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MOBILITY

Magazine of Worldwide ERC 速

January 2010

2010 Worldwide ERC President 速 速

Michael C. Washbourn, SCRP, GMS


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Real estate valuation issues? Solved. Whether you’re a global relocation services provider, a lender, an HR professional, or a local agent, our Mercury Network system is the solution to your valuation management needs. Using cutting edge technology and innovative workflow tools, Mercury Network eliminates delays and information bottlenecks. Everyone stays in the loop, on point, and happy.

It scales seamlessly to your needs, from handfuls of valuations to hundreds of thousands. You always get 24 x 7 status, a PDF plus full XML data, and automated review rules — even for the ERC form. And it’s of course 100% compliant with GLB, HVCC, USPAP, and every other acronym. But perhaps best of all, it’s free, fast, and secure. You simply can’t lose. Try it today.

Mercury Network Vendor Management Platform We’ve delivered more appraisals than any other company, period. Here’s why. t Use your appraisers, or augment with ours — we cover every county in the U.S. t All appraisals are auto-reviewed for over 1000 items before being transmitted, reducing issues due to oversights t Get a printable PDF, plus full XML data for the entire ERC report (or any other form) t Check the AVM and assessed values, market direction, and other key info with one click t Tie it in to your own back office systems using APIs, or just use it ad hoc on the web t Benefit from the sharpest technology: Proximity selection, 24 x 7 status, appraiser mobile iPhone tools, and much more

Try it right now! www.MercuryVMP.com/Relo Or call 1-800-ALAMODE AD CODE: MAMM0110 a la mode and its products are trademarks or registered trademarks of a la mode, inc. Other brand and product names are trademarks or registered trademarks of their respective owners. All prices, terms, policies, and other items are subject to change without notice. Copyright ©2009 a la mode, inc.

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Calendar

FEBRUARY 2010 Worldwide ERC® Learning Zone Webinar Quarterly Tax and Legal Update February 9 2 p.m. to 3 p.m. EST

MOBILITY • Vol. 31 No. 1 • January 2010

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

MARCH 2010 Global Workforce Summit®: Focus on Asia-Pacific March 10-11 Hong Kong GMS™ Training and Certification March 6, 8-9 Hong Kong March 16-18 White Plains, NY

Chairman, Board of Directors AL BLUMENBERG, SCRP, NEI Global Relocation, Omaha, NE

BOARD OF DIRECTORS CORI L. BEAUDET, SCRP, GMS, 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 WILLIAM (BILL) GRAEBEL, GMS, Graebel Relocation Services Worldwide, Aurora, CO JOHNNY H. HAINES, CRP, GMS, Deloitte, Hermitage, TN

MAY 2010 National Relocation Conference May 19-21 Orlando, FL

LARS LYKKE IVERSEN, Santa Fe Relocation Services, Hong Kong, CHINA CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ JO LAY, SCRP, GMS, 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

GMS Training and Certification May 17-19 Orlando, FL

SANTRUPT MISRA, PH.D., Aditya Birla Management Corporation Ltd., Mumbai, INDIA

JUNE 2010

JOHN PFEIFFER, GMS, Mustang Engineering, L.P., Houston, TX

Global Workforce Summit®: Focus on Europe, Middle East & Africa June 10-11 Paris, France

C. MATTHEW (MATT) SPINOLO, SCRP, GMS, Primacy Relocation, LLC, Memphis, TN

GMS“ Training and Certification June 7-9 Paris, France

Chairman, U.S. Advisory Council

JOY MORRISON, CRP, GMS, PepsiCo, Inc., Purchase NY STEVEN A. NORD, UPS, Atlanta, GA IAN PAYNE, GMS, Cartus, London, UNITED KINGDOM

PANDRA RICHIE, SCRP, GMS, Long & Foster Corporate Real Estate Services Division, Chantilly, VA

EX-OFFICIO

JOSEPH V. BENEVIDES, JR., SCRP, Consultant, Assonet, MA

OCTOBER 2010 Global Workforce Symposium October 27-29 Seattle, WA GMS“ Training and Certification October 25-27 Seattle, WA

MAY 2011 National Relocation Conference May 18-20 Las Vegas, NV

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/JANUARY 2010


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Perceptions

Top of Mind Trends for 2010

S

ome of our biggest workforce mobility trends have received plenty of “air time:” trends like economic challenges, contractions in our industry, and the resulting belt-tightening we have experienced. But there are a few others that bear closer scrutiny in 2010—we might think of them as “top of mind” trends—which I’d like to

share, because of their possible long-term impact on the way we will shape our business. Engaging younger talent. There’s no doubt that younger generations are our future. Donna Fenn, author of “Upstarts: How GenY Entrepreneurs Are Rocking The World of Business,” points out that new professionals today crave teamwork and training, want work to be fun and meaningful, and want fluid access to tech tools and social networks. On this last point, a 2008 Accenture report titled “Millennials at the Gate” notes, “there’s a gap between how organizations enable employees to communicate with clients and customers and how younger employees would prefer to communicate with them.” How can we take this information and incorporate it into our strategic planning? Consider Fenn’s list of attributes for a GenY-friendly company: “it has a great digital footprint, clearly maps its expectations, illustrates a defined career path, offers short-term goals and rewards, expresses its social mission, and has internal plans in place for frequent communication, mentoring and training.” Getting all a-Twitter. Facebook, LinkedIn, and the like have broadened our networking and communication landscape, and links to social media grace our web pages and electronic résumés. Some companies are breaking ground with Twitter that goes far beyond tweeting standard industry fare. Instead, they’re leveraging the business possibilities of Twitter for growth and excellence. Pizza Hut executives, unsure of what to make of Twitter’s capabilities, created a paid “Twintern” position, and conducted a national search for a media-savvy college student to be Pizza Hut’s voice on Twitter. Hotels that are tapped into Twitter monitor 4 MOBILITY/JANUARY 2010

tweets about their customers’ service dilemmas and immediately address a situation that calls for quick resolution. Bing, Microsoft’s new search engine, integrates real-time data into its search results, and Twitter contributors now see their content emerging in Bing searches. Based on the speed of Twitter’s communication capabilities and other new media influence and integration, what do we need to anticipate in the workforce mobility industry? Global grooming. This isn’t one of the newer trends we’ve seen, but it’s certainly one that keeps growing in relevance for our industry. A December 2009 Fortune magazine article, “How to Build Great Leaders,” states that developmental international assignments are among the most important tools that great companies use to build leaders… and that average companies rarely use at all. Notes author Geoff Colvin, “the importance of such assignments and how they’re being adapted to pay off in today’s global economy are two of the strongest messages emerging.” Colvin points out that the companies around the world that are best at attracting, developing, and keeping business leaders truly believe that in an informationbased economy, the concept that “people are our most important asset” is more accurate than ever before. Giving back and conserving. Recognizing, acknowledging and

acting upon social and environmental issues translate into a top of mind trend that is quickly gaining traction. At its most basic level, this concept is about giving back to the community wherever in the world our companies conduct business, and diminishing a negative impact in our operations. Increasingly, our business decisions incorporate not just financial vetting, but also consider the social and environmental consequences of the choices we make. What is particularly striking is how intertwined these top of mind trends are—effective social media commitments aid marketing, PR and communications strategies and make a company more attractive to younger professionals. Building potential to give back to communities and support world issues, and improve one’s green initiatives and sustainability are responsible actions in and of themselves, but also make a company more competitive in business and more appealing as an employer when sourcing talent. The importance of grooming global leaders in an information-based economy means that employers and service companies must be aware of the knowledge that tomorrow’s leaders will need to harness, and know how to source employees with the right capabilities and outlook. Ours is an industry that has always been rich in possibilities to consider. Adding these top of mind trends to our strategies will surely position us for a more powerful outcome. —Karen Reid Worldwide ERC® Interim Executive Director


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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®

DEPARTMENTS

MOBILITY

2 CALENDAR

STAFF

Vice President & Publisher

4 PERCEPTIONS

Jerry Holloman

Top of Mind Trends for 2010

Managing Editor Frank Mauck

By Karen Reid

12 AROUND THE WORLDWIDE ERC® 14 EXECUTIVE SPOTLIGHT

EDITORIAL ADVISORY COMMITTEE

Chairman Joy Morrison, CRP, GMS, PepsiCo, Inc., Purchase, NY Gaetane Brummett, CRP, GMS, Prudential CA Realty, Huntington Beach, CA

17 INDUSTRY SPOTLIGHT

Claude A. Choate, CRP, Choate Realty Group, Dallas, TX

17 WORLDWIDE ERC® TRENDSPOTTING

Sean Dubberke, RW3 LLC, New York, NY

20 QUICK TAKES

Pamela Dunleavy, CRP, Primacy Relocation, LLC, Memphis, TN

Marge A. Dillon, CRP, GMS, Xerox Corporation, Lewisville, TX Deborah A. Dull, CRP, GMS, Crown Relocations, Houston, TX C. William Heald, SCRP, Heald Associates LLC, Boston, MA

22 2010 WORLDWIDE ERC

®

BOARD OF DIRECTORS

Tacha Kasper, CRP, Leading Real Estate Companies of the World®, Chicago, IL Joleen Lauffer, CRP, GMS, AIReS, Pittsburgh, PA Mark A. Lozano, CRP, Wells Fargo Home Mortgage, Minneapolis, MN Patrick Moore, Hayden Moore LLC, Chagrin Falls, OH

84 RAC REPORT

Paul O’Leary, CRP, GMS, The Move Management Center, San Mateo, CA

86 GLOBILITY®

Bari L. Rubenstein, CRP, Consultant, Glenview, IL

88 LAST PAGE

Christopher J. Otteau, Otteau Valuation Group, Inc., East Brunswick, NJ Stefanie R. Schreck, CRP, GMS, American International Group, New York, NY Judit Slezak, GMS, Prudential Relocation, Washington, DC Carolyn White, Graebel Relocation Services Worldwide, Aurora, CO GLOBAL EDITORIAL ADVISORY COMMITTEE

Chairman Joy Morrison, CRP, GMS, PepsiCo, Inc., Purchase, NY Michele Bar-Pereg, Bar-Pereg Group, Amsterdam, THE NETHERLANDS Lorraine Bello, GMS, Ricklin-Echikson Associates, Inc. (REA), Millburn, NJ Lorelei Carobolante, SCRP, GMS, GPHR, G2nd Systems, LLC, San Ramon, CA Scott Craighead, SCRP, GMS, Blue Sky Executive Search, New York, NY Anne Dean, Living Abroad, LLC, Norwalk, CT Cindy Madden, CRP, Cartus, Danbury, CT Derrick Kon, Mercer (Singapore), Pte. Ltd, SINGAPORE Anne-Claude Lambelet, GMS, The International Relocation Associates (TIRA), Geneva, SWITZERLAND

Design/Production: Ideas, Communicated, LLC, Vienna, VA, www.ideascommunicated.com Printing: CADMUS Specialty Publications, Richmond, VA Reprints: Katina Moaney, CADMUS Reprint Services, ercreprints@cadmus.com; +1 800 487 5625 Advertising Sales: Glen Cox, National Sales Manager, The Townsend Group, +1 301 215 6710; ext. 109; gcox@townsend-group.com

8 MOBILITY/JANUARY 2009

Tacita Lewars, GMS, Globaforce Incorporated, Calgery, Alberta, CANADA Andrea Massoud, GMS, Living in Brazil, International Relocation Services, Barueri-Sao Paulo, BRAZIL Christine Moore, SIRVA Relocation, Westmont, IL Nino Nelissen, GMS, Executive Mobility Group, Schlipol Airport, THE NETHERLANDS Constance Pegushin, Berry Appleman & Leiden LLP, San Francisco, CA Maureen Bridget Rabotin, 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, GMS, Woodhams Relocation Centre, Sydney, AUSTRALIA


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Prudential Real Estate and Relocation Services

Rock Solid value every step of the way ®

When it comes to relocation, you have an important decision to make. So why not select a company that delivers satisfaction, savings and security throughout the process? With Prudential Real Estate and Relocation Services, 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 Minimize operational risk with our complete Relocation Management Services. Benefit from our global reach and Prudential’s more-than 130 years’ experience.

Realize savings through our unparalleled provider network.

Experience high levels of employee satisfaction and productivity.

© 2010 Prudential Financial, Inc., Newark, NJ, USA. All rights reserved.


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Global Relocation Is Always A People Willing to Expand Their Horizons & People Eager to Exceed Expectations

Global mobility begins and ends with people helping people. It starts with the corporate relocation manager who teams with talented people who manage a people-focused relocation program and the people performing in-person relocation services worldwide.

Here are some reasons why people choose our people and find us easy to work with. #1 Your budget is our budget Graebel is NOT a cost-plus service arranger. Our services are competitively-priced with direct pass-through costs so you will never pay expensive hidden fees or middleman mark-ups.

#2 Excellence everywhere and every time For 59 years, Graebel has asked...

What do you need? How can we help?® Our people are driven by one common goal worldwide...

Commitments Made. Commitments Kept.® Graebel is truly one-of-a-kind. We are not cost-plus service arrangers. We are service providers of the highest caliber worldwide.

Worldwide Full-Ser vice Relocation Ser vices | World © 2009 - 2010 Graebe l Companies, Inc. All rights reserved.

Graebel is your single source global relocation solution. Our menu is all encompassing from policy review to inperson destination services worldwide. Our 150-country alliance unites over 11,000 experienced relocation people who are continuously measured to ensure excellence.

#3 Our expertise knows no boundaries Up-to-the-minute information helps your people make informed decisions about where to live, find the best schools, special interest and social networks, and more. We also offer cultural and language training, currency information, helpful hints to settle-in, and of course far more!

rc i a l S orldwide Comme W | t n e m e g a n a M e wide Mo v

er vices

| Wo


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s About People

Official Sponsor of the Worldwide ERC® 2010 Conferences HONG KONG | ORLANDO | PARIS | SEATTLE

s

vices

#7 Right for today. Ready for tomorrow! #4 Minimum open case files for maximum service Every consultant is teamed with a trained relocation associate to make sure your people’s calls never reach voicemail. And, every team’s open case files are monitored daily so highest-possible personalized service is preserved.

Our people are never satisfied with business as usual. We regularly arrange business reviews to set higher benchmarks; write white papers and share trendsetting best practices; host regional roundtables and hold an annual global relocation policy summit, and a by-invitation alliance conference for relocation leaders from around the world.

#5 Real-time business intelligence Our real-time business intelligence reports provide you with the decision-making power at your fingertips, around the clock! 24/7, your transferred people can access city or countryspecific details and more. Of course, they can submit expenses or check reimbursements online.

#6 Always grateful for – never satisfied with! Graebel is widely recognized. The HRO ‘relocation bakers’ dozen,’ the Workforce Management ‘HotList,’ and the Quest for Quality Award, and SAS 70, C-TPAT, TRACE, and ISO certifications are examples of our ongoing quality commitment.

