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Magazine of Worldwide ERC ®
Divorce, Family and Relocation
Inside This Month
•Transfer Volume and Cost Survey •Pre-decision •Choosing the Best Mobility Program
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MOBILITY • Vol. 31 No. 9 • September 2010
SEPTEMBER 2010 Worldwide ERC® Learning Zone Webinar Imported Corrosive Drywall: the Sequel September 14 2 p.m. to 3 p.m. EST
EXECUTIVE COMMITTEE President MICHAEL (MIKE) C. WASHBOURN, SCRP, GMS, Pfizer Inc., Peapack, NJ Vice President SUSAN SCHNEIDER, SCRP, GMS, Plus Relocation Services, Inc., Minneapolis, MN Secretary/Treasurer PAMELA (PAM) J. O’CONNOR, SCRP, Leading Real Estate Companies of the World®, Chicago, IL
Worldwide ERC Learning Zone Speedsession Webinar Home Loss-on-sale: Still a Major Issue in Relocation. Does Your LOS Policy Need Another Look? September 21 2 p.m. to 3 p.m. EST Sponsored by SIRVA Cost: Free
Chairman, Board of Directors AL BLUMENBERG, SCRP, NEI Global Relocation, Omaha, NE
BOARD OF DIRECTORS CORI L. BEAUDET, SCRP, SGMS, SC Johnson—A Family Company, Racine, WI LISA CARAVELLA, CRP, Bank of America, Plano, TX JAY K. DELICH, SCRP, SRA, IFA, Arizona Appraisal Team, LLC, Scottsdale, AZ MARIO FERRARO, International SOS Pte Ltd., SINGAPORE MARK GIORGINI, GMS, China Vanke Co. Ltd., Shenzhen, CHINA
OCTOBER 2010 Worldwide ERC® Learning Zone Speedsession Webinar Five Key Steps to Ensure Your RFP Really Works October 5 2 p.m. to 3 p.m. EST Sponsored by Capital Relocation Services Cost: Free Worldwide ERC® Learning Zone Webinar Homesale Programs: Understanding the Costs October 12 2 p.m. to 3 p.m. EST Global Mobility Specialist (GMS™) Training October 26-27 Seattle, WA Global Workforce Symposium October 27-29 Seattle, WA
WILLIAM (BILL) GRAEBEL, SGMS, Graebel Relocation Services Worldwide, Aurora, CO JOHNNY H. HAINES, SCRP, SGMS, Deloitte, Hermitage, TN LARS LYKKE IVERSEN, Santa Fe Relocation Services, Hong Kong, CHINA CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ JO LAY, SCRP, SGMS, Coldwell Banker Central Region Relocation, Chicago, IL EARL LEE, Prudential Real Estate and Relocation Services, Scottsdale, AZ STEPHEN C. MCGARRY, SCRP, WPP, New York, NY SANTRUPT MISRA, PH.D., Aditya Birla Management Corporation Ltd., Mumbai, INDIA JOY MORRISON, SCRP, SGMS, PepsiCo, Inc., Purchase, NY STEVEN A. NORD, Alpharetta, GA JOHN PFEIFFER, GMS, Mustang Engineering, L.P., Houston, TX PANDRA RICHIE, SCRP, GMS, Long & Foster Corporate Real Estate Services Division, Chantilly, VA C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN
EX-OFFICIO Chairman, U.S. Advisory Council AL BLUMENBERG, SCRP, NEI Global Relocation, Omaha, NE Chairman, Foundation for Workforce Mobility KEVIN E. RUSSELL, SCRP, PHH Mortgage, Mt. Laurel, NJ Chairman, Global Advisory Council SANTRUPT MISRA, PH.D., Aditya Birla Management Corporation Ltd., Mumbai, INDIA
Worldwide ERC Foundation “BESTIVAL!” October 28 Seattle, WA
Chairman, Government Relations Council C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN
CHIEF EXECUTIVE OFFICER
MARCH 2011 Global Mobility Specialist (GMS™) Training March 4, 5, and 7 Shanghai, China Global Wokforce Summit: Focus on Asia-Pacific March 8-9 Shanghai, China
PEGGY SMITH, SCRP, SGMS, Worldwide ERC®, Arlington, VA
MOBILITY (ISSN 0195-8194) is published monthly by Worldwide ERC®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203, +1 703 842 3400. MOBILITY examines key issues affecting the global mobility workforce for the benefit of employers and firms or individuals providing specific services to relocated employees and their families. The opinions expressed in MOBILITY are those of the authors and do not necessarily reflect the opinions of Worldwide ERC®. MOBILITY is printed in the United States of America. Periodical postage paid at Arlington, VA, and additional mailing offices. Worldwide ERC® members receive one annual subscription with their membership dues. Subscriptions are available to both members and non-members at $48 each per year. Copyright © by Worldwide ERC®. All rights reserved. Neither all nor part of the contents published herein may be reproduced in any form without written permission of Worldwide ERC®. POSTMASTER: send address changes to M OBILITY , Worldwide ERC ®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203
2 MOBILITY/SEPTEMBER 2010
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Allied wins its 17th Quest for Quality award.
Quality moving and logistics services.
Nothing earns a customer’s trust like quality. That’s why we focus on the things that are most responsible for customer satisfaction during their move experience. And today we’re proud to be
Allied received high marks in 5 key criteria: On-Time Performance | Value | Information Technology Customer Service | Equipment & Operations
recognized for our efforts with the Quest for Quality award for
It’s what you can expect from one of the largest professional
“Q4Q recipients have consistently proven that they’re meeting ever increasing shipper demands in what is now a 24/7 global marketplace where actions and mistakes can be tracked down to the day, hour, minute or even second.”
moving companies with the global strength and stability to
Household Goods and High-Value Products.
deliver consistent quality moving services for all your moving and shipping needs.
allied.com 866.841.7530 alliedspecialproducts.com 630.570.3687 © 2010 Allied Van Lines, Inc. U.S. DOT No. 076235 ALLIED and the ALLIED ROADWAY DESIGN are registered trademarks and service marks of Allied Van Lines, Inc.
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The Tale Wagging the Blog
log search engine Technorati counted about 200 million English language blogs at the start of 2009. Current estimates say that number has risen to about 400 million today… and that doesn’t include millions more blogs in other languages. For any individual or company with a tale to tell, blogs have been an efficient, cost-
effective way to distribute quick data, market products and services, educate readers, and share colorful stories. Whether through a free blog service or one’s own personal or company website, bloggers around the world are committed to communicating, sometimes spending up to ten hours or more each week writing multiple entries. What’s the “blogjective” behind all this activity? For those using their blogs as marketing vehicles, Hubspot reported that companies with blogs gathered 68 percent more leads than those without them (Statistics show that a larger cache of articles for the consumer to tap into has a healthy impact on lead growth once at least 20 posts are available.). Seventy percent blog to share expertise, more than half of bloggers say their blog has helped their company establish positioning as a thought leader within its industry, and 58 percent of individuals say they have gained positive familiarity in their industry through blogging. The three blogs of Worldwide ERC®, found on our home page under “Communities,” have positive familiarity—and distinct personalities! The China Blog™, developed by Mark Giorgini, GMS, China Vanke Co. Ltd., reflects the author’s knowledge of global HR issues and his love for his adopted home in Shenzhen, in mainland China. It also draws on his expertise as an attorney and a professor of HR issues in an international MBA program offered by Sun Yat-sen University (in conjunction with MIT’s Sloan School of Management) and the Northwest Polytechnic 4 MOBILITY/SEPTEMBER 2010
University in Xi’An, China. In the 80 entries since the blog debuted in April 2009, Giorgini (and, occasionally, guest student writers) have educated us on culture, customs, and holidays; global mindset and business practices; and labor contracts, talent management, and sourcing. As the blog intro suggests through a Chinese proverb, “To know the road ahead, ask those coming back,” Giorgini helps us know the road ahead with every fresh entry to The China Blog. New Worldwide ERC® CEO Peggy Smith, SCRP, SGMS, wanted to reach members soon after she had her boots on the ground at our association’s headquarters. So she developed her blog, wordsmithing™, to communicate some of her early initiatives— like a “listening tour” that would put her in touch with hundreds of members over several months to hear concerns and suggestions; an Annual Survey of Members (to take the pulse of our association and to see what our
members value in the organization, collect some demographics, and review customer service interaction); a stronger push to incorporate new media in the association’s communication outreach, and a “one for all, and all for one” approach to industry relationships. She even blogged about her own relocation! Newer posts— which appear every two weeks— reflect Smith’s business philosophy and perspectives, and in each successive entry, her voice comes through with personality and approachability. Our most recent blog is the new kid on the block. Introduced in August, the Mobility LawBlog™ showcases breaking tax and legal news and provides a forum to focus on new legislation and regulations, shifting trends, and risk management. Entries are posted weekly by Tax Counsel Pete Scott and General Counsel Dick Mansfield. Our LawBlog, like The China Blog and Smith’s wordsmithing blog, offers the opportunity to sign up for e-mail alerts or subscribe to an RSS feed and encourages comments and input from readers. Whatever your communication preferences, one thing is clear: blogs offer a wealth of information quickly and easily for visitors with limited time to read. And in my opinion, that makes a blog man’s best friend. –Mike Washbourn SCRP, GMS Worldwide ERC®President Pfizer Inc
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WR R I N E XT P R A CTI CE
There are satisfied customers. And then there are Raving Fans! The quality of service your relocating employees receive impacts more than just their moves. It affects their engagement and productivity, and can color their entire perception of your company. That’s why at Weichert Relocation Resources, we’re committed to turning your employees into Raving Fans®—so impressed with the level of service they’ve received, they feel as good about their moves as they do about the company that relocated them.
Weichert Relocation Resources Ranks #1 in Quality of Service Source: HRO Today Magazine’s 2010 Relocation Baker’s Dozen Customer Satisfaction Survey
...and Earns the Highest Percentage of “Top Block” Scores from Relocating Employees Source: Trippel Survey & Research’s Nationwide Relocating Employee Survey*
Raving Fans has set the standard for customer service programs within our industry, and, as you can see, it’s helped us earn some impressive accolades. If you’d like to discover how we can turn your mobile employees into Raving Fans, just give us a call.
For the latest trends and topics, visit wrri.com/blog
*Report provided by Trippel Survey & Research, LLC. “Top Block” scores indicate rankings of 9 or 10 on a 10 point scale.
| The Next Practices Company®
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2009 Fragomen Mobility Mag Full Page Ad 2.pdf 1 6/11/2009 12:59:55 PM
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MOBILITY Magazine of Worldwide ERC®
24 32 38 42 47 54
Divorce, Custody, and Employee Mobility By Peggy Scott, GRI, CRP, GMS
Pre-decision—the 8,000-pound Gorilla in the Room By Cullen Bunn
Corporate Housing Serves Families in Transition By Amanda Cook
Families on the Move: Challenges and Opportunities By Liz Perelstein
2010 Transfer Volume & Cost Survey By Mariam Lamech
Beyond Chocolate, Gruyere Cheese, and Breathtaking Mountain Scenery: an Overview of Employee Mobility in Switzerland By Anne-Claude Lambelet, SGMS
70 76 82
The Long and Short of It: Choosing the Best Relocation Program By Julian Yates
When to Chat With Your Expats By Virginia G. McMorrow
Group Moves: a Balancing Act for Employers and Employees By Kathy Sharo
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MOBILITY Magazine of Worldwide ERC®
Vice President & Publisher jholloman@WorldwideERC.org
The Tale Wagging the Blog By Mike Washbourn, SCRP, GMS
10 AROUND THE WORLDWIDE ERC
Managing Editor Frank Mauck
EDITORIAL ADVISORY COMMITTEE
12 EXECUTIVE SPOTLIGHT
Jo Lay, SCRP, SGMS, Coldwell Banker Central Region Relocation, Northbrook, IL Alex Alpert, Wheaton World Wide Moving, Tucson, AZ
15 INDUSTRY SPOTLIGHT
Tamara Bianchi, CRP, Capital Relocation Services, Denver, CO
15 WORLDWIDE ERC® TRENDSPOTTING
Christopher R. Chalk, CRP, GMS, Graebel Relocation Services Worldwide, Alpharetta, GA
18 QUICK TAKES
Brenda Darrow-Fuhs, Bank of America, Longmont, CO
20 RAC REPORT
Tim Denney, Stirling Henry Global Migration, Sydney, AUSTRALIA
Robert F. Burch, SCRP, Alexander’s Mobility Services, Baltimore, MD Alex Chua, Newport Real Estate Limited, Shanghai, CHINA Terry Baxter Davis, SCRP, SGMS, Ernst & Young LLP, Cleveland, OH
87 2010 CERTIFIED RELOCATION ®
92 TAX AND LEGAL UPDATE
Marge A. Dillon, CRP, GMS, Nationstar Mortgage, Lewisville, TX Sean Dubberke, RW3 LLC, New York, NY Deborah A. Dull, CRP, GMS, Crown Relocations, Houston, TX Kari Hamilton, ABODA, Inc., Redmond, WA Nancy F. Harmann, CRP, GMS, Latter & Blum, Inc., Realtors, New Orleans, LA Gustavo Higuera, CRP, GMS, Prudential Real Estate and Relocation Services, Scottsdale, AZ Christine E. Holland, GMS, Massachusetts Institute of Technology, Cambridge, MA Ronald Huiskamp, GMS, Dwellworks, LLC, Kirkland, WA
Rob Johnson, SCRP, SGMS, Altair Global Relocation, Plano, TX Tim McCarney, GMS, Weichert Relocation Resources Inc., Norwell, MA
94 ADVERTISERS’ RESOURCE
Elizabeth Perelstein, School Choice International, White Plains, NY Patricia Pollard, CRP, GMS, Coldwell Banker United Realtors, Houston, TX
Michelle Sandlin, CRP, John Daugherty Realtors, Inc., Houston, TX Stefanie R. Schreck, CRP, GMS, American International Group, New York, NY
96 LAST PAGE
Scott T. Sullivan, Brookfield Global Relocation Services, Woodridge, IL Mara Terrace, Siemens Corporation, Global Shared Services NA, Orlando, FL Sherrie Tessier, CVS, Woonsocket, RI Allie Williamson, CRP, OneWorld Relocation Services, Naples, FL GLOBAL EDITORIAL ADVISORY COMMITTEE
Chairman Joy Morrison, CRP, SGMS, PepsiCo, Inc., Purchase, NY Michele Bar-Pereg, Bar-Pereg Group, Amsterdam, THE NETHERLANDS Lorraine Bello, GMS, Ricklin-Echikson Associates, Inc. (REA), Millburn, NJ
Design/Production: Ideas, Communicated, LLC, Vienna, VA, www.ideascommunicated.com Printing: CADMUS Specialty Publications, Richmond, VA Reprints: Katina Moaney, CADMUS Reprint Services, email@example.com; +1 866 487 5625 ext. 3736 Advertising Sales: Glen Cox, National Sales Manager, The Townsend Group, +1 301 215 6710; ext. 109; firstname.lastname@example.org
Lorelei Carobolante, SCRP, SGMS, GPHR, G2nd Systems, LLC, San Ramon, CA Scott Craighead, SCRP, GMS, Blue Sky Executive Search, New York, NY Anne Dean, GMS, Living Abroad, LLC, Norwalk, CT Jeff Knapton, SIRVA Relocation, Westmont, IL Derrick Kon, Mercer (Singapore), Pte. Ltd, SINGAPORE Anne-Claude Lambelet, SGMS, ACL Consulting, Geneva, SWITZERLAND Tacita Lewars, GMS, Globaforce Incorporated, Calgery, Alberta, CANADA Cindy Madden, CRP, Cartus, Danbury, CT Andrea Massoud, GMS, Living in Brazil, International Relocation Services, Barueri-Sao Paulo,BRAZIL Nino Nelissen, SGMS, Executive Mobility Group, Schlipol Airport, THE NETHERLANDS Constance Pegushin, Berry Appleman & Leiden LLP, San Francisco, CA Maureen Bridget Rabotin, GMS, Effective Global Leadership, Paris, FRANCE René Rosemary Stegmann, GMS, Relocation Africa, Cape Town, SOUTH AFRICA Rita Wagner, GMS, Interdean International Relocation, London, UNITED KINGDOM Nick Woodhams, SGMS, Woodhams Relocation Centre, Sydney, AUSTRALIA
8 MOBILITY/SEPTEMBER 2010
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Prudential Real Estate and Relocation Services
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When you choose Prudential Real Estate and Relocation Services, you do more than secure the most comprehensive range of relocation services in the industry. You also realize the value of an organization that delivers satisfaction, savings and security at every step. It all leads to a better experience — for both you and your transferees. To learn more, call 1-877-418-0617. To download our complimentary relocation tools, visit www.prudential.com/relocation/value Benefit from the experience of our Prudential Real Estate Network.
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© 2010 Prudential Financial, Inc., Newark, NJ, USA. All rights reserved. Prudential Real Estate brokerage services are offered through the independently owned and operated network of broker member franchisees of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. and Prudential are registered service marks of The Prudential Insurance Company of America. Equal Housing Opportunity
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Around the Worldwide ERC®
Your LawBlog Awaits
n August, Worldwide ERC® introduced its new Mobility LawBlog™, where Tax Counsel Pete Scott and General Counsel Dick Mansfield share current tax and legal news with workforce mobility professionals managing U.S. domestic and worldwide assignments. Read about federal funding to prevent foreclosures, the new law that will require more reporting in 2012, and other entries at www.WorldwideERC.org/Blogs/MobilityLawBlog. Be sure to click on “Comments” at the end of each post to add your feedback, and sign up to receive e-mail alerts or subscribe to the RSS feed for immediate delivery!
Global Workforce Symposium Exhibit & Sponsorship Opportunities Now Available!
et ready for one of the global workforce mobility industry’s largest annual events! Exhibit and sponsorship opportunities are now available for the 2010 Global Workforce Symposium at the Seattle Convention Center in Seattle, WA, October 27 through 29, 2010. Now more than ever before, it is critical to take advantage of this opportunity to boost your company’s visibility, showcase your services, and connect with your clients and partners. You will experience exceptional networking opportunities, insightful educational sessions, and a dynamic relocation services marketplace at the Symposium. If you provide workforce mobility and relocation services, exhibiting at this event is a MUST for your company! Exhibit space and sponsorship opportunities for the Global Workforce Symposium space is available on a first-come, first-serve basis, so sign up today! For more information and to sign up, visit the Global Workforce Symposium online at: www.WorldwideERC.org/Events/Pages/ gws10.aspx.
10 MOBILITY/SEPTEMBER 2010
Gain the Ultimate Advantage!
ary Hamel, recently ranked by The Wall Street Journal as the world’s most influential business thinker, will be the keynote speaker at the Worldwide ERC® Global Workforce Symposium in Seattle, WA, this October. His landmark books include “Leading the Revolution,” “Competing for the Future,” and “The Future of Management,” which was selected by Amazon.com as the best business book of the year. Hamel will lead a discussion— Management 2.0: the Ultimate Advantage—to kick off the Global Workforce Symposium at the opening general session on Thursday morning, October 28. The two-day Symposium lineup also includes a variety of timely educational sessions that will change your approach to mobility, and give you revolutionary solutions to your most difficult problems. As Symposium veterans will attest, this event is an exceptional benchmarking opportunity. And, because we know that more HR professionals at this leading-edge event means better networking and deeper industry data for everyone attending, this year we’re inviting you to come for free if you’re responsible for administering your company’s workforce mobility program, and you have not attended a Worldwide ERC® Global Workforce Symposium during the past three years. For more information and to register visit www.WorldwideERC.org/Symposium. Executives and managers: sign up for the Executive Education Certificate Program, a highlevel, interactive classroom-style workshop taught by Gary Hamel on October 28 at the Symposium. Hamel’s provocative and practical four-hour class will give you the secrets to construct a company that is truly fit for the future. Find out how to develop a blueprint to build the essential capabilities that will distinguish tomorrow’s most successful organizations… and help you become an inspired management innovator (Note that an additional registration fee is required for this program.). Register using the Optional Programs section of the Global Workforce Symposium registration form. Attendance is limited, so take action today!
