Altair Global 2020 Momentum Survey - Lump Sum

Your business doesn’t advance during downtime.

Neither do your employees relocating under a lump sum program.

Lump Sum Report January 2020

Forward Since 2015, Altair Global has been on a mission to examine how relocation and global mobility affects the productivity of employees and quantify the loss of productivity into hard dollar costs for corporations. While it stands to reason that some level of distraction and upheaval is necessary and acceptable for someone moving within a region or across the globe, our goal was to illustrate the significance of the impact when calculated across an entire moving population.

Through detailed surveys conducted across our client base, intensive analysis, and discussions with individual employees to gain insight and first-hand feedback, we have been able to uncover unique trends across various program types and identify areas of focus in order to mitigate the effects of relocation. With this knowledge, we want to arm clients with creative solutions to decrease the productivity drain and diminish the impact on the company bottom line.

To gain a cross-section of various demographics and programs, we first focused on U.S. Domestic Inbound Employees; in our second version of the survey, we looked at International Employees. Now, we are examining employees who are relocating under a Lump Sum Program, which inherently comes with less formalized support. With our intensive focus on Experience Management, we also felt it was important to gauge how employees felt about a move that was less high-touch than other types of relocation programs and whether they felt it was really “worth it� in their eyes.

With the global war for talent not easing up any time soon, companies must always balance their talent objectives wisely. Although easy to administer, lump sums can leave more experienced employees with out-of-pocket expenses and a feeling of being left to fend for themselves. At the same time, lump sums can be the perfect solution for younger demographics, who are less tied to things and are more excited just for a move experience.

In the end, we hope to shed light on areas that could enhance any usage of a lump sum package.

Countless hours of research and analysis have gone into the production of the full Momentum Survey Series. As always, Altair extends our gratitude to our clients, customers, and all those who work diligently to bring these studies to fruition.

Chad Sterling Chief Executive Officer, Altair Global

Table of Contents 4 Objectives 5 Methodology 8 Demographics 18 Survey Analysis 26 Key Insights & Recommendations 27 Conclusion

Š 2020 Altair Global Services, LLC. All Rights Reserved. Copying of any portion of this document is prohibited without the express prior written permission of Altair Global Services, LLC.

Objectives The Lump Sum edition of the Momentum Survey Series was developed based on the previous two Momentum Surveys. It has been customized to examine how the loss of productivity of employees being relocated under a lump sum program would compare with that of those who were relocated under full benefit programs.

The overall intent of the Momentum Survey Series remains the same, which is to: • Identify the “pain points” that have the highest impact on transferee productivity.

• Measure their effect on workplace productivity and ROI. • Translate the findings into action items that employers can use to positively impact productivity.

However, for the Lump Sum version, we also wanted to focus on the differences between what employees received and how they felt with a lump sum program versus a full program with presumably more support and assistance throughout the relocation.

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Methodology The Lump Sum edition of the Momentum Survey Series was developed

by Altair Global to investigate the impact of the relocation process on customer productivity. It was conducted from August 2018 through March 2019, using commercial survey software.

Altair Global solicited support from nine companies, from which 900 customers were identified and invited to respond to the survey. Of those invited, 169 customers responded to the survey and their answers were used to compile this report. The response rate of 19% provides a high degree of confidence in the findings as the average response rate for external email surveys ranges from 10% to 20%.

In previous Momentum Surveys, Altair surveyed customers who were relocated under full benefits relocation packages. In these instances, Altair was able to obtain data to clearly identify when a customer’s move was considered complete, utilizing the date of the delivery of the customer’s household goods as the “completion date” and likewise, calculating the length of time after the completion of the move to determine a customer’s eligibility to participate in the survey (see below).

Participant criteria included: • Current employee or new hire.

• Completed a permanent relocation within the previous six- to twelve-month period, from a location within the United States to a location within the United States (U.S. domestic).

• Was relocated under a “lump sum only” relocation policy.

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Methodology Cont’d Given the participants in the Lump Sum survey were relocated under lump sum only policies, in the majority of cases, Altair did not have data from household goods partners indicating the date of delivery of the customer’s household goods. Taking this factor into consideration, we felt it was important to qualify with respondents whether or not they considered their move to be “complete.” The qualifying question was structured as follows: Considering the following scenarios and criteria: • My family (if applicable) has relocated permanently to the new location.

• I am/we are settled in my/our permanent residence in the new location.

• My/our household goods and personal effects have been delivered to the primary, permanent residence in the new location.

Do you consider your relocation complete?

Out of 169 total respondents, 159 indicated their move was complete, based on the criteria above.