Mo v | Worldwide

ing & Storage Ser vic

To learn how our people will make a positive impact on your relocation program and your people, visit: www.graebel.com/OurPeople.html

es

port Circle, Aurora, Colorado 80011 U.S.A. | www.graebel.com | marcom@graebe arters: 16346 Air l.com | +1 u q d a e H d l r o .800.723.6 W 683


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Around the Worldwide ERC®

Higher Profit per Employee

M

cKinsey & Company research published in May 2008 discovered a strong relationship between company financial performance and 10 specific global talent management practices. According to this report, the correlations between the companies with the highest profit per employee “were particularly striking in three areas: the creation of globally consistent talent evaluation processes, the management of cultural diversity, and the mobility of global leaders.” Although companies claim to understand the importance of these global talent management factors, there are significant barriers to achieving cultural diversity, establishing globally consistent HR practices, and promoting mobility between countries, according to the report. The authors note, “participants cited several disincentives to global mobility, but one of the most significant was the expectation that employees would be demoted after repatriation to their home location. ‘Overseas experience is

not taken seriously and not taken advantage of,’ commented one senior manager. ‘Much valuable experience dissipates’ because companies have a habit of ‘ignoring input from returnees, and many leave.’” Leaders from major global companies provided information for the research, and companies are finding ways to address these issues. The Worldwide ERC® Global Workforce Summits provide a platform for such leaders to gather and share information, exchange ideas, network with subject matter experts, and identify solutions. Registration is ongoing for the Global Workforce Summit®: Focus on Asia-Pacific, taking place March 10 and 11, 2010, in Hong Kong. Visit www.WorldwideERC.org/Events/Pages/apac10.aspx for more information and to register. The Global Workforce Summit®: Focus on Europe, the Middle East, and Africa will convene in Paris, France, June 10 and 11, 2010.

What Are Providers of Workforce Mobility and Relocation Services Saying? orldwide ERC® has helped me learn more about the industry and how the work I do fits into the larger scheme of workforce mobility.” _Elena Arzumanyan, GMS, Prime Realty & Relocation

W

“The educational and networking opportunities have paid off handsomely. The monthly educational webinars, unbiased research on the industry’s hottest issues and trends, their website, and the conferences are outstanding sources of information regarding workforce mobility and international assign-

ment management. I wholeheartedly endorse Worldwide ERC®.” _Jim Schneider, SCRP, Weichert Relocation Resources Inc. We’ve found a network of skilled professionals who have all enhanced our understanding of the best ways to move people around the world.” _David Berry, Berry Appleman & Leiden LLP Members who provide workforce mobility services for our industry have a wealth of learning and networking benefits and an important market presence for their firms.

They automatically receive one listing in the printed Roster of Members and Resource Guide and one listing in our online Global Workforce Services Directory. The Roster is distributed in more than 60 countries and the online Directory has a worldwide reach. If your company provides a needed workforce mobility or relocation service, be sure to enroll today to be included in the print Roster and online Directory and receive $100 off the standard fee. Visit www.WorldwideERC.org or call us at +1 703 842 3400 to talk to a member representative.

National Relocation Conference Exhibit and Sponsorship Opportunities

et ready for one of the workforce mobility industry’s largest annual events! Exhibit and sponsorship opportunities are now available for the 2010 National Relocation Conference at the Walt Disney World Dolphin in Orlando, FL, on May 19 through 21, 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’ll experience exceptional networking opportunities, insightful educational sessions, and a dynamic mobility services marketplace at the conference. If you provide relocation and workforce mobility services, exhibiting at this event is MUST for your company! Exhibit space and sponsorship opportunities for the National Relocation Conference are limited and selling quickly. Booth space is available on a first-come, first-serve basis, so sign up today! For more information and to sign up, visit the National Relocation Conference online at: www.WorldwideERC.org/Events/Pages/nrc10.aspx.

G

12 MOBILITY/JANUARY 2010


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Worldwide scope. Localized service. End-to-end precision.

At Primacy, excellence is our standard. Regardless of location or logistics, our global relocation experts have all the right tools to provide you with consistent, end-to-end results. Those tools are integrated into a unified technology platform, providing us with a real-time snapshot of every detail, including costs, right down to the penny, centavo, senti, fen and dirham. Managing every detail of every move is not a goal at Primacy. It’s a way of life that leads to more predictable outcomes for everyone involved – time after time. For more information, visit www.primacy.com today.

1-877-343-5897

©2009, Primacy Relocation, LLC. All rights reserved.

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Executive Spotlight

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RT LLC, Baltimore, MD, has named Dean Cottrill president of Coldwell Banker Residential Brokerage in Greater Baltimore. Michael Saunders & Company, Sarasota, FL, has named Maureen Horn an agent in the company’s Longboat Key South office. Judy Arreola and Kristina Talkie have joined the Siesta Key office. Coldwell Banker United, Realtors®, Charleston, SC, has named Dan Garrison sales associate in the company’s Charleston office. Arpin Group, Inc., West Warwick, RI, has promoted Matt Dolan to chief operating officer. The Tri-State Relocation Group, New York, NY, has named its 2010 board of directors. Christine Haney, CRP, GMS, Prudential Douglas Elliman Real Estate, has been named president. Sonya Weisshappel, Seriatim, Inc., was named executive vice president and treasurer. Jeanne Ann Heiser, CRP, Korman Communities, was named vice president of membership. Cheryl Wright Alexander, SCRP, GMS, LGS Management, Inc., was named secretary. Past president is Chris O’Connor, Drew & Rogers. Board members are Claire Andia of American Furniture Rental; Melanie Buechler of Bridgestreet Worldwide; Mike Cahill of Graebel Relocation Services Worldwide; Cynthia Cross of AIReS; Michelle Durkin of Honeywell International; Johnny Haines, CRP, GMS, of Deloitte; Ron Labin, CRP, GMS, of Cornerstone Relocation Group; Scott McCain, CRP, of Bank of America; Silvana Malpelli, CRP, GMS, of Brown Harris Stevens; Kelly Pieper of K. Pieper Consulting LLC; Robert Ricketts of Berkshire Designers Ltd.; Linda Riordan, CRP, GMS, of Ernst & Young LLP; and James Theophilakos, CRP, of Primacy Relocation, LLC. Marriott ExecuStay, Bethesda, MD, has announced Chris Cramer, regional sales manager for its insurance housing solutions division, has 14 MOBILITY/JANUARY 2010

Citibank Global Executive Banking (GEB), Houston, TX, has named Steve Rogers, SCRP, GMS, vice president of corporate sales. GEB provides U.S. dollar banking and brokerage services to corporate employees on international work assignment and is designed to help assignees manage their finances in their home and host countries. Rogers served as 1999 Worldwide ERC® president, and has chaired the Nominating Committee and Rogers Industry Advisory Council. He also has been a member of the Board of Directors, Coalition Public Policy Management Committee, Membership Growth and Fundraising Committee, Coalition Board of Directors, Membership Committee, National Relocation Conference Planning Committee, Foundation Board of Trustees, and Foundation Research and Education Committee. He is a recipient of the Meritorious Service Award, four-time recipient of the Distinguished Service Award, and a member of the Worldwide ERC® Hall of Leaders. responsibility for an expanded territory to include the Mid-Atlantic region. UniGroup Worldwide UTS in Hong Kong has named Ludovic Valls general manager. The Council of Residential Specialists, Chicago, IL, has named its 2010 leadership team. Gregg Fujita, CRS, GRI, Frank Serio, CRS, CRB, and Mark Minchew, CRS, CRB, were installed as president, president-elect, and first vice president, respectively. Cornerstone Relocation Group, Irvine, CA, has named Christopher Furlotte, CRP, vice president, global business development. The Rocky Mountain Relocation Council has named its 2010 board of directors. Rick Willard, CRP, Wells Fargo Home Mortgage, was named president. Julie Johnson, Johnson Storage & Moving Co., was named vice president. Kylie Rupert, CRP, GMS, Coldwell Banker Residential Brokerage, was named secretary. Rob Giese, SCRP, GMS, CCHP, Equus Software, was named treasurer. Dolores Mozer, CRP, Fuller Sotheby’s International Realty, was named immediate past president and committee co-chair—conferences. T.J. Marchello, CRP, Golden Van Lines, Inc., was named committee co-chair—

conferences. Kelly West, CRP, GMS, Excellerate HRO Relocation & Assignment Services, was named committee chair—communications. Pamela Darby, CRP, GMS, RCC, WRS, Kentwood Companies, was named committee chair—industry relations (networking). Melissa Stevens, Gables Corporate Accommodations, was named committee chair—membership. Bob Kelly, CRP, GMS, CMC, New World Van Lines, Inc., was named committee chair—charitable causes. Board members are Brenda Darrow-Fuhs, Bank of America, and Stephanie Egan, Leprino Foods. Ace Relocation Systems, Inc., San Diego, CA, has named John Burton senior vice president of commercial services. Amy Stewart has joined Signature Source, Chicago, IL, as an executive career coach and recruiter. The Talbot Group, Avon, CT, has named Ernie Coshonis vice president and chief operating officer for the firm’s nationwide relocation counseling and management services. Vin Carboni, CRP, has been named national accounts director. Interdean International Relocation, London, United Kingdom, has named Lorraine Gray account manager.


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WHR continues to staff our office 7 days a week with experienced relocation counselors so WHR can respond to your employees’ when they need us most.

“My WHR te am was great and so was th staff when I c e alled after ho urs. I was mo impressed tha st t, with the tim e c h a nge, when I called at nig ht, They were a ble to help vs. taking a mes sage and me having to wa for a return c it all the next d a y . T heir office really works seamlessly to gether.” Based upon an

oup actual WHR Gr

testimonial

Innovative Solutions.. Concrete Results.

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www.whrg.com Jan 10 WHR Mobility pub

© WHR Group Inc. 2010

800.523.3318 Saturday December 05 2009 15:26


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Industry Spotlight

Expatriates Give Canada High Marks in Quality of Life Survey

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hether the motivation to move stems from improved career prospects, financial gain, or better accommodations, employees nevertheless remain mobile around the globe. A recent survey asks these same employees where the best assignments are in terms of quality of life, and whether the living is better compared to their home locations. The survey, “Report Two: Expat Experience,” is the second of three of the Expat Explorer Survey 2009, commissioned by HSBC Bank International, and explores the quality of life as an expatriate. In its second year, the survey has queried more than 3,100 expatriates on four continents about the details of a mobile life, and focuses on the experiences involved with settling in to a new location, as well as how the quality of life rates compared to their origin location. Countries were ranked according to 23 different criteria, including accommodations, food, entertainment, transportation, health care, education/child care, and social life, among others, to determine which location offered the best quality of life. In addition, they also rated the relative ease in which they were able to accomplish a standard list of destination-specific activities, including setting up utilities and learning the local language. According to the report, Canada ranked first overall (without language) across all categories out of 26 countries. It ranked fourth for quality of life, and second for ease of integration. Sixty-seven percent of expatriates report owning a property in Canada, compared to a global average of 31 percent, according to the report. Forty-seven percent own more than

one car (the global average is 29 percent). Canada scored high marks on what the report refers to as “measures of expatriate integration.” Fiftythree percent said they have noticed an improvement in quality of their family life, compared with a global average of 32 percent. The global averages for “making local friends” is 76 percent. In Canada, the figure is 91 percent. In addition, according to the report, 32 percent said they found love in Canada, and 42 percent indicated they had joined a community group.

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In terms of personal administration, 61 percent of expatriates in Canada said it was “easy to organize their finances,” and 61 percent said the same with regard to their health care. The global averages for these two categories are 51 percent and 50 percent, respectively. Canada also is the best location in the survey for accommodations for expatriates, with 68 percent saying it was “easy to find somewhere to live.” In addition, 68 percent of expatriates surveyed said the quality of their accommodations is superior than in

Altair Global Relocation

Ranked #1 in Overall Service Satisfaction—Trippel Survey & Research, LLC® MOBILITY/JANUARY 2010 17


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Industry Spotlight

their home country, which was a number one ranking for the category among the countries surveyed, according to the release. It appears from the results of the survey that expatriates truly enjoy Canada more than their home country. Only 44 percent of expatriates returned home at least once a year; the global average is 74 percent.

The top five reasons to live in Canada, according to the report, include 39 percent of expatriates saying “it offered a better environment/quality of life for my children;” 38 percent citing “lifestyle;” 36 percent indicating “length of contract;” 35 percent saying “career prospects;” and 13 percent indicating that there was “less crime.”

FYI Fragomen, Del Rey, Bernsen & Loewy, LLP, New York, NY, has announced the opening of an office in Johannesburg, South Africa. Elliott International, Johannesburg, South Africa, has set up specialized business units to handle expanding relocation services into and out of Africa. It announced the acquisition of Corporate Relocations South Africa, and will merge the business activities with the company and Elliott Relocations into Corporate Relocations South Africa (CRSA). The company also has announced CRSA has aligned itself with Fragomen, Del Rey, Bernsen & Loewy, LLP. Weichert Relocation Resources Inc. (WRRI), Morris Plains, NJ, has announced the launch of the Relocation Next Practices blog, found at www.wrri.com/blog, featuring insights from subject matter experts across the company’s global operations, as well as podcasts that discuss current employee mobility trends and challenges. Updates to the blog are announced via Twitter at www.twitter.com/WRRI. The company also announced the release of Next Neighborhood, a proprietary suite of web-based community and housing research tools that enable mobile employees to identify locations best suited for their lifestyles and needs.

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Quick Takes Rocky Mountain Relocation Council Brings Message of Hope n December 3, 2009, the Rocky Mountain Relocation O Council (RMRC), Denver, CO, board of directors gathered for their annual Holiday Luncheon. This year, the

difficult time as the amount of toys donated councilâ&#x20AC;&#x2122;s Charitable Causes Committee invited U.S. this year is sigMarines from the local reserve unit, Marine Air Control nificant less Squadron-23, Buckley Air Force Base, in Aurora, CO, to than in previjoin the boardâ&#x20AC;&#x2122;s holiday tradition and accept a large quanti- ous years. We ty of new, unwrapped toys in support of the 2009 U.S. are so grateful Marine Corps Reserves Toys For Tots Campaign. The for organizations RMRC Board, accompanied by Sergeant Melody Gentry like Rocky (second from left) and Sergeant Colin Gordon (right) gather around some of the toys that will be handed out by Mountain Relocation the Marines to needy boys and girls at Christmas within Council for local Colorado communities. Sergeant Gentry said, â&#x20AC;&#x153;as a result of the economic situation, this has been a particularly putting in this wonderful effort.â&#x20AC;?

Communities

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orldwide ERCÂŽ members are exchanging questions, answers, and ideas in our five online Forums. Under discussion right now: â&#x20AC;˘ Does your company require individuals to use their relocation benefit within 12 months to avoid tax? â&#x20AC;˘ In a transition from short-term to long-term conditions, what do you do to replace the short-term assignment allowance when there is no cost-of-living allowance? â&#x20AC;˘ How can we make sure U.S. immigration reform addresses green card backlogs for foreign workers? â&#x20AC;˘ Have you seen a trend toward more in-depth HOA disclosure forms over the past three months? Have you changed your form recently? Be part of the conversation. Log in and add your comments and questions today. Visit www.WorldwideERC.org/Pages/Web2.0.aspx or click on the white â&#x20AC;&#x153;Communitiesâ&#x20AC;? text hyperlink at the top of every page of www.WorldwideERC.org. Come join your community. Note that access to the forums is an exclusive benefit of Worldwide ERCÂŽ membership. Join now or review your membership for 2010 if you have not already done so.

