPDATES

• Number of Policies- 3 Policy Tiers – Average

• Various Changes:- Increase Loss on Sale- Incentive to Rent- Extending Marketing Time- Extending Temp Living Benefit

POLICY TIERS/ADDITIONS

Home Sale Programs 54% Guaranteed Buyout 23% BVO 2% BVO & GBO

Loss-On-Sale Program 84% Provide Caps

- 15% - $50K- 11% - $10K & $30K

- 5% - $100K

HOME SALE PROGRAMS

88%

12%

Negative Equity Assistance

NoYes

EQUITY ASSISTANCE

• Do You Provide a COLA?- Yes – 73%; No – 27%

• Do You Provide a COLA for High Cost Locations Only?- Yes – 76%; No – 24%

• Do You Provide a COLA for All Transferees?- Yes – 28%; No – 72%

• Do You Provide a COLA to Homeowners and Renters?- Homeowners – 92%; Renters – 92%

COST OF LIVING ALLOWANCES (COLAs)

• What Level of Employee Receives COLA- Transferee – 79%- Executive – 42%

- Experienced New Hire – 38%- New Hire – 38%- Other – 25%

EMPLOYEE LEVEL FOR COLA

• COLA Thresholds- 48% No Threshold- 24% - Threshold = 5%- 12% - Threshold = 10%

• COLA Caps- 96% No

• Mortgage Subsidy- Yes = 52%; No = 48%- 23% Subsidy Based on COLA

COLA THRESHOLDS, CAPS & SUBSIDIES

• Do You Have a Formalized Lump Sum Policy?- Yes = 82%; No = 18%

• Number of Policies- 30% More than 5 Policies- 21% = 2 Policies- 18% = 4, 5 Policies

• Temp Living Days – Homeowner- 37% = 30; 28% = 60; 8% = 45

• Temp Living Days – Renter- 51% = 30; 8% = 60

LUMP SUM POLICIES

• Temporary Living or Renter – 53%• Other – 53%• Talent Management – 12%• Virtual or Home Office Program – 12%

NEW POLICIES/PROGRAMS DEVELOPED

Survey targeted strategic objectives and policy offerings that companies have adopted or are considering adopting in response to today’s mobility environment

Two Major Findings:• Companies once again expanding expatriate

population• Companies adopting increasing number of mobility

policies and compensation approaches, with a continuing trend toward multiple policy types and adoption of lower cost alternative solutions

Source: AIRINC

GLOBAL/INTERNATIONALMOBILITY

• 42% of Companies Report Increase in Expatriate Population in 2010 Compared to 26% in 2009

• US and Asia Pacific Companies More Likely to Increase Expatriate Population Numbers at 53% and 50% respectively

• Only 38% of European Companies Expect to Increase Their Expatriate Populations in 2011 although 52% report populations to remain stable

EXPATRIATE POPULATIONSINCREASING

• Expatriate Population Growth Strongest in High Tech, Financial & Professional Services, Manufacturing and Transportation Industries

• Companies Report on Average 3-4 Formal Assignment Policies- Most Common: -- Balance Sheet 83%-- Short Term – 73%-- Localization – 45%-- Host Plus 21%-- Commuter 21%

EXPATRIATE POPULATIONSINCREASING

• Half of companies are looking to adopt new policies in 2011.-- Most common policy type under consideration is Localization Plus – 28%-- Localization – 26%-- Reduced Balance Sheet – 21%-- Host Plus – 21%-- Commuter – 21%

GLOBAL/INTERNATIONAL POLICIES

• Decision-Makers Continue to Explore and Implement Los Cost Alternative Packages

• 2010 – 15% of Companies ImplementedOne or More Low Cost Alternative Package

• 30% More Considering

• 44% Respondents Package in Active Use

ALTERNATIVE PACKAGES

• Balance Sheet is Still Most Popular Expat Compensation Scheme- 83% Respondents use Balance Sheet- 74% Companies use Balance Sheet

Exclusively for Long Term Assignments- 60% Use Balance Sheet as Only Approach

to Long Term Assignments- 14% Use Mix of Full and Reduced Balance

Sheets.

BALANCE SHEET

• Host Plus Used Most by Financial Firms and Companies Headquartered in Asia-Pacific and European Regions

• 43% Asia-Pacific• 35% European• 14% U.S. Companies use Host Plus• 45% of Financial Firms Regardless of HQ

use Host Plus

HOST PLUS

• Top Sending Countries- U.S. – 80%- U.K. – 71%- Australia – 31%- Canada – 26%- Singapore – 21%

• Top Receiving Countries- U.S. – 65%- U.K. – 50%- China – 41%- Singapore – 29%- Hong Kong – 22%

SENDING & RECEIVING LOCATIONS

• Tax and Immigration Top Challenges for Mobility Practitioners

• Other Challenges- Designing globally consistent policies- Aligning mobility with talent management

TAXES AND IMMIGRATION

QUESTIONS AND ANSWERS

Cathy BaumanRunzheimer Internationalceb@runzheimer.com262-971-2356

THANK YOU