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Methodology Cont’d Respondents were asked to rate the separate components of their relocation in terms of distraction level and time taken away from job focus: • High-impact Item: Caused three or more days (combined) of lost productivity.

• Low-impact Item: Caused fewer than three days (combined) of lost productivity.

• Not Applicable: Did not apply to the customer or did not impact productivity.

Beyond the predictable disruption caused by relocating and starting a new job, the survey also sought to ascertain whether there were additional productivity impacts as a result of not receiving a full suite of relocation benefits. Respondents were asked to identify whether they would request additional support in a future relocation and whether they would relocate again with the same level of benefits.

Respondents were further asked to opt in to a telephone interview for further discussion on specific topics, and 50 respondents (31%) agreed to the interview portion of the survey. While we spoke directly with a smaller survey sample (26), the candid dialogue allowed through these live interviews provided anecdotal enrichment for the report.

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Demographics Demographics play an important role and can significantly impact is completed. Survey findings throughout this report highlight characteristics and personal situation. Below is a summary profile

Company Industry The provision of lump sum packages versus full benefits packages is increasingly influenced and determined by a company’s industry and the competitive landscape with regard to the attraction of talent. While multiple industries were represented by the survey respondents, the majority of respondents represented the Banking/ Finance/Insurance industry and the IT/Computer Software/Social Networking industry.

39% Banking, Finance, and Insurance

1% 1% 1%

Information Technology, Computer Software, and Social Networking Healthcare/Pharmaceuticals Automotive

2%

Publishing and Media Arts, Entertainment, and Recreation

4%

Oil and Gas Chemicals and Engineering

6%

Professional, Scientific, and Technical Services

13% 8

33%

employees’ experience and work productivity before, during, and after the relocation selected productivity areas that are impacted by an individual’s particular demographic of the 159 customer respondents who provided input for this survey.

Employee Type & Relocation Triggers Just over half of all respondents (55%) were transferred to fill existing vacancies, while 45% were transferred to fill newly-created roles. Other demographics related to transfer type include:

Employment Status

55% Existing Employee

45% New Hire

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Family Status & Home Ownership The vast majority of respondents (80%) either transferred alone (single) or with only one accompanying family member (spouse/partner). Of those who moved with additional family members, 19% moved with children and 1% moved with a dependent elder. We also saw that a clear majority (71%) of these relocations involved renters.

Family Size

51%

Employee Only Employee and Spouse/Partner Employee, Spouse/Partner and 1 Child Employee, Spouse/Partner and 2 Children

1%

Employee, Spouse/Partner and 3+ Children

3%

Employee and Child(ren)

3%

Employee and Elders

6% 29%

7%

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Lump Sum Amounts Related to Residence Status and Family Size

100% 80% 60% 40% 20% 0%

Less than $5,000 Homeowner

$5,001 – $15,000

Greater than $15,000

Renter

Percentage of Employees Moving Alone

Housing Status

29% Homeowner

71% Renter 11

Destination and Distance The Lump Sum survey respondents were moved between locations within the 48 contiguous states, with the vast majority of respondents (65%) moving more than 750 miles.

In comparison, more than half of the respondents (52%) from Altair’s first Momentum Survey, U.S. domestic relocations with full benefits packages, moved less than 750 miles.

Distance of Move

65%

< 150 miles

18%

150 â&#x20AC;&#x201C; 350 miles

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9%

351 â&#x20AC;&#x201C; 750 miles

8%

> 750 miles

When we looked at the correlation between the distance of an employeeâ&#x20AC;&#x2122;s move and the amount of the lump sum the employee received, there was definitely a trend. As the distance of the move increased, the number of respondents receiving lump sums of less than $5,000 decreased, while the number of respondents receiving lump sums of greater than $5,000 increased. This shows us that distance played a role, at least part of the time, in determining the majority of the lump sums received by respondents.

<150 miles

150-350 miles

7%

8%

21%

45%

15%

29%

39%

351-750 miles

21%

35%

10%

39%

>750 miles

16% 14%

29%

41%

35% Less than $5,000

$5,000 â&#x20AC;&#x201C; $10,000

$10,000 â&#x20AC;&#x201C; $15,000

Greater than $15,000 13

Lump Sum Amounts and Move Distance 70% 60% 50% 40% 30% 20% 10% 0%

65%

18% 9%

Less than 150 miles

Less than $5,000

8%

150 – 350 miles

$5,001 – $15,000

351 – 750 miles

Greater than $15,000

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Greater than 750 miles

Percentage of Respondents

Transfer History For the majority of respondents (70%), this was a first corporate relocation, while 30% reported that they had been transferred before.