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2010 Worldwide ERC® Board of Directors EX-OFFICIO

EXECUTIVE COMMITTEE PRESIDENT

VICE PRESIDENT

Michael (Mike) C. Washbourn, SCRP, GMS Pfizer Inc. Peapack, NJ

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

CHAIRMAN OF THE BOARD

Al Blumenberg, SCRP NEI Global Relocation Omaha, NE

CHAIRMAN, U.S. ADVISORY COUNCIL

Joseph (Joe) V. Benevides, Jr., SCRP Consultant Assonet, MA

BOARD OF DIRECTORS

Cori L. Beaudet, SCRP, GMS 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

Johnny H. Haines, CRP, GMS Deloitte Hermitage, TN

Lars Lykke Iversen Santa Fe Relocation Services Hong Kong, CHINA

Christopher (Chris) James Bechtel Corporation Phoenix, AZ

Santrupt Misra, Ph.D. Aditya Birla Management Corporation Ltd. Mumbai, INDIA

Joy Morrison, CRP, GMS PepsiCo, Inc. Purchase, NY,

22 MOBILITY/JANUARY 2010

Steven A. Nord UPS Atlanta, GA

Mark Giorgini, GMS China Vanke Co. Ltd. Shenzhen, CHINA

William (Bill) Graebel, GMS Graebel Relocation Services Worldwide Aurora, CO

Earl Lee Prudentia Relocation Scottsdale, AZ

Stephen C. McGarry, SCRP WPP New York, NY

Mario Ferraro International SOS Pte Ltd. SINGAPORE

Jo Lay, SCRP, GMS Coldwell Banker Central Region Relocation Chicago, IL

Ian Payne, GMS Cartus London, UNITED KINGDOM

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, GMS Primacy Relocation, LLC, Memphis, TN


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2010 Worldwide ERC® President

Michael C. Washbourn, SCRP, GMS BY FRANK MAUCK

I

t is an early fall morning in October and, sheltered from the steady drizzle outside, the rooms of the Hyatt Regency Chicago hotel are humming with discussion between the world’s leading mobility professionals. It has been a year since the economy began its journey south and, at this gathering, the sense among its attendees is that it’s the dawn rather than the dusk. Yes, there are issues. But this particular group has gathered to focus on solutions. Dubbed “The New Normal,” the Worldwide ERC® Global Workforce Symposium has convened during challenging times. Chief among current concerns is the global financial crisis, a complex consequence of the collapse of the U.S. housing bubble following the sub-prime mortgage crisis. Some economists say the recession ended in July 2009. They point to a real GDP reduction of only 4 percent. They say S&P revenues only fell 18 percent. But there still are the aftershocks with which to contend. Recovery is a challenge when nationwide home prices are down more than 30 percent. Unemployment also is on the rise, as often is the case at the end of a recession. It is at this economic crossroads where we find Michael C. (Mike) Washbourn, SCRP, GMS, senior manager, global mobility operations for Pfizer Inc., Peapack, NJ. As chairman of the Program Planning Committee, he has closely watched this conference develop and is acutely aware of the issues. This clarity is just one of the reasons his peers recently elected him 2010 Worldwide ERC® president and look to his capable leadership to guide the organization this year. 24 MOBILITY/JANUARY 2010

The Path to Mobility For the last four decades, the Ford Mustang has been the only original pony car that has remained continuously in production. One from 1969 sits in Washbourn’s garage in Hillsborough, NJ. It was his first set of wheels, and for a long time he has wanted to finish restoring it. He stopped when his daughter, Emily, 12, was born. She likes to joke now that it will be her first car. Emily and Washbourn’s other two children, Nolan, 10, and Erin, 8, are the focus of his life outside work now. They are the reason he has been putting off the restoration. When not dedicating considerable hours to his career managing global mobility, he enjoys spending time volunteering for his children’s activities, among them coaching Little League, announcing football team home games, and serving as treasurer for the local Cub Scout pack. “My kids are my hobby at the moment,” he said. “That’s where my time goes. These are the years you pour into it. You don’t want to miss that stuff. I’ll have plenty of time to restore the Mustang when they’re grown and making their way in the world!” He has been married to Eileen now for 15 years. They met at Villanova University, first semester freshman year. They frequently observe that they have known each other for more than half their lives. “I was lucky enough to meet a wonderful girl in college who became my wife and who supported me through a lot. And I knew right away. If there really is such a thing as love at first sight, then this was it.”


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Mike Washbourn and wife, Eileen. After graduation, as Washbourn was beginning his professional career, the United States was undergoing an economic contraction. Although the 1990s proved to be the longest period of growth in the United States, one would not know it entering the workforce in the beginning of the decade. Late 1980s interest rate increases, new banking regulations, oil price shock, and debt accumulation factored into a short economic recession. Having been raised on Long Island in the shadows of Manhattan, Washbourn’s early goal was to work on Wall Street. He says that is what a young man growing up in that environment wanted; having witnessed his neighbors and others he looked up to doing the same. So he went to school to study finance. Armed with a degree in business administration and facing a difficult employment environment, he took a job selling insurance—sales being one of the few jobs available at the time. He realized a fondness for the customer service aspect of the job, and though actually selling insurance did not thrill him, he was good at helping anyone who came to him with a problem. At the same time—similar to today—mortgage failures were 26 MOBILITY/JANUARY 2010

hurting the real estate market. His next career step was into an entrylevel position as an assistant inventory manager in the REO division of Weichert Relocation. There, he learned the ropes of selling and managing properties and worked his way up to inventory manager. He quickly took a liking to real estate. He enjoyed the responsibility for the assets, working with customers, real estate agents, and banks, and was able to use the finance skills he developed in college. Like every business cycle, the recession of the early 1990s came and went, and as the volume of REOs waned, relocation began to pick back up. His boss and mentor at the time offered Washbourn the opportunity to get into the workforce mobility side of the business. He learned about counseling, as well as the ins and outs of rentals and homesales. He says that working directly with corporate transferees right from the start—how mobility works from the ground up—has given him perspective. And not just the mechanics of the business—the human side, too. Then, an option opened up at a client’s company, Warner-Lambert.

His boss gave him the opportunity to take over the manager role there. The corporate culture proved a great fit. Pfizer merged with Warner-Lambert in 2000, and Washbourn worked closely through the merger with Pfizer’s thenmanager of relocation services. After the merger closed, the Pfizer manager was promoted and Washbourn was offered the job for relocation. “I had to think long and hard about it, but ultimately Pfizer was a great company, it was a great opportunity, and it really made sense for me to take that jump. So he gave me the opportunity of a lifetime to join Pfizer and I was able to work in Manhattan for a little over four years, managing an on-site program that was global in nature.” Washbourn says he always has had an optimistic and thankful attitude toward life. He says that in his world, things happen for a reason. Looking back, he marvels at ending up in Manhattan after all. “It is interesting in life how people give you chances,” he said. “Like most others who land in this industry, relocation is not one of those things that you plan, but once it happens, you see what a perfect fit it can be for your skills and education.”

The Corporate Environment Washbourn has been with Pfizer since February 2001, and has watched the mobility program grow along with the company. After having a responsibility for both U.S. domestic and global mobility, he now focuses exclusively on global mobility. It has been a busy few months trying to create a global platform and launch new policies. He says reinvention is what this business is all about—determining the situation within a company, sizing up the situation with the global economy, and looking for solutions. But he enjoys the responsibility. “We’ve got people around the world


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who count on us to make sure they are compliant with the rules: we’re dealing with immigration, with taxes, with a range of additional issues. I think it’s that part of it, and I think a lot of my colleagues who are in this global mobility space would agree, that it’s always different, it’s challenging, it’s 24/7, but I don’t know what else I would want to do.” “I wouldn’t work for a company I wasn’t proud of,” he said. “Pfizer exists to help people live longer, happier, healthier lives. In fact, one of the company’s mottos is ‘life is our life’s work.’ Being inside a company that can have an impact on a better future is important to me.” He knows the scientists in the labs—he has moved them. He has talked to them, shaken their hands. He knows their dedication, and he takes their movement seriously. He knows the potential for derailment if a scientist or his or her family is under stress from the transfer, and creates a situation where the employee is unfocused on the work at hand. In his industry, that translates to a delay in finding a cure. “All of us know that there is a direct link between mobility and the success of your organization,” he said. “And I think our senior leadership recognizes that. We’ve always had good strong support to have proper benefits in place to do it. And just as the right medicine and treatment can raise the quality of someone’s life, the right mix of relocation benefits can raise the quality and success of a relocation for mobile employees and their families.

Worldwide ERC

®

The volunteer ethic Washbourn demonstrates for his children shows in his Worldwide ERC® participation, too. He has served on the board of directors, the Finance Committee, the

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The Washbourn family (from left to right) Mike, Erin, Eileen, Emily, and Nolan. Audit Committee, and is currently chair of the CEO Search Committee. He says that if he is going to be involved in something he wants to jump into it and try to help in any way he can, and that Worldwide ERC® offers a variety of options. “That’s the beauty of this whole organization,” he said. “There really is something for everybody. We’ve got so many talented colleagues out there, and there are so many opportunities. One of the best things for me was getting introduced to that.” He says he was surprised and humbled when elected secretary-treasurer, his first officer position, which was followed by his election to vice president and now, president. “I didn’t pursue officer positions in Worldwide ERC®, so I wasn’t sure whether to believe it at first. But once I learned it was real, I was really gratified that my fellow colleagues saw something in me, and felt I was worthy of taking that step. I feel I am in the process of completing something important, and I want to make my peers proud of the job I’ll do as president this year.”

Advice for Burgeoning Professionals Washbourn places great value on an

education. “One of the greatest strengths of Worldwide ERC® is its ability to develop and deliver education. That is the foundation of what we value in our association. It’s all about elevating our knowledge base and, along with it, the level of our professionalism.” That belief made earning his CRP® a deeply proud moment for Washbourn. “Earning a certification in most professions raises the bar in one’s industry. And the CRP® is not an easy certification to achieve. It says to the world that you have studied and learned your craft, and that you’re a competent professional who can be relied on to understand the depth and breadth of your business. It brings a Worldwide ERC® member the kind of recognition and respect that they deserve, and shows that they have achieved a certain level of knowledge in our industry. And on a global scale, that’s what the GMS™ does for its designees as well.” He is a strong proponent of customer service, and the integral part it plays in the success of a business. “If I were advising a young professional coming into the industry, I’d point MOBILITY/JANUARY 2010 27


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information, and communications that demonstrate the connection between a well-run workforce mobility program, exceptional customer service, and an employer’s success.”

Looking to the Future

The Washbourn family (from left to right) Nolan, Mike, Erin, Emily, and Eileen. out that there are an incredibly diverse number of things you can do if customer service is in your heart. If you take pride in helping people, there are endless opportunities within this industry. You can find a home here.” Washbourn also says that empathy is a key trait for relocation. “I truly believe that we need to put ourselves in the shoes of the transferee—the person who is being asked to uproot their family in many cases, sometimes for a promotion, but more often these days to keep a job. Those are difficult, gut-wrenching decisions and they’re even harder on the family. If they can see that the individuals helping them through this process ‘feel the pain’ and understand their issues, we can communicate with each other in a way that makes for a much stronger outcome.”

2010 Goals Washbourn’s mantra for 2010 is “invest in the future.” He notes that for many industry professionals, much of the past year or more has been focused on survival tactics, but “now is the time to move from survive to thrive, and put ourselves into a growth perspective.” Through this lens, Washbourn has some powerful goals in mind. 28 MOBILITY/JANUARY 2010

“I’m very focused on overseeing the CEO selection process, hiring a strategic leader, and effecting a successful leadership transition. I’d like to be remembered as having been in part responsible for selecting the leader who gets us to the next level. “Another significant piece for me is around Worldwide ERC® getting to the next level from a global perspective. I truly feel strongly about our U.S. domestic foundation of members—they laid the groundwork for our entire industry. And I also know that for us to flourish in the future, we really need to push into global markets. So I will be working with Worldwide ERC® leadership and staff to bring our global initiatives to fruition. I’d like to see us complete the comprehensive review of our overall globalization strategy we began in 2009, and begin implementation of the most timely and significant elements in 2010. “It’s also critical that we increase the value proposition for our U.S.centric members through expanded collaboration, consultation, and communication, with special focus on real estate-related issues that are central to our industry’s U. S. domestic recovery. And I will continue to advance programs, education, certification,

“The economy and our businesses will swing back. They always do,” he said. “I’m an optimist about that. I’ve been on the Earth long enough to see one or two of these myself, as have many of our members. It doesn’t always come back the same way every time, or as fast as we might want, but there will be a need for our services in a big way soon enough.” This confidence has been reinforced by what he witnessed in Chicago. Said Washbourn, “during a lot of the sessions and meetings I’ve been in, I heard optimism. There is an underlying conviction that we’ll get through this, and we’ll be stronger for it in the end. Sure, we’ll be a little leaner and meaner, but it’s ultimately good for the long-term health of the industry. “I do believe in the resiliency of our business, in our partnerships. I think at the end of the day, the thought leaders that I know and have worked with can see the subtle shifts forward that are happening. All around us, our colleagues are putting their visions of the future into motion. “As a board member, and as an officer, I know that the time I spend working for Worldwide ERC® is relatively brief, but it is a rare gift to be able to serve in this fashion, and I will do my best to ensure that the impact I make will move the organization forward. I see good things for our association, and for the entire membership.” Frank Mauck is managing editor of MOBILITY. He can be reached at +1 703 842 3432 or e-mail fmauck@worldwideerc.org.


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OCanada BY LISA RAMBERT

This article highlights Canada’s uniqueness and, in particular, compares and contrasts different aspects of Canada and the United States. According to Rambert, “to know us is to love us!”

D

espite its size, riches, and beauty, Canada remains somewhat unknown by people around the world. Alternately, Canada often is defined in counterpoint to the United States, as in “Canadians and Americans are pretty much alike.” Ask anyone what first comes to mind when they think of Canada and there is a popular set of answers: trees, maple syrup, moose, and the like. While these things are indeed part of our cultural and physical landscape, Canada is so much more than the sum of its stereotypes. Could it be that its famously polite and understated people simply are uninterested in shouting its own praises from the mountain top? Or is it that Canada is too vast and varied for simple descriptions? It is particularly fitting that Canada be featured in MOBILITY. In many ways, Canada is the model of a mobile population.