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uCompass Mobility Services, Inc., Pleasanton, CA, has named Patrick Cacho, CRP, regional vice president, business development. Crown Relocations, Hong Kong, China, has promoted Leon Hulme to country manager for Crown Thailand in Bangkok. Soorjaneel Chaterjie has been named general manager for Crown India’s records management division, Mumbai, India. First Preston Relocation and Realty, Addison, TX, has promoted Nesa Grider, CRP, GMS, to executive vice president Lawrence-Arendall-Humphries, Birmingham, AL, has named Lauren Weil and Karen Champion agents in the company’s Homewood office. Dana Ellison has joined the Mountain Brook office as an agent.
12 MOBILITY/SEPTEMBER 2010
Daniel Gale Sotheby’s International Realty, Huntington, NY, has promoted Suzanne Hildebrandt to relocation director. Graebel Movers, Inc., Aurora, CO, a division of Graebel Companies, Inc., named Bruce Vaughn general manager of Graebel Denver Movers, Inc. Philip M. Berkowitz has joined Littler Mendelson, P.C., New York, NY, as a shareholder in the company’s New York office and will serve as U.S. practice leader for the firm’s international employment and labor law practice group. Coldwell Banker United Realtors®, Columbia, SC, has added several new sales associates to its offices. Jeffrey Slifer has joined the Chapin office. Marilyn Tyler, Arlean Tessler, Tony Minus, and Stephen Chostner
have joined the Aiken office. Michael Todd has joined the commercial division. Paige Tyler and Amanda Payne have joined the Midtown office. Janine Mabe and Henry Laurens have joined the West Ashley office. Julie Coman has joined the Mt. Pleasant office. Carmen Smith has joined the Summerville office. RealtySouth, Birmingham, AL, has named Kent Brenner managing and qualifying broker of its Hoover Metro office. The company also has added several new agents to its offices. Dot Hartley and Steven Chess have joined the Chilton office. Debbie King has joined the First Realty Auburn office. Freida Zamiatala, Brenda Shirley, and Joy Everson have joined the I-495 office. Tamia Lazzari and Scott Boudreax have joined the Lake Martin office. Staci Graphos and Brian Dodson have joined the Mountain Brook Euclid office. Brandi McNiese and Jerry Duke have joined the Orange Beach office. Kelly Jones has joined the Over the Mountain Acton office. Kenneth Kirkes, Byron Euler, Brandon Littleton, Steve Fraley, Karen Seiler, Roddy Slaughter, Garry Rich, Patsy Giglio, Ken Giglio, Janice Little, and Betsy Slaughter have joined the Inverness office. Heith Pike has joined the Northern office. Wilson Perry has joined the Over the Mountain Alford office. Ruth Nedoma has joined the Shelby office. Sheryl Pace has joined the Trussville office. Century 21 Real Estate LLC, Parsippany, NJ, has announced the appointment of five new members to its commercial advisory board: Conrad Vanino, CENTURY 21 Park Road, Wyomissing, PA; Kenneth Kujawa, CENTURY 21 Signature Realty, Saginaw, MI; Larry Matos, CENTURY 21 M&M and Associates, Turlock, CA; Renee Williams Harvey, CENTURY 21 Harvey Properties; Paris, TX; and Sam Mizrahi, CENTURY 21 Mizrahi Realty, Brooklyn, NY.
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Survey Reveals Companies Keeping Employees Mobile Despite Downturn Economy Despite the challenges manifested by the global economic downturn, a report from Weichert Relocation Resources Inc. (WRRI), Morris Plains, NJ, has discovered that employers increasingly are managing their mobility programs with an eye toward strategy. Weichert’s survey, the fourth annual “Mobility and the Current Real Estate Market,” queried nearly 200 relocation and HR professionals responsible for more than 26,000 annual moves. WRRI found that organizations are updating there mobility policies more frequently to address obstacles to employee relocation, specifically human capital who cannot afford to sell their housing or have trouble acquiring mortgages. According to the release, 90 percent of organizations have made changes to their policies during the last year. “Our survey results show a continuing shift in attitude regarding relocation policies,” said Ellie Sullivan, SCRP, SGMS, director of consulting for WRRI. “Six to 10 years ago, policies were implemented and then remained virtually untouched because there was little reason to adjust them, since markets were stable and employees were typically ready and willing to move. Today, there are more challenges to contend with, including a recession, the velocity of business change, shifting workforce demographics, and depreciating home values. “The fact that the vast majority of our survey respondents changed their policies over the past year to control costs and motivate employees indicates that despite the current economic picture, companies still realize the importance of maintaining a mobile workforce.” According to the release, 75 percent of respondents provide alterna-
tives to traditional homeowner benefits, either formally or on a case-bycase basis. Included among the offerings are delayed homesale benefits, delayed home purchase, or allowing homeowners to become renters. In addition, according to WRRI, 33 percent said they added or increased loss-on-sale assistance, with the most common maximum dollar cap rising to $50,000. Pre-decision programs, an emerging trend identified by WRRI’s 2008 survey, are increasing in popularity among employers in 2010, with 65 percent offering pre-decision and 11
percent planning to offer it this year. “Despite slow markets and economic hurdles, employee mobility remains a critical part of most companies’ growth and talent management strategies,” said Sullivan. “The difference today, according to our survey results, is that companies are being more strategic in managing their programs. Rather than casting a wide net of similar benefits for all mobile employees, they’re taking a more targeted approach, offering specific packages to specific employees and new hires to convince them to accept moves.
Bank of America Home Loans We help open the door.
MOBILITY/SEPTEMBER 2010 15
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FYI James R. Amschler, SCRP, former senior vice president and general counsel of PHH Relocation and Real Estate, Wilton, CT, and three-time Worldwide ERC® Distinguished Award recipient, has announced the opening of his law firm, Amschler & Hacker in Addison, TX, a general practice firm with relocation law as a specialty. His partner, Jeff Hacker, is the former southern regional counselor for PHH Relocation and Real Estate, Dallas, TX. Relocation Advantage, Plano, TX, a division of First American Title Company, Santa Ana, CA, has announced an affiliation with Channel Match Consulting, LLC, Plano, to represent its title and closing programs in the relocation marketplace. Daniel Gale Sotheby’s International Realty, Huntington, NY, has announced the opening of a sales office in Mattituck, NY. Leading Real Estate Companies of the World®, Chicago, IL, has selected Mobile Real Estate ID™ to provide service to its 600 member firms. The alliance is part of the network’s Leading Real Estate Solutions® division. Century 21 Real Estate LLC, Parsippany, NJ, has announced an agreement with the Distressed Property Institute, LLC, Austin, TX, to provide Certified Distressed Property Expert® (CDPE) designation training to its sales professionals. Dwellworks, Cleveland, OH, has announced the relocation of its New York operations to a new, larger office on Park Avenue.
16 MOBILITY/SEPTEMBER 2010
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Bridging Continents & Cultures Chicago Calgary
Los Angeles Toronto
New York Vancouver
Philadelphia London, UK
San Francisco Hong Kong
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A Bright Spot in a Slow Economy A
ccording to the spring 2010 issue of Industry Trends, a publication of the American Moving & Storage Association (AMSA), Alexandria, VA, the number of household goods shipments through the first five months of 2010 has increased 4.2 percent from the same period in 2009. Individual consumer shipments have exhibited significant growth from January to May, 2010, up 11.2 percent. According to AMSA, individual consumer shipments declined 21.5 percent during the same five-month period in 2009, and were down 18.2 percent between January and May in 2008.
“These numbers are very encouraging,” said Linda Bauer Darr, AMSA president and CEO. “They show big improvements in both of the private-sector business lines we track, consumers as well as corporate relocations, which were up nearly 2 percent.” According to AMSA, the volume of household goods shipped by the United States military was down 1 percent and the number of shipments by civilian federal agencies (the smallest of the four business lines tracked) declined by more than 10 percent from January to May 2010.
orldwide ERC® members are exchanging questions, answers, and ideas in our online forums and blogs. Current discussions include:
U.S. Domestic Relocation All Members Forum: “Home prices have stabilized slightly this year, but since the expiration of the tax credit, housing activity and sales in many locations have slowed down. Is there any evidence of declining relocation authorizations yet? Or are most of you still seeing even or slightly increasing relocation volume this year?” The Green Forum: “Since appraisal files may contain private information, we must shred them. I used to have to pay to have this done. I found that my local UPS store will shred them for free and thank me for the opportunity. They use the shredded paper as packing material. Saves them money on packing material, saves me money on shredding, and its good for the environment. That’s a triple play in my book.” Global Workforce Mobility All Members Forum: “I am looking for a resource or guidelines around driving an auto from Canada to the United States. The transferee is driving their auto from California. What documents are required? What taxes will be paid at port of entry, etc.?” The China Blog: Foreign companies may think their ways are superior because they are simple and, more importantly, the whole salary packages of them are higher than those of most of local companies. But as an experienced employee in both local company and foreign company, I prefer the local ways,” writes guest blogger Evelyn Jiang Lin, full-time student in the international MBA program at Lingnan (University) College, Sun Yat-sen University, in Guangzhou, China. Read the replies and discussion that these posts solicited—log into the Communities right now. To get there, visit www.WorldwideERC.org/Pages/Web2.0.aspx or click on the white “Communities” text hyperlink at the top of every page of www.WorldwideERC.org. Note, access to the Forums is an exclusive benefit of Worldwide ERC® membership.
18 MOBILITY/SEPTEMBER 2010
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Regional Market Summary: Greater Kansas City Metro Area
he Kansas City metro area appears to be zeroing in on the recovery stage with declining unemployment and a revival of the local economy. The Kansas City metro area, for the purposes of this article, consists of Johnson, Leavenworth, Miami, and Wyandotte counties in Kansas, and Cass, Clay, Jackson, and Platte counties in Missouri. The Kansas City combined statistical area (CSA) consists of 17 counties. Kansas City home prices, on average, are expected to decline until mid-2011 before they begin to rebound. The decline in 2010 will be gradual because of the large inventory of new and existing homes. The federal government stimulus money and low-interest rates stimulated the housing market for a short period. The expiration of the stimulus money eventually will cause a negative effect on home values and put added pressure on the real estate market. Low interest rates have potential buyers refinancing their homes, which, in the long term, will have a negative effect on the housing market. To offset the expiration of the stimulus and low interest rates, Kansas City will have to create more jobs in the private sector and, in turn, reduce unemployment to revive the metro area. On a positive note, in the past year, the average new homesales price for 2010 has stabilized, along with the average sales price of existing homes. New homesales have been increasing, resulting in a reduction of new home inventory. Existing home inventory has increased. To summarize, unemployment for the metro area is around 8 percentâ€” which is below the national averageâ€”and, as of June 2010, there was 20 MOBILITY/SEPTEMBER 2010
Unemployment Months of Supply Annualized Sale Volume Annualized Avg. Sale Price Average DOM
ONE YEAR AGO
8.5% 8.0% $15,893 $163,479 97
8.9% 11.5% $14,049 $156,903 115
- 4.7% - 6.96% 13.12 4.20% -18.61%
MARKET AT A GLANCE
an 8-month supply of new homes and a 7.7-month supply of existing homes. New home inventory has declined and existing home inventory has stabilized. With the national economy in flux, it is uncertain as to
how fast the Kansas City metro area will recover. Richard K. Champagne, SRA, CRP, is with Champagne Appraisal, Inc., Leawood, KS. He can be reached at +1 913 764 3831 or e-mail firstname.lastname@example.org.
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Divorce, Custody, and Employee Mobility As society becomes increasingly mobile, so does the frequency with which global mobility professionals encounter relocation cases involving child custody. Scott defines custody, discusses its effects on mobility, and offers a case study demonstrating how divorce affects the relocation process.
BY PEGGY SCOTT, GRI, CRP, GMS
hile the divorce rate varies greatly in each country of the world, affecting the lives of men and women, those with children will be affected the greatest. No family law generates more concern, strife, and emotional turmoil than child custody and visitation matters. Every court around the nation will advocate for the best interests of the children involved in a divorce. Developing an amicable parenting plan or agreement for the interests of the children is the best solution to establishing custody of a child. The best interest of the child is served by a parenting arrangement that best maintains a child’s emotional growth, health and stability, and physical care. According to Washington state law, the best interest of the child ordinarily is served when the existing pattern of interaction between a parent and child is altered only to the extent necessitated by the changed relationship of the parents. If the parents cannot reach an agreement concerning the custody and parenting plan for the child, then the court may establish either sole or mutual decision-making authority as well as residential provisions. The parenting plan or agreement needs to support, in detail, the child’s best interest in the areas of school, physical care, traveling 24 MOBILITY/SEPTEMBER 2010
expenses, individual parental authority, and residence options and rules. All divorce cases involving child custody, whether uncontested or contested, must include a parenting plan or custody order (either by agreement or ordered after trial) that is adopted by the courts.
Who Determines Custody? The court will allocate decision-making authority (legal custody) to one or both parties regarding the children’s education, health care, and religious upbringing based on the parenting plan or agreement proposed by the parents. The American Bar Association’s “Family Legal Guide” states that many joint custody orders specify procedures parents should follow in the event they cannot agree on an issue. The most common procedure is for the parents to consult a mediator. According to the 1997 paper, “Child Custody Policies and Divorce Rates in the U.S.,” by Richard Kuhn, Children’s Rights Council, and John Guidubaldi, D. Ed., John Carroll University and Kent State University, states differ widely in their policies toward joint custody. Many states routinely grant joint legal custody, which gives the non-residential parent the right to participate in major decisions about the child’s upbringing and to view certain records.
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Joint legal custody does not affect the child’s living arrangements. Often, it is granted with the traditional residence arrangement, in which the child lives with one parent but visits the other parent so many days a week, month, or year.
Relocating with Children of Divorced Parents Parents who share custody of their child face a difficult dilemma when one parent wants to relocate or move away to a relatively distant location. Of all the potential issues that can arise in child custody cases, one of the most difficult and complicated to resolve is whether to permit the proposed relocation of the child. The relocation of the custodial parent necessarily affects the strength and quality of both parents’ continued relationships with the child, as well as fundamentally altering the child’s environment, thus requiring substantial adjustments by all parties involved. According to Leslie J. Olson, attorney and counselor, Olson & Olson,
26 MOBILITY/SEPTEMBER 2010
Of all the potential issues that can arise in child custody cases, one of the most difficult and complicated to resolve is whether to permit the proposed relocation of the child. PLLC, Seattle, WA, “if a divorced parent considers a relocation, it is important to understand the consequences and effect it will have on the child. The age, relationship to the other parent, and developmental maturity of the child will weigh heavily on the decision by the court as to whether it is in the best interest of the child to move with the relocating parent. It is further important to understand that a proposed relocation often requires that the non-relocating parent be given adequate notice (such as 60 days in Washington) of the pending relocation. Keep in mind that the
child has already gone through a family restructuring during the divorce and this would be another restructuring for the child and family. The parent proposing to relocate with the child must provide his or her reasons for the intended relocation. In Washington state, there is a rebuttable presumption that the intended relocation of the child be permitted. A person entitled to object to the intended relocation of the child may rebut the presumption by demonstrating that the detrimental effect of the relocation outweighs the benefit of the change to the child and the relocating person.” Prior to accepting a relocation, it is important that the parent who is planning to relocate do a thorough study of the destination to include a comparison of the financial impact on the family, quality of life, cost of living, schools, neighborhoods, community resources, child care, and support groups. Traveling to the destination location to do onsite research of the area and resources also is advisable prior to the decision to relocate.
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“If I place my home on the market will it sell?“ “Can I afford a similar home in the new location or will I need to rent?“ “What should I do to make sure I get top dollar for my home?” “How much of a gain or loss will I have if I sell at this price?” Lexicon has the experience and technical tools to help answer these questions. Whether it’s developing a cost effective valuation report, an estimate on projected market time, or a detailed cost analysis; we have an app for that. Information is essential to making clear, sound decisions. For a demonstration of these tools, please contact us at 800.387.8242 or email us at firstname.lastname@example.org.
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It is beneficial for the relocating parent to work with a sales agent who is trained to work with relocating individuals and families, because the trained agent will better understand the emotional challenges and many details involved in the relocation process. The agent can be a helpful resource for valuable housing, school, and community information. If it can be shown that the relocation will be beneficial to the child with better school systems, medical facilities, and community resources, the courts will look more favorably at the move. Some courts will want specific evidence from knowledgeable witnesses who can attest to the benefits of the move for the child.
California Case Study Recent California cases indicate that in custody situations, if one parent is functionally the primary or custodial parent and the children have been living primarily with that parent, that parent is likely to be permitted by the courts to move away and take the child along, even if he or she agreed earlier not to move away or relocate. California Family Code section 7501 provides, “a parent entitled to the custody of a child has a right to change the residence of the child, subject to the power of the court to restrain a removal that would prejudice the rights or welfare of the child.” However, if there is a joint or shared custody arrangement, where the child spends a significant amount of time with each parent, an exception can be raised in a move away case (relocation), known as the “footnote 12” exception to Burgess (Marriage of Burgess case). In “footnote 12” of the Burgess decision, the court held that where there is a
shared custody relationship the court would have to make a new, or “de novo,” determination regarding custody based on the best interest of the child.
The Reality—Today As our society has become increasingly mobile and migratory, the number of relocation cases involving child custody has continued to expand at an astounding rate. According to the National Legal Research Group, Inc., Charlottesville, VA, no jurisdiction has escaped the need to address this thorny custody issue and its attendant effects on a child’s relationship with his or her parents. These jurisdictions have recognized the delicate nature of such decisions and have expressed their concern regarding the inherent difficulty in crafting an evenhanded result. Ideally, after a divorce, parents cooperate and remain in close proximity to each other to provide access to their children. But, that ideal is not always reality. In our global economy, relocation for employment purposes is common. Non-custodial parents may relocate to pursue other interests, but custodial parents may do so only with the consent of the former spouse. If the consent is not granted, a court application is required. There has been a recent trend to apply some type of bestinterest-of-the-child standard to resolve relocation disputes and this trend is evident in both recent court decisions as well as state statutes governing a parent’s right to relocate. According to The American Bar Association’s “Guide to Marriage, Divorce & Families,” in some states the law may say a child cannot be moved without permission of the other parent or permission of the
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court. If a job change is the basis for a move, the plan for a new job should be specific and in good faith. It will be up to the relocating parent to show that the relocation will improve the family’s situation—this could include having a better job, having more family support, entering a stable relationship, and more. Usually it will be necessary for the child visitation plan to be restructured if a move is out of state. In some cases, the non-custodial parent may end up spending more time with the child than during the prior visitation plan because it usually involves scheduling more visitations in the summer and during other holiday breaks. However, if parents cannot afford visits over a long distance, the court may be less likely to allow the relocation.
enacted statutes that allow a custodial parent to relocate within a state without having to seek permission from the court as long as the proposed move is less than a fixed distance as provided in the statute.
The Expatriate With Children
Frequently, a custodial parent will seek to relocate with the child after securing a new job or being transferred to a new geographic area within the resident state by his or her employer. Courts often find that the prospect of increased economic advantages for the custodial parent as a result of these employment opportunities is enough to support a request for relocation. Again, in most cases, the bottom line is whether the move is in the best interest of the child. If a custodial parent seeks to move with the child to another location within the same state, generally, such intrastate moves are allowed regardless of the differing relocation standards applied by the states. The reason for this is that most intrastate moves typically do not involve the same amount of geographical distance between the parents as most interstate moves. Some states have
How might divorce and child custody affect the expatriate? In the article, “Altered States—Policy Issues to Consider When an Expatriate’s Status Changes,” from the November 2007 issue of MOBILITY, Lynne F. Molnar wrote that the break-up of a family unit through separation and divorce has the opposite effect of a wedding—the employer decides whether to reduce or eliminate certain benefits: • Housing usually remains unchanged for two reasons: it allows sufficient space and familiarity of the foreign home if there are children who will come to visit. In addition, if the company weighs the advantage of spending money on moving the expatriate into a new residence and negotiating a new lease against the higher rental prices in the market at the time, the company might decide to leave the housing situation as is.