Of the 30% who had been previously relocated, very few (17%) had significant previous corporate relocation experience, as shown here:

Number of Previous Relocations

83%

15%

2%

1-2

3-5

6-9

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As part of Altairâ&#x20AC;&#x2122;s Momentum International Employees edition, departure and destination locations. This helped identify same question as part of the Lump Sum survey:

Departure State

16% CALIFORNIA

6.3% GEORGIA

8.2% TEXAS

6.3% NEW YORK

4.4%

3.8%

NEW JERSEY

COLORADO

3.8% FLORIDA

3.1% MARYLAND

7% ILLINOIS

5% NORTH CAROLINA

3.8% MICHIGAN

3.1% VIRGINIA

Other departure states include (ranked in order): Indiana, Massachusetts, Missouri, Pennsylvania, Ohio, Tennessee, Arizona, Connecticut, Hawaii, Minnesota, Oklahoma, South Carolina, Washington, Wisconsin, Alabama, Alaska, Kansas, Louisiana, Maine, Mississippi, Nebraska, Oregon, and Washington D.C. 16

the second study in the Momentum Survey Series, we asked respondents to identify both their international destinations having the greatest impact on employee productivity. We asked the

Destination State

25.8%

13.8%

CALIFORNIA

TEXAS

9.4% NORTH CAROLINA

7.5%

7.5%

5.7%

ILLINOIS

TENNESSEE

GEORGIA

4.4%

3.1%

FLORIDA

VIRGINIA

Other destination states include (ranked in order): Arizona, New York, Pennsylvania, Colorado, Delaware, Nevada, South Carolina, Washington, Colorado, Nevada, South Carolina, Washington, Alaska, Arkansas, Connecticut, Hawaii, Indiana, Minnesota, Nebraska, New Mexico, North Dakota, Ohio, Utah, and Wyoming.

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Survey Analysis All respondents were asked to rate the separate components of their relocation in terms of their distraction level and time taken away from job focus. High-impact activities were those that caused three or more days (combined) of lost work productivity. Low-impact activities were those that caused less than three days (combined) of lost work productivity. The top ten concerns identified as having the most significant impact on transferee productivity were:

Top 10 Productivity Drains Arranging household goods transportation, packing, delivery, etc.

38%

55%

Finding appropriate destination community

36%

55%

91%

Transition of household services, e.g., utilities, mail, etc.

64%

27%

91%

Adapting to new work environment

56%

33%

89%

Managing relocation travel

58%

30%

88%

Securing destination residence

45%

42%

87%

Settling into new community

58%

29%

87%

Managing relocation funds and expenses

66%

19%

85%

Situational financial decisions

57%

27%

84%

Communicating with departments supporting the relocation process

66%

17%

83%

93%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Low Impact

High Impact

Overall Impact

When compared to the highest rated activities from the U.S. Domestic Inbound Momentum Survey (which studied those relocated under a full benefits package), the activities rated by respondents as being most impactful to work productivity are consistent; however, when we look at the different activities impacting homeowners versus renters, we see distinct differences.

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Homeowners: Top Five Impacts 98%

96%

94%

Securing destination residence

Finding appropriate destination community

Arranging household goods transportation

92% Communicating with departments supporting the relocation process

92% Transition of household services

Renters: Top Five Impacts 91%

91%

90%

88%

88%

Arranging household goods transportation

Transition of household services

Finding appropriate destination community

Managing relocation travel

Adapting to new work environment

When reviewed with our previous surveys for U.S. Domestic Inbound Momentum (20 lost days for U.S. homeowners, 15 lost days for U.S. renters) and international employees (24 lost days), the lump sum employees have a consistent number of lost productivity days (22 for homeowners and 15 for renters). The data from the Lump Sum survey indicates homeowners receiving a lump sum do lose more days of work productivity; however, renters seem to lose the same amount of work time. Some of the factors behind this, as identified through the Lump Sum survey data and the post-survey telephone interviews, include employee expectations and perceptions. Employees who responded to the Lump Sum survey were expecting to receive a lump sum versus a full relocation benefits package. As such, they did not go into the relocation process expecting to receive full support and assistance and as such, their perceived productivity loss was less given their expectations were not set too high.

Destination Location Productivity Impacts

As noted previously, the largest concentration of survey respondents moved to California. We looked at the productivity loss of this population separate from the overall respondents to see if there were different productivity impacts, especially given the high cost of living and tight housing market often found in California.