MOBILITY/JANUARY 2010 31


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Canada has the highest per capita immigration rate in the world. It relies on immigration for its sustained economic growth. With the United States, Canada enjoys the single most important trading relationship in the world. And, its border with the United States is the longest unprotected land border in the world. These facts are strong evidence of everything that Canada is doing well when it comes to mobility issues. However, they also are the reasons why Canada must strive for excellence in all policy matters affecting workforce mobility. There is simply too much at stake not to. Much of what sets Canada apart from other nations is a factor of its physical territory. First, there is its sheer size. Canada is the secondlargest country in the world, outranked only by Russia. It enjoys the longest land border in the world with its American cousin to the south and it also shares a border with Alaska in the northwest. It stretches from the Atlantic to the Pacific to the Arctic, hence the saying “from sea to sea to sea” when talking about Canada’s borders. Canada also has the longest coastline in the world: 243,000 kilometers (151,000 miles). With so much land, it is not surprising that Canada enjoys one of the lowest population densities in the world. Its 31 million people are spread out at the rate of 3.5 inhabitants per square kilometer; however, as most of the population is located within 150 kilometers of the American border, much of Canada’s land mass is uninhabited. Canada relies on immigration to grow its population. The most populous part of the country is situated amid a stretch that runs from Quebec City, in the province of 32 MOBILITY/JANUARY 2010

Quebec, to Windsor in southern Ontario (the golden horseshoe of Toronto, Ottawa, and Montreal), the British Columbia Lower Mainland (including Vancouver), and the Calgary-Edmonton corridor in Alberta. Not only is Canada huge, with plenty of room for everyone, it also is immensely rich in natural resources. Northern Canada, called the Canadian Shield, is a wild and beautiful place. It is a rocky area with stunningly beautiful landscapes punctuated with pristine lakes and rivers. Its remoteness, however, does not diminish its strategic value to Canada and, indeed, to the world, as this area contains more lakes than any other country in the world. Further, Canada contains 20 percent of the world’s fresh water supply. The strategic value of this asset cannot be understated. The management and protection of Canada’s fresh water supply is a top foreign policy priority. Canada also is the world’s largest producer of zinc and uranium and a world leader in many other natural resources such as gold, nickel, aluminum, and lead. In fact, many northern towns exist because of a nearby mine or source of timber.

Regionalism This rich and varied physical landscape helps define strong regional identities. Canada’s regions (west, prairie, central, maritime, and the north) define its industries, local population growth, and cultural identities. Beware the newcomer who dons a tie at the Calgary stampede or shows up at a swanky Montreal bistro in cowboy boots! Western Canadian culture is marked by the rugged beauty of the mountains, the dominance of the oil


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industry, and an affinity for outdoor activities. Once a year, Calgary welcomes cowboys from around the world, most notably from Texas and Montana. The boom of the oil and gas industry in recent years has seen Western Canada’s economic growth outpace the rest of the country. In British Columbia and Alberta, at the height of the boom, the demand for labor and skilled workers was so acute that employers often were unable to fill jobs. The prairies are made up of Saskatchewan and Manitoba. With its millions and millions of acres of farm land, this area is the breadbasket of not only Canada but much of the world, as well. Canada is one of the world’s most important suppliers of agricultural products, with the Canadian prairies one of the most important suppliers of wheat, canola, and other grains. The people who live here share values finely honed by the demands of agriculture and, although farmers are growing fewer in number, there still are many families in Saskatchewan and Manitoba who have been tending the land for generations. Central Canada is made up of Ontario and Quebec. These provinces traditionally have been the economic engine of Canada, though the recent energy boom has seen Western Canada lay claim to that distinction. Toronto is the largest city in Canada, with a population in excess of five million. It is the center of Canada’s financial, service, automotive, and manufacturing industries. Toronto’s population is multicultural and highly skilled. Moreover, Ottawa, the capital of Canada, also is situated in Ontario, making this province a hub of political as well as economic activity. In addition to its business scene, Toronto has a thriv-

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ing entertainment industry. In fact, the entertainment industry infrastructure here is so good that many American films are shot on its streets with Toronto passing for Chicago, New York, and any number of other American cities. Toronto’s International Film Festival is an important event that is now a must for filmmakers around the world. Quebec is a province set apart from the others by its French language and culture. In reality, however, many of its inhabitants speak English, especially in the city of Montreal. It, too, is a multicultural city that enjoys a more European culture and lifestyle than any other city in North America. The New York Times has called it “Paris without the

jet lag” and its cultural and gastronomical scene is highlighted repeatedly by the most influential travel writers. Some of the more notable cultural exports from Quebec include Celine Dion and Cirque du Soleil. In addition to its vibrant cultural and creative scene, Quebec also is Canada’s hub for the pharmaceutical, aerospace, engineering, and video game industries. Quebec’s European flavor and excellent business and investment opportunities make this location a particularly attractive one for corporate transfers. Last, but definitely not least, we arrive at the eastern-most tip of Canada; the Maritime provinces. This region is made up of New Brunswick, Newfoundland, Prince

MOBILITY/JANUARY 2010 33


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CanadaCulture Tips • Canadians pride themselves on the link between their cultural heterogeneity and their strength as a peaceful nation. • Historically, Canadian immigration policy has been very welcoming in its philosophy, celebrating diversity and offering opportunities to anyone. This has created a cultural mosaic where individuals are encouraged to retain their cultural identities through traditions, languages, and customs. • English and French are the country’s two official languages. Both languages appear on maps, tourist brochures, and product labels, so it is important to have business materials in both French and English. • There are several distinct varieties of French, collectively known as Canadian French, spoken in Canada, and it is not the same as the French spoken in France. Canadian French speakers tend to communicate more indirectly and nonverbally than native English speakers. • Because Canada is a country of immigrants from all around the world, Canadians exhibit a multiplicity of communication styles. Even within ethnic groups there is variation. For example, a fourth-generation Chinese-Canadian working in Toronto would communicate far more directly than an ethnic Chinese who lives in a Chinese enclave in Vancouver. • Although Canadians generally are individualistic and make decisions based on their own needs rather than those of the group, they place great emphasis on the individual’s responsibility to the community and to achieving a good quality of life. • Most Canadians see time as something that can be controlled, although they are not obsessive about letting the clock rule their lives. • For the most part, Canadians strive to be on time for social engagements, so deviations are more a matter of personal preference than culture. Punctuality is expected in business. • Canadians are egalitarian businesspeople, so it is safest to treat everyone with equal respect and deference. In Quebec, there is a bit more regard for titles and hierarchy. Canadians generally are reserved and somewhat formal in their behavior, especially in Quebec. • As an egalitarian culture, Canadians tend to express their opinions freely. In general, information flows in all directions and managers often seek the advice of technical experts. Managers tend to see themselves as facilitators whose job is to assist their subordinates to produce their best work, rather than vice versa. Source: RW3 CultureWizard’s™ Country Profiles 34 MOBILITY/JANUARY 2010

Edward Island, and Nova Scotia. Just as the economies of the prairie provinces were defined by those regions’ agricultural riches, the Maritimes depend on fisheries. This industry was devastated by the collapse of the cod population in the Atlantic. But recent years have seen a slow return to healthier levels. Atlantic Canada also can rely on its vast offshore deposits of natural gas to maintain economic prosperity. In fact, Canada is a net exporter of energy. Strongly influenced by its Irish and Scottish heritage (and Acadian in New Brunswick, which is related to French Louisiana) the people of the Maritimes are known for their warmth and hospitality.

Canadian Culture and People Although regional identities are strong across Canada, there still exist some overarching national values that Canadians hold dear. And, while venturing into the minefield of cultural generalizations always is risky business, some basic traits are worth noting. For example, while American political philosophy draws heavily on an unwavering belief in the individual, Canada’s approach to governance tends to be more community-oriented. The current health care debate is a perfect example of this difference. Universal health care has been a fact of life in Canada for approximately 40 years while our American cousins still are grappling with all its implications and ramifications. Ours is a society marked less by the peaks and valleys of prosperity and poverty found in the United States. In Canada, economic freedom is ranked lower than in the United States, but higher than most European nations, as indexed by the Heritage Foundation. Hence, Canada’s economic culture can be seen as a middle ground between that of the United States and Europe. In addition, Canadians as a group tend to be more reserved and prudent than Americans. The Canadian banking system remains robust and escaped the worst of the financial crisis in part because of its more conservative banking culture. Canada’s culture is rooted in its bicultural English and French heritage. Canadians pride themselves on their multicultural population and view it as an essential part of their identity. In fact, an interesting point is that while Americans speak of their population of different cultures as a melting pot where all come together as Americans, Canadians view their own multicultural population as one where each cultural group retains their identities, all the while standing side-by-side with other groups that together form a Canadian cultural mosaic.


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And a rich mosaic it is. Canada boasts 43 different ethnic groups. Based on the 2006 population census, the breakdown largely is as follows: the largest ethnic group is English (21 percent), followed by French (15.8 percent), Scottish (15.2 percent), Irish (13.9 percent), German (10.2 percent), Italian (5 percent), Chinese (3.9 percent), Ukrainian (3.6 percent), and First Nations (3.5 percent). Approximately one-third of respondents identified their ethnicity as “Canadian.” Canada’s aboriginal population is growing almost twice as fast as the Canadian average, as 3.8 percent of Canada’s population claimed aboriginal identity in 2006. Also, 16.2 percent of the population belongs to non-aboriginal visible minorities. The largest visible minority groups in Canada are South Asian (4 percent), Chinese (3.9 percent), and Black (2.5 percent). At 3.8 percent of the current population, Canada’s aboriginal community is small; however, its importance cannot be understated. Canada, or “Kanata,” is Iroquois for settlement. There are distinctive aboriginal cultures originating from all regions of Canada. Aboriginal people today are active in many different occupations and may live fully “NorthAmericanized lifestyles” while others maintain their traditions on reserve lands granted them by the government. Despite challenging political relations at times between some aboriginal leaders and the Canadian government, they remain a seminal and cherished part of Canada’s cultural heritage and identity. National Aboriginal Day is a day of recognition of the cultures and contributions of the First Nations, Inuit, and Métis peoples of Canada. Today, most of 36 MOBILITY/JANUARY 2010

the 30 different languages spoken by the indigenous peoples of North America, are spoken in Canada. In fact, two of Canada’s territories give official status to native languages.

Canada’s System of Government Canada and the United States are both democracies and both are federal states. And that is about the end of any similarity between the two. Canada is an officially bilingual (English and French) country by the express design of our Fathers of Confederation in 1867. The United States is a republic whereas Canada is a constitutional monarchy. Our head of state is the Queen of England and we share her with Australia, New Zealand, and many other nations such as the Bahamas, Papua New Guinea, and Tuvalu. In Canada, the Queen is represented by the Governor General, a Canadian citizen appointed by the Queen of England on the advice of the Prime Minister. But the significance of this difference is about much more than our figurehead, however, because Canadians are governed by a parliamentary cabinet, while Americans have a presidentialcongress. While the difference may appear formal only, its practical effects are profound. The presidential-congress is based on a separation of powers. The American president cannot be a member of either house of congress. Neither can any of the members of his or her cabinet. Neither the president nor any member of the cabinet can appear in congress to introduce a bill or defend it, answer questions, or rebut attacks on policies. No member of either house can be president or a member of the cabinet. The practical effect of this is that the president may propose a specific program of legisla-


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tion but either house can add to or modify it and the president only can lobby from the sidelines. Also, no matter the successes or failures of the American president, he or she is elected for a fixed-term of four years (unless he or she is impeached or resigns), and has a two-term limit. Canada’s parliamentary-cabinet government is completely different. It is based on a concentration of powers. The prime minister and every other minister must be a member of one house or the other. Every government bill is introduced by a minister and ministers are regularly in Parliament debating, defending, and answering questions on government policies and actions. As such, so long as the prime minister can maintain a majority in the House of Commons, he or she will be able to pass every bill he or she introduces. And, if not, then an election may be triggered and a new prime minister and a new House of Commons can get back to business. Of course, there remain other differences, such as the types of federalism both systems embody but it is clear that, despite these differences, both nations have constructed successful systems of government.

Canada’s Economy Canada is one of the wealthiest nations in the world. It is a member of the Organisation of Economic Co-operation and Development (OECD) and the G8. As of February 2009, Canada’s national unemployment rate was an enviable 7.77 percent. We all have witnessed spectacular reversals of fortune on an international level during the recent financial crisis. Canada has emerged at the 38 MOBILITY/JANUARY 2010

head of the pack, though, and is poised to lead all other nations in its economic recovery and growth in 2010. Of course, it had a solid economic foundation on which to build. In 2008, Canada had the lowest level of government debt in the G8. And the OECD predicts that Canada will continue to be in great fiscal health as its debt-to-GDP ratio is expected to decline to 19 percent in 2009. This is less than half the expected average of other G8 nations. During the past 50 years, Canada has transformed from an agriculturalbased economy to an industrial economy dominated by manufacturing, mining, and the service industry in which 75 percent of Canadians are employed. Canada’s economy stands out among those of other developed nations for the prominence of its oil and logging industries. Canada has avoided the usual pitfalls of a natural resource-based economy. On the contrary, its wealth of natural resources leaves it poised to experience another era of economic growth and prosperity as the world grapples with issues related to the environment.

United States and Canadian Trade As one of our former beloved Prime Ministers, Pierre Trudeau, once said about the Canada-U.S. relationship in a 1969 speech, “living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.” The United States and Canada enjoy an economic partnership unique in the world. The two nations share the world’s largest and most

comprehensive trading relationship, which supports millions of jobs in each country. In 2007, total trade between the two countries exceeded $560 billion. To make it all a bit more tangible, consider the following: the two-way trade that crosses the Ambassador Bridge between Detroit, MI, and Windsor, Ontario, equals all U.S. exports to Japan; Canada is the number one export market for 36 of the 50 U.S. states, and is ranked in the top three for another 10 states; Canada is a larger market for U.S. goods than all 27 countries of the European Community combined, whose population happens to be more than 15 times that of Canada; Canada is the single largest foreign supplier of energy to the United States—providing 17 percent of U.S. oil imports and 18 percent of U.S. natural gas demand; Canada is a major supplier of electricity (mostly clean and renewable hydroelectric power) to New England, New York, the Upper Midwest, the Pacific Northwest, and California; and Canadian uranium helps fuel U.S. nuclear power plants. Canada and the United States also enjoy one of the world’s largest investment relationships. The United States is Canada’s largest foreign investor. In 2007, U.S. foreign direct investment in Canada totaled $289 billion, or about 59 percent of total foreign direct investment in Canada. Most of this money flowed to Canada’s mining and smelting industries, petroleum, chemicals, the manufacture of machinery and transportation equipment, and finance.


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Mobility It is clear that the mobility of its people abroad and the organized integration of foreign workers in Canada is a key factor of its continued prosperity. As noted by the Honorable Preston Manning at the annual conference of the Canadian Employee Relocation Council in 2007, Canada was built by immigrants and migrant workers and it will be the skilled and knowledge workers that will ensure Canadaâ&#x20AC;&#x2122;s

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prosperity in the future. This is a pressing issue that governments at all levels are grappling to deal with. Canadaâ&#x20AC;&#x2122;s aging population means that without an increase in immigration, Canada will not be able to maintain the workforce it needs as early as 2011. Canada is very much open for business and has much to offer any person or company. Its unparalleled cocktail of enticements and resources make it the ideal place to

invest in and do business with. The staggering volume of trade between Canada and the United States indicates that many already are wise to the riches to be made in Canada. For those who have yet to launch ventures on our shores, all I can say is: what are you waiting for? Lisa Rambert is director of business development for ARIANNE Relocation, Montreal, Quebec, Canada. She can be reached at +1 514 482 2200 ext. 226 or e-mail lisa@ariannerelocation.com.

