| Case Study: A Collective Vision | ||
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VISION’s Consulting Services Team Provides the Antidote to Skyrocketing Relocation Costs Experienced by a Global Pharmaceutical Manufacturer
Situation Analysis
Our new client’s relocation program…like those of so many other companies…became the subject of internal cost reduction scrutiny. The program has worked well in meeting the recruiting challenges our client faces in a competitive talent environment. Not being immune to economic forces in the US and abroad, our client needed to reduce homesale program costs…most especially the “loss on sale” component. Historically, our client’s policy reimbursed 100% of the employee’s loss on sale…defined as the difference between the employee’s original purchase price and the greater of the Amended Offer or the Guaranteed Buyout Offer. With the erosion in US real estate markets, the cost of this benefit skyrocketed last year. With VISION as their newly selected relocation partner, we set to work on a complete policy evaluation and action plan to implement better practices.
Imagination in Action
In addition to examining the Loss on Sale benefit, a careful diagnosis of the client’s policy showed that they were missing other important cost reduction opportunities including---Tiered Policies and Mandatory Departure Home Marketing.
Tiered relocation policies link assistance levels and services to employee status in various categories. Typically, assistance is differentiated by home owner or renter and current employee or new hire. These tiers allow a company to align relocation spend with recruiting and retention objectives. Before VISION’s policy consulting support, our client used one policy for owners and one for renters…this was changed to four tiers: Critical to Quality Employee Homeowners, Critical to Support Employee Homeowners, New Hire Homeowners, and Renters. The cost savings are significant in the use of the lower policy tiers by management.
By instituting a Mandatory Home Marketing policy for all homeowners, our client experienced an immediate reduction in homes going into inventory. They have required that all homeowner transferees market the home according to sensible guidelines before accepting the Guaranteed Buyout. Each home sold by an employee costs our client half the amount of the same home going into inventory. With the newfound understanding that a Loss on Sale Program should not compensate for unwise purchase decisions, over-improvements or standard risks involved in homeownership, our client’s Loss on Sale Assistance policy has been overhauled to exclude capital improvements and include a cap at 60% of the total loss on sale. Only three months into the new policy components, our client is already experiencing cost savings, fewer inventory properties, and happier hiring managers. VISION has implemented supportive counseling with our client’s relocating employees to help them understand the intent of the relocation benefits, to smooth over perceptions of takeaways, and to keep them focused on selling their home for the best price available.
These results can be yours.
Better Practices
VISION recommends that you consider an annual checkup of your relocation policy alignment with overall organizational cost and business objectives.
A few things to consider:
*Worldwide Employee Relocation Council. (2008). 2008 Transfer Volume & Cost Survey.
How VISION Can Help Contact us today for a complete review of your current relocation policies. The sole focus of your Consulting Services team at VISION is researching, analyzing and reporting on the latest trends in the global relocation and human resources industries. Your Consulting Services team will assist in implementing Better Practices for your policy type and relocation budget. To read more articles and white papers written by VISION's Consulting Services team, click here. |
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