30 MOBILITY/SEPTEMBER 2010
Courts often find that the prospect of increased economic advantages for the custodial parent as a result of these employment opportunities is enough to support a request for relocation.
• Cost of living allowance (COLA) will decrease, though the amount varies depending on whether or not the children (if any) remain in the host location. • If the spouse returns home with the children, the employer usually is not responsible for educational assistance in the home country. The company might, however, allow the children to periodically visit the employee overseas, paying for transportation and also adjusting the COLA if the visit is a long one (e.g., summer vacation). If the children remain in the host location with the expatriate, the company’s policies for dependent children continue. Whether the divorced parent with primary or custodial custody of a child is relocating across the state, across the nation, or to another country, it is imperative to communicate with the child’s other parent well in advance of the proposed move to try to reach a satisfactory agreement about the welfare of their child and a visitation plan that will work best. If an agreement cannot be reached, the court will decide a plan or agreement that will keep the best interest of the child at the forefront.
Advice of Attorney There are many informative websites to visit about divorce and child custody law for most states. However, it is recommended to seek the advice of an attorney who specializes in family law when relocating with children to assure that their needs and interests are the primary concern of the family. Peggy Scott, GRI, CRP, GMS, is relocation director and designated broker for Windermere Relocation and Referral Services, Seattle, WA. She can be reached at +1 206 526 7730 or e-mail email@example.com.
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32 MOBILITY/SEPTEMBER 2010
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The pre-decision process has emerged in the mobility industry as a critical tool in the retention and management of an organization’s talent. Bunn says that the true value of pre-decision is not just as a tool for encouraging an employee to accept a move, but useful as a method for eliminating potentially disastrous relocations before they have a chance to take place. BY CULLEN BUNN
ou remember the King, don’t you? No, not Elvis or “King of Pop,” Michael Jackson, or even “King of All Media,” Howard Stern. The other King. King Kong. He tried to take New York City by storm once, expressing his rage by swatting at jets while dangling off the side of the Empire State Building. Once just a big ape on a small Southeast Asian island, international relocation rocketed Kong to fame as the enormous ape who fights dinosaurs, kidnaps damsels in distress, and causes collateral damage and mass panic. But what does Kong’s story have to do with workforce mobility? Simple. The tragic story of Kong’s own relocation (an international relocation, at that) perfectly illustrates the importance pre-decision plays in keeping your best and brightest employees… and avoiding relocation disaster. King Kong lived most of his life on Skull Island, a lost land somewhere off the coast of Sumatra. He was happy there, battling T-Rexes and eating what one only can assume to be an unimaginable amount of bananas. He was a one-of-a-kind creature—the “Eighth Wonder of the World!” When filmmaker Carl Denham found out about Kong, he believed the giant primate could make his dreams come true and ensure his financial well-being. Kong was definitely an “A-player” in Denham’s mind. No other creature could fill the animal’s shoes so well, so making sure the gorilla was in the right place at the right time was crucial to Denham’s success. Relocation was central to protecting Denham’s investment.
MOBILITY/SEPTEMBER 2010 33
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Employers face similar challenges. An increasing number of first-choice relocation candidates are declining offers, forcing organizations to turn to less-qualified employees. Even with employment at a 25-year high, highly skilled personnel who match a company’s vision are difficult to find. That is because the best employees— those who consistently demonstrate value and results—are always in demand, especially during tough times. A recent talent synchronicity workshop at Intel revealed 80 percent of talent management professionals still had jobs to fill, according to the October 2009 issue of Talent Management magazine. The Randstad 2009 “World of Work” survey spotlights the growing shortage of high-quality, highly skilled employees with 52 percent of employers responding that there are not enough qualified managers in their organizations. The economy has left no room for error regarding costly, timeconsuming failed assignments. Collectively, the mobility climate has changed drastically, and the importance of getting first-choice candidates to relocate has not diminished over the years. Still, getting those top employees and first-choice candidates to say “yes” to a move is more difficult than ever. As the talent pool’s demographics, priorities, and motivations shift rapidly, reluctance to relocate is at an all-time high. And Kong was, if anything, reluctant.
Pre-decision The big gorilla liked his jungle life. He was not ready for the hustle and bustle of the big city. He had responsibilities on Skull Island. His expecta34 MOBILITY/SEPTEMBER 2010
THE ACTUAL COST OF A FAILED RELOCATION MAY NOT MEASURE UP TO SMASHED BUILDINGS, TRASHED JETS, AND DERAILED TRAINS, BUT STILL CAN HAVE SIGNIFICANT IMPACT FOR AN EMPLOYER WHO NEEDS TO MEET SPECIFIC GOALS.
tions, demands, and priorities presented challenges that might have been addressed, averting catastrophe. The Atlas World Group’s 2010 “Corporate Relocation Survey” identified the top reasons that candidates declined a move this year. According to respondents, 77 percent cited housing/mortgage concerns and 51 percent said family issues or ties. Relocation is a decision employees now make based on life stage, life events, financial status, real estate considerations, and current family priorities. It is a common misconception that pre-decision consists solely of addressing real estate and mortgage issues. These are significant factors, but not nearly enough to constitute a complete pre-decision plan. In fact, family issues have been the most important decision-making factor until the recent mortgage crisis. In the Atlas survey, family issues are second only to housing/mortgage concerns. However, family issues have been the top issue cited
annually since 1983. 2010 marked the first time in 27 years that housing and mortgage concerns were the prominent reasons for turning down relocation offers. As the economy stabilizes and the real estate market bounces back, family and lifestyle issues are likely to return as the most important factor in relocation consideration. After all, Kong lived in a cave. Property values on a dinosaur-infested island have always suffered. Other areas employers might consider during the pre-decision stage: Relationships: the impact on spouses, children (like the oftforgotten Son of Kong), and social networks. Lifestyle: the day-to-day aspects of life the employee values most (such as beating dinosaurs to death with one’s bare hands). Location: cultural shifts (rural jungles to urban jungles anyone?), safety issues (tall buildings and fighter planes), and transportation (face it: that cargo ship really was not a great way to move Kong). Financial and legal considerations: how the move affects the family’s earning potential (Going from king of all he surveys to sideshow attraction, for example.). Employee professional and career considerations: current and new professional opportunities (because falling off the Empire State Building is a dead-end gig). Spouse/partner professional and career considerations: career opportunities or entrepreneurial considerations (after all, Kong’s “bride” Fay Wray was an actress, which may be a tough job to replace in some destinations). But Denham was in too much of a hurry to get Kong to the States, put
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In fact, two out of three of TRC’s inventory homes sell in 60 days or less and nearly 80 percent sell within 90 days! Learn more at www.trcgs.com or call 800.783.5337. And prepare to have your expectations exceeded.
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him to work, and reap the rewards. Without addressing the big ape’s circumstances, he gets Kong on a ship, takes him to the big city, and puts him on display. We know the story ends badly—a major failed relocation for everyone involved. Kong escapes, laying waste to much of the Big Apple before climbing the Empire State Building for his final, fatal battle with an airplane squadron. A little extreme, yes, but for the relocating employee and family, being ill-prepared for a move (or illprepared to make the decision to move) can feel like a major life event. The actual cost of a failed relocation may not measure up to smashed buildings, trashed jets, and derailed trains, but it still can have significant impact for an employer who needs to meet specific goals.
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36 MOBILITY/SEPTEMBER 2010
Assistance and Support Today, costs associated with relocation are getting attention at the board room level and, for the first time since the 1970s, the return on investment (ROI) of relocation is being given serious consideration. According to the 2010 Worldwide ERC® Transfer Volume & Cost Survey (see page 47 of this issue), the average cost for moving a homeowning new hire in 2009 was $66,610. If this assignment were to be unsuccessful, the cost of the failure does not take into consideration the possibility of losing a terrific employee. The cost of replacing valuable skill sets or bench strength can be as staggering as a 30-foot-tall ape falling from a skyscraper. Companies are discovering that the cost of offering pre-decision support increases ROI. Weichert Relocation Resources Inc., Morris Plains, NJ, surveyed nearly 200 relo-
cation and HR professionals responsible for more than 26,000 annual moves in the 2010 “Mobility and the Current Real Estate Market Survey.” Results revealed that 90 percent of companies have updated their relocation policies to overcome mounting obstacles to employee mobility—particularly employees who cannot afford to sell their homes or have difficulty securing mortgages. More specifically, 65 percent of those companies currently offer a form of predecision support and 11 percent reported plans to add it to their programs this year. Where were these forward thinkers when King Kong needed them? Progressive employers may offer a wide range of pre-decision support to get their employees moving in the right direction and ensure a successful move, including: Assessment. Surveying the candidate clearly illustrates what he or she perceives as positive with the move and, more important, emphasizes perceived obstacles, particularly in relation to lifestyle circumstances. A little assessment in King Kong’s situation could have revealed that he might have difficulty adjusting to the drastic cultural differences between Skull Island and New York City. Coaching. The candidate can be coached as to how he or she may overcome the critical issues exposed in the assessment and make the move successful. Coaching often helps uncover preconceived notions about certain areas of the move and eliminates them with research. Fay Wray was able to calm Kong down and get him to cooperate (in a fashion). A little more coaching like that might have gone a long way. Destination visit. Companies often offer a family visit to the antici-
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pated destination. This opportunity allows the candidate to see the attributes and amenities of the potential location up front. It also is a great opportunity to investigate the best facilities and programs for any special needs the family may require—often a reason to decline a move. Okay, this one might not have worked for Kong. Financial assistance. Certain financial factors may make a candidate unmovable, such as bad credit. Other candidates cannot financially afford to move. A financial advisor can help uncover these debilitating issues early to streamline the process. Face it, Kong was king on Skull Island, and there had to be some perks that went along with that role. Maybe his unstoppable rage in the United States had a little to do with a sudden reduction in his banana bank. Mortgage assistance. This is a common offering, gaining popularity with the current economy. It is critical for employees to understand the market value of their current homes
A COMMON MISCONCEPTION IS THAT PRE-DECISION CONSISTS SOLELY OF ADDRESSING REAL ESTATE AND MORTGAGE ISSUES. THESE ARE SIGNIFICANT FACTORS, BUT NOT NEARLY ENOUGH TO CONSTITUTE A COMPLETE PRE-DECISION PLAN.
IN FACT, FAMILY ISSUES HAVE BEEN THE MOST IMPORTANT DECISION-MAKING FACTOR UNTIL THE RECENT MORTGAGE CRISIS.
in advance and the type of community they can afford in the proposed destination. These programs often offer appraisals, title searches, inspections, and equity calculations. When Kong reached the United States, his
accommodations amounted to chains and concrete walls. A little help with housing might have made the transition a little smoother. What could Denham have done to make Kong’s relocation to the United States more successful? Would pre-decision have helped Kong become acclimated to his new home? Probably not. Moving a giant, prehistoric ape into modern civilization is typically a very risky proposition. But the value of pre-decision is not just in getting an employee to agree to relocation. Preliminary support and research can eliminate obstacles and emphasize opportunity, but it can be just as valuable for identifying deal-breakers that can prevent a move from ever being successful. Some employees simply are not in a position to relocate, and it is best for the employer to know when these situations arise… before they cause costly problems. Cullen Bunn is vice president of marketing and communications for Vandover, St. Louis, MO. He can be reached at +1 314 576 0010 or e-mail firstname.lastname@example.org.
MOBILITY/SEPTEMBER 2010 37
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Corporate Housing Serves Families in TRANSITION BY AMANDA COOK Corporate housing accommodations remain the standard for families in transition who require flexibility and convenience from their temporary accommodations. Cook offers real-world examples of how these properties can ease transitions and reduce stress for families on the move.
ver the years, corporate housing has become synonymous with traveling business executives whose work has taken them from place to place. Corporate housing, however, serves many more customer segments. There are many opportunities for which corporate housing is a good fit: long-term medical care, temporary accommodations during career and life transitions, insurance housing, and disaster relief housing. 38 MOBILITY/SEPTEMBER 2010
According to the 2008 Worldwide ERC® “Family Issues Survey,” about six in 10 transferees have dependent children and nearly three-fourths are married. In fact, family concerns are the primary reason transferees choose to commute rather than relocate their households. Corporate housing is one solution that helps alleviate these concerns because of the comfort and quality it affords for those traveling with families. There is no denying that traveling with families can be stressful, and corporate housing provides families with the space and amenities needed
to be comfortable during their temporary stay. With the apartment fully furnished and the utilities turned on, everything needed for a comfortable stay is already available and nothing is left to chance.
From Down Under to a Mile High When Natasha Sinclair learned her family would be moving from Melbourne, Australia, to Colorado for her husband’s one-year contract assignment, the task seemed daunting. Not only were she and her husband moving, their daughters were going along as well. Having never
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been to the United States, she did not know where to start. An astute real estate agent from Fuller Sotheby’s International Realty, Denver, CO, recommended she contact a corporate housing provider at Gables Corporate Accommodations, Highland Ranch, CO. This advice was far more beneficial than Sinclair realized at the time. Not knowing anything about the area, Sinclair relied on her corporate housing provider to guide her to the perfect place for her and her family to settle in as they looked for a longer-term rental home. “We really had no idea where we wanted to be for the year,” Sinclair said. “We knew we wanted to live in an area that had good schools, a lot of activities, and a safe environment. We also had to find some place that would allow my husband to do his work, since he didn’t have an office.”
Gables Corporate Accommodations placed the Sinclairs in a three-bedroom, three-bathroom apartment that was fully furnished, including all accessories and housewares. The property offered a clubhouse, fitness center, and playground for Sinclair’s daughters. “We literally showed up with our suitcases and everything was taken care of,” Sinclair said. “The utilities were all squared away, the Internet worked immediately, and we didn’t have to worry about any bills. I was quite amazed at the contrast between the hotel room we stayed in on our arrival and our apartment. “Each daughter had her own space and they were individually decorated, as opposed to a hotel. It was so convenient to be able to cook meals, do laundry, and feel comfortable. We actually became quite attached to the apartment.”
Corporate housing providers often hear that clients enjoy their accommodations so much they do not want to leave. Sinclair and her family stayed in the apartment for more than a month before finding the perfect location in a great school district where they are renting a home. “I would definitely recommend using corporate housing for a temporary stay,” said Sinclair. “It allowed us the flexibility we needed to find what we really wanted and was the perfect solution for us. Everything was taken care of for us so all we had to do was show up.” The Sinclair’s story is an excellent example of how corporate housing can work for families needing a solution to a temporary stay problem. Corporate housing can work for nearly any scenario and can serve as a one-stop shop. In addition, given the level of comfort and space corporate MOBILITY/SEPTEMBER 2010 39
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housing provides, it often is a convenient solution for families, especially those traveling with children.
The Mobility Professional Becomes the Corporate Housing Client In May 2010, Worldwide ERC® named Peggy Smith, SCRP, SGMS, its new chief executive officer. Smith came from software giant Microsoft Corporation, Redmond, WA, where she was director of global mobility with responsibility for more than 5,000 annual global moves. With her new position, however, Smith became the client as she planned her own cross-country move and used corporate housing in the process. Smith and her family actually used corporate housing on both ends of the move to accommodate their
40 MOBILITY/SEPTEMBER 2010
needs. Smith was not only moving with her husband and daughter, but they also were relocating their two pets. “Using corporate housing on the front end allowed us to keep our pets with us, and gave the movers and stagers the opportunity to prepare our Seattle-area home for our departure,” said Smith. Even though she initially did not intend to use corporate housing in Virginia, it turned out to be the best solution. “Being completely unfamiliar with the area, we wanted to make a solid choice about where to put down roots in a new community,” said Smith. “We looked at houses first, but didn’t find anything we liked that we felt comfortable making a long-term commitment to.”
Given Smith’s knowledge of the model and services provided with corporate housing, she quickly realized the convenience it would afford them, as all their housing needs were coordinated in their new home state. “We didn’t come into this move planning to use corporate housing,” she said. “But once we knew we weren’t going to buy right away, and we found a property we really liked—close to my daughter’s school and with a straightforward commute to the Worldwide ERC® office—it became apparent that going through a corporate housing provider would make the transition much easier. They handled furniture rental, utilities setup, property negotiation with the rental company, and a variety of other arrangements.”
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“The ease of getting into our new home, being able to turn in for the night without much fuss, and not worrying about anything was enormously gratifying.”
Another benefit that Smith found invaluable was being able to get into the property as soon as they arrived at their final destination—even though it was close to midnight. “We showed up at the concierge desk and just picked up our key—it was that simple. We didn’t even have to stay in a hotel that first night,” Smith said. “The ease of getting into our new home, being able to turn in for the night without much fuss, and not worrying about anything was enormously gratifying,” she said. Smith and her family plan to stay in their apartment for at least six months, and possibly longer. The Smith family’s move provides an excellent example of using a tradi-
tional resource in a non-traditional manner. “We were thrilled with being able to leverage the services offered by a corporate housing provider,” says Smith. “It has been a fantastic experience. Knowing the mechanics was helpful because it made the logistical transition so easy.” Corporate housing has long been the perfect solution for temporary accommodations for traveling business executives, and the industry continues to evolve to be a solution for a variety of uses, especially when traveling with families. The convenience it provides eases the transition, reducing the stress and anxiety for many families. Corporate housing also accommodates a number of unique needs such as pets. With most
properties located in residential areas, families are close to recreation, entertainment, and necessary facilities such as grocery stores, medical offices, and schools. In addition, corporate housing is flexible. The Smiths’ experience demonstrated that corporate housing organizations can provide as much or as little assistance as needed. It is a full-service solution customized for the client’s needs. That kind of flexibility can lead to more successful relocations and work-life balances, which in turn create more satisfied and successful employees. Amanda Cook is director of membership and marketing for the Corporate Housing Provider’s Association (CHPA). She can be reached at +1 317 328 4631 or e-mail email@example.com.
MOBILITY/SEPTEMBER 2010 41
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Families on the Move:
Challenges and Opportunities BY LIZ PERELSTEIN
t was the middle of a good year. My daughter, Sarah, had made a successful transition to middle school in the sixth grade, and my son, Dan, was thriving with a wonderful teacher in grade four. I just had been re-elected to our school board, my job was going well, and my husband was succeeding in his. All of us were solidly entrenched in our suburban New York, NY, community when my husband was approached to consider a job in London, United Kingdom. When he asked whether I would be willing to move, I said, “go for it; if it is meant to be, it will be.” I had no idea how much those words would change our lives. You know what the personal trainers say: “no pain, no gain.” Now a member of the “global mobility” world, I am almost embarrassed that my only overseas assignment already was 12 years ago in a Western, English-speaking location—London—and for a predictable three years. But for me and for my family, even that relatively sheltered adventure provided an abundance of pain, out of which came infinitely more gain.
Decisions, Decisions, Decisions The first thing that changed is that everything became a decision. Our lives had been routine; we all went about our schedules on a daily basis. Suddenly, we had to ask ourselves whether we wanted to live in the city or the suburbs, to send the kids to local or international school, and whether to rent out or sell the house. We had major decisions to make on a daily basis. The multitude of details to resolve in only two months almost numbed the pain of leaving friends and family, worrying about our elderly parents, and acknowledging the grief we had imposed on our children. Our first decision was when to tell the kids—and how to get them to buy-in if we decided to make the leap. 42 MOBILITY/SEPTEMBER 2010
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Global mobility professionals who undergo their own international moves traditionally emerge with a sympathetic and empathetic viewpoint of the transferees and their families they themselves manageâ€” but only after what is commonly an arduous journey. Perelstein relates her own experience crossing borders, and how this experience led to the creation of her own educational consulting company. MOBILITY/SEPTEMBER 2010 43
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We painted a rosy picture of the life we would have in London. On our look-see visit—the kids’ first trip to London—we took them to the theater and Harrods between housing and school visits. We had been naively hopeful, but our efforts did not close the sale. Then we promised the kids a dog in exchange for the rabbit they were leaving. But Maxx, soon to become the love of our lives, still did not replace Sniffy, and we soon learned that neither new friends nor travel could replace longstanding relationships. Only when the movers came to pack our boxes and I found myself lying on the laundry room floor in tears did I face the ache that comes with leaving a rich life for an overseas assignment. A professional by identi-
44 MOBILITY/SEPTEMBER 2010
ty, when I found myself in tears once again, spending my days cleaning up after Maxx while my husband was at work and my children at school, I realized that not only was leaving hard but that a prolonged adjustment in a new country followed. Our greatest fears were realized when not all of our elderly parents survived our overseas assignment. And, not until my family repatriated and my daughter came home from her first day at her former school and said, “it’s not cool to be smart here,” did we understand that the assignment had changed our children, and ourselves, in a fundamental way.