MOBILITY/JANUARY 2010 39


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B Y TAT YA N A K O VA L C H U K

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Recent changes to the Canada-U.S. Tax Treaty may affect business travelers and assignees on short-term assignments. Kovalchuk examines the possible effects stemming from the change to the Fifth Protocol.

C

hanges to the Fifth Protocol of the 1980 Canada-U.S. Tax Treaty will affect cross-border employers and their internationally mobile employees. The protocol provides changes to the taxation of pension contributions, equity awards, and capital gains. Communicating these significant changes to affected employees will be an important undertaking for HR departments of multinational organizations. The provisions intend to reduce the potential negative tax effect of global mobility on individuals working between the United States and Canada in two ways.

MOBILITY/JANUARY 2010 41


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First, the protocol attempts to ease concern about deductibility of contributions to cross-border pension plans. Next, it brings relief from potential double taxation of stock option benefits to internationally mobile employees. The provisions on deductions for pension contributions and treatment of stock options took effect on January 1, 2009. The provision for capital gains on departure is effective on a retroactive basis for dispositions that occurred after September 17, 2000.

Pension Plans Short-term assignees who remain in their home country pension plan and their employers will benefit from

these pension plan changes. Crossborder commuters who participate in a pension plan from their country of employment and not their country of residence also will benefit. In tax years ending prior to January 1, 2009, pension deductions were permitted only for country-specific qualified pension plans. The United States would not permit a U.S. taxpayer a deduction for contributions made to a Canadian pension plan.

Effect on Short-term, Cross-border Assignees If a U.S. expatriate who is on assignment in Canada wants to deduct his or her U.S. qualified retirement plan contributions for Canadian tax purposes and let his or

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her Canadian employer deduct the employer’s contributions, the expatriate: • must be a member of the U.S. qualifying retirement plan prior to starting to work in Canada; • must have been a non-resident of Canada prior to starting the Canadian assignment; • must be on Canadian assignment of less than five years; • must be taxable in Canada while on assignment; • may only deduct contributions that are attributable to services performed in Canada; and • must not participate in any other pension plan except the home country plan. The amount of deduction allowed in Canada will be limited to the lesser of the actual amount contributed and the amount allowed under the domestic law of the United States to a U.S. resident.

Effect on Commuters Most commuters continue to reside in their home country and work in another jurisdiction (for example, a resident of the United States who works in Canada). The individual will remain in the host country (country of employment) qualified retirement plan. Before changes to the Fifth Protocol, the commuter only could claim a deduction for pension contributions when calculating his or her host country taxable income. No deduction was allowed in the home country. Now, the commuter will be able to claim a pension deduction in the home country (in addition to the host country) if: • the individual is taxable in the host country on the services rendered in the host country;


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individual’s main place of employment was in that country during the time between the granting of the option and its exercise. This common sourcing method is the key to avoiding double taxation.

Looking Ahead It is important for transferees and their managers to stay aware of treaty

changes. Business travelers may find it easier and more economical to commute country to country because changes to the treaty have eased double taxation issues. To discuss how the treaty changes will affect your pension plan and employment income, speak to your HR department, local representative, or tax advisor and discover the potential

benefits and considerations when working overseas. The views expressed herein are those of the author and do not necessarily reflect the views of Ernst & Young LLP. Tatyana Kovalchuk is a senior manager in Ernst & Young LLP’s Human Capital practice, San Jose, CA. She can be reached at +1 408 947 6871 or e-mail tatyana.kovalchuk@ey.com.

Expatriate Tax News About Croatia, Ireland, Italy, Malaysia, the Europe Union, and China recent Global Insight bulletin issued by Deloitte last month contained news about tax issues relevant to expatriates in Croatia, Ireland, Italy, Malaysia, the European Union, and China. This bulletin was reproduced immediately on its release in the Global Tax and Legal News Library of the Worldwide ERC® website. To see it, as well as other global tax or immigration news alerts, visit www.WorldwideERC.org and click on Resources, then Global Tax Legal News. In addition to Deloitte, contributors to this valuable resource include: Baker & McKenzie; Berry Appleman & Leiden LLP; Emigra Ogletree Worldwide; Foster Quan; Fragomen, Del Rey, Bernsen & Loewy, LLP; Nachman & Associates, P.C.; Orion Mobility/Relocation Taxes, LLC.; Pro-Link GLOBAL Inc., and Stirling Henry Migration Services. Visit the Global Tax and Legal News Library often to stay informed about these important issues.

A

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Pandemic Considerations for International Employers The health of an organization’s most important resource— its human capital—is of utmost importance in today’s complicated and challenging fiscal environment. Vaughan outlines key considerations facing international employers in the face of a global pandemic. BY KEN VAUGHAN

46 MOBILITY/JANUARY 2010


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pandemic is a genuine worldwide health threat that international employers cannot ignore. Public health officials warn that even in these health-conscious times, a new virus could make its way around the world in as little as three months. Planning for unexpected health issues related to a pandemic is a critical business decision for employers with domestic employees and international assignees across the globe. Once a globally mobile employee contracts H1N1, they may not be able to return home for treatment. While it is hard to predict just how many people have or will contract the disease, experts warn that one person out of every 1,000 cases diag-

nosed will die. Certain demographics are at a higher risk of contracting the H1N1 virus, including pregnant women, persons who are 6 months to 24 years of age, and persons aged 25 years through 64 years who have health conditions associated with a higher risk of medical complications from influenza. According to the World Health Organization, the potential that a virus could mutate and infect a population that has not been exposed previously to it can cause a worldwide pandemic much quicker than in the past due to the ease of global transport. â&#x20AC;&#x153;Unlike natural or man-made disasters, true pandemics are likely to be very disarming. The

MOBILITY/JANUARY 2010 47


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availability of resources, freedom of movement, and rationing of care may all quickly lead everyone to become mere spectators,” said Gregory Cain, a global health solutions expert at CIGNA International Expatriate Benefits (CIEB), Claymont, DE. “This is what makes preparation beforehand critical in limiting exposure and transmission.”

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In the event of a pandemic, preparation is essential, and prevention is a major component of preparation. Employers with a globally mobile workforce need to be proactive and manage the situation by either speaking to their international health benefits provider regarding business continuity or seeking an international insurer for extra support. Some international insurance providers are making arrangements to sustain expatriates’ access to care through such measures as: • suspension of referrals, prior authorization, and medical necessity requirements; • suspension of “too soon to fill” requirements for prescriptions; • coordination with, supporting, and complementing public health efforts with international medical directors; and • providing 100 percent coverage for preventive care benefits.

Symptoms of H1N1 Experts recommend that medical care be obtained if anyone becomes ill and experiences warning signs of the H1N1 virus. In adults, emergency warning signs that could signal

the need for urgent medical attention may include: • difficulty breathing or shortness of breath; • pain or pressure in the chest or abdomen; • sudden dizziness; or • severe or persistent vomiting. Additional warning signs that may need urgent medical attention manifest in children. These warning signs may include: • fast breathing or trouble breathing; • bluish skin color; • flu-like symptoms improve but then return with fever and worse cough; or • fever with a rash. “We encourage employers and employees to contact their international insurer for pandemic preparedness literature based on public health agency policies such as the Centers for Disease Control and the World Health Organization,” said CIEB Medical Director Dr. Lyndon Laminack. “These agencies also offer guidelines that can be linked to a company-wide planning process.” This material is provided for informational purposes only. It is believed accurate as of the date of publication and is subject to change. Such material should not be relied on as legal or medical advice. We recommend that you consult with your independent legal and/or medical advisors. For more information, employers and employees should contact their international insurer. Ken Vaughan is senior vice president, CIGNA International Expatriate Benefits, Claymont, DE. He can be reached at +1 302 797 3564 or e-mail ciebmarketing@cigna.com.


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THERE’S MORE THAN ‘ONE WAY’ TO SUPPORT PERMANENT TRANSFERS:

Breaking Ground on a Permanent Workforce Mobility Policy

50 MOBILITY/JANUARY 2010


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Executive Domestic Policy Component Movement of Household Goods

Homeowner

Experienced Professional Existing Employee

Renter

Shipment of reasonable amount of personal effects and household goods, includes up to $100k in full replacement value insurance, 1 to 2 autos shipped if mileage exceeds 250 to 400 miles U.S. or 500km to 800km in Canada based on accompanied status, no pet transport

Homeowner

Renter

Shipment of reasonable amount of personal effects and household goods, includes up to $100k in full replacement value insurance, 1 to 2 autos shipped if mileage exceeds 250 to 400 miles U.S. or 500km to 800km in Canada based on accompanied status, no pet transport Up to 30 days

Homeowner

Renter

Entry Level

Homeowner

Renter

Shipment of reasonable amount Supplemental of personal effects and household goods, includes up to $100k in full replacement value insurance, 1 to 2 autos shipped if mileage exceeds 250 to 400 miles U.S. or 500km to 800km in Canada based on accompanied status, no pet transport Up to 30 days

Up to 30 days

Supplemental if Supplemental offered HHG if offered HHG shipment shipment

Up to Storage— Destination Location 60 days often coincides with Temporary Living Period, portion that exceeds 30 days is taxable

Up to 60 days

Temporary Housing Up to 60 days Supplemental: Up to 60 more days

Up to 30 days Up to 60 days Supplemental: Up to 30 more days

Up to 30 days Up to 30 days

Up to 15 days NA

NA

Return Trips Home

4 trips Supplemental: 2 extra trips if temp housing extended

2 trips 2 trips Supplemental: Supplemental: 1 extra trip if 2 extra trips temp housing extended

NA 1 trip Supplemental: 1 extra trip

NA

NA

NA

Miscellaneous Allowance

One month’s base salary not to exceed $10,000, not tax-assisted

Half month’s salary not to exceed $5,000, not tax-assisted

One month’s base salary not to exceed $10,000, not tax-assisted

Half month’s salary not to exceed $5,000, not tax-assisted

Half month’s salary not to exceed $5,000, not tax-assisted

NA

NA

Spouse/Family Assistance

Professional assistance

Professional assistance

Resource and referral information

Resource and Resource and referral infor- referral information mation

Resource and NA referral information

NA

Supplemental: professional assistance

Supplemental: professional assistance

NA

NA

Lump Sum

NA

54 MOBILITY/JANUARY 2010

NA

Up to 30 days

Experienced Professional New Hire

One month’s base salary not to exceed $10,000, not tax-assisted

NA

NA

A one time allowance in lieu of receipt of individual policy benefits. It is spent at the employee’s discretion, and can include homefinding, temporary housing, miscellaneous allowance, and lease cancellation. Average lump sums range from $3,000 to $5,000. Tax assisting the lump sum ensures maximum stretch of mobility budget for the employee.


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Executive Domestic Policy Component Tax Assistance

Termination

Homeowner

Experienced Professional Existing Employee

Renter

Homeowner

Renter

Federal, state, FICA, and Medicare gross-up on nondeductible expenses; based on W2 wages (supplemental rates).

Federal, state, FICA, and Medicare gross-up on nondeductible expenses; based on W2 wages (supplemental rates).

Canada: federal and provincial gross-up on non-deductible expenses based on T4 wages.

Canada: federal and provincial gross-up on nondeductible expenses based on T4 wages.

All mobility provisions cease as of termination date. Repayment of mobility expenses is required for terminations with cause or employee resignations.

All mobility provisions cease as of termination date. Repayment of mobility expenses is required for terminations with cause or employee resignations.

Experienced Professional New Hire

Homeowner

Renter

Entry Level

Homeowner

Renter

Federal, state, FICA, and Medicare gross-up on nondeductible expenses; based on W2 wages (supplemental rates).

Federal, state, FICA, and Medicare gross-up on nondeductible expenses; based on W2 wages (supplemental rates).

Canada: federal and provincial gross-up on non-deductible expenses based on T4 wages.

Canada: federal and provincial gross-up on non-deductible expenses based on T4 wages.

All mobility provisions cease as of termination date. Repayment of mobility expenses is required for terminations with cause or employee resignations.

All mobility provisions cease as of termination date. Repayment of mobility expenses is required for terminations with cause or employee resignations.

* IRS Publication 521 should be referenced. In summary, IRS permits the en route travel costs and shipment of household goods, and up to 30 days storagein-transit to be excluded from the employee’s U.S. taxable income provided the transfer increases the employee’s commute by 50 miles, takes place within a 12-month period, and is considered a permanent one-way move (i.e. the employee physically is present in the new work location for a minimum of 39 weeks). * CRA Employer’s Guide Taxable Benefits and Allowances T4130 should be referenced. A significant portion of mobility costs are non-taxable in Canada provided the transfer meets the 40km requirement.

which industry insights, trends, and networking opportunities are readily accessible without leaving the office or incurring travel costs. Tapping these resources assures the organization a consistent menu of mobility policy and practice ideas and brings forth insights to assist in evaluating the employer’s mobility program. A steady diet of external trends is helpful, but reviewing such information within the context of the company’s specific mobility program feedback is critical, as well. A mobility program evaluation process in which a formal debrief is conducted on a regular basis using, for example, a customized survey tool or a facilitated focus group session, is recommended. Implementing a formal briefing system ensures that program successes as well as support gaps are captured. Keep in mind that feedback data should be solicited from hiring managers as well as from transferred employees. These briefings then provide targeted support to conducting the calibration activities segment of the

recommended strategic mobility program design steps.

The Starting Line To understand general practice, a policy menu of permanent transfer provisions has been assembled in Table 1 based on a survey of the Crown Relocations, Brookfield, CT, policy library and related observations of industry practice (It is important to note that policy surveys are a “lagging indicator,” i.e., in many cases mobility practice often changes first, and policies then are redefined or modified accordingly.). For the purposes of this exercise, permanent transfers are defined as “one way” moves in which the candidate is making a commitment to physically change his or her domicile in order to fulfill a new position at the company’s request. In defining the policy’s applicability to an individual employee, most employers cite specific eligibility criteria, which is often in alignment with the same principles that the tax authorities employ to recog-

nize a mobility event favorably for tax purposes. While the provisions noted in Table 1 represent a sample of mobility support provisions for oneway domestic moves within a country, note that the table also features a sample of how such policy components often will vary according to: • Grade level. The most common tiers for allocating benefits are: executive, experienced, and entry-level hire. • Employee status. Provisions are allocated based on the employee’s homeowner or renter status at origin, as well as if the employee is a new hire or an existing employee. • Move type. Benefits vary if the move is domestic, cross-border, international, or a localization (localization provisions will be addressed in the next article as an adjunct to international assignment policy design). • Policy approach. Employers may feature core options for the specific move type, yet employ a set of supplemental options, used on an as-needed basis to allocate additional support in a structured way for critical hires. MOBILITY/JANUARY 2010 55


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• Monetary caps. Employers may cap a benefit in a specific category to contain costs and be able to budget projected mobility expenses. Explore Table 1 to identify what gaps or excesses might exist in your current mobility program or consider it as a basis for assembling what policy components might make sense to be featured, for each of the employer’s move profile types.