95%

93%

90%

88%

88%

Adapting to new work environment

Arranging household goods transportation

Managing relocation travel

Finding appropriate destination community

Becoming familiar with destination

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Lump Sum Amounts Related to Productivity Loss We took a more in-depth look at how the amount of a lump sum an employee receives correlates with

Less than $5,000 – Lost 26 days

18% 53%

29%

Funds Left Over from Lump Sum?

12%

Yes No – exactly amount needed No – had to utilize personal funds

Homeowner Renter

88%

$5,001 - $15,000 – Lost 27 days Funds Left Over from Lump Sum?

32%

38%

Yes

33%

No – exactly amount needed No – had to utilize personal funds

30%

Homeowner Renter

67%

Greater than $15,000 – Lost 31 days Funds Left Over from Lump Sum? Yes

33%

46%

Homeowner

No – exactly amount needed No – had to utilize personal funds

21% 20

50%

50%

Renter

the employeeâ&#x20AC;&#x2122;s demographics and overall productivity loss.

4% 14%

Family Size Single

65%

18%

Married

20%

Family Size Single

49%

30%

38%

24%

Managing ongoing personal financial concerns, issues, and decisions resulting from the move

26%

Managing relocation funds and expenses

19%

Managing ongoing personal financial concerns, issues, and decisions resulting from the move

21%

Managing relocation funds and expenses

26%

Managing ongoing personal financial concerns, issues, and decisions resulting from the move

Married with Children

Family Size

29%

29%

Married Married with Elders

4%

Managing relocation funds and expenses

Married with Children Married with Elders

1%

24%

Single Married Married with Children Married with Elders

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It’s no surprise that as respondents’ lump sum amounts increased, the number who indicated they had money left over also increased. Interestingly, as respondents’ lump sum amounts increased, so did productivity loss. We attribute this to the following: • As the net lump sum amount increases, the number of employees moving alone (single) decreases and the number of employees moving with spouse/partner and/or family increases.

• As the net lump sum amount increases, the number of renters decreases and the number of homeowners increases.

We know that in many cases, higher lump sums are more often provided to employees with larger family sizes, employees who are homeowners versus renters, or employees who are moving greater distances. This validates the increase in lost productivity, as this profile of employee is dealing with more complexities and external factors related to their move.

Voice of the Customer Data As mentioned previously, all survey respondents were asked to opt in to a telephone interview for further discussion on specific topics, and 50 respondents (31%) agreed to the interview portion of the survey. While we spoke directly with a smaller survey sample (26), the candid dialogue allowed through these live interviews provided anecdotal enrichment for the report.

Homeowner

62%

38%

Renter

4% 11% 35%

Family Size Single

50%

Married Married with Children Employee and Child(ren)

Telephone Interviews – Highest Impact Activities

27%

23%

19%

15%

15%

Locating and securing new residence

Settling in to new location

Making decision to accept move

Finding a reputable mover/ working with mover

Other: researching, adapting to work, selling home, etc.

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Telephone Interviews What could/would have helped during the relocation process?

“ “ “ “ “ “

List of vendors for services that had negotiated discounted rates.

Employee would pay for this from lump sum but would have vetted list of vendors.

Point of contact to coordinate details. Need a list of preferred vendors.

”

Having the relocation management company coordinate the household goods shipment versus being on my own.

” ”

Local support for finding destination housing.

To make a quicker decision on whether to accept move, have more than one home finding trip with financial assistance. Have company time off without having to use my own time.”

”

Point of contact early in process to assist with timing and logistics.

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”

”

Suggestions and Recommendations for Future Moves

“ “ “ “ “ “

” ” ” ” ” ” ” ” ” ” ”

Clarity on where to access services and support.

Specific support for spouse employment or activity.

Support for securing destination housing.

One person for point of contact for relocation assistance.

Assistance in securing destination housing.

Help securing reputable household goods mover.

“ “ “ “ “

Company support to identify good vendors for household goods movers.

New supervisor needs to be supportive, welcoming, and offer flexibility.

Send local information to transferee regarding housing, schools, etc., before transfer to facilitate decision on destination housing.

Current and accurate list of vetted household goods shippers and other vendors.

Need a point of contact to coordinate details and timing.

Resources regarding what you need to think about before moving, e.g., checklist for action items and timing during move.

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Many of the comments from survey respondents who participated in the live telephone interviews focused around settling in to the new location, finding destination housing, managing and overseeing the shipment of household goods (including engaging with a vetted, reputable moving company), as well as issues related to spouse and family adjustment.