Things Not Asked We did not know what questions to ask before moving to London.
The kids. Shopping for school supplies in an attempt to stimulate enthusiasm before the move, we bought new, shiny three-ringed binders and 8.5” by 11” paper. After the embarrassment of bringing the wrong school supplies for the first day of school, they were quickly discarded for two ringed binders and A4 paper. My journey. As a full-time working mother, I had assumed that after arriving in London I could just get a job. I knew enough to do my research in advance and to learn that my husband’s work permit made this possible. After only two months in London my job search was successful. Replicating the child care choice which was familiar to me, I hired a nanny. And then a second nanny.
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Creating an Expatriate Spouse/Partner Support Program
he Worldwide ERC® one-hour online course, “Creating an Expatriate Spouse/Partner Support Program,” explains the purposes and key elements of solid spouse/partner programs for international assignees. Participants will learn strategies that uncover the critical support needs of families proposed for international assignment; the challenges associated with arranging visas and work permits for spouses or partners; the role of cross-cultural support in ensuring a smooth transition and adjustment; the type of support needed during transition and settling-in; and elements of a strong job search and career continuing education support program for the spouse or partner. For more information, and to take the course, visit www.WorldwideERC.org and click on the silver “Education and Training” button. Please note that this course counts as one continuing education (CE) credit for Certified Relocation Professional (CRP®) and Global Mobility Specialist (GMS™) designees. If you have any trouble finding what you are looking for on www.WorldwideERC.org, please do not hesitate to contact our web team at +1 703 842 3400 or e-mail webmaster@WorldwideERC.org.
And then a third nanny. When Wednesday’s early dismissal resulted in a weekly call from the school office to inform me that my son had not been picked up, I began dreading Wednesday before the previous weekend. Without friends or family I had no safety net—there was no one to collect my son if the nanny was not there on time. After two months of stomach aches, I resigned from my new job. It was the first time I ever had quit anything. I could write a book about our wrong assumptions, the mistakes we made, the opportunities we missed. But the point is clear. Every step of the move was hard. So how could we feel that our London experience was worth all the anguish? Moving to London was a pivotal, life-changing experience for each member of our family. Why?
Because you have everything to gain when you have nothing to lose. So we could take risks and learn and grow from them. Because when no one else understood how we felt, we relied on each other. Because learning that we could master change encouraged each of us to evaluate every part of our lives and identities, and to recognize that we should love what we do every day. As a result of our experience in London, my son reinvented himself entirely. He discarded his Michael Jordan posters and accepted himself as a music/theater/math/science kid. Finally comfortable in his own skin, he evolved into a double major in music and engineering in college. Because we discovered that we could survive loneliness and loss—and come out of it stronger. And, therefore, we could make inde-
pendent decisions, rather than follow the crowd. Nothing could be worse than sitting alone in a school cafeteria for six weeks without anyone to talk to. Having done that, my daughter Sarah learned that eventually she would make friends—who have become lifelong friends—and what to expect next time she went through a process of starting over. Because relocating to London taught all of us that we could move on a dime and start again— and, in today’s world, who knows if any of us may have to. My daughter, who went to college in Houston, TX, was put to the test right after Hurricane Katrina in New Orleans, LA, when Houston, too, anticipated a hurricane. Her American friends all hunkered down to wait. She and three other friends—all global nomads—packed a car with their jewelry and hair straighteners (although they forgot to pack underwear) and headed out. Although the storm proved insignificant, the kids who had moved around knew how to survive. Because last, but hardly least, we learned that not everyone is American. Our kids easily can adapt in other countries if they need or want to. And they understand how to work with people from other cultures in the global workplace into which they have become young adults.
How Lemons Became Lemonade For Me Eventually I learned that I could not—and would not want to—simply replicate my former life in a different culture. The rules of the game, even in a Western and English-speaking country, were entirely different; which meant I had to do something MOBILITY/SEPTEMBER 2010 45
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unique. Even as a former educator I knew that finding and adapting to school in a new country was emotionally and actually challenging. With nothing to lose I tried something that would have frightened and embarrassed me at home. I began visiting schools and learning about the British, American, and International curricula. At the same time, I developed a brochure about my educational consulting company, School Choice International, and phoned an expatriate journal to let them know about this innovative business. Surprisingly, they published the article. I sent my brochure and the article to a wide range of Fortune 500 companies that had a London presence. One called me and said they would try me on a one-off basis to help a family relocating from the United States to find schools for their children. And so, School Choice International was born. Combining my education background, experience as an expatriate, and the entrepreneurial skills I did not know I had has given me 12 years of unparalleled work satisfaction. I started School Choice International based on needs I identified through personal experience. With nothing to lose I developed a business that has grown to 17 employees and 90 consultants in all the key expatriate destinations worldwide. When we returned from London, my daughter turned to me and said, “now I know Mom, that there’s nothing I can’t do.” Yes we experienced pain, but in that simple phrase she spoke for all of us. And I could not ask for anything more. Liz Perelstein is president of School Choice International, White Plains, NY. She can be reached at +1 914 328 3000 or e-mail firstname.lastname@example.org. 46 MOBILITY/SEPTEMBER 2010
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2010 U.S. Transfer Volume & Cost Survey BY MARIAM LAMECH
Worldwide ERC® is engaged actively in the study and benchmarking of employee mobility data, and the Worldwide ERC® Transfer Volume & Cost Survey is an annual enterprise that offers analysis of data pertaining to employees transferred domestically within the United States. Lamech offers analysis of the 2010 survey results illustrating mobility activity within the United States.
his year’s Worldwide ERC® Transfer Volume & Cost Survey results show that while transfer activity in 2009 declined significantly from the prior year, companies are projecting an uptick in their transfer volumes for 2010. The 136 member organizations responding to this year’s survey relocated nearly 40,000 employees in 2009 averaging 287 transfers each. These organizations anticipate relocating an average of 299 employees by the end of 2010. Forty percent of the respondents reported having between 101 and 500 relocations annually, while only 11 percent report moving more than 500 transferees. Companies with 100 or fewer domestic transfers per year comprised the largest group and account for 49 percent of the respondents.
Transfer Activity Transfer activity in member organizations has been on the decline since 2006. Between 2006 and 2007, overall U.S. domestic relocation volume dropped 4 percent and, between 2007 and 2008, transfer activity declined an additional 3.4 percent. However, between 2008 and 2009, there was a precipitous drop of 22 percent in transfer volume—from an overall average of 368 employees to 287.
FIGURE 1: Represented Industries Percent of Organizations TYPE OF INDUSTRY
Aeronautics, aerospace, electronics/electricals, business machines, computers, computer software, computer services, semiconductor
Automobiles, automotive parts, industrial machinery/equipment, metals and alloys, transportation
Chemicals, plastics, rubber/rubber products, cement products, wood and paper products, glass/glass products
Communications, telecommunications, publishing, printing
Government, military services, public utilities, non-profit
Professional services: accounting, auditing, consulting, law, advertising
Financial services: insurance, banking, finance
Petroleum, gas, refining and distribution, pipeline construction, engineering, mining, forestry, energy, construction
Retail, wholesale, distribution, consumer products, manufacturing
Pharmaceuticals, health care, medical devices/diagnostics
FIGURE 2: Breakdown of Companies by 2009 Transfer Volume Percent of Organizations
MORE THAN 2,000
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FIGURE 3: Trend in Transfer Volume Over Time
Reluctance to Relocate Organizations continue to report growing employee reluctance to relocate. Three-quarters of respondents report having at least some minor problems with employee reluctance to relocate. Forty-three percent cite 48 MOBILITY/SEPTEMBER 2010
Current Employees and New Hires 300 Average Number of Relocated Employees
During these years, new hire activity accounted for most of the decline, decreasing more than 36 percent between 2008 and 2009. Current employee activity, on the other hand, declined 15.2 percent during the same period. However, the decline in current employee transfer volume between 2008 and 2009 was far greater than the 2.3 percent experienced between 2007 and 2008. For 2010, respondents project an overall increase in transfer volume of 4 percent from 2009. This projection includes an increase in current employee transfer activity, which is anticipated to be nearly 6 percent above the 2009 level (up from an average of 212 current employee moves to 224). New hire activity in 2010, however, is not projected to change from 2009. Nearly three-fourths (74 percent) of employees relocated in 2009 were current employees and, according to the projections, the ratio of current employees to new hires will be similar in 2010. In addition, the percentage of transferees was split evenly between homeowners and renters in 2009. The decrease in the percentage of renters from 2008 (56 percent of the relocated employees were renters) is likely a consequence of the significant decrease in the movement of new hires, many of whom are renters. Respondents also report that 83 percent of their U.S. domestic transfers in 2009 were interstate moves while only 17 percent were intrastate.
50 0 2000
FIGURE 4: Reluctance to Relocate Percent of Organizations* Slowed real estate appreciation/depressed housing market at old location
Old location home is in a negative equity situation
High housing cost areas
Employee/family resistance to move
High cost-of-living areas
Spouse reluctance to leave his/her job
Less than adequate relocation policy
Employees satisfaction with current position
2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
* Percentages do not total 100% due to multiple responses. Based on 95 companies that are experiencing problems with employee reluctance to relocate.
moderate to major problems in this area (compared to 41 percent in 2009 and 33 percent in 2008), while another 33 percent report minor difficulties. As expected, the difficult housing markets prevalent throughout the country are directly implicated in the top two reasons for employee reluctance to relocate. Ninety-three percent of the responding companies with reluctance problems report that “slowed real estate appreciation/ depressed housing market at the old location” is the primary reason their
employees are averse to moving (similar to the 95 percent figure reported in 2009). The second reason is that the transferee’s old location home is in a negative equity situation (reported by 88 percent of respondents). Running a distant third on the list of reasons for employee reluctance to relocate is “high housing cost areas.” Though real estate markets have declined around the country, there still are areas in which housing costs remain relatively high, and 39 percent of respondents indicated this
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FIGURE 5: Trend in Homeowning Transferees Choosing to Rent at New Location Percent of Organizations Don’t know
No discernable change
A significant increase
Somewhat of an increase
was an important reason behind employee reluctance to relocate (this is a 10 percentage point increase from the prior year).
Pre-decision Assessments In these uncertain times, some employees are in financial situations that make it difficult for them to relocate. As reported earlier, nearly 40 percent of respondents said their employees were reluctant to relocate because their homes in the old location were in a negative equity situation. Sometimes employees do not discover this until they already have accepted the transfer offer and the relocation is underway. To tackle this issue, companies sometimes provide a pre-decision assessment to help candidates determine if a relocation would be feasible (financially and otherwise) if offered. Nearly 40 percent of the responding organizations report that their organizations provide candidates with a pre-decision assessment—9 percent offered such assessments prior to 2007. Four percent added this provision in 2007, while 22 percent did so in 2008 or 2009 at the height of the economic and real estate crisis. The
remaining 4 percent is offering it for the first time this year.
Renting Versus Purchasing a Home in the New Location Due to the problematic housing markets of the past few years, homeowning transferees and their companies have experienced a variety of challenges causing both groups to search for new solutions. Home rental (versus home purchase) in the new location is one solution that may help both employees and their companies to remain mobile while keeping costs in check. Two-thirds of organizations reported an increase in homeowning transferees choosing to rent at the new location rather than buying a new home (14 percent witnessed a significant increase while 53 percent reported only somewhat of an increase). Thirty one-percent noted no discernable change and the remaining 2 percent were unaware. One-third of the responding organizations report encouraging homeowning transferees to rent at the new location if they are likely to be relocated again. Nine percent have incorporated this into their formal policy
while the rest do so on a case-by-case basis. Twenty-seven percent of the companies (12 companies) that encourage homeowning transferees to rent at the new location offer relocated employees a financial incentive if they agree to rent for a specified period of time. For two-thirds of these companies, the time period ranged from 12 to 72 months, with 24 months being reported by half of the respondents. The remaining companies indicated that the time period varies. The amount of the incentive varied widely. Two companies offer a lump sum averaging $5,500 and another two companies provide a lump sum equal to a percentage of the employee’s salary—averaging 21 percent. Other incentives provided include 50 percent of rental amount with a cap, rental bonus equal to one month’s rent, and a rental subsidy.
Policy Changes Seventy percent of companies reported having made at least one change to their relocation policies in the past two years. Illustrated in Figure 6, the reported policy revisions continue to revolve around solutions to address homesale challenges. This is not surprising, as during this time period, housing prices had continued to fall across the nation. Data from the National Association of Realtors® (NAR) showed that the average price of an existing home dropped from $266,000 in 2007 to $242,700 in 2008 to $216,900 in 2009. The most frequently cited policy changes were: an added or enhanced bonus/incentive for transferees who found buyers for their homes; an added requirement for homes going through the company’s homesale program to be listed within a certain MOBILITY/SEPTEMBER 2010 49
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FIGURE 6: Policy Changes* PERCENT OF ORGANIZATIONS
TYPE OF CHANGE
Added or enhanced a homesale bonus/incentive for employees who find buyers for their homes
Added a requirement to homesale program that employees list their homes within a certain percentage of the buy-out offer (or BMA or appraisal) in order to qualify for homesale assistance
Extended temporary living period
Added a requirement to homesale program that employees use selected real estate agents to market their homes in order to qualify for homesale assistance
Modified policy to provide loss-on-sale assistance in greater dollar amounts
Limited the availability of the guaranteed buy-out provision to selected employees
Added or enhanced duplicate housing assistance for employees who purchase a home in the new location prior to selling the one in the old location
Added loss-on-sale assistance
weeks (29 days) to report to the new job—10 fewer days less than last year. Responses ranged from five days to 90 days and, as in the past, the most common response was 30 days. Having peaked in 2008 with the economic crisis, the overall time allowed for employees to accept a transfer offer and report to the new location has declined during the last two years.
Modified policy to provide loss-on-sale assistance to more employees
Added or enhanced home fix-up allowance for employees marketing their homes
Added or enhanced a homesale incentive for buyers
Increased lump sum for temporary living
Increased use of appraisals in homesale program
Modified policy to provide loss-on-sale assistance in more limited dollar amounts
Note: Costs reflect national averages and include all industries and transfer volumes. Some industries or programs will experience higher or lower average costs than those reported here. The reported figures represent only general trends. Homeowner costs. In 2009, the average cost to relocate a current employee homeowner increased 18 percentage points from $76,600 in 2007 to $90,017, while the average cost to relocate a new hire homeowner increased from $61,929 to $66,610 (8 percentage points) for the same time period. Renter costs. While homeowner costs increased during the past couple of years, the cost to relocate renters decreased. The average cost to relocate a renting current employee in 2009 was $20,750—7 percentage points lower than the $22,212 reported in 2007. There was also a 3 percentage point decrease in average cost to relocate new hire renters from $18,355 in 2007 to $17,877 in 2009. Component costs. Given a list of cost components for current employee relocation assistance, companies were asked to indicate the average cost of each component and base the figures only on the number of employees who actually had received
Added or enhanced a guaranteed buy-out provision to homesale program
Changed methodology to determine the guaranteed offer (e.g., if three appraisals are needed, average two lowest vs. two highest)
Added preference or requirement that employees select appraisers from a list of approved appraisers
Added or enhanced mortgage subsidy
Added or enhanced coverage for home purchase closing costs
Added or enhanced an equity loan/advance
Based on 95 companies that reported making changes during the past two years. *Percentages do not total 100% due to multiple responses.
percentage of the company’s buyout offer; and extended temporary living. About one-third of those who made policy changes cited “other” types of changes, of which there were a wide variety. Examples include addition of imported drywall exclusion, addition of repayment agreement, addition to company list of the types of homes that are ineligible for the homesale program, and elimination of points and loan origination fees as reimbursable closing costs.
Transfer Acceptance and Reporting to the New Job This year, the average amount of time employers allow for transferees 50 MOBILITY/SEPTEMBER 2010
to consider and accept a transfer offer, as well as to make the move to the new location, declined by one week compared to 2009. Today, employees are allowed, on average, a little more than six weeks (45 days) to accept the offer and move. On average, organizations permit their employees just over two weeks (16 days) to consider a formal transfer offer—an increase of three days from last year. Responses ranged from two to 120 days, with 14 days being the most common response (same as last year). Once the employee has accepted the transfer offer, employers allow the transferee an average of four
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Conclusion The 2010 survey certainly reveals steep declines in transfer activity between 2008 and 2009, and some significant increases in costs. These results are unsurprising as the economy struggles to recover from the worst recession since the Great Depression. The turbulence of the past few years has driven organizations to continually seek policy and program options that curtail their costs. In addition, challenging housing markets and negative home equity positions continue to fuel employee reluctance to relocate, which continues to be a problem for companies. The upside for 2010 is that several areas are showing signs of a slowly improving economy. This survey found that companies are anticipating
Worldwide ERC® Research Resources
f you are looking for more surveys and research pertaining to employee mobility, either U.S. domestic or international in focus, visit our Resource Library on the Worldwide ERC® website. To get there, type www.WorldwideERC.org/Resources or click the silver “Resources” button from any page on the Worldwide ERC® website. From there, browse the “Research” section where you will find links to Worldwide ERC® reports and surveys dating back to 2003, most of which you can download for free if you are a Worldwide ERC® member. And, the research available is not limited just to our own; the Research Index is a growing library of valuable studies from other organizations that you will find of particular help and interest. If you have any trouble finding what you are looking for on our website, please do not hesitate to contact our Web Team at +1 703 842 3400 or e-mail webmaster@WorldwideERC.org.
FIGURE 7: Trends in Acceptance and Reporting Periods Over Time 60 Number of Days
assistance. Cost comparisons have been made with 2007 costs. Averages for six major component costs increased, i.e., loss-on-sale assistance, shipping household goods, federal tax liability, miscellaneous expense allowance, temporary living at the new location, and spouse employment assistance. The five components with decreased averages include purchase closing costs, bonuses/incentives given for employee-generated homesales, duplicate housing assistance, homefinding trips, and travel and lodging at the time of the move. The challenging housing market continued to drive the increases in loss-on-sale assistance, which jumped 52 percentage points between 2007 and 2009 to $30,671. Connected with the increased loss-on-sale payments is the increased amount companies spent on federal tax liability assistance, which rose 34 percentage points to $12,046 in 2009 compared to $8,957 in 2007.