Integrating Policy Components It is important to note that Table 1 illustrates a sample range of days or allotments or frequencies of a mobility benefit within each category. The employer’s actual policy should include reference to a specific day or cap or frequency versus a range of parameters to ensure effective interpretation and clear delineation of actual support available. Further, policy components should “work” with each other. For instance, generally the duplicate carrying costs provision would not be in effect during the temporary housing benefit. Or, for instance, generally the storage-intransit allotment usually mirrors the temporary housing period permitted. Often, auto shipment provisions are “offset” against the total number of vehicles that can be driven to a location. Return trips home usually are granted in a frequency of one to two times a month; as such, trip frequency should coincide with the temporary housing occupancy period. These are just some examples to ensure that the policy is well integrated in order to prevent employee exception requests and minimize the administrative burden of managing the program.

Cost Containment—Is It for Real? The pressure to quantify and contain costs is a priority in most organizations. Evaluate cost containment opportunities carefully so that direct 56 MOBILITY/JANUARY 2010

cost savings do not undermine the employer’s overall investment—as measured in employee productivity, satisfaction, and loyalty. For instance, while it is may be attractive to assign a cost cap to the entire move, many employers discover that this creates a significant administrative burden in reimbursing partial benefits. It also often results in the forfeiture of tax planning opportunities and frequently severs continuity in support for the employee. Inconsistencies in support and “choppy” delivery arise as responsibility for costs are shared between employee, supplier, and the employer. Further, some employers have experienced that it fosters inequity as the monetary value cap may “stretch farther” in certain economies than others and, therefore, compromises the overall mobility strategy. Within each mobility provision, however, there is a home for caps and cost containment. For example, capping certain financial allowances, or limiting services or travel to a capped number of days is strongly recommended to contain costs in a uniform way. Other cost containment initiatives include use of qualified mobility-experienced brokers, linking list price caps to eligibility for homesale benefits, examining gross-up rates and applicable provisions (e.g., no gross-up on the miscellaneous allowance), leveraging mobility volume for supplier discounts, excluding specific bulky and high-value items from a household goods shipment, and ensuring employer travel guidelines apply for all mobili-

ty-related travel. Managing the mobility timeline is another critical element in cost containment—for instance, coordinate the shipment with the vacate date from temporary housing to avoid storage-in-transit times. Carefully managing the tempo of the transfer and all the concurrent activities is an excellent opportunity for cost containment. Managing costs is feasible. Employers just have to ensure that the costcontainment strategies employed are the “real deal.” It is essential to evaluate each option within the context of the individual company’s culture, move demographics, and mobility policy purpose.

International Moves and Cross-border Transfers When it comes to international permanent transfers, many employers refer to the “domestic” plan in effect at the departure or destination location as the governing plan. To simplify administration, it is recommended that an international permanent transfer plan, as well as a cross-border plan, if applicable, be assembled with a set of core benefits for equitable support. To recognize regional differences, most notably in homesale or home purchase benefits, adopt a general approach in which latitude can be granted to honor local deviations yet preserve policy intent. This can be accomplished through the use of a supplemental provisions appendix to illustrate regional support differences. Certain provisions for international permanent transfers/cross-border moves that often appear in addition to the domestic offerings cited in Table 1 include: • Immigration support • Medical exam reimbursement, if not covered by existing plan • Additional familiarization/ homefinding trip days or permission for child accompaniment for


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Pre-decision:

Getting the Facts Before the Move B Y T I M M C C A R N E Y, G M S

A growing trend in employee mobility is the pre-decision program. McCarney offers an overview of pre-decision services and how they can assist in improving acceptance rates, as well as save employers time, money, and effort.

A

s if convincing existing employees and coveted new hires to uproot themselves and their families and accept transfers was not challenging enough, current economic conditions are making these candidates increasingly gun-shy about accepting moves if it means selling a home in a down market. On the flip side, the cost of workforce mobility continues to escalate, even as it becomes a more integral component of a successful corporate growth strategy. To avoid a failed move or assignment, employers must be confident that they will receive the best possible return on their mobility investment. In response, a growing number of employers are bolstering their programs and recruitment efforts with predecision services. Pre-decision is a sort of “fact-finding” mission conducted before a move takes place, enabling the employer and employee to better assess the potential costs of each move (particularly the value of the employee’s departure home), ensure that the employee is a good fit for the new job and destination location, and make informed decisions. Pre-decision services can help recruiters close qualified candidates more quickly, boosting acceptance rates, and can help employers overcome employee reluctance by providing critical information and counseling that

demonstrates the company’s culture, alleviates concerns, and motivates employees for heightened productivity in their new roles. They also can save employers from wasting valuable time, money, and effort on candidates or transitioning employees who cannot afford to move.

Why Pre-decision? Consider the following scenario: an employer transfers a new hire, with the move approved at the estimated cost of $55,000. But a buyer for the employee’s departure home never materializes. In fact, the home, located in a region overrun with similar properties for sale, remains on the market for more than two years before it finally sells. In the end, tallying up temporary housing fees and carrying costs, the employer has spent nearly $150,000— almost three times the anticipated cost—to move this employee. Meanwhile, the employee’s family is suffering separation, and dual-housing and commuting costs, and now are extremely disillusioned and disgruntled with a move that sounded so promising in the beginning. While a pre-decision program is not a crystal ball, it can help prevent situations such as these, giving the employer a better handle on the potential cost of a move and helping to identify situations that may prove too costly. It also can be useful in educating employees who may have made poor homebuying decisions in the past, so that MOBILITY/JANUARY 2010 59


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these decisions do not haunt future moves. “Management will sometimes ask us why our employees are buying the homes they buy, but we don’t have any control over their personal decisions or how much debt they chose to take on,” said Diane Kelts, North American relocation manager for AstraZeneca, Wilmington, DE. “What we can do is counsel them so that the home they buy doesn’t exclude them from our program in the future and try to provide guidance so that they don’t make bad decisions. If someone who has overbought in the past is going out to buy another house, we’ll try to help them avoid getting into a similar situation all over again and try to help them buy wisely.”

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What constitutes a well-rounded pre-decision program? Our research indicates that regardless of the type of homesale assistance you offer, a program that addresses the concerns of both employees and employers may include the following: • Proactive counseling to assess any unique concerns and requirements. You may find that it simply is not cost effective to transfer certain employees based on personal, familial, or financial needs in the new location. • Mortgage pre-qualification for the destination home. Knowing in advance how much home an employee can afford is critical in targeting potential destination communities.

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60 MOBILITY/JANUARY 2010

• A pre-decision trip to the destination location. • Expert valuation of the departure home. If it is a home that is going to prove challenging to sell or is worth far less than what the employee owes, the employee will want to know about it. • Preliminary acquisition documents including title search, inspections, and equity calculations to identify any additional costs required to get the home ready for sale or that could cause a sale fall-through. • A comprehensive marketing plan that identifies target buyers and incentives most likely to result in a sale within the specified time period.

A Matter of Value Pre-decision also helps address one of the biggest obstacles to mobility today: the gulf between what employees think their homes are worth and what their homes actually are worth. “Above anything else, the value of their departure home is of the greatest importance to transferees,” explained RoseAnn Steeber, relocation manager for US Bank, Milwaukee, WI. “Transferees often feel they should be getting a certain amount for their property and when they find out they can’t get that amount, they’re disappointed. Our interest in pre-decision started because of situations like this, where transferees would come into the program and be shocked at the market value of their homes. Their enlightenment came a bit too late, as they were already well into the process, and frozen in place without a buyer. “In establishing a pre-decision program, we want to try to help our employees better understand their financial situation if they accept a move, and that there is a potential


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“In establishing a pre-decision program, we want to try to help our employees better understand their financial situation if they accept a move, and that there is a potential for loss. It’s far better to know these things up front.” for loss. It’s far better to know these things up front.” Because the sale of a home has a considerable financial impact on mobility decisions and budgets, getting an estimate of value can provide a credible benchmark for an employee to assess how their home may have been affected by the current economic downturn and get them thinking about what they can do to maximize their proceeds. However, there are time constraints involved. When your company needs a candidate in a critical position as soon as possible, you do not want to spin your wheels waiting for an estimate of value on which the decision of whether or not to take the job will hinge. While there are a number of valuation options available, all offer different levels of turnaround time and reliability, meaning your company should examine all available options before making a choice. Some of these options include: Full-scope Worldwide ERC® appraisal. Statistically speaking, a full appraisal offers the most accurate method of valuation. It will yield a number that can be used with confidence to calculate a defendable safety net offer/sales price, loss on sale and/or equity, and also can be used to establish the guaranteed buy-out offer (GBO) if the program advances to a

full GBO, enabling greater program consistency, no duplicate costs, and a faster overall process. On the downside, there are roughly five to seven business days between the appointment date and turnaround time. “Drive by” appraisal. Less expensive than a Worldwide ERC® appraisal, a “drive by” appraisal is completed without a full home inspection, delivering an “anticipated sales price” at which a property would be expected to sell in a competitive and open market. Although this form of appraisal can be completed in four to five days, it involves making assumptions on the condition, size, and quality of the home, which can significantly impact overall accuracy. Automated valuation model (AVM). Using mathematical modeling and recent sales data, AVMs calculate property values at a specific point in time within zip codes. These values can be turned around instantly—often within minutes— but there is very little verification of these numbers and it is more computer estimate than appraisal, with no regard for specific property condition or “micro factors” that a home inspection would uncover. Broker’s Market Analysis (BMA). Prepared by a real estate agent, a BMA is used to establish an asking price in line with market conditions, providing recent comparable sales and listing

prices/DOM for similar homes in the area. While turnaround time is approximately three days from appointment, this type of valuation will not reflect a forecasting adjustment to account for market value changes. Once the estimated value is achieved, both the employee and the hiring manager will have a clearer idea of what the move is going to cost—and involve. “Once that number is determined, the employee and the hiring manager are in a better position to determine the next steps,” said Kelts. “In some situations, an employee may not want to make the move, requiring the hiring manager to reach out to the next candidate in line for the job. They can also explore what it might take to get the employee to accept, if it’s financially feasible.”

Selling the Candidate Another important component of a pre-decision program is building employee engagement and excitement. You want the candidate to see the move as a good opportunity for career advancement and an indication of how high a value the company places on such experiences. This should be reflected, first and foremost, in your company’s policy as a properly aligned and competitive policy, with benefits reflecting current market and economic condiMOBILITY/JANUARY 2010 61


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tions, will help make your offer stand out from your competitors’. You also will want to sell the destination location, calling attention to all the amenities, attributes, and advantages that it has to offer. If there is any reluctance on the employee’s part, the thought that life could be better in the new location can be a powerful motivating factor. Pre-decision counseling also can help employers overcome employee reluctance and boost acceptance rates by alleviating employee worries, addressing their unique needs, and motivating them for heightened productivity in their new roles. In some situations, hiring managers may need to offer some form of assistance to convince a candidate to accept a move—especially when an employee is underwater or the home will otherwise prove difficult to sell. Some of the more frequently offered types of assistance, offered to the most ideal candidates, include: • sign-on bonuses; • a full guaranteed buy out (if new hires are only eligible for a BVO);

Page 6

• a low-/no-interest loan, repaid or forgiven over time; • a commuter allowance in lieu of relocation; • an option to rent at the new location instead of buy; and • loss-on-sale/negative equity assistance. To the last point, the results of the Weichert Relocation Resources Inc. (WRRI), Morris, Plains, NJ, 2009 “Mobility and the Current Real Estate Market Survey” indicate that only a small percentage (11 percent) of employers are willing to cover negative equity, while 22 percent are willing to handle it on a case-by-case basis. The Worldwide ERC® 2007 “New Hire Survey” indicates that 44 percent of employers will provide loss-on-sale assistance for executive level new hires, 19 percent will for experienced new hires, and 4 percent will for entry-level new hires. The bottom line: if it is a critical new hire, such assistance may be worth the investment, or even necessary to remain competitive in some situations.

A Smart Investment The offer of pre-decision services should be extended along with the job offer to make sure employees understand what their move will cost, how well they match up with the destination location, and what type of assistance—if any—the employer is willing to provide. It should be clear that it is an offer to assist them, and that once the predecision process is complete, they will have a certain time frame in which they will need to accept or decline the offer. “The point of a pre-decision program is to let employees know that the company is on their side, and that we want to work with them to ensure a mutually rewarding relocation experience,” said Steeber. “We think it will be better to invest in pre-decision than risk employee despair and lost productivity.” Tim McCarney, GMS, is the manager of marketing communications for Weichert Relocation Resources Inc. (WRRI). He can be reached at +1 781 982 5026 or e-mail tmccarney@wrri.com.

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Home Financing Solutions.

The Comforts of Home.

Take Comfort in Our Experience. At Citi, we are proud of our more than 25 year tenure dedicated to the relocation mortgage industry. With CitiMortgage Corporate Programs, your relocating and non-relocating employees can take comfort in our comprehensive home financing solutions, individualized mortgage counseling and valuable financial education resources. Whether your employees are refinancing an existing mortgage, relocating across the country or moving just down the street, our mortgage experts can provide the guidance they need for a smooth move in the New Year. To learn more about bringing CitiMortgage Corporate Programs to your organization in the New Year, please contact: Kelli Fischer at 1-636-261-8892 or email: kelli.a.fischer@citi.com

©2009 CitiMortgage, Inc. CitiMortgage, Inc. does business as Citicorp Mortgage in NM. Ci tiMortgage, Inc. is an equal housing lender. Citi, Arc Design, Citi and Arc Design and Citi Never Sleeps are registered service marks of Citigroup Inc.

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Culturally Diverse MANAGING A

WORKPLACE–A BALANCING ACT

B Y T A C I T A L E W A R S , C H R P, G M S , G P H R Managing a culturally diverse work environment can prove quite challenging, and Lewars offers a strategy for HR professionals to understand and leverage these differences to contribute to the success of an organization. n our increasingly culturally diverse

I

workplaces, managing human capital is a challenging organizational responsibility.

With staff of varied native languages, ethnicities, and beliefs inquiring “what’s in it for me?” maintaining organizational effectiveness requires a balance between respecting cultural differences and managing expectations.

Research demonstrates success comes to those who seek both to understand and to leverage differences while retaining a solution orientation and results focus. Sound easy? As with most undertakings, it may be easy in theory but far more challenging in practice.