These comments, along with the survey data, affirm what many in the mobility industry inherently feel about lump sum only relocation programs. Some companies mistakenly assume that simply cutting an employee a check and giving them the flexibility to manage their own move will result in a low-cost yet high-impact relocation; however, what is missing are the tools, resources, checklists, etc. to assist the employee in making sound, educated decisions related to their move. For minimal cost, a company can partner with a relocation management company (RMC) to provide consulting and referrals to vetted suppliers. This allows oversight into the quality of the suppliers the employee chooses and puts the RMC in a position to be an advocate for the employee in engaging with the suppliers. The RMC can also counsel the employee on the benefits and services available that most often result in the highest return for the investment and cost such as destination services, home finding assistance, and spouse/partner employment and transition support.

The alternative is the employee ending up with cut-rate, low-quality suppliers resulting in the employee spending more time and money while ultimately losing more work productivity.

Worthy Investment of Time During a corporate benchmarking session at an industry conference hosted by Worldwide ERC®, a corporate attendee challenged the audience to consider asking employees if they felt their relocation was “worth it” in regard to the employee’s career. We asked similar questions as part of the Momentum Survey. As you can see from the responses below, most employees still believe the relocation was a positive move.

Relocation Effort was a Worthy Time Investment for My Career

Relocation Effort was a Worthy Time Investment for Potential Future Opportunities with my Employer

2% 1%

2% 1% 8%

9%

43%

43%

46%

Strongly Agree

Neutral

Agree

Disagree

Strongly Disagree

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45%

Key Insights & Recommendations Lump sum programs are not going away, and they can work and be beneficial if utilized to support the appropriate employee populations. Employees earlier on in their career, single, moving with minimal personal belongings, etc., can certainly benefit from receiving a lump sum to cover relocation expenses. However, if you are moving employees with families, who own homes and have larger amounts of household goods and personal belongings, offering full relocation support should be a consideration.

2018 Tax Cuts and Jobs Act Impact – In 2018, as the industry prepared for potential changes resulting from tax reform, there was much discussion and speculation that companies would just end up giving lump sums for household goods; however, based on Altair’s client base, we have not seen this come to fruition. According to the results of the Momentum Lump Sum Study, arranging and overseeing the transportation of household goods was rated as having the greatest impact on employee productivity, noted as being impactful by 93% of survey respondents. It is recommended that the transportation of household goods be managed separately from a lump sum whenever possible.

Phase of Life – Interestingly, employees moving with a spouse/partner only had the highest productivity loss (32 days), higher than employees moving with spouse/partner and additional family members (30 days) and employees moving alone (20 days). Our assessment is that this is due to the phase of life these employees are most likely in, i.e., possibly younger and earlier in their relationship/marriage. Many may be dependent upon a dual employment/income lifestyle.

As such, spouse counseling is likely even more important in these scenarios and not something that would typically be purchased by an employee on their own. It is important that employees receiving a lump sum be counseled on the benefits of these types of services and support.

Previous Moves – Employees who had moved previously lost more productivity than employees who had moved for the first time. We attribute this to the fact that certain employees may be more excited for their first move. There is the excitement around the opportunity and possibly, lower expectations related to the level of support and assistance the employee will receive. It is important that expectations be set early on regarding the relocation support an employee will be receiving.

Existing Employees vs. New Hires – New hires lost less productivity than existing employees.

There are several explanations for this. The impact of employee orientation and the onboarding process was rated as being highly impactful by virtually the same percentage of existing employee (31%) as new hires (35%). Sometimes, a company’s onboarding process is geared more toward new hires than existing employees. Based on the survey results, the onboarding process is important regardless of an employee’s status.

Almost twice as many existing employees (41%) as new hires (23%) rated adapting to the new work environment from a social/cultural perspective as being highly impactful to their work productivity.

This supports the theory that existing employees need as much onboarding and assimilation assistance as new hires do. This was evidenced in the International Momentum Study as well, where we saw a large number of existing employees express they wish they had been treated as new hires when joining their new office location.

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Conclusion Lump sum programs are a vital part of any corporationâ&#x20AC;&#x2122;s relocation program; however, the main consideration is to always use them for the appropriate demographics and employee populations. While keeping in mind that lump sums are not a one-size-fits-all solution, talent managers must weigh the advantages against some of the perceived disadvantages and decide what is best for their overall talent management goals.

Altair Global has numerous high profile clients that effectively utilize lump sums and have exceptional success in doing so. Key to the success is a thorough understanding of the best use case for this type of program. Please reach out to Altair Global for assistance if you are considering adopting a lump sum move policy for detailed guidance and suggestions.

To learn more about our Momentum Survey Series and Productivity Calculator, visit us at: altairglobal.com/momentum-series

Š 2020 Altair Global Services, LLC. All Rights Reserved. Copying of any portion of this document is prohibited without the express prior written permission of Altair Global Services, LLC.

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