50 40 30
Accept/reject transfer offer
Report to new work locations
FIGURE 8: 2009 Average Relocation Costs $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 0
Current Employee Homeowner
New Hire Homeowner
Current Employee Renter
New Hire Renter
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FIGURE 9: Average Component Costs* COMPONENT COSTS
Loss-on-sale assistance Federal tax liability Shipping household goods Purchase closing costs Miscellaneous expense allowance Bonuses/incentives given for employee-generated homesales Temporary living at new location Duplicate housing assistance Homefinding trips Spouse employment assistance Travel and lodging at the time of the move
$30,671 $12,046 $11,900 $7,815 $6,464 $6,280 $5,515 $4,995 $2,056 $1,485 $1,392
$20,243 $8,957 $11,680 $8,967 $5,466 $6,408 $5,377 $5,244 $2,375 $1,351 $1,498
52% 34% 2% -13% 18% -2% 3% -3% -13% 10% -7%
*Averages are based on transferees who actually received assistance.
an increase (albeit small) in transfer activity over last year. The American Moving & Storage Association (AMSA) recently reported that the overall volume of household goods shipped between January and May of 2010 was up 4.2 percent from the same period a year ago and that corporate relocations were up nearly 2
52 MOBILITY/SEPTEMBER 2010
percent. In addition, data released in late June by Standard & Poorâ€™s for its S&P/Case-Shiller Home Price Indices show that the annual growth rates of all 20 metropolitan statistical areas (MSAs) tracked, as well as the 10- and 20-city composites, improved in April when compared to March 2010. Also, the 20-city com-
posite was up 3.8 percent from April 2009, while the 10-city composite was up 4.6 percent. While the data does not show that housing prices are in sustained recovery, the news is hopeful. Mariam Lamech is research manager for Worldwide ERCÂŽ. She can be reached at +1 703 842 3426 or e-mail mlamech@WorldwideERC.org.
cook_MOBILITY 8/12/10 10:56 AM Page 6
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Beyond Chocolate, Gruyere Cheese, and Breathtaking Mountain Scenery:
an Overview of Employee Mobility in Switzerland BY ANNE-CLAUDE LAMBELET, SGMS
Beyond its familiar stereotypes of chocolate and cheese making, its magical scenery, and its banking institutions, there is a lot more to Switzerland than meets the eye. In fact, writes Lambelet, there are some very good reasons to consider relocating a business unit here or even using Switzerland as a base to manage European operations, particularly now, as it offers some advantages that are unique in Europe. irst and foremost, Switzerland offers a fiscal climate that is extremely favorable in comparison with other European countries, particularly those in the European Union, which Switzerland voted against joining in 1972. These fiscal advantages are not solely limited to the multinational organizations setting up operations
locally—and indeed some more remote regions in Switzerland do benefit from additional tax breaks set up to support their development—there also exist specific advantages for toplevel executives’ personal tax that can help secure buy-in from senior management affected by a relocation project. Traditionally, the labor relations climate in Switzerland is well bal-
anced between the rights and responsibilities of employers and employees, particularly in comparison with the surrounding EU. In addition to access to a highly productive, highly skilled, welleducated multilingual local workforce with a strong work ethic, employers benefit from very flexible employment legislation. For instance:
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General Overview Switzerland at a glance: Area: 41.3 km2 Population: 7.6 million Density per km2: 492 Capital: Berne Languages: Swiss German (64 percent) French (20 percent) Italian (7 percent) Rhaeto-Romansh (0.5 percent) Other (8.5 percent) Life expectancy: 81.7 years GDP: US$ 423.6 bn GDP per capita: US$ 58,084 Unemployment: 3.9 percent
• no general entitlement to severance pay in addition to notice period wages; • short notice period (one to three months); and • low compulsory social contributions. Cost of social security and other payroll withholdings: employer’s share is 15.5 percent of gross salary, and employee’s share is 11.7 percent of gross salary. The business support infrastructure, including transportation, information technology, telecommunication, and office/laboratory/ manufacturing sites and space is well developed. It should be noted, however, that as a consequence of its success in attracting foreign companies, some of the major cities and business hubs do suffer from a chronic lack of commercial office space. The next definite positive, as all recruiters will tell you, is that Switzerland as a destination of choice is an easy sell should you need to augment your local workforce by foreign recruiting and hiring (subject to federal and cantonal work/residence permit approval procedures). 56 MOBILITY/SEPTEMBER 2010
If all these advantages make it savvy for an employer to relocate, what is the situation for relocated employees? After all, their acceptance of the transfer and ability to embrace and function effectively in their new environment is critical to business continuation and the overall success of a relocation project. Switzerland boasts a daily living environment that is among the best in the world. The quality and variety of housing, international and local schools, and recreation and entertainment opportunities are top-notch. That said, the process of finding and securing housing in general, and placement in international schools in particular, requires expert help. Because of Switzerland’s attractiveness as a place to do business and to live, pressure on the housing and schooling offer are at unprecedented highs. The situation is manageable, however, provided adequate lead time is built into project planning, and destination service specialists with good networking contacts in the local real estate and academic communities are used to complement relocation management compa-
nies (RMCs), project management teams, and HR departments. Environmental protection is at the highest level in Switzerland. One look at its pristine mountains, lakes, and rivers will convince anyone that this is a place where natural resources clearly are seen as a heritage to be preserved and enhanced. Safety and security also are a high priority and are well managed in Switzerland. The excellent rail and highway systems make traveling around Switzerland easy and safe. Crime levels are extremely low by any standards, and law enforcement generally is strict but appropriate to the situation. With a local cultural heritage that is accepting and tolerant of foreigners, Switzerland has long been known as a haven for refugees (One in five inhabitants of Switzerland is a foreign national—this amounts to nearly 1.5 million people. In some of the business hubs such as Geneva, almost one-third of the population are foreign nationals, making for an expatriate-friendly environment.). It is also no accident that the League of Nations, forerunner of
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today’s United Nations (UN), was headquartered here. The International Committee of the Red Cross was founded here, and today Switzerland continues to host the European headquarters of the UN and the global headquarters of several international organizations including the Red Cross/Red Crescent, World Health Organization, and International Labor Organization. From a “doing business” perspective, Switzerland’s geographic location in the center of Europe makes both business and personal travel to other European locations relatively convenient and quick. London, Paris, Rome, Brussels, and Amsterdam, for example, are all within one to one and a half hours of Zurich and Geneva by air. By train, one can reach most of Europe within a few hours. The two major airports in Zurich and Geneva benefit from multiple long distance courier traffic, and Geneva is a hub for easyJet, a low-cost airline covering multiple European destinations. And last but not least, Switzerland is marked by a “business-friendly” attitude by government officials at all levels. Because Switzerland is a confederation, most political and economic policy decision-making and implementation occur at the cantonal level. Most cantons have an “economic promotion” department, which is specifically tasked with helping businesses considering relocation become familiar with all aspects of the canton’s commercial infrastructure, tax and legal requirements, work/residence permits, site selection, housing and schooling, recreation and entertainment venues, spouse employment opportunities, and the like.
Business Clusters—Major Cities Attracting Foreign Organizations Beyond its traditional sectors of excellence—banking and finance, watchmaking, and luxury goods—
Switzerland has a leading position among industrialized countries in enabling the acquisition of new skills and technologies in the growth sectors of the future. This is thanks to
An interview with Pierre-François Unger, State Councillor in charge of the Department of Regional Affairs, Economy, and Health, Republic and State of Geneva. hat are the factors that make Switzerland so attractive as a location for setting up an EMEA HQ or business? A number of images come to mind when you think of Switzerland: fine watches, precision machines, banks, or exquisite chocolate. In all of these domains our country developed an expertise PIERRE-FRANÇOIS UNGER based on heritage and values such as reliability and excellence. Capitalizing on these assets, modern Switzerland developed an extraordinarily diverse economic base made of a number of high added-value activities. This attracts a multitude of multinationals from all over the world, choosing Switzerland for their world, EMEA, European headquarters, or simply for doing business. But, besides a highly developed business community with strong values, what companies find in Switzerland is an exceptional business environment made of assets rarely found together. Indeed, here they find an international business base, centrally located in Europe and well connected to the world, with a highly multilingual and motivated workforce—all of it in a preserved environment, with a great quality of life and all services available within direct reach. Finally, our framework conditions for business (including but not limited to such aspects as business freedom, productivity, taxation) are clearly recognized as being among the most favorable for enterprise development. That’s why companies choose Switzerland and stay here for the long term. What kind of challenges does this attraction generate for the cantons in terms of infrastructure? Our challenges are linked to our capacity to preserve the exceptional business environment Switzerland has developed over the last decades. Indeed, we strive today to offer the best possible business base in the best environment. This means we need to develop further infrastructures, to invest in innovation capacity and people and, at the same time, look after preserving the kind of assets we have here and that represent “a unique selling proposition:” our quality of life, the stability and security for which Switzerland is famous all over the world. Therefore, it is a long-term challenge that needs continuous attention from authorities.
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Destination of Global Headquarters that Moved Outside Their Country of Origin2 As % of all global headquarters that moved to these countries
60% 50% 40% 30%
n= 35 Global Headquarters Source: National Authorities, trade organizations and Arthur D. Little desk research. 1) Switzerland is the most attractive place for global headquarters of European companies. For U.S. and Asian companies, Switzerland also is an attractive location for reginal (typically Europe, Middle East & Africa, and even Asia) headquarters. 2) Statistical Analysis based on Headquarter Database Arthur D. Little (Switzerland) Ltd.
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the geographic concentration and intensive links between firms and with knowledge institutions in specific technology fields. Such highly competitive clusters also are highly appealing to new investors. Today and in the future it is the following new technologies and clusters that act as the motors of the Swiss economy:
• biotechnology; • medical devices; • information and communication technologies (ICT); • micro- and nanotechnology; • environmental technology; and • shared services. Switzerland maintains numerous incubators and technology parks with state-of-the-art facilities to promote
innovative products and services in any of these areas. Berne. The federal capital, Berne, is home to all the diplomatic missions and institutions, including the Universal Postal Union. Basel. Historically the birthplace of the Swiss pharmaceutical industry, this region, which shares common borders both with France and
Work Permits—a Requirement for All Foreign Workers E.U. Nationals: Since June 1, 2002, Switzerland and the European Union entered into bilateral agreements that have considerably facilitated the free flow of labor between Switzerland and EU countries (Citizens from Estonia, Hungary, Latvia, Lithuania, Poland, Czech Republic, Slovenia, Slovakia, Bulgaria, and Romania are subject to quotas.). To work in Switzerland, a work permit is required. There are several kinds of work permits: frontalier, temporary, or permanent workers. The main work permits are the following: 1 – Authorization for short stay – L permit The L work permit allows to undertake any paid activity anywhere in Switzerland. The L work permit is valid for three months up to one year. 2 – B work permit The B work permit allows to undertake any paid activity anywhere in Switzerland. The B work permit is valid for five years and may be extended. 3 – Frontalier workers – G work permit The G work permit allows to undertake any paid activity anywhere in Switzerland. The foreign worker under a G work permit must be domiciled in another EU or European Economic Area (EEA) member state. The G work permit validity is variable in cases of temporary work contract, or of five years renewable in case of permanent work contract. For further information, contact the cantonal aliens police, or cantonal immigration and labor market authorities to get more comprehensive documentation concerning requirements and specific regulations applicable in the canton your are targeting as your new location. Nationals from Outside the EU/European Economic Area: Foreign nationals from outside the EU/EEA are subject to strict quotas. Requirements are sometimes hard to reach
and the most qualified and graduated applicants are likely to get a work permit in Switzerland. An employer in Switzerland who wishes to hire a foreign national from outside the EU/EEA must prove to the Swiss authorities that there is no Swiss or European candidate to fill the position. The job offer must first be advertised in local employment networks, then on the European employment network. If no Swiss or EU candidate applies or meets the eligibility criteria for the position, the application for a residence permit for the foreign worker can begin. Initially, the employer in Switzerland or the applicant files an application form to the cantonal immigration and labor market authorities. This is a three-step process inclusive of a cantonal approval, a federal approval, and the reception of a work visa in the consular office of the home country. To find out more about the agreement on the free movement of persons in Switzerland, please refer to Swiss Migration Office website at http://www.bfm.admin.ch/. Detached employees (working in Switzerland but remaining on foreign payroll) always will be considered as thirdcountry nationals even if EU/EFTA nationals and quotas will apply for them, too. Special procedures apply to employees of international organizations based in Switzerland such as the UN, WHO, or IOC. For more information, please refer to the Federal Office for Migration website at http://www.bfm.admin.ch/. All the large immigration firms are represented in Switzerland and many of the local destination service providers among the members of SARA (the Swiss Association of Relocation Professionals) also provide inhouse immigration services. It is highly recommended to select a service partner with local expertise and a strong relationship with the local authorities handling the work permit process, as this will help facilitate any difficult cases. MOBILITY/SEPTEMBER 2010 59
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witzerland is a renters’ market. This is partly because of the high cost of real estate and the mortgage loan conditions. More than 60 percent of the population in Switzerland is renting their lodgings, with peaks of 80 percent in specific locations (Geneva, for instance). Rental contracts in Switzerland normally require a oneyear term for apartments and three to five years for houses. So called diplomatic clauses, which in fact can be invoked only if a tenant is able to prove he or she is leaving the city and region, may not always be accepted by landlords. Leases follow a standard government approved format as well as the regulations governing the rights and responsibilities of tenants. Any additional clauses should be carefully considered. Although there are search engines and real estate agent’s websites to consult, not surprising, in a market where suitable properties are at a premium, the housing offer is very limited by comparison to other larger international business centers. It is an owners’ market with a plethora of prospective tenants, so high expectations about renovation or home improvements may lead landlords to choose another less demanding tenant. Your choice for a destination service provider should be based on a local company that has not only developed strong links with the real estate agent’s market but also is conversant of, and connected to, all other sources of rental offer in the market. The availability here is so limited that you may want to review your usual service delivery model, as two days (faceto-face) will be sufficient no matter what the housing budget to cover the whole of the housing offer in any specific range of accommodation. It should be noted that only a portion of the market is available through the Internet—those listings often
60 MOBILITY/SEPTEMBER 2010
are out of date as properties literally rent within hours of being visited. It is important in that type of market to conduct a thorough review of needs and setting of expectations. No property previews are possible, as what is on the market today will not be tomorrow and expatriates must be made aware that their turnaround time to lodge an application for a lease is same day and that there will be a lot of competition, so no guarantees can be given until the landlord issues a lease. In this type of marketplace, it is not surprising that there are beginning to be apartment hunting scam postings on Craigslist. These are highly organized operations and exist purely to relieve you of your money. When budgeting for a relocation project, corporations need to: • take into account expatriate accommodation costs; • confirm that any accommodation and utilities cost data used is location-specific (because of variances) and updated at least on a quarterly basis; • develop a risk model for building a temporary accommodation pool to support employees who may, for whatever reason, not find permanent housing immediately; • plan for the up-front funding of guarantees (three months rent) and the first month’s rent, as well as for a loan process to recuperate blocked funds from employees; and • ensure that if they plan to localize employees within a specific period of time, they either build a phase-out model or communicate clearly with employees about discontinuation of allowances. In general in Switzerland, a real estate agent will ensure that rent represents no more than 25 percent of a prospective tenant’s salary.
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Germany also is a hub for transportation/logistics. Some of the world’s favorite brands are produced in the Greater Geneva Berne area (GGBa), which has dominated the nutrition and consumer goods sector on a global level for decades. GGBa has a long association with Toblerone chocolate and other household names, including Ovomaltine (or Ovaltine outside Switzerland), which is consumed in 100 countries and continues to have its research base in Berne. The canton also is home for Nestlé’s Nutrition Production Center, recently specializing in milk products, probiotic baby food, dietary nutrition, and special foods for the health care sector. This area also is world leader in high value-added sectors such as micro- and nanotechnology and precision engineering. Berne and Fribourg. The presence of generations of highly skilled engineers has enabled the creation and growth of many companies in the field of information technology, which obviously creates a network of skills, a cluster. This region is a haven for research and development projects. Fribourg is home for Nestlé’s Chocolate Centre of Excellence. The region of Fribourg also is known for bringing together leading chocolatiers, sensory experts, and packing designers to create some of the world’s finest and most innovative chocolate. Geneva and Zurich. The two major business destinations, they stand respectively as second (ZH) and third (GVA) in Mercer’s 2010 “Quality of Living Survey” in major cities. As the location for two-thirds of the UN’s activities with the largest concentration of UN personnel in
the world, at 8,500, Geneva makes a strong case in claiming to be the international city of Switzerland. All of the UN’s major fields of work are carried out in Geneva: health, labor issues, setting standards in intellectual property, human rights, humanitarian action and disas-
ter relief, economic, trade and development activities, disarmament efforts, science and technology, as well as research and training. The UN’s 26 constituent agencies with headquarters in the city include: • International Labour Organization (ILO);
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• International Telecommunications Union (ITU); • Office of the United Nations High Commissioner for Human Rights (UNHCHR); • World Health Organization (WHO); • World Intellectual Property Organization (WIPO); and • World Meteorological Organization (WMO). In addition to the WTO, whose base is in Geneva, a multitude of other intergovernmental organizations (IGOs) and approximately 300 non-governmental organizations (NGOs) have a long association with the city. This ensures a concentrated network of informal and institutional contacts in many of the region’s key industries. These organizations also include the International Air Transport Association (IATA), the International Organization for Standardization (ISO), the World Wide Fund for Nature (WWF), the International Committee of the Red Cross (ICRC), and the International Federation of Pharmaceutical Manufacturers & Associations. Found here are nearly 200 permanent missions of foreign countries offering invaluable informal and institutional contact opportunities 62 MOBILITY/SEPTEMBER 2010
and ensuring a positive business environment that can be felt well beyond the city’s boundaries. In addition, Geneva also is home for the headquarters of more than 120 multinational companies and a hub for private banking, luxury, trading, information and communication technologies, flavors and fragrances, fast moving consumer goods (FMCGs), and, lately, a number of leading hedge funds. Zürich and the Greater Zürich area. This region covers the area of a 60-minute drive radius from Zürich International Airport, i.e., approximately 5,790 square miles. The Greater Zürich area is home to a population of 3.7 million. The cantons of the Greater Zürich area are Aargau (AG), Glarus (GL), Grisons (GR), Schaffhausen (SH), Schwyz (SZ), Solothurn (SO), Zug (ZG), and Zürich (ZH). Zürich city is the largest city in Switzerland. The financial services sector is of fundamental importance for the Greater Zürich area and serves as a powerful international magnet. The Greater Zürich area represents the world’s third-largest insurance market; numerous Swiss and foreign insurance and reinsurance companies
also have their headquarters here. Switzerland also is known for its high insurance density: the Swiss are the best-insured people in the world. The premium income from private insurance in the Swiss market amounts to around CHF 53.5 billion, with the global figure totaling over CHF 133.5 billion. The high premium volume primarily stems from the attractive tax-saving opportunities presented by life insurance policies and pension plans. It is no surprise, therefore, that Switzerland is attractive for reinsurance companies. The Swiss stock market, SIX Swiss Exchange, is headquartered in the Greater Zürich area and plays a key role in Europe. It is one of the world’s most technologically advanced stock markets and is the European leader in international biotech and pharmaceutical IPOs. In addition, the Greater Zürich area actively supports medtech and biotech initiatives. The Lake Geneva region. This area includes the Cantons of Geneva and Vaud and locations such as Rolle, Lausanne, and beyond to Montreux and Vevey. It is a hub for pharmaceutical, biotechnology, and medtech organizations.
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This specialization is reinforced by the presence of Geneva and Lausanne Universities, and in Lausanne, one of the two sites of the Swiss Federal Institute of Technology (EPFL), the other (EPFZ) being based in Zürich. The International Olympic Committee was established in Lausanne in 1915. Today the GGBa, and particularly the canton of Vaud, hosts more headquarters of international sports federations and organizations than any other region in the world, such as the Union of European Football Associations (UEFA), the International Gymnastics Federation (FIG), the International Cycling Union (UCI), the Court of Arbitration for Sport, the World Anti-Doping Agency, and many others. In 2006, Lausanne opened the House of International Sport (MIS), the only center in the world that groups together under a single roof some 30 international sports federations and organizations, as well as a dozen enterprises active in the field of sports. This dynamic makes it pos-
sible for the various international sports leaders to tap significant synergies and to share skills and best practices. Nestlé’s main headquarters is in Vaud, along with other industry leaders including Nespresso, the world leader in coffee capsules, and other major multinationals including Philip Morris International, Cadbury Schweppes, and General Mills. Neuchatel. Traditionally a region specialized in watchmaking (and great wines), this Canton has become a hub for nanotechnology and precision engineering and a major location for research and development units.