The Challenge Many culturally diverse workers are highly educated, have a great willingness to learn, and display high levels of loyalty to their employer. Many employers encourage an inclusive work environment and try to promote respect among employees. If only that were enough. It takes a deeper understanding on the part of the worker 64 MOBILITY/JANUARY 2010

and the organization to ensure the working relationship will be successful long term. The challenge is culture. There are 192 countries in the world, each with a culture that may be very distinct from that of even its closest neighbor. If we think in terms of the Iceberg Model developed by Dr. Gary Weaver of the American University’s Division of International Communication, 10 percent of culture is above the surface—easily identifiable and enjoyed by external participants. Surface culture includes the obvious, tangible demonstrations of culture such as food, dress, music, arts, celebration, and language. The remaining 90 percent of the iceberg is beneath the surface—deep-seated beliefs, philosophies, and behaviors engrained from early childhood. These cultural factors beneath the surface include values, time consciousness, rules of conduct, practices, notions of leadership, courtesy, sense of self, and personal space. In general, these cultural factors explain both what motivates employees who originate from various global locations, and what rewards they perceive as valuable. For example, if an individual is from a culture that values hierarchy, he or she may have a more difficult time adjusting to North American culture that tends to have fairly flat organizational structures and open-door policies. If an individual is from a culture where society is founded on strict stability, he or she may not appreciate a pay structure wherein a component of income is based on commission or merit. Likewise, working from home might be a


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welcome change to a North American employee, but not to an immigrant or foreign worker who, according to their cultural orientation, would prefer consistent face-to-face interaction with their supervisor and peers.

Solutions First and foremost, organizations should develop a compass. A compass results from identifying the mission, vision, and values of the organization. From a solid foundation, it is easier to establish HR initiatives that truly support the business perspective and facilitate achievement of goals. With that focus, managing employee expectations is a cooperative discussion of alignment with the mission, vision, and values. After developing a compass, expect to share the responsibility for making diversity work. In their book “Recruiting, Retaining, and Promoting Culturally Different Employees,” Don Rutherford and Dr. Lionel Laroche suggest newcomers should be responsible for making 80 percent of the adjustment while the existing employees make 20 percent of the adjustment. In other words, employees of diverse cultural backgrounds should be willing to develop an understanding of attributes for success in the North American work environment and, subsequently, make the appropriate adjustments. Like-

Leading Global Teams

wise, organizations should seek to leverage the experience and expertise of their diverse members. Integration training for newcomers, cross-cultural competency training for existing staff members, conflict management assistance, and English language training for those who would benefit, are ways in which this may be facilitated. In addition, well-planned HR programs assist new employees in getting off to a great start. Thorough orientation and mentorship programs help individuals of various cultures integrate and feel at home within an organization. Flexible benefit plans allow each individual employee to find a package that suits his or her needs. Also, securing Employee Assistance Program providers who are multilingual and cross-culturally competent provide a high level of support for employees who encounter personal issues that may affect their work. Again, this is a delicate balance. Managing human capital is increasingly complicated, especially when varying cultures are added to the equation. However, in that success comes to those organizations that seek to understand and to leverage differences, the result is well worth the effort. Tacita Lewars, CHRP, GMS, GPHR, is global workforce specialist for Globaforce Incorporated, director for the Global Workforce Institute, Calgary, Alberta, Canada, and a member of the MOBILITY Global Editorial Advisory Committee. She can be reached at +1 403 444 6813 or e-mail tacita@thegwi.com.

“Working Successfully in the Multicultural Environment of Latin America” explores the cultural differences, both subtle

he challenges of managing culturally diverse teams are

and profound, that influence daily life and work within the

compounded when those teams are geographically dis-

major Latin American cultures, provides answers to why such

persed. Employees whose native cultures are “high context”

differences exist, and helps you to develop important tactics

cultures in which personal relationships are important may find

and strategies for managing these cultural differences both at

a geographically dispersed team especially awkward.

work and in daily life—whether you are an HR professional or

Fortunately, valuable research has been conducted on this

service provider responsible for Latin American assignees, or a

topic and strategies have been identified to help leaders of

professional working on or with a multicultural Latin American

such teams build trust, communicate effectively, and drive per-

team.

T

formance among team members. These concepts are present-

Although these courses were developed as part of the cur-

ed in the Worldwide ERC® online course titled “Leading Global

riculum for recertification for the Global Mobility Specialist

Teams.”

(GMS™) designation, anyone may enroll, and there are no pre-

Depending on the make-up of your team, two other online courses will prove helpful as well. “Working Successfully with-

requisites to take them. For more information about these and other practical

in the Multicultural Environment of Modern Europe” explores

online courses, visit

the cultural differences, both subtle and profound, that influ-

www.WorldwideERC.org/pages/globalcourses.aspx. To “click”

ence daily life and work within the major European cultures;

your way to the catalogue from the Worldwide ERC® home

provides answers to why such differences exist; and helps you

page, www.WorldwideERC.org, click on Training & Education,

to develop important tactics and strategies for managing these

then click Global Mobility Specialist™ Designation, and finally,

cultural differences both at work and in daily life.

click Recertification Courses Catalogue. MOBILITY/JANUARY 2010 65


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One Year into the Obama Presidency: The Effects on the Mobility Industry B Y J E F F W I L L S A N D J O R U S T, G M S

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2009 was a challenging year for mobility, and Wills and Rust take a look at the federal governmentâ&#x20AC;&#x2122;s policies, including the American Recovery and Reinvestment Act, and examines their effects on employee mobility. ctivity from the beginning of the Obama presidency has focused on the economy with the American Recovery and Reinvestment Act of 2009 (ARRA) passed by Congress in February 2009 and the The Worker, Homeownership and Business Assistance Act of 2009 supplementing it in November 2009. This article highlights some of the changes that affect both domestic and global mobility and suggests what lies on the horizon.

A

Domestic Transfers Because of the financial crisis, economic recession, and decline in the housing industry, domestic transfers (especially those company-assisted) have been at their lowest levels in years. To date, legislative changes have done little to change the situation. The February legislation enhanced

the first-time homebuyerâ&#x20AC;&#x2122;s credit of up to $8,000 by eliminating recapture provisions for principal residences purchased after December 31, 2008, and before December 1, 2009. The recapture still will apply if the home purchased during that period is sold or the homeowner ceases to use the property as his or her principal residence within 36 months after the date of purchase. Novemberâ&#x20AC;&#x2122;s changes expanded the availability of the credit by raising adjusted gross income limitations and including a credit of $6,500 for certain long-term residents of the same principal residence for purchases made after November 6, 2009. These changes apply to taxpayers entering into a written binding contract before May 1, 2010, to close before July 1, 2010. While the February changes had little direct effect on company-sponsored domestic moves, as most transferring employees were not first-time homebuyers or had adjusted gross income that exceeded the limitations, it remains to be seen how the November changes will increase domestic transfer activity. Certainly, the credit has sparked an increase in housing activity, which has a ripple effect throughout the entire housing market.

MOBILITY/JANUARY 2010 67


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key question remains when and whether the proposed tax rate increases will be enacted and become effective. Health care reform, if enacted, likely will include increased taxes at least for higher income individuals. The 2010 budget reflects a proposed increase in the top marginal rate from 36 percent to 39.6 percent, a reinstatement of the phase-out of personal exemptions and itemized deductions, along with an increase in the capital gains and dividends rate to 20 percent. The rate increase and phase-out changes will increase tax equalization costs for employersâ&#x20AC;&#x2122; global mobility programs as middleincome taxpayers get pushed into higher tax brackets due to assignment allowances treated as compensation. Employers will bear the cost of this tax increase through the tax equalization settlements. While the increase in taxes on capital gains and dividends will not affect employers directly, it may have another negative effect on the mobility industry as this change, along

70 MOBILITY/JANUARY 2010

. . . it may have another negative effect on the mobility industry as this change, along with the higher ordinary income tax brackets, adversely affects the cash flow of higher income individualâ&#x20AC;&#x2122;s transferring.

with the higher ordinary income tax brackets, adversely affects the cash flow of higher income individualâ&#x20AC;&#x2122;s transferring. However, tax benefits available to middle income taxpayers may provide additional cash flow, which could spur increased willingness on the part of these taxpayers to consider a transfer.

Future Effect on Mobility While no proposals directly target the mobility industry, Congress and the Obama Administration can have a profound impact on mobility. As efforts by the Administration and Congress contribute to economic recovery and resurgence in the housing market, the mobility industry will benefit. Until then, the domestic mobility market will continue to struggle while global mobility assignments will continue as long as they create strategic value for employers. As we move into 2010, changes will be constant and affect employers to varying degrees. We recommend continued communication with your mobility service and tax providers so your mobility programs remain cost effective and address changing laws and regulations. Jeff Wills is director, global employer services for Deloitte Tax, Memphis, TN. He can be reached at +1 901 322 6854 or e-mail jwills@deloitte.com. Jo Rust, GMS, is director, international HR consulting services for Primacy Relocation, LLC, Memphis, TN. She can be reached at +1 901 291 5613 or e-mail jo.rust@primacy.com.


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Reduce Mobility Costs by Taking a Total Cost of Ownership (TCO) Approach B Y D A V I D B . B A R L O W J R . , S C R P, G M S

T

The effective management of costs is a key component in quality employee mobility programs. Such an approach also offers an opportunity to increase transferee satisfaction and overall service levels, which is consistent with increasing the overall value of the total mobility spend. Barlow offers an overview of the total cost of ownership approach as an effective methodology to managing mobility costs and understanding the “whole picture” of mobility costs, as well as how it can be implemented.

he lessons of this economic downturn are many, but an important one is that it is critical to manage costs. Saving company money (or spending company money more efficiently) not only is a logical objective but also crucial to an employer’s viability and survival. Now, as never before, it seems that all expenditures are subject to review and scrutiny—often down to every line item of cost. The process of inspecting costs in selected areas, or even in individual expenditures, sometimes can obscure the most obvious costsaving opportunities, which can be found by looking at the total cost of ownership (TCO). While the difficult economy may have caused employers to focus more on mobility cost control, the reality is that mobility products and processes have continued to be treated as independent variables, rather than connected and linked. MOBILITY/JANUARY 2010 73


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TCO is the methodology that progressive employers are using increasingly to manage costs—and mobility costs are a perfect target for application of this expertise. It is the TCO approach that provides a consistent framework to track and analyze all costs for a holistic comparison of all programs over all mobility service providers/vendors. It also provides a standardized framework in which to track and evaluate costs and value during a defined time period and/or program lifetime and provides the “base point” for what should be required by employers of their providers—namely ongoing cost reduction and process improvement. The conventional approach to cost control reinforces the methodology in which total mobility costs are obscured by multiple providers with many separate billings for everything from homesale and homefinding to household goods moving and storage and temporary living, along with numerous other expenses. Mobility service provider fees are about 3 percent of the total cost of the mobility spend. In most cases, 97 percent of total mobility costs are not directly visible to clients. As a result, many employers are procuring mobility services based on the visible 3 percent of the mobility service providers’ fees and assuming incorrectly that the other costs are far less controllable. In addition to missing the significant portion of the total mobility cost, employers have limited visibility into the key performance indicators (KPIs) that drive costs and service levels. This lack of transparency makes it difficult to compare subsuppliers and how effectively they are spending company dollars. This challenging residential real estate market has created an oppor-

tunity for HR and procurement managers to rethink the way they evaluate and measure mobility costs and how cost visibility can affect the bottom line. By questioning the traditional cost-plus-fee-based approach to supplier pricing and simultaneously adopting a TCO approach, employers can gain a complete picture of all mobility costs that hit the bottom line—both directly and indirectly. TCO ensures that an employer is evaluating the whole picture and analyzing the effect of cost expenditures at all levels with not just primary suppliers but sub-suppliers, as well. Properly applied, this approach also should result in increased transferee satisfaction and service levels. Armed with this information and in partnership with a global supplier with TCO expertise, employers can establish controls to affect process change and sustainable performance improvement throughout the entire supply chain. To gain clarity and visibility across the entire mobility supply chain requires the establishment of a common operating platform and methodology. This can be a challenge for a number of reasons, including the reality that costs may be difficult to capture and compare across different accounting periods. Because mobility costs can occur during more than one fiscal year, flow through a variety of departments, and incurred in different areas of the country or globe, the analysis of all elements of supply-chain costs can be difficult. How, then, can HR and procurement departments better meet this challenge? The answer is by taking a systematic and measured approach to evaluating the entire cost structure of mobility services, which can help


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reduce and/or eliminate hidden and wasteful costs.

What It Means to the Bottom Line Properly executed, the TCO approach can result in significant mobility cost savings for employers. On average, employers can save an estimated 10 to 15 percent on their total mobility costs. In other words, by looking at the “big picture,” this cost inefficiency and “waste” can be eliminated with no reduction or even an increase in service levels to the transferees. The financial advantages of the TCO methodology easily can be seen when applied to the homesale process. Accounting for an estimated 40 percent of an employer’s total mobility costs, homesales typically exemplify the practice of looking at this one cost event; but doing so based solely on the expenditure of fees charged (directly or indirectly) by the mobility service providers is not the whole story. For example, the costs incurred from homesales often continue to accrue long after the transferee has physically moved. This situation occurs in one of two ways: when there is a “fall through”—in a buyer value option-type (BVO) program; or a home does not sell to an outside buyer and the guaranteed offer is taken by the transferee, which results in the home going into an employer’s inventory. In today’s poor real estate market, an estimated one in two homes ends up in inventory, where both direct and indirect costs increase rapidly. Homesale costs are just one piece of the total mobility cost spend that often are not properly evaluated or measured. Homesale costs, especially the cost of the homes that go into

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inventory, are not just affected by the real estate market but also by the systems and solutions an employer’s mobility service supplier may or may not have in place to proactively increase amended homesale rates while also lowering loss on sale and reducing the home inventory risk to the employer.

Implementation of a TCO Process First, the strategic procurement of mobility services both domestically and globally should begin with identifying a qualified supplier that can help an employer understand where inefficiency and waste exist in the total mobility spend. Most mobility programs have significant cost-saving opportunities. This is the result of programs that have evolved over time with too many people responsible for too many costs and not enough single-point accountability throughout the process. Accordingly, it is important to identify and assemble all the cost elements that comprise a mobility program, which can include homesale, expense/tax management, temporary living, destination services, and similar areas. A supplier can help manage the evaluation process by auditing and estimating these cost drivers by conducting a thorough analysis across company divisions, geographic regions, and mobility suppliers at all levels. The supplier can take a thirdparty objective view of a company’s supply chain and establish expectations and accountability for driving efficiency and cost-effectiveness through process improvements and cost reductions. Once the individual elements are identified, a standard set of metrics must be defined so that costs can be evaluated. In establishing these met-

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rics, one needs to consider what risk and variance levels are acceptable. For example, in the cost-critical area of homesale, variances can exist in every areaâ&#x20AC;&#x201D;from the amended value rate and direct homemarketing costs to the days-in-inventory/days-onmarket costs, and the most probable sales-price variance. Since the real estate bubble burst a few years ago, the average direct homesale costs have become even more important. Employers must establish a baseline of acceptable risk to be more aware of the effect these elements have on the bottom line. While homesale is the largest contributor to the overall cost, it is just one area that can affect total costs and the satisfaction of the employer and the transferee.

