Business Solutions

Think Bold: Controlling Mobility Costs with Flexibility

Are you using flexible benefits in your mobility program? If not, are you considering them? Jennifer Connell, SCRP, SGMS of Weichert Workforce Mobility will moderate a panel at the Global Workforce Symposium: Blueprints for Success: Building a Mobility Program That Balances Cost and Flexibility. It’s an opportunity to hear panelists’ thoughts on program flexibility and optimization.

We asked Jennifer to share some findings and data to help shape the conversation – have a look and then register to participate in the in-person discussion in Seattle on Thursday, 18 October from 11:45 a.m. – 12:15 p.m.

Managing the mobile employee has become exponentially more complex as all industry sectors experience shifting demographics, increased globalization and tighter competition for talent.

In response, companies are pursuing greater agility and flexibility to accommodate rapidly-changing business goals and seize new opportunities quickly.

An “optimized” workforce mobility program is one that equips HR and hiring managers with the flexibility they need to accelerate decision-making, meets the needs of the business and provides opportunities that sync their mobile employees’ personal and professional desires.

Optimizing Benefits Through Mobility & Flexibility

When developing a menu of flexible benefits, consider provisions that will support your recruitment and talent development objectives.

Relocation benefits have evolved, driven by increasing negotiations and excessive expectations required to meet the needs of a more diverse workforce and budget constraints. Companies initially responded to their employee’s needs by tiering benefits through employment classification (i.e., new hires/ middle managers, senior executives). Weichert research finds that 41% of companies currently support flexibility through multiple tiers with 69% having three or more tiers.

Tiered benefits have become too costly, however, because they offer a particular set of benefits to all within that tier, implying that the employee is entitled to them, including any that may go unused. For the unused benefits, employees may feel entitled to seek a cash equivalent or other benefits in kind.

A common problem with tiered programs is that companies are addressing employee’s demographics instead of their unique situation. Companies are seeing a rise in requests for policy exceptions, causing mobility managers to invest more time in finding a more efficient way to provide benefits.

The challenge is ensuring the employees are being offered the “right” set of benefits for both the needs of the individual and the business. In other words, finding that “sweet spot” by embracing a more flexible approach.

Research we’ve conducted reveals that 71% of organizations opt for a lump-sum program to support flexible mobility arrangements. While a lump sum can be efficient, it doesn’t always meet the needs of the employee and the business. Employees left to their own devices to manage mobility funds may invest them poorly and look to their company to cover the costs that should have been covered by an allowance.

A good first step is to prioritize your organization’s needs for a flexible approach. Your benefit structure will differ depending on whether the intent is to support more diverse employee demographics or cost containment.

Related: Balancing Freedom of Choice and Duty of Care

Capped Mobile Employee Benefits

Capped (or “budgeted”) programs present another option for containing costs, but our research reveals that 86% of companies will only “cap” or place a hard limit on certain benefits, while overall caps seem to be set aside for new hires and entry-level programs.

Capping mobility benefits will undoubtedly impact the overall program costs.  But if the amount is too low, the program will likely not meet the needs of the employees, potentially resulting in a stretched budget over only a few benefits and a perception that they are not being given sufficient assistance. This can result in negative feelings, a bad move experience, loss of productivity and in the worst-case, significant loss of investment, should employees leave the organization.

When evaluating a capped approach, it’s important to consider:

  • The list of all benefits that are intended to be included in the capped amount,
  • A calculation based on a realistic cost estimate, keeping in mind that home-sale scenarios impact costs significantly and should be excluded,
  • The tax gross-up treatment, and if provisions for more equitable treatment can be evaluated on different levels/tiers, homeowners/renters and current employees/new hires.

Regardless of what combination of flex/capped benefits your program ultimately offers, companies concerned with consistency of benefits need to consider whether these programs match their culture. Centralizing program administration and allowing global mobility to recommend flexible options ensures a more consistent way of making decisions within an agile framework.

Managed correctly, flexible mobility programs can be useful in controlling costs and responding to different business needs, provided there is a consistent and defensible way to administer benefits.

Much of the preceding information is excerpted from a Weichert Workforce Mobility whitepaper “How Flexibility Can Control Your Workforce Mobility Costs.” For a copy of the complete whitepaper, email solutions@weichertwm.com.

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