Challenges With regard to infrastructure, Switzerland is the victim of its success. While the cantons generally are very supportive of companies seeking to open operations here, the volume of relocations during the past few years has caused some tension between the canton’s infrastructures and both the needs of businesses setting up and those of their employees. In many areas, commercial real estate
is available in limited supply. Construction of new premises is in the pipeline but there definitely is a gap between the demand and the offer, as well as severe competition for properties on offer. Expatriate housing also is at a premium and costs of residential rentals are high. This must be taken into account in the definition of housing support and allowances, especially in the case of permanent relocations where the initial housing allowance or support may be phased out after a couple of years, and it is important that the overall benefits package is sufficient to ensure a long-term commitment is feasible for employees facing that situation otherwise a company may suffer significant turnover. But probably the most difficult challenge at the moment is the availability of suitable schooling in the international or English-speaking schools. Another challenge is that of working spouses and partner’s careers. With an unemployment rate relatively low and employment opportunities
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in many economic sectors such as finance, pharmaceutical, luxury goods, watchmaking, chemistry, communication, and hotel and catering industries, finding a job in Switzerland is not as complicated as it may seem, especially for degreeholding, highly qualified multilingual workers. For some positions, it may not be necessary to speak the local language. For any service-related or sales position, lack of fluency in the local language will represent a severe handicap. The situation for working partners has improved significantly during the past few years. EU citizens can benefit from the agreement on free movement of labor within member states of the EU, including Switzerland, and may very easily find employment in the country.
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For other nationals who are holders of a B permit for the purpose of family reunion, they may carry on a gainful activity and change employ-
ment. On receipt of a work offer, they need to go through a notification process of the local authorities so their change of status is recorded.
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Not all employers are aware of the latest developments with regard to working partners, and job applicants need to be primed to inform their potential employers accordingly. It is, therefore, highly recommended to build a spouse/partner career continuation service into your relocation program as this offer has gone from best practice to norm for all the latest group relocation projects.
Location Analysis Both Kevin Cornelius and SiiriMall Musten, partner and senior consultant human capital, respectively, Ernst & Young, Zurich, Switzerland, state that, “relocation of a business and its employees from one country to another is a complex and multidisciplinary change process. Many companies are experienced in moving individual employees (‘expats’) from location a to b, but they struggle with dynamics of moving groups of people. Retaining a company’s key talent and avoiding business disruption is closely linked with the corporate objectives of the move. There are various people issues that need to be clearly identified and dealt with in advance to eliminate any surprises in risk and cost, and to avoid ultimate people failure.” They also recommend that, “as a first step, a company needs to decide which location to choose, especially in Switzerland where taxation and legal framework, availability of office space, housing, and international schooling can vary significantly among cantons and communes. Therefore, companies tend to have a whole catalog of criteria they check for the ideal HR location for their operations, which plays an important role in supplementing the business
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Location Analysis – OPE Headquarters Sample template with weighting CATEGORIES
Attract and retain people
Flexibility of labor regulations Permits, work permits, and visas Ease to recruit/move management staff Sufficient labor supply for administrative functions Flexibility of cantonal authority/rules and local support
5 10 50 10 25 100
0.8% 1.5% 7.5% 1.5% 3.8% 15%
Cost of-living (including housing costs/school fees) Safety Availability and flexibility of housing Availability international schools (free—no waiting list) Personal taxation expatriates Attractiveness of region/international community
5 5 35 35 5 15 100
1.5% 1.5% 10.5% 10.5% 1.5% 4.5% 30%
Corporate tax Local (tax) incentives Office costs
60 20 20 100
18.0% 6.0% 6.0% 30%
General business environment
Bureaucracy Support of local authorities and development agencies
50 50 100
5.0% 5.0% 10%
Accessibility by air/public transport/road Availability and quality of telecommunication Local public services (police, fire, medical, waste) Availability expandable office space at reasonable cost Zero environmental issues Total
30 20 10 30 10 100
4.5% 3.0% 1.5% 4.5% 1.5% 15%
decision that is primarily driven by the corporate tax advantages.” Cornelius and Musten further state that, “once a suitable location is identified, the HR project team can start designing its group relocation strategy and packages to incentivize the move in line with the company’s international HR strategy and the culture of the organization. Here it is important to find the right balance between long-term cost efficiency for the company and attractiveness to the employees and families. Consistent, equitable, and competitive relocation packages and benefits can play a significant role in gaining a maximum ‘pick-up’ rate of the employees targeted for relocation. 66 MOBILITY/SEPTEMBER 2010
When evaluating your investment in people, consider both one-off and ongoing costs as well as severance, replacement, and training costs for non-movers. Loss of talent is one of the biggest business risks for any company, which may not only mean loss of revenue and intellectual capital but also may have associated direct costs relating to severance payments, recruitment, and training of a new local hire. Employee replacement costs are estimated to be about two to three times that of an annual salary.” Concerning individual tax, social security, and legal implications, Cornelius states that, “the tax and social security cost of relocation ben-
efits is another crucial aspect that needs to be carefully planned in advance. Especially today, multinationals require more efficient ways of managing their global mobility in terms of cost pressures and pressure for better compliance and at the same time managing the continuing business need for relocating and sending employees around the globe. The risks of operating a globally mobile workforce are multiplying, and so is the likelihood of those risks materializing as tax and immigration authorities around the globe cooperate to investigate any cases of non-compliance. Some of the key risks evolving from people relocations are around cost control, regulatory
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compliance, risk of prosecution, permanent establishment risk (as crossborder commuting gains popularity), and business reputation risk. On the one side, companies need take measures to mitigate these risks and the other side they can benefit from the various individual tax rulings available in Switzerland if submitted and negotiated with the local tax authorities beforehand. Besides, the consequences and potentials gaps when departing from home-country tax and social security schemes and
families to Switzerland. For a smooth move, internal functional work streams as well as third-party service providers, i.e., compensation and cost of living providers, relocation agencies, shipping companies, recruitment agencies, training providers, insurance brokers, etc., all need to be well integrated within the project.” Last but not least, communication plays a key role. Cornelius and Musten confirm that, “for a successful group move wherein multiple business units, functions, and indi-
entering into new plans in Switzerland have to be analyzed and explained to the employees.” According to E&Y’s human capital specialists where it concerns project timelines and coordination, “the HR work stream has a strong impact on business continuity as well as the timeline for relocation. For example, work councils in the home country may present additional legal requirements concerning the terms and conditions of the move and thereby cause delays in the project’s overall timeline. Also, the timely submission of international schooling applications is critical to relocate employees with
viduals are affected, communication is key. During the initial project stages, emphasis should be placed on ensuring confidentiality of your relocation plans to avoid any miscommunication and resistance to change. During the course of the project, the focus should be on delivering consistent and transparent messages to set realistic expectations and generate enthusiasm and a positive atmosphere around the move.”
welcome home and let one-group be your qualiﬁed partner for allinclusive relocation services. To make your employees feel at home from the ﬁrst day.
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68 MOBILITY/SEPTEMBER 2010
Anne-Claude Lambelet, SGMS, is founder and senior counselor of ACL Consulting, Geneva, Switzerland, and a member of the MOBILITY Global Editorial Advisory Committee. She can be reached at +41 79 406 18 17 or e-mail firstname.lastname@example.org.
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Assignments come in all shapes and sizes, and the opting for the right type for both the employer and employee (and his or her family) can mean the difference between assignment failure and success. Yates evaluates the pros and cons of shortand long-term assignments, as well as the factors employers and employees should take into account when choosing between a permanent move and a temporary transfer.
Choosing the Best Relocation Program BY JULIAN YATES istorically, when relocating an employee overseas, longterm assignments were the norm. However, with the current economic situation and the evolving nuclear family dynamic, this increasingly is changing. For a corporation, a long-term assignment entails sending an employee to a new workplace to accomplish essential strategic or operational objectives. With a long-term assignment, the employer pays for the employee and his or her family to relocate and covers many of the living costs in the new location. However, with todayâ€™s emphasis on tight management and control of costs, the demand for a more cost-effective assignment option has increased. For the relocating employee, a long-term assignment means packing up the family, heading to another country and essentially beginning life anew. This experience brings great opportunity, new responsibilities, a new environment, a new home, and new schools for the children. However, for a dual-career family, it can be difficult, as the spouse has to make significant career adjustments.
Enter Short-term Assignments Typically with a short-term assignment, the employer only pays for the employee to relocate, not his or her family. Although employees can bring their families, it is at their own expense. Thus, short-term assignments are less expensive for the company and bring an opportunity to significantly cut spending. MOBILITY/SEPTEMBER 2010 71
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Worldwide ERC ® Policy Benchmarking Resource he Worldwide ERC® online Policy Library contains more than 180 sample policies, both U.S. domestic and international, from more than 80 companies. These include various types of policies used by our members, such as policies for new hires and current employees, homeowners and renters, management and executive levels, short- and longterm assignments, commuters, permanent assignments, as well as developmental and strategic assignments. You can search the search the policies for specific key words and/or sort them by industry type and transfer volume. The Policy Library is only available to full Corporate HR members of Worldwide ERC®. Visit www.WorldwideERC.org and click on the silver “Resources” button. From there, select the “Policy & Program Tools” section where you will find the link that says “Policy Library.” Once you’re there, consider bookmarking this page—this resource is that good. If you have any trouble finding what you’re looking for on www.WorldwideERC.org, please do not hesitate to contact our Web Team at +1 703 842 3400 or e-mail webmaster@WorldwideERC.org.
Short-term assignments offer benefits for the employee as well. For dualcareer families, which now comprise more than 70 percent of U.S. households according to 2008 U.S. Census Bureau statistics, the short-term assignment often is far less disruptive because both family and spouse remain in the origination location. Within this article, the term “short-term assignment” is defined as an employee relocating single status or, in order words, without his or her family. Each family structure and dynamic is different. A long-term assignment might work best for some, while a short-term assignment is preferable for others. It is critical that both employer and employee evaluate all assignment options and ascertain how each option potentially could affect the employer, the employee, and the employee’s family. Choosing the right type of assignment can be the difference between a successful and unsuccessful relocation. Let us take a look at the pros and cons of short- and long-term assignments, and the factors that employers and employees should consider when choosing the assignment type.
Long-term Assignments: the Traditional Approach In a long-term assignment, the employee and his or her family relo72 MOBILITY/SEPTEMBER 2010
cate to another country for three or more years. In some cases, these assignments remain the best way to execute certain business objectives and are the right choice for the family. With a long-term assignment, employees and their families gain a new perspective of the world and the workforce, not to mention the professional growth opportunities that come with it. An international assignment can improve an employee’s professional skills and expertise, as he or she gains experiences not available otherwise. It is a unique chance for extensive personal development, and increases an employee’s long-term value to the company as he or she builds a complete understanding of the company’s global business. For an employer, when employees are on assignment for a longer period of time, it can have a greater impact. Employees can design and implement global strategy, train and build management teams, and accomplish other strategic objectives. For projects that require comprehensive strategy building, long-term assignments tend to be the most appropriate option. For all of its benefits, long-term assignments do have challenges. The assignments can be costly for employers, given the expenses involved in relocating an entire family. In fact, the average cost of a long-
term assignment typically is three times the employee’s salary. In addition to the financial picture, long-term assignments can create challenges for the employee’s family. Family members, especially spouses, might not acclimate to the new environment as quickly as the employee. While the employee is busy beginning his or her new corporate assignment, and the children are meeting friends and becoming involved in new activities at school, the spouse may feel isolated in an unfamiliar environment. Career re-entry issues on completion of an assignment are another challenge. When assignees move back home, they may return to an office with unfamiliar employees, different work environments, and changed office politics. Assignees also might return to jobs they no longer find challenging, given their recent international responsibilities. These factors, among others, lead to high attrition rates. According to Alice Andors in her article, “Happy Returns,” in the March 2010 issue of HRMagazine, as many as 35 percent of repatriated employees leave their job after one year. Nearly 50 percent leave after two years.
Short-term Assignments Gaining in Popularity Although long-term assignments are the best option for many situa-
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tions, there are circumstances in which the potential negatives outweigh the positives. In these instances, short-term assignments provide an appealing alternative and companies increasingly are taking notice. In fact, according to J. J. Smith, SHRMIndia.org, a recent study indicates nearly 80 percent of companies surveyed said they plan on using short-term assignments. The reason? For employers, shortterm assignments are more costeffective. Relocating a single individual costs significantly less than relocating a family, and there are fewer allowances. Employers can rent an apartment or other small residence for one assignee and do not have to incur the costs of selling or managing the assignee’s home. In addition, employers do not have to cover the education costs for the assignee’s children. In addition to the cost benefit, the likelihood of a short-term assignment failing is typically less than a longterm assignment because only one individual is moving. Consequently, there is no added challenge of extra family members adjusting to the new environment. With fewer people to satisfy, the chance of success is higher. This minimizes the costs associated with failed assignments, which include lost productivity, poor morale, and the costs to relocate a family home again. The benefits are not just financial, nor are they limited to employers. Employees on a short-term assignment gain valuable international experience without having to uproot their family. In addition, career reentry is significantly easier when the employee has been on assignment for only six to 12 months and thus is still very connected to the origination
location, office, and the employees who work there. For dual-career families, a shortterm assignment allows both spouses to keep their positions. A spouse does not have to adjust or sacrifice his or her own career to move for the assignment. There also are no disruptions to the children’s schooling, friends, and activities. In addition, there is no separation from extended family and community or disturbance to the pets. However, the physical absence of one parent does present some challenges for a family. There is an increased burden on the nonrelocating spouse, as that person now has to manage the responsibilities of two individuals, including household tasks and child care. And those on assignment might have increased anxiety with regard to their family’s well-being. Regardless of the potential family complexities, short-term assignments are a viable option. To increase the success rate of a short-term assignment, there are several measures companies and families can take to overcome the potential challenges a short-term assignment can bring.
Commitment by the Employer Prior to the assignment, employers should take a key role in educating the family—not just the assignee—on what to expect during a short-term assignment. Some individuals are better suited for international assignments than others, and some families are better suited for the separation short-term assignments create. Employer-sponsored counseling can help uncover any potential problems before they erupt into larger issues. During the assignment, employers should build frequent return trips MOBILITY/SEPTEMBER 2010 73
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into their policy. Return trips can coincide with corporate meetings or other business-related events at the home office, so both assignee and employer can benefit. Overall, employers should remember the effect short-term assignments could have on families and make the employees’ family and personal welfare part of their concern. The initial discussion should be an open dialogue, not a one-way conversation, between employer and employee on how to make the assignment successful.
Families First An employer is not solely responsible for the success of a short-term assignment—the assignee and his or her family each play a large role. The
reality is that short-term assignments are not for everyone, and those considering such an assignment should not take the decision lightly. In addition to carefully considering what it means for their professional development, employees should consider what it means for their families. Employees should involve their families in the decision-making process from the very beginning. Making sure all family members are on board and have an opportunity to ask questions and voice concerns is critical. Once on assignment, one of the keys to mitigating family-related stress is to keep communication lines open. Assignees should stay in close contact with their spouse and other family members. Today’s technology,
Gettingasfamilies back to normal soon as possible. (or at least as NORMAL as they can be) Community Connections Research Partner Employment Assistance Outplacement Services Predecision Programs Group Moves w w w. s a l l y w h i t e . c o m
including e-mail and webcams, makes contact easier than ever.
Ensuring a Successful Assignment With the global marketplace, economy, and family dynamics continually evolving, it is essential that mobility policies and programs adjust to meet these changes. Both long- and short-term assignments have their own unique benefits and challenges. Before choosing one type of assignment over another, employers should ensure they have weighed both assignment options and have thoroughly evaluated the assignment requirements and the welfare of the employee. Assignments should be analyzed up front by HR, the business leaders, and all other decision-makers with questions such as the ones noted below: • How many months or years does this assignment require in order to be successful? • What assignment length would generate the most lasting impact? • Could more than one employee share the assignment over a period of time? • Is this assignment more of a strategic or operational role? By taking these steps, employers are more likely to be better prepared to have open and honest discussions with their employees about the potential impact the assignment could have on themselves and their families. Spending this time up front helps ensure employees are placed in assignments most conducive to their situations, and companies are positioned to gain the greatest value and success. Julian Yates is vice president of global client services for SIRVA Relocation, Westmont, IL. He can be reached at +1 630 570 3387 or e-mail email@example.com.
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When to Chat With Your Expats
Key to the y expatriate success of an the relationassignment is d between the e ship maintain employer, and d a employee n serving this critical to pre ommunication. c connection is ility entifies mob id w o rr o M c M provides guid d n a s e n to s e mil ree ctive transfe ance for effe se on during the communicati times.
BY VIRGINIA G. MCMORROW ome organizations spend a lot of time communicating with their expatriates prior to the international assignment, whenever the assignee has a problem or complaint, and when he or she is preparing to return home. But that is not enough. There are other significant milestones along the way. And when appropriate, this interaction should include the spouse/partner, too. When and how to go about the best communication effortâ€”before, during, and after the assignmentâ€” remains specific to the culture of the organization, the home office, and the host office. Once a procedure has been established, it is up to HR, with assistance from line managers in the home and host locations, to ensure that the interaction actually happens.
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Before You Go
Typical items included in an international assignment letter of agreement: Legal requirements. Explain that the assignment is contingent on the employee’s compliance with legal requirements for entry, work, and residence; health and immunization certificates; home and host tax laws; and so on. Compensation. Delineate all terms of compensation, providing an easily understandable explanation of the basis on which salaries and allowances are established, changed, and delivered. Explain potential tax liabilities and any employer assistance in meeting them. Timing. Specify the effective date of the assignment and anticipated duration, which often determines compensation approach, clarifies the type of visa necessary, and identifies the appropriate type of tax treatment. Future assignment changes. State the possibility of transfer to another location on completion of the assignment and include a brief general statement regarding the employee’s options should that occur. Benefits and perquisites. Outline benefits and perquisites—vacation, medical services and benefits, transportation, shipping, expense reimbursement, miscellaneous allowances (e.g., housing, education, spousal), retirement plans, life insurance, services offered (e.g., language and cultural training), company cars (and drivers in certain locations), and so forth. Housing policy. Explain the assignee’s contribution, housing allowances, assistance with home-country residence (e.g., rental, maintenance, sale), and all housing-related issues. Point of origin. Specify the point of origin for home leave travel and repatriation planning. Family status. Confirm whether the employee is relocating on married or single status, explain the rules for home visits or spousal visits (if unaccompanied), and specify eligibility criteria for change in status. Termination. Include policy statements on termination, outlining responsibility for repatriation expenses under different scenarios. Emergencies. Explain company policy on emergency situations.
Before the Assignment: Picking and Choosing In many cases, the initial point of contact between HR (and/or line management) and the potential assignee arises during the candidate selection process. At this time, it may be helpful to talk to the candidates’ spouses/partners, not just the candidates. After all, finding the right “fit” for an international assignment not only involves the employee’s possessing the right work experience and skills, but also the family’s adaptability to living in a strange new world 78 MOBILITY/SEPTEMBER 2010
away from obligations and ties back home. During the initial discussions, appropriate topics generally would include the following: • job tasks and responsibilities in the host office, company objectives with regard to the foreign posting, the structure of the host-office organization and where the candidate would fit in, and the overall length of time projected for the assignment; • local conditions (hardship, if any), quality and availability of schools, dual-career issues, home-
country obligations (e.g., elderly parents); • general pay and benefits package; and • candidate questions and concerns. When a candidate has been chosen and has accepted the foreign assignment, many employers set out terms and conditions in a document (or letter of agreement signed by both the employer and employee) to avoid future misunderstandings or uncertainties. Although documents sometimes require clauses dictated by the
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host government or use of certain legal formats, typical contracts provide details for items such as those listed in the sidebar at left, “Before You Go: Sign Here.” But do not just hand over the document to the assignee. Talk about the contents to ensure complete comprehension, or be ready to field questions down the line.
Before the Assignment: Pre-departure Planning Organizations typically permit the candidate and spouse/partner to travel to the assignment location for several days at company expense before accepting the assignment, particularly if the posting will last several years. These trips offer an opportunity to become familiar with neighborhoods, locate appropriate housing, determine a suitable move-in date, learn about school opportunities, consider the disposition of household goods and furnishings (ship, store, or sell), meet the local host office staff, and generally gain a better understanding of what expatriate living will entail.