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The final step in implementing a TCO program is standardizing and tracking these costs. Strategic procurement must enable improved sourcing decisions, which create value-added benefits to the employer beyond simple price reductions. There are several benefits in looking at these sourcing decisions holistically, including the ability to leverage volume by awarding more business to certain suppliers that have the proven ability and the demonstrated track record to save money without decreasing benefits or transferee satisfaction.

The Whole Picture In summary, HR and procurement managers have long treated and sourced mobility products and pro-

cesses as independent events. Without a common operating platform and methodology, the opportunity for lowering overall mobility costs and sustaining cost-efficiency over time has been difficult to achieve. By using a TCO approach to workforce mobility, employers are given systematic, hard data on the efficiency of each mobility dollar. This approach not only tracks all costs associated with the mobility programs, but also provides the opportunity to increase both client and transferee satisfaction and services levels, which together drive increased value in the mobility spend. David B. Barlow Jr., SCRP, GMS, is a senior vice president and senior consultant at SIRVA Relocation, San Ramon, CA. He can be reached at+1 925 824 3109 or e-mail david.barlow@sirva.com.


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W h a t ’ s R e a l ly G o i n g O n with Short Sales at Mortgage Companies? BY JOE ANDERSON The real estate and mortgage industries have witnessed an increased prevalence of short sales as a loss mitigation tool. Anderson provides an overview of the loss mitigation process and provides tips for homeowners faced with short sales.

M

ore than 16 million homeowners have negative home equity and the number is expected to continue to grow throughout 2010 and beyond. Some analysts now say it may take more than 10 years for national home prices to get back to what they were in 2006.

Combine that trend with rising unemployment and mortgage delinquency and you quickly realize that “short sales” (the forgiveness of a portion of the mortgage loan amount necessary to help sell the home) will continue to be a growing part of the real estate and mortgage landscape for years to come.

The role of the mortgage servicer is critical in short sale transactions. All mortgage servicers have a contractual responsibility to minimize potential losses on the loans they service on behalf of the owner/investors of the loans (e.g., Fannie Mae and Freddie Mac) and the mortgage insurance (MI) companies that insure the loans. MOBILITY/JANUARY 2010 77


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Loss Mitigation Tools The standard loss mitigation tools used to help at-risk borrowers include: Loan modifications. The preferred solution to helping homeowners within the initial stages of delinquency (less than 60 days past due) or those facing “imminent default.” The loan modification process now is formalized for most servicers through their participation in the Making Home Affordable (MHA) program announced by the U.S. Treasury in March 2009. The program allows servicers to lower the interest rate and payment on the loan to 31 percent of the customer’s current monthly income. It also provides servicers an initial financial incentive up to $1,000 to $1,500 for each completed modification, and borrower’s

a financial incentive of $1,000 per year during five years, if the loans continue to perform. Unfortunately, loan modifications cannot help customers who have extremely limited or no current income, typically because of the loss of a job. Forbearances. Designed to provide payment delays or reductions for customer’s facing temporary financial hardships such as job loss. Repayment plans. Can be arranged to distribute the delinquent payments during a period of time (usually no more than six months) and helps the borrower avoid damaging his or her credit. Deed-in-lieu of foreclosure. The option for homeowners unable to sell their property for more than 90 days

and can help the customer avoid the foreclosure process, and also is less damaging to their credit rating. This option generally is offered on homes that cannot be sold in “as is” condition and require extensive repairs to become marketable.

Short Sales For homeowners who cannot be helped with the loss mitigation options listed above, servicers can pursue short sale options that often can be a “winwin” option for both the borrower and the owner/insurer of the loan. Borrowers get a chance to avoid foreclosure and lessen the damage to their credit rating (i.e., the bureau rating says “settled for amount less than owed”). Many servicers even will provide financial incentives such as

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78 MOBILITY/JANUARY 2010


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one to two months’ rent if the borrower agrees to maintain the property throughout the sale process. Mortgage investors and insurers also can benefit from short sales because they avoid many of the costs and delays associated with foreclosure. According to the article, “Short Sale Resolutions at GSEs Growing Rapidly,” published in the March 25, 2009 issue of Inside the GSEs, the losses taken on short sales are onehalf the average losses taken on foreclosures. That does not mean that the decision to agree to a short sale is automatic. The decision process can be very complex and, unfortunately, time consuming. Most servicers, investors, and insurers use sophisticated net present value (NPV) mod-

els to establish a break-even amount of principal forgiveness compared to the costs and relative likelihood of foreclosure. These models typically take into account several key risk management and expense variables, including: • an updated, appraised home value; • forecast home value depreciation rates; • the current stage of delinquency of the borrower; • the standard foreclosure timeline (varies by state);

• the average time-on-market for properties to sell; • all foreclosure carrying costs including legal fees, costs to secure the property, taxes, and the like; and • presence of a second lien (creates an additional short sale approval requirement that often creates long delays and inconsistent approval standards). Given the complexity of the transaction, it is no wonder there are so many horror stories of long delays up to six months or longer for short sale approval. Many servicers are not properly staffed to handle the volume of requests they are receiving and/or do not have the experienced staff or technology required to properly evaluate and facilitate a short sale with the multiple parties typically involved in the approval process. The “Survey of Real Estate Agents on Market Conditions—2009,” conducted by Campbell Communications, revealed that the average response time to a short sale request takes four and a half weeks.

Short Sale Tips for Homeowners The following is a list of tips for customers compiled by our short sales specialists. • Call your mortgage servicer as soon as possible to evaluate the options it has based on your unique situation. Remember that a short sale option may not be approved if other solutions such as a loan modification are warranted. • Do not pay a third-party to assist you in negotiating a short sale option unless clearly required. This can create even longer turnaround times and no financial benefit. • In the event a short sale is approved, be prepared for the servicer to require the sale to be completed in 80 MOBILITY/JANUARY 2010


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60 to 90 days or less. In addition, most servicers cannot suspend foreclosure proceedings from continuing in the event the sale falls through. • Work with your servicer to establish a proper listing price strategy prior to listing the home for sale. • Be prepared for counteroffers as this is normal in the negotiation process. • If possible, select a listing agent who is experienced in distressed homesales. • Real estate agent commissions may be capped at 5 percent or less to have all parties contribute to the short sale. • Require that any potential buyer making an offer on the property get prequalified through your mortgage servicer or another reputable lender,

even if they furnish a pre-approval letter. This will help you avoid wasting valuable listing time on the “preapproved” buyers who actually do not qualify for a mortgage. • And, most important, stay involved with the servicer throughout the process. Do not allow thirdparties to control the transaction without your approval. More than two-thirds of all home purchases in 2009 were made on “distressed properties,” of which 14 percent were classified short sales, according to “Distressed Property Sales Surge to Two-thirds of Market, New IMF-sponsored Study Finds,” from the July 1, 2009 issue of Inside Mortgage Finance Newsletter. This ratio surely will grow as major mortgage investors such as Fannie

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Mae and Freddie Mac, which control more than 70 percent of the mortgage market, create standardized short sale processes. Until then, borrowers and real estate professionals should work closely with mortgage servicers and lenders to navigate the ever-changing short sale process. The points of this article solely represent the view and opinions of the author and are not necessarily the views and opinions of Champion Mortgage, a division of Nationstar Mortgage LLC, or members of its management. Joe Anderson is the executive vice president of production for Champion Mortgage, Lewisville, TX, the retail origination and relocation mortgage division of Nationstar Mortgage LLC. He can be reached at +1 469 549 3334 or e-mail joe.anderson@nationstarmail.com.

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RAC Report

Regional Market Summary: Greater Dallas Metro Area

U

nlike much of the rest of the country, most markets in Texas, and Dallas in particular, experienced only very modest price appreciation in the first part of this decade. Hence, there was no â&#x20AC;&#x153;bubbleâ&#x20AC;? to burst as the housing and finance crisis hit the nation in 2007. At first, it appeared that Dallas would drift through relatively unscathed, but the deepening crisis and ensuing national recession proved too much as the fourth quarter of 2008 arrived. Indeed some of the mid- to low-price housing has survived with only minimal decline, but the upper-end custom to luxury market has experienced a marked softening with some declines noted in late 2008 and early 2009. The median price has been flat during the past year. However, the average sales price has dropped from $211,983 a year ago to $198,575 in the fourth quarter of 2009, indicating a lack of sales at the upper price ranges.The sales volume is off 15 percent from a year ago, but the number of listings is down 17 percent. However, the Dallas market is very segmented; the sub-$200,000 price ranges in most areas show strong demand relative to supply, but the $400,000 and above markets are decidedly oversupplied in most areas. Undoubtedly, the success

STATISTICAL SNAPSHOT Today

Unemployment Months of Supply Annualized Sales Volume Annualized Average Sales Price Average Days on Market

One Year Ago

8.3% 6.0 44,551 $153,000 79

of the First-time Homebuyer Tax Credit is contributing to this disparity. New spec building is almost nonexistent, as single-family permits for 2009 likely will end up at the lowest level since 1991. REOs are present in almost all sub-markets in Dallas, but they are being absorbed as soon as they hit the market. Unemployment stands at 8.3 percent, up sharply from a year ago, but may have peaked as the rate has held at 8.2 percent to 8.3 percent since June 2009. Historically low-interest rates and strong demand driven by the Firsttime Homebuyer Tax Credit appear to be the main drivers of the Dallas market at year end 2009. The sales volume has seen a marked up tick in late 2009 with many markets in the sub-$200,000 price range reporting that 35 percent to 40 percent of the houses on the market are pending. However, in the $400,000 and above

5.2% 6.1 52,682 $154,300 80

Change

60% -1.63% -15.4% -1% -1%

MARKET AT A GLANCE Economic Climate

Fair

New Construction

Very Low

REO Activity

Remains High

Supply

Normal

Demand

Normal

Market Direction Market Mood

Flat

Cautiously Optimistic

price ranges, typically only 10 percent to 20 percent of the listings are under contract. While these trends are expected to continue in the near term, the soft job market and high employment rate are troublesome and are a drag on the market recovering. New construction is expected to remain at very low rates especially in the spec market. Many sellers would like to sell, but lack equity to make the move. The recovery of the housing market in Dallas is in large part dependent on the national economy and the return of a robust job market. Jim Goodrich, SRA, MAI is with Goodrich & Associates, McKinney, TX, and is vice president of RAC. He can be reached at +1 972 529 2828 or e-mail jimgoodrich@rac.net. Ron Box, SRA, CRP, is president of Box & Associates Inc., Dallas, TX. He can be reached at +1 972 392 0300 or e-mail ronbox@rac.net. Michael Cook, SRA, MAI, is with Michael S. Cook & Associates, Inc., McKinney, TX. He can be reached at +1 972 547 9697 or e-mail michaelcook@rac.net.

84 MOBILITY/JANUARY 2010


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Shanghai First to Offer Social Net to Expatriates South China Morning Post (China) (11/24/09) P. 4; Clem, Will Expatriates working in Shanghai can now receive the same social security and pension coverage as locals, as the city has become the first on mainland China to include foreign residents in the programs. Formerly companies with foreign workers had to buy commercial insurance to cover those employees, but now foreigners who pay into the system will get equal benefits. Also included in the new rules are overseas Chinese and people from Taiwan, Hong Kong, or Macau. Foreign workers will have to make payments for a “specified period,” although the exact number of years has not yet been indicated. Employers would pay up to 37 percent more in social security charges, and workers would contribute up to 11 percent of wages. Those who leave the city before collecting their benefits may withdraw their contributions. (http://www.scmp.com) Iraqi Vice President Vetoes Election Law Over Expatriate Seats Radio Free Europe (11/18/09) Iraq’s Vice President Tariq al-Hashimi vetoed a recently passed election law, saying more seats in the future parliament should be allocated for representatives of the estimated 1.5 million Iraqis living abroad. Many Iraqis abroad are part of Iraq’s once-dominant Sunni Arab community, who fled in 2003 after Saddam Hussein’s ousting led to a sectarian war. Hashimi says he will send the election law back to parliament in the hopes that the issue can be solved quickly. “My objection is not to the entire law but essentially to its first article in order to be fair to Iraqis living abroad,” says Hashimi. “I do not expect an amendment will take long to pass. Perhaps in a single session, the council of deputies can decide on the proposed amendment.” It is unknown when parliament will take on the vice president’s challenge, though a member of the parliament’s Legal Committee, Khalid Shwani, says the committee will study Hashimi’s proposed changes as soon as they are received. Both Washington, D.C., and Baghdad believe the upcoming January election in Iraq is key to the withdrawal of U.S. combat troops. Iraqi President Jalal Talabani recently said that he had proposed parliament increase the number of

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seats for minorities, including Christians and expatriates, to 15 percent of the legislature. Currently, those compensatory seats only account for 5 percent. (http://www.rferl.org/ content/Iraqi_Vice_President_Vetoes_Election_Law_ Over_Expatriate_Seats/1881368.html)

December 2, 2009 This issue is sponsored by:

House Hunting in ... Ecuador New York Times (11/18/09) Keys, Lisa The town of Cuenca in Ecuador is becoming a popular destination for American expatriates looking for high-class living that they can no longer afford back home. A three-bedroom home with mountain views, a terrace, maid’s suite, and ensuite baths is currently selling for $220,000, a fraction of what the same home would cost in the U.S. There are numerous universities and hospitals in the city as well as markets, art galleries, and one of the strongest economies in the country. There are no restrictions on foreign ownership in Ecuador, and the majority of foreign buyers are American retirees, followed by Canadians, Britons, Australians, and New Zealanders. A significant number of home buyers are Ecuadoreans returning from jobs overseas as well, at about 35 percent. Average home appreciation has been 13 percent per year between 2004 and 2008, though that has leveled off to around 9 percent. Interest rates tend to be high and obtaining financing is difficult, and most foreign buyers pay in cash. (http://www.nytimes. com/2009/11/18/ greathomesanddestinations/ 18gh-househunting.html? _r=1& pagewanted=print) Immigrants Investing in Businesses South of the Border Arizona Daily Star (11/15/09) Alvarado, Mariana Mexico’s Productive Assets Project provides federal funding to Mexicans living abroad for the purpose of opening small businesses in their home towns, as part of an effort to encourage them to return to Mexico. The first project, a cattle ranch in the Mexican state of Sonora, is already underway with the help of a $23,000 federal grant and $46,000 in private financing. The government has funded the project with $8 million, and matches financing of up to $23,000. To qualify, expatriates must be Mexican citizens and have membership in an expatriate club abroad. The money does not have to be paid back, but must be reinvested in an expatriate club in less than three years. (http://www.azstarnet.com/business/317630)

Read the full issue at www.worldwideerc.org/Newsroom/ GLOBILITY/. Visit our online Career Center jobs.worldwideerc.org

GLOBILITY is an exclusive service of Worldwide ERC®. The editors review more than 15,000 stories in nearly 7,000 sources and prepare summaries of the most significant global workforce mobility news. Included here are a few of the briefs pubished in the December 2, 2009 issue, which is delievered to your e-mailbox twice per month. © 2009 Information Inc.


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