Before the overseas visit, a discussion with the expatriate and spouse can guide their actions during the trip so as to avoid it becoming a sightseeing vacation. Once the expatriate and spouse return home, talk to them about what they have accomplished and what, if any, concerns and questions have arisen. At that point, it also may be useful to ask them how well the destination services provider, if any, handled their visit and helped or hindered their homefinding and other objectives. When the family is ready to make the physical move, the moving company usually handles the logistics. However, it is important to keep tabs on how well the process is going, particularly if the employee relocates to the host location earlier than the rest of the family, leaving the spouse/partner behind to supervise the transition between homes, schools, and everything in between.
On Assignment: Early Days During the settling-in period, do not assume that the destination ser-
vices provider, if any, is handling everything as expected. Check in with the expatriate to see whether the family is facing any difficulties. Even with language and cultural training programs, they will still experience some level of culture shock in their own individual ways. Be there to offer support and a friendly ear, helping them solve their problems but sharing their good times, too. Let them know your role is not solely to hear grievances. Early days on the new job also can be very stressful, even for a confident and skilled employee. If possible, coordinate some type of appropriate welcome for expatriates and monitor their responses to tasks, colleagues, work hours and culture, and so on.
On Assignment: Staying in Touch Periodically, it is important to chat with assignees to avoid their feeling “out of sight, out of mind.” Make these interactions as formal or informal (and as frequent or infrequent) as fits the company culture. Some
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organizations implement a mentor program to strengthen the bond between home and host. But beyond these “checking in” conversations, there are some key points that require clear communication: Changes in pay. Clear and unambiguous communication on an ongoing basis about how the pay program works and why there may be changes in certain pay elements can help the employee fully understand the concepts and methodology behind the pay package and minimize questions and complaints. Performance appraisal. Similar to a program in place for domestic employees, expatriate performance review should entail routine discussions of the individual’s progress on the job, future career plans and how
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they fit into the company’s objectives, and any issues and concerns that may have arisen since the last appraisal session. Organizations following the balance sheet approach to compensation typically administer merit increases according to homecountry performance appraisal guidelines and frequency. The process should involve a coordinated effort between the local host-office manager (who measures performance) and home-country manager or HR staff (for administration and approval). Local guidelines may be more appropriate if the assignee is on a localnational status. Change in policy. If HR implements a corporate-wide or regional change in policy that affects all employees or all expatriates, discuss
the change and the underlying reasons with assignees. Corporate change. Inform expatriates of any organizational restruc-
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turing, company acquisitions or selloffs, name or branding changes, and the like. It is important to keep assignees in touch with what is happening to the company on a global basis.
On Assignment: Expect the Unexpected Although most companies grant limited time off for personal emergencies such as the serious illness or death of an expatriate’s spouse, child, or parent, many employers have no written policies—resulting in variations on a case-by-case basis. While guidelines may be broken with good reason, it is nonetheless a sound practice to adopt formal policies to address these situations and communicate this policy—before anything happens. But personal emergencies are not the only danger. In some locations, expatriates may face potential war, civil strife, terrorism, disease outbreaks, and natural disasters. Employers should develop and communicate detailed evacuation plans for all foreign operations, particularly where such incidents are real possibilities, clearly indicating the responsibilities of all parties—once again, before anything happens. It is especially important to establish the chain of command so that someone familiar with the local situation can make quick, logical decisions for taking appropriate action and communicating policy and procedures. When an unexpected situation occurs, common sense dictates the need to communicate with employees on site as soon as possible. Where feasible, the employer should have a way to stay in contact with assignees throughout the duration of whatever is happening, and then follow-up afterward to ensure that all is well.
On Assignment: Time to Go Home? Before the formal end of the assignment arrives, there should be a discussion of repatriation timing, potential jobs at home or abroad, moving logistics, and all matters related to future steps. Share ideas about what the individual expects, as well as the organization’s expectations, during performance appraisal meetings and periodically throughout the assignment. If the organization has a mentor program, this information should be part of the ongoing discussions. Knowing in advance what career track the assignee desires may help both parties achieve a consensus and satisfactory conclusion to the foreign posting.
After the Assignment: It’s Not Over ‘Til It’s Over When the family is moving back home—or going on to another host location—once again, do not assume that the destination services provider is handling everything adequately or that the family is avoiding reverse culture shock. Check in to determine whether the family is experiencing any minor or major problems. Also, as with the initial relocation, make an effort to welcome the repatriate to the new position and monitor the employee’s experience until the individual is settled in. The best practice is to keep an open line of communication with the assignee in whatever way works for the organizational culture. It can be face-to-face, virtual, electronic, or any other method. Constant “chats” with the expatriate can help nip the proverbial problem in the bud. Virginia G. McMorrow is senior associate for Mercer, New York, NY. She can be reached at +1 212 852 0334 or e-mail firstname.lastname@example.org. MOBILITY/SEPTEMBER 2010 81
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a Balancing Act for Employers and Employees
As organizations face tough decisions to survive and grow, Sharo says that a strategic approach to group moves can help retain key talent while meeting business objectives.
BY KATHY SHARO
s the economy continues to waver, businesses across the country face inordinate challenges in determining new methods for survival and growth. To remain soluble, mergers and acquisitions have become a reality for hundreds of U.S. businesses. According to a survey of nearly 500 executives conducted by Ernst & Young, New York, NY, 25 percent of businesses were likely or highly likely to make an acquisition in the next six months, 33 percent in the next 12 months, and 41 percent in the next 24 months, prompting a plethora of corporate decisions for a department or “group” of employees’ moves. Not only does a group move decision come with great risks for the company involved, it also can have a multi-level effect on employees. For example, an unsuccessful group move can cost a company millions of dollars and spur the loss of its best and brightest employees. With top talent in short supply and employees more
reluctant than ever to relocate, organizations need solid strategies to guide business decisions that involve both talent and mobility.
The Group Move Decision Businesses considering a group move must carefully study the benefits they would reap from such a decision, including reduced labor costs, proximity to the primary customer base, the need for a more central location following a merger, greater access to the available talent pool, and creating a strategic location for global business. The debate concerning whether to move often centers on a few strategic questions: • What does the success of the organization look like currently and in the future? • What changes need to be made to get there? • Do the long-term gains trump any short-term business disruptions and risks associated with a merger, acquisition, HQ relocation, or a group move of one or more business units?
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aking time to consider all scenarios and potential obstacles related to a group move—particularly those faced by employees—is vital in ensuring an organization is ready to address them if they arise. Organizations should evaluate: • the demographics of those being asked to relocate, including willingness to relocate; • alternative deployment options to retain key talent, such as extreme commuting and short-term assignments; • perceived obstacles, concerns, unknowns, and budget considerations; • goals and objectives, including optimum percentage of employees to move, critical moves, and retention goals for those who decline move; • timelines for announcements, employee decision deadlines, and completion of move; • HR policies for relocation and separation; and • planning and budgeting for employee support.
• How long will it take to recoup the cost associated with moving the entire organization, and how soon will there be an upside in terms of cost savings or revenue generation? In addition to the cost a group move would incur for the organization, probably most critical to both
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employers and employees is the financial impact of cost of living and the housing market, because they can be a significant portion of the group move expense and will affect employees directly. A systematic approach should include the following to balance cost containment for the orga-
nization with adequate compensation support for employees: Location comparisons. Cities can have vastly different profiles and costs, even when in close proximity. Analysis of specific criteria can
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ensure proper compensation for employees and business impact for the employer. Current housing values. Today’s home market values change rapidly and require consistent monitoring. Mortgage age, income, income tax, and family size. These areas can differ significantly by employee and require detailed analysis for cost accuracy.
The Employee Dilemma As the employer debates the pros and cons of a group move and decides on a location, employees often can begin to sense the impending change. When considering the possibility of relocation, many questions can be expected from employees, such as:
• What would the move mean for my family? • Will my spouse/partner be able to find a job in the new location? • What if our existing home does not sell? • Is the company stable enough for this move, or is it the first step in a downward spiral? • How can I balance my work responsibilities and make sure my family’s transition goes well? • What is the cost-of-living difference in the two locations? How else will this move affect my finances? • Will layoffs be part of the group move? Within these categories are the questions of how the employee and his or her family will adjust to a new location. Issues including friends,
family, social networks, a potential change of lifestyle, changes in work responsibilities, and/or opportunities for work advancement once a merger takes place all contribute to the decision-making process. The questions are similar for any potential relocation, but with group moves the frank reality eventually surfaces: relocate or find a different job. Some employees may feel relocation is the only option, especially in the current job market. Others may opt to search for a new opportunity rather than uproot family and personal life. Still other employees may become so overwhelmed with the issues at hand that they cannot identify the most important factors in their decision. They are unable to get
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Supporting Employees During Their Decision
y supporting employees in their relocation decisions, employers not only avoid the cost of a failed move, but also convey that they value their employees. Providing comprehensive support can lead to higher employee productivity throughout the relocation by reducing stress and distractions. Recommended practices include: • developing a group move website for announcements, newsletters, blogs, relocation/retention/separation policies, destination information, and links to local service providers; • setting up orientation sessions for employees and spouses. These can be opened with presentations from senior leadership and HR executives to explain the business case for relocation, timelines, retention, and relocation goals; • arrange area tours for employees and spouses; • review and/or modify policies if acceptance goals are not being achieved; and • communicate often with updates via meetings and postings to website or other communication channels. Tracking and Reporting Results Group moves are complex and conditions often change during the process. Proper tracking and measurement of results can identify key milestones and allow for necessary changes. Implementing measures such as a secure, live data website allowing up-to-the-minute review of the status of employees, group move timeline reporting through a journal/blog, group move analysis through periodic status review of goals, objectives, and timelines and a report covering final results will help complete the group move cycle. Conclusion As with any significant business change, the success of a group move begins with the development of a specific strategy and ends with an analysis of that strategy that identifies areas for improvement. A considerable amount of money and valuable talent can be at amplified risk during a group move. To be successful, organizations must balance and address both business and employee needs by developing a plan that outlines clear business objectives, uses the most current geographic data, and defines a comprehensive support plan for employees. By starting with a solid strategy and well-defined metrics for success, companies can retain key talent and achieve business objectives during and after a group move.
past the questions about what might go wrong with the relocation and how strongly the repercussions may be felt. The reality of group move decisions is that no two employees have the same needs, yet many companies attempt to create a one-size-fits-all policy for support. Sometimes the organization selectively chooses the employee groups it feels need support the most, such as those with families, working spouses, or special need situations. When it comes to employees and relocation, however, things are not always what they seem: the young, single employee who appears easily mobile may be caring for an elderly parent or grandparent, and the long86 MOBILITY/SEPTEMBER 2010
time baby boomer employee, near retirement and perceived to be loyal, may balk at relocation in favor of starting his or her own business. With such complex and often emotional considerations, employees may be uncomfortable approaching their HR representative or hiring manager with issues related to career, family, or finances. Thus, employers must arm their employees with the tools needed for comparing accurate costof-living and other data, as well as access to a financial analyst who specializes in such employee mobility topics. A mobility financial analyst can assist employees in interpreting the data and serve as an objective sounding board, empowering the employee to make an informed financial decision about relocation.
Planning the Balanced Group Move For any organization planning a group move, keeping the lines of communication open throughout the process is critical for success. Employers must recognize the uncertainty and fear employees feel and treat group move communication accordingly. While the employer focuses on the strategic and financial factors in the decision, employee decisions are swayed by emotion. With ample support from the employer, employees can be better equipped for successful decisionmaking, which ultimately leads to greater acceptance rates and continued success for the company. Kathy Sharo is director of marketing, Runzheimer International, Madison, WI. She can be reached at +1 262 971 2651 or e-mail email@example.com.
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Worldwide ERC® would like to extend its sincere congratulations to the 201 recipients of the Certified Relocation Professional™ designation in 2010, the 20th year in which the certification has been awarded. Aimee N. Abbruzzese, CRP Wells Fargo Bank N.A. San Francisco, CA
Erin Bellemeur, CRP TheMIGroup Irvine, CA
Jenifer T. Brown, CRP RE/MAX Preferred Realtors San Antonio, TX
Sheila C. Castellanos, CRP JM Family Enterprises Deerfield Beach, FL
Leo Artiles, CRP Weichert Relocation Resources Inc. Morris Plains, NJ
David R. Berg, CRP LDS Church Salt Lake City, UT
Brett Brummett, CRP, GMS Prudential CA Realty Huntington Beach, CA
Michelle R. Cechini, CRP Prudential Financial Scottsdale, AZ
Mark Babekov, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Laura Beron Harper, CRP AIReS Pittsburgh, PA
Edward Lee Buckingham, CRP Department of the Treasury Parkersburg, WV
Cynthia L. Clemens, CRP Macy’s, Inc. Cincinnati, OH
Erica L. Binelli, CRP Department of Veterans Affairs Austin, TX
Amanda E. Bunger, CRP SIRVA Relocation Plymouth, MN
Ken Cleveland, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Catherine L. Bishop, CRP Harris Corporation Melbourne, FL
Mahnaz Campitelli, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Erica L. Badgley, CRP Graebel Relocation Services Worldwide Aurora, CO Stephen Bakken, CRP Stephen Bakken Apple Valley, MN Beth E. Ballard, CRP SIRVA Relocation Independence, OH Kevin L. Batungbacal, CRP Coldwell Banker Pacific Properties Honolulu, HI David A. Baxter, CRP First Preston Relocation and Realty Dallas, TX Theresa M. Bayer, CRP, GMS SIRVA Relocation St. Louis, MO Donna Belgram, CRP Prudential Real Estate and Relocation Scottsdale, AZ Allen C. Bellamy Jr., CRP Wells Fargo & Company Charlotte, NC
Dawn M. Bitterlich, CRP Lexicon Relocation Shelton, CT Debbie A. Bonfiglio, CRP HSBC Bank USA Schaumburg, IL Cheryl Borgman, CRP Graebel Relocation Services Worldwide Aurora, CO Leslie S. Bowser, CRP SIRVA Relocation Independence, OH Laura Breazeale, CRP Fidelity Residential Solutions, Inc. San Antonio, TX Gabe Brown, CRP TheMIGroup Irvine, CA
Tracy A. Carey, CRP AIReS Pittsburgh, PA Kendra M. Carlmark, CRP Move Management, Inc. Aurora, CO Christine G. Carnes, CRP HRW Appraisal Services Tampa, FL
Judy K. Collett, CRP Graebel Relocation Services Worldwide Alpharetta, GA Rita L. Collins, CRP SIRVA Relocation Independence, OH Ruth A. Cripe, CRP Lexicon Relocation West Chester, OH Janet Kay Davis, CRP Department of Veterans Affairs Austin, TX
Dan J. Carraher, CRP Graebel Relocation Services Worldwide Aurora, CO
Margaret Deluca, CRP SIRVA Relocation Independence, OH
Bebe Carter, CRP Wells Fargo & Company Minneapolis, MN
Christine A. Denz, CRP SIRVA Relocation Westmont, IL
Candace L Carter, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Angela Deppe, CRP Starbucks Coffee Company Seattle, WA
MOBILITY/SEPTEMBER 2010 87
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Anna M. Dillie, CRP Prudential Real Estate and Relocation Scottsdale, AZ Luanne M. Diodati, CRP Mobility Services International Newburyport, MA Martin T. Dudley, CRP Weichert Relocation Resources Inc. Morris Plains, NJ Lisa J. Dye, CRP Sibcy Cline Relocation Services, Inc. Cincinnati, OH Jennifer E. Ellsworth, CRP Graebel Relocation Services Worldwide Aurora, CO Marne J. Engelking, CRP Herman Group Real Estate Denver, CO Chad V. Eubank, CRP Prudential Financial Scottsdale, AZ Dawn A. Farrell, CRP CARTUS Danbury, CT Michele L. Frede, CRP SIRVA Relocation St. Louis, MO
Arlene Gardella, CRP Altair Global Relocation Shelton, CT
Brian J. Henry, CRP SIRVA Relocation Independence, OH
Bryan J. Innes, CRP SIRVA Relocation New York, NY
Christy L. Gates, CRP SIRVA Relocation St. Louis, MO
Gustavo Higuera Jr., CRP, GMS Prudential Real Estate and Relocation Scottsdale, AZ
Rochelle Jewell, CRP MillerCoors Milwaukee, WI
Lori A. Gentile, CRP, GMS Fresenius Medical Care North America Waltham, MA Kelley A. Godin, CRP Mobility Services International Newburyport, MA Jason G. Gojdas, CRP SIRVA Relocation Westmont, IL Jimmie Gonzalez, CRP Prudential Real Estate and Relocation Scottsdale, AZ Elizabeth Goodchild, CRP Weichert Realtors Goodchild Homes Rolling Meadows, IL Traci E. Gryb, CRP Lexicon Relocation Jacksonville, FL David C. Hackett, CRP Paragon Relocation Irving, TX
Jenni K. Galli, CRP Keller Williams First Coast Realty Orange Park, FL
Rachael A. Hall, CRP, GMS Prudential Real Estate and Relocation Scottsdale, AZ
Kimberly Joy Gamero, CRP Washington Group International Boise, ID
Linda S. Hauff, CRP Prudential Tropical Realty Port Richey, FL
Catherine L. Gannon, CRP Altair Global Relocation Shelton, CT
Jill J. Heineck, CRP Focus Relocation, LLC Atlanta, GA
88 MOBILITY/SEPTEMBER 2010
Beth A. Hillenbrand, CRP Wells Fargo Home Mortgage Schaumburg, IL Heather H. Hiltz, CRP Prudential Real Estate and Relocation Scottsdale, AZ Elena J. Hoff, CRP Mobility Services International Newburyport, MA Megan E. Holder, CRP Jim Maloof Realtor Peoria, IL Allison M. Hollenshead, CRP Graebel Relocation Services Worldwide Aurora, CO Diane Howard, CRP Real Estate One, Inc., DBA/Max Broock/Johnstone and Johnstone Southfield, MI Lisa J. Howard, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Tasha A. Johnson, CRP, GMS Graebel Relocation Services Worldwide Aurora, CO Joylynnette Jonas, CRP Prudential Real Estate and Relocation Scottsdale, AZ Deborah A. Kafer, CRP, GMS Constellation Energy Baltimore, MD Angela M. Kaiser, CRP Vandover St.Louis, MO Mary T. Kelly, CRP Prudential Real Estate and Relocation Scottsdale, AZ Kendra Kennedy, CRP Deere & Company Moline, IL Chrystie L. King, CRP Altair Global Relocation Plano, TX Naif B. Kojah, CRP, GMS TRC Global Solutions, Inc. Milwaukee, WI
Katherine A. Hoyer, CRP Graebel Relocation Services Worldwide Aurora, CO
Linda S. Komatsu-Wong, CRP Coldwell Banker Pacific Properties Honolulu, HI
Heather A. Hudnall, CRP Capital Relocation Services Bentonville, AR
Thomas W. Krettler, CRP RE/MAX Unlimited Northwest Palatine, IL
Mindy L. Hughes, CRP Lexicon Relocation West Chester, OH
Lillian F. Lambert, CRP MoveTrek Mobility, LLC Rockland, MA
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Timothy J. Lamson, CRP Timothy J. Lamson, PLLC Peoria, AZ
Rashi D. McKinney, CRP SIRVA Relocation Plymouth, MN
Lowell P. Mulkins III, CRP Prudential Financial Scottsdale, AZ
Anna M. Rigney-Phillips, CRP Department of Veterans Affairs Austin, TX
Selma Lawrence, CRP TheMIGroup Calgary, Aberta CANADA
Keith D. McLaughlin, CRP All Relocation Services Houston, TX
Leanne K. Nelson, CRP Burnet Relocation Minneapolis, MN
Michael W. Roach, CRP Independent consultant Wharton, NJ
Christine Lee, CRP Christine Lee Team, Keller Williams Jacksonville, FL
Charity A. Meek, CRP Fidelity Residential Solutions Plano, TX
Carol W. Norris, CRP, GMS The Walt Disney Company Burbank, CA
Carrie L. Robinson, CRP SIRVA Relocation Plymouth, MN
Jason P. Mendelsohn, CRP Sealed Air Corporation Danbury, CT
Matthew O’Connor, CRP, GMS Terrie O’Connor Realtors Ramsey, NJ
Ann Marie Rodriguez, CRP Graebel Relocation Services Worldwide Alpharetta, GA
Genel Palmer, CRP Real Estate One, Inc., DBA/Max Broock/Johnstone and Johnstone Southfield, MI
Patricia H. Roe, CRP, GMS Harris Corporation Melbourne, FL
Alice M. Lesman, CRP Columbia University New York, NY Melanie D. Lewis, CRP Graebel Relocation Services Worldwide Aurora, CO Grady Ligon, CRP Prudential Real Estate and Relocation Scottsdale, AZ Shelby R. Livingston, CRP Graebel Relocation Services Worldwide Aurora, CO Debby A. Lopardo, CRP Morreale Real Estate Services, Inc. Glen Ellyn, IL Patricia M. MacKinnon, CRP, GMS MoveTrek Mobility, LLC Rockland, MA John Maco, CRP JPMorgan Chase Bank, N.A. Stratford, CT Michael A. Mapel, CRP SIRVA Relocation Independence, OH Tanya A. Mathews, CRP Prudential Financial Scottsdale, AZ Janis M. Mathis, CRP Intel Corporation Folsom, CA Andrea M. Mattison, CRP SIRVA Relocation Independence, OH Juanita Mayo, CRP NRT Coldwell Banker Parsippany, NJ Rena McDonald, CRP, GMS Stirling Sotheby’s International Realty, Inc Heathrow, FL
Tiffany J. Metcalfe, CRP Prudential Real Estate and Relocation Scottsdale, AZ Pamela Metzger, CRP Colorado Landmark, Realtors Boulder, CO Michelle A. Meyers, CRP SIRVA Relocation Plymouth, MN Noelle Milbury, CRP SIRVA Relocation Westmont, IL Teri L. Miller, CRP Prudential Real Estate and Relocation Scottsdale, AZ Tim R. Milligan, CRP Macy’s, Inc. Cincinnati, OH Dana C. Mobley, CRP Graebel Relocation Services Worldwide Alpharetta, GA Douglas A. Mohns Jr., CRP MoveTrek Mobility, LLC Rockland, MA Melissa E. Moorer, CRP Prudential Real Estate and Relocation Washington, DC Kathleen M. Morris, CRP, GMS Prudential Real Estate and Relocation Shelton, CT Carol L. Motyl, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Liz M. Parker, CRP Prudential Lovejoy Realty, Inc. Maple Grove, MN Robert M. Parrilli, CRP Prudential Real Estate and Relocation Scottsdale, AZ Elizabeth C. Phelps, CRP Move Management Intl. Bellevue, WA Chasity D. Philpott, CRP Fidelity Residential Solutions Plano, TX Cherline Pierre, CRP Department of Homeland Security Dallas, TX Karen J. Pocius, CRP Capital Relocation Services Bentonville, AR
June G. Rogers, CRP Graebel Relocation Services Worldwide Alpharetta, GA Angela M. Saar, CRP SIRVA Relocation Plymouth, MN Richard A Salaver, CRP Graebel Van Lines Aurora, CO John P. Sanborn, CRP Prudential Financial Scottsdale, AZ Mikal R. Sanchez, CRP CARTUS Plano, TX Danielle N. Santangelo, CRP, GMS Prudential Real Estate and Relocation Scottsdale, AZ
Cynthia R. Powell, CRP Keller Williams - The Woodlands & Kingwood The Woodlands, TX
Cindy Schlager, CRP Wright Kingdom Real Estate Boulder, CO
Amanda R. Ray, CRP Department of the Treasury Parkersburg, WV
Roslyn A. Schlenker, CRP Schlenker Appraisals & Consulting Davis, CA
Brenda S. Reeves, CRP SIRVA Relocation Westmont, IL
Harry A. Schmitt, CRP Old Republic Title Relocation Services Wayne, PA
Marci M. Renfro, CRP PetSmart Phoenix, AZ Robert B. Reynolds, CRP AIReS Danbury, CT
Frank J. Schofield Jr., CRP Summit Realtors Reston, VA Barbara A. Schuster, CRP Independent consultant Bloomington, MN MOBILITY/SEPTEMBER 2010 89
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Steve Szostak, CRP TheMIGroup Mississauga, Ontario CANADA
Stacy L. Vehonsky, CRP Graebel Relocation Services Worldwide Aurora, CO
Sean P. Wilkison, CRP Graebel Relocation Services Worldwide Aurora, CO
Kate E. Scott, CRP Graebel Relocation Services Worldwide Aurora, CO
Karen E. Tarby, CRP Prudential Financial Scottsdale, AZ
Tammy L. Vlah, CRP Watson Realty Corp., REALTORS Jacksonville, FL
Felicia M. Williams, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Jane R. Sells, CRP Burnet Relocation Minneapolis, MN
Sharonlee Tavares, CRP MSI Newburyport, MA
Lisa A. Voit, CRP SIRVA Relocation Plymouth, MN
Terri R. Shaffer, CRP, GMS U.S. Department of Justice, Drug Enforcement Administration Springfield, VA
Tara L. Tesmer, CRP SIRVA Relocation Westmont, IL
Stacey M. Williams, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Diane R. Schuster, CRP Altair Global Relocation Plano, TX
Myrtle Sharp, CRP TheMIGroup Calgary, Alberta CANADA Linda A. Smallwood, CRP, GMS The Walt Disney Company Burbank, CA Joseph M. Smith, CRP Wells Fargo Home Mortgage Minneapolis, MN Lynn M. Smith, CRP Sibcy Cline Relocation Services, Inc. Cincinnati, OH Elizabeth A. Sofranko, CRP Conlon A Real Estate Company Chicago, IL Kenyon A. Spencer, CRP Keller Williams Realty Professional Partners Buckeye, AZ Jaime S. Suarez, CRP CARTUS Lewisville, TX
90 MOBILITY/SEPTEMBER 2010
Michael H. Voors, CRP Blue Oak Appraisals Roseville, CA
Donna J. Wilson, CRP CORT Cave Creek, AZ
Stephen Torma, CRP Passages Relocation Service Toronto, Ontario CANADA
Lynn Wagner, CRP Vandover St. Louis, MO
Jennifer Tromiczak, CRP Burnet Relocation Edina, MN
Kevin M. Wallenberg, CRP Wells Fargo Home Mortgage Minneapolis, MN
Sasha D. Tyers, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Cynthia D. Walter, CRP Sibcy Cline Relocation Services, Inc. Cincinnati, OH
Julianne Yackley, CRP SIRVA Relocation Westmont, IL
Beth Van Den Berg, CRP, GMS IOR Global Services Northbrook, IL
Matthew R. Wasylyk, CRP SIRVA Relocation Independence, OH
Patricia T. Yoke, CRP SIRVA Relocation Independence, OH
Laura Waurishuk, CRP Altair Global Relocation Shelton, CT
Michelle T. Zenobi, CRP SIRVA Relocation Independence, OH
Treniere J. Wells, CRP SIRVA Relocation Independence, OH
Sandra Zentz, CRP Prudential Real Estate and Relocation Scottsdale, AZ
Susan M. Van Hoosen, CRP CENTURY 21 Scheetz Company, Inc. Carmel, IN Viviana V. Vasquez, CRP Farmers Insurance Group Los Angeles, CA Diane M. Vaughn, CRP Ralcorp Holdings, Inc. St. Louis, MO
Catherine M. Westrich, CRP Lexicon Relocation West Chester, OH Gayle White, CRP, GMS Ferguson Enterprises Newport News, VA
Dane M. Wujnovich, CRP SIRVA Mortgage Independence, OH Robert E. Wynard, CRP Global American Title Glen Ellyn, IL
Ellen G. Zimmerman, CRP Weichert Relocation Resources Inc. Morris Plains, NJ
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Tax and Legal Update
RESPA Reform—the Good, the Bad, and the Confusing
his series of articles (the first, “Revisiting the FHA Anti-flipping Rule,” was featured in the May 2010 issue of MOBILITY; the second, “Short Sale Clawback Provisions, can be found in the August 2010 issue) examines three developments that relocation professionals should be aware of to ensure a successful real estate closing. After years of discussion and a one year implementation period, the key provisions of HUD’s RESPA Final Rule went into full effect on January 1, 2010. The most important aspects of the rule are the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement and a system of tolerances limiting the amount by which certain costs estimated on the GFE may increase at closing. These changes are intended to help enable borrowers to compare loan offers between lenders and better understand the terms of their loan and various settlement costs. While this certainly will be a benefit to transferees on their destination home purchases, the eccentricities of the new forms complicate the process of determining which costs fall within reimbursement policies and the tolerance system will introduce additional burdens on already cautious lenders. Under the old RESPA rules, lenders were required to issue a GFE within three days of loan application, but there was no proscribed format, so different lenders would disclose charges under various terminology and categories. This lack of uniformity made it difficult to compare how costs associated with a loan differed among lenders. Further, if actual costs at closing were more than the borrower expected, it was no easy matter to make line-byline comparisons between the GFE and HUD-1. The new forms are intended to rectify this situation. The new GFE introduces detailed categories of charges, such as “Our Origination Charges” and “Title Services and Lender’s Title Policy.” HUD has given very specific guidance on which charges are included in each category and, in most cases, they may not be broken out into further itemization. This approach continues with the new HUD-1 Settlement Statement, which on many lines includes the same bundled categories of charges provided on the GFE. The settlement agent’s ability to break out these categories into itemized charges is similarly restricted in the interest of providing borrowers simplified disclosures of the overall cost of a service. HUD’s approach to these new forms presents two problems for relocation service providers auditing the HUD-1 for expenses eligible for reimbursement. First, certain costs paid to the lender or title company may not be itemized on the HUD-1. They will be reflected in the aggregate total for “Our Origination Charge” or “Title
92 MOBILITY/SEPTEMBER 2010
Services and Lender’s Title Insurance,” but there will be no way to determine what services these costs are attributable to on the HUD-1 itself. The second issue is that all charges listed on the GFE must be reflected in the borrower’s column of the HUD-1, even if the seller actually will be paying for that service. This becomes a serious concern on destination transactions when the seller is paying for the owner’s title policy, but the HUD-1 will show that cost in the transferee’s column. There is a mechanism for reflecting who actually paid the charge on the first page of the HUD-1, but it will no longer be sufficient simply to look to a specific charge and quickly determine who paid for it. The solution for both of these problems will be some form of supplemental disclosure or fee sheet itemizing all necessary charges and accurately reflecting who is paying for each service. Closing agents are restricted in their ability to do such tasks on the HUD-1 itself, so it will be in everyone’s best interest to communicate the need for this additional documentation as soon as possible. The other key element of the new rule is a system of tolerances requiring the lender to reimburse the borrower if the actual costs for certain services quoted on the GFE exceed a set threshold. Each item on the GFE falls within one of three tolerance categories: costs that cannot increase at all; costs that in the aggregate can increase up to 10 percent; and costs that are not subject to any tolerance limit. There are circumstances when a lender can issue a revised GFE if they discover additional costs of which they were unaware at the time of issuing the GFE (e.g., power of attorney must be prepared and filed). However, if the tolerance is breached and the lender is unable to revise its GFE to reflect the additional expense, it will have to provide a credit to the borrower at closing or reimburse the excess within 30 days of closing. Because there will be instances where these payments are made to transferees outside of closing, it may be necessary to introduce tolerance-related concepts into reimbursement policies, to prevent duplicative payments. Further, this adds additional pressure to lenders, who now not only have to worry about loan quality but also whether tolerance reimbursements will cut into their origination fees. As business practices develop, it will be important to watch their approaches to controlling price accuracy through preferred vendor arrangements, indemnification agreements, and other creative avenues. Eric Arnold is counsel for Stewart Relocation Services, Houston, TX. He can be reached at +1 713 561 7974 or e-mail firstname.lastname@example.org. Piper Sheffield, CRP, is senior vice president, director, for Stewart Relocation Services, Houston, TX. She can be reached at +1 713 625 8194 or e-mail email@example.com.
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China Has Foreign-Worker Problem, Too BusinessWeek (08/11/10) Einhorn, Bruce China is thought of as a country with an endless supply of cheap labor, but few are aware that the country has its own problem with illegal foreign workers. A recent report in the South China Morning Post says that officials in the Guangdong province are considering new regulations on undocumented workers from neighboring countries. A new labor law that requires higher pay and benefits for Chinese workers has many employers looking for foreign workers who will accept lower pay and poor working conditions, according to reporter Ivan Zhai. Government officials in Guangdong have long been hoping to move the local economy away from reliance on low-wage labor, and that has begun to happen as companies like Foxconn are moving away to other parts of the country. (http://www.businessweek.com/ globalbiz/blog/eyeonasia/archives/2010/08/china_ has_foreign-worker_problem_too.html) Foreign Workers Clambering to Denmark Copenhagen Post (07/29/10) Many Europeans are going to Denmark for the summer to work, as the pay there is high even for unskilled jobs. About 24,000 EU residents have already registered with state job recruitment portal WorkinDenmark, though there are only 1,800 summer jobs open. Before the recession there were just 10,700 foreigners registered in the portal. The majority of those registered this year are Romanians, followed by workers from Poland, Bulgaria, and Spain. “This year has been very different, with people coming here to the office, calling us and sending us frustration-laced e-mails,” said Lise Lotte Brandt of EU job portal Eures. “They’ll do anything for anything, just to come to Denmark.” (http://www.cphpost.dk/business/ 119-business/49580-foreign-workers-clambering-todenmark.html) Drinking Ban for Dubai Expats Telegraph.co.uk (08/11/10) Hyslop, Leah Drinking has been banned at all British bars and sports pubs in the Al Barsha area of Dubai between 4 p.m. and 6 p.m., as many bars that served long brunches with unlimited alcohol were
clashing with Dubai’s strict Islamic laws. The ban was first imposed on just one British pub, but now applies to all in the Al Barsha area and could be extended to other areas. “It is a very strict rule and some officers without uniform are on patrol to see if the rules are being obeyed,” said one police officer. “If people are still serving we can shut the pub and hit them with a big fine.” Alcohol is strictly licensed in Dubai, permitted only in licensed bars and hotels and even residents must obtain licenses to drink in their homes. Expats, however, commonly drink at all hours of the day, particularly on Fridays, and the FCO advises Britons in Dubai to “respect local laws and traditions at all times and beware of your actions to ensure they do not offend others’ cultures and religious beliefs.” (http://www.telegraph.co.uk/ expat/expatnews/7934439/Drinking-ban-forDubai-expats.html) Industry Backs Calls for Foreign Skilled Workers to Enter Germany MonstersandCritics.com (08/03/10) While a proposal from German Economics Minister Rainer Bruederle to offer “welcome money” to skilled foreign workers was batted down by Chancellor Angela Merkel this weekend, U.S. companies are saying that there are still too many obstacles to bringing foreign workers to Germany. Over 25 percent of respondents to an American Chamber of Commerce in Germany survey said the biggest obstacle is government red tape, and the Chamber said the requirement that foreign workers take frequent professional exams is more onerous than in other European countries. Other obstacles are Germany’s refusal to recognize driver’s licenses from several U.S. states, complicated tax laws, and integration of migrant workers, according to survey respondents. Strong economic growth and declining employment in Germany has many in the business sector concerned about a skills shortage—indeed, there was a 31.3 percent increase in job vacancies in the past month. (http://www.monstersandcritics.com/ news/business/news/article_1575176.php/ Industry-backs-calls-for-foreign-skilled-workers-to-enter-Germany)
Aug 18, 2010 This issue is sponsored by:
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GLOBILITY® is an exclusive news service of the Worldwide ERC® offered free of charge for the asking and comes to you twice a month. To subscribe, visit: www.WorldwideERC.org/ Newsroom/GLOBILITY. GLOBILITY® sweeps nearly 7,000 sources including major newspapers, business magazines, web sites, wire services and industry publications to find the most noteworthy news focusing on global workforce mobility issues. The editorial staff reviews over 15,000 stories per day and prepares an executive summary of the most significant articles to be delivered to your e-mail inbox.
MOBILITY/SEPTEMBER 2010 95
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The Competition to Communicate with Foreign Languages “
oday, the lack of a second language doesn’t just isolate people. It makes them less competitive,” says U.S. Rep. Judy Chu, (D-Calif.) who grew up in a bilingual American household, in Mary Ann Zehr’s July 21, 2010 article, “U.S. Reps. Push for Foreign-language Teaching in ESEA, from Education Week. She further states that people who speak more than one language end up with “more customers” and “a better future.” Chu is among an increasingly vocal faction that is clamoring for higher prioritization of foreign language study within the U.S. public school system. It is interesting to note that the congresswoman’s rationale for this prioritization is underscored by a desire to compete successfully in the global marketplace as much—if not more—than the desire to explore and appreciate global culture. If communication is competition, as Rep. Chu’s comments imply, then the United States is clearly the world’s language laggard. In a typical American public school, foreign language study typically is not required or even offered until 8th or 9th grade (age 13 to 14) and then students often drop it after two or three years, never to return. Meanwhile, most European nations require compulsory foreign language training in the early years of primary school (ages 6 to 10), some at the pre-primary level (ages 5 to 6). By the time they graduate from university, European students typically are fluent in their native tongue and proficient in one or two of the “big three” Indo-European languages: French, German, and/or English. Asian students may have fewer language options available, but proficiency in English is widely viewed as a badge of status and a passport to better-paying jobs, and so many Chinese begin formal study of English at age 8. Small wonder, then, that expatriate families who come to the United States for the first time often are alarmed by the dearth of foreign language offerings in the schools and are unprepared to deal with the resulting gaps in their children’s grade transcript on return to the home country. American private elementary schools (kindergarten through fifth grade) are three times more likely than public elementary schools to offer students foreign language classes, according to a national survey released recently by the Center for Applied Linguistics. In 2008, the percentage of private elementary schools offering foreign languages was 51 percent, versus 15 percent in public elementary schools. The level of foreign-language offerings at high schools has stayed about the same during the last decade, according to Zehr’s December 10, 2009, article, “What Kinds of Schools Are Most Likely to Teach Foreign Languages,” featured in Education Week. 96 MOBILITY/SEPTEMBER 2010
At the college level, “The Big Three” European languages still predominate in terms of numbers of students enrolled in active study, with Spanish first at 822,985, French second at 206,426, and German third at 94,264, according to a 2006 study by the Modern Language Association cited by Mackenzie Carpenter in her article, “Au Revoir for Study of French, German?” in the Pittsburgh Post-Gazette. However, that same study found that percentages of enrollment growth for those two languages from 2002 to 2006 was in the single digits, compared to double-digit growth for Chinese and Spanish and triple-digit growth for Arabic. Faced with crippling budget cuts and falling enrollments brought on by economic recession, thousands of heretofore well-regarded American public and private schools have discontinued or downsized FLES (foreign language in elementary schools) programming. However, a contrary trend has educators and policy-makers like Rep. Chu positively abuzz: a rush by public and private schools in all parts of America to offer instruction in Mandarin Chinese and Spanish; the former is likely a response to China’s rise as an economic power and the attendant need to compete, while the latter is a necessary accommodation of the recent spike of Hispanic immigration into the United States. So while the United States is still the slowest horse in the global competition to communicate, recent economic and demographic trends have at least forced the horse onto the right track. Hopefully FLES will be able to stage a quick comeback and make the United States a foreign language contender but, in the meantime, expatriates heading into a two- to threeyear assignment in the United States should carefully research a community’s public and private education options to ensure continuity and expansion of their children’s existing language skills. Charlie Strater is an education consultant for Bennett School Placement Worldwide, Exeter, NH. He can be reached at +1 978 270 0858 or e-mail firstname.lastname@example.org.
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