2015 Trends & Insights

Transcription

1 U.S. Domestic Mobility Companies who relocate employees understand that the key to managing the ups and downs of the U.S. economy and domestic housing market is the development of appropriate mobility strategies which successfully assist employees in their mobility efforts, mitigate the overall cost of mobility, and ensure that the company s talent and staffing needs are being met. Many mobility leaders are continuing to evaluate and make key adjustments to their mobility policies and programs which will likely position their policies and programs favorably no matter what the economic future holds. Although sluggish at times, economists were largely on point when they predicted that the U.S. would see steady growth in The U.S. ended last year with key events such as an improved job market, low home mortgage interest rates, an increase in home values and a positive advance in U.S. gross domestic product (GDP). What s in store for 2015? Economists once again believe that the U.S. economy will continue to advance and perhaps pick up speed in The dynamics underpinning this growth consumer spending remains positive and many predict will allow for about 3% in economic growth. According to Freddie Mac s economist, the real estate market is expected to strengthen along with the economy in While this outlook is positive, the U.S. economy is still volatile and many factors can quickly slow it down. Correspondingly, looking into 2015 there is still a level of cautiousness in U.S. domestic mobility which we saw in We expect that companies will remain optimistic and continue to increase their mobility activity within the U.S. but at a controlled rate of increase. Over the past several years, as more companies reviewed and modified their policies and programs, Brookfield Global Relocation Services has seen practices emerge and then become commonplace as companies continue to learn from each other and implement strategies that prove successful. We continue to identify mobility trends that companies are likely to see as a result of the changing economy and housing market. Some of these are new trends we are currently seeing, some are trends we have seen in the past but may be resurfacing in a different form, and some are ones that we anticipate will emerge in the future. We discuss below what we see as some important trends, insights and emerging practices in Inside: Balancing the Cost-Benefit Scale Including Mobility CareerPath in Talent Management Adopting a Tiered New Hire Policy Approach Looking Beyond the Traditional Family Unit Ensuring Compliance with Home Sale Assistance Programs BROOKFIELD GLOBAL RELOCATION SERVICES 2015 TRENDS & INSIGHTS U.S. DOMESTIC MOBILITY BROOKFIELDGRS.COM 1

2 Balancing the Cost-Benefit Scale This is a trend that we have seen repeated over the last few years and we expect will continue to be seen in 2015 but with a different point of view. Although U.S. domestic mobility programs continue to remain in the spotlight as targets for cost management, companies are also considering the impact of considered policy changes on the employee. Reviewing policies for cost savings has become a perennial objective for mobility leaders. Recent trends have focused these reviews on the balance between cost and value and on holistic program management rather than straight cost containment. There is a growing recognition that there is only so much cost that can be squeezed out of programs as a result of straight-line benefit reduction before the cost-benefit scale tips the wrong way. Key Ideas Developing a balanced and well-structured home marketing assistance program which can improve the employee s ability to sell the home and reduce the company s cost (e.g. participation in a home marketing assistance program, adjusting list price with broker s opinion and appraisal s value) Continuing to offer a loss-onsale program but one that requires the employee to participate in the loss while also providing the employee with assistance for extreme/ catastrophic loss Reviewing policies to fit the generation (e.g. allowing a self- move option for shipment of household goods for entry level employees with minimal belongings) Providing a lump sum payment for specific provisions, such as House Hunting Trip and Temporary Living, to provide the employee flexibility to manage their move and allowing the company to manage costs The search for a balance between cost and program quality takes careful analysis to determine where to cut costs and where to expand, where to add flexibility and where to decrease it, where to reinforce standards and where to take a completely new approach. The economic environment has created a complex set of reactions and concerns within business as a whole, and U.S. domestic mobility will continue to feel pressure to reduce costs. However, as programs reach the limit of the amount of costs that can be taken out without compromising the quality and consistency of the support that is offered, mobility leaders will need to balance both short-term need and long-term strategic goals and to manage value versus cost. As mobility leaders seek to manage their programs into the future, they will be faced with complex choices and will need to make well-thought-out and sometimes difficult decisions. The key is to strike a balance among all these competing issues. BROOKFIELD GLOBAL RELOCATION SERVICES 2015 TRENDS & INSIGHTS U.S. DOMESTIC MOBILITY BROOKFIELDGRS.COM 2

3 Including Mobility Career Path in Talent Management A leading trend that we continue to see is linking mobility to talent management. Companies engaged in talent management are strategic and deliberate in how they source, attract, select, train, develop, retain, promote and relocate employees through the organization. They believe that business performance is driven by talent and that it is particularly important in the areas of candidate selection and long term career planning. Companies May Consider Permanent Relocation for upward movement/promotion Temporary Domestic Assignment for leadership training Rotational Assignment for management and tactical training purposes and talent exchange Extended Business Travel for experience and developing talent Employee-requested Relocation/ Assignment for hand-raisers, employees who identify themselves for relocation or assignment Emerging from this is a focus on talent mobility which includes providing employees with a mobility career path. Mobility is no longer used just for recruiting talent or for upward movement within the organization but as a career path for employees. Talent mobility provides the opportunity for employees to gain skills and experiences that the employee needs to stay engaged and that the company needs to meet business goals. Whether mobility creates an opportunity for a lateral, upward, diagonal or even downward career path, employees who progress in their career are more likely to stay engaged. Mobility leaders will need to establish an annual process to meet with talent and mobility stakeholders to review their talent mobility strategy and to ensure that there is alignment with the company s objectives. When done right and communicated properly, talent mobility will significantly expand the company s talent pool. In addition to business needs, employee demographics are influencing talent management and mobility programs. As an example, for a few years now, we believed that the Millennial Generation (born ) would be the most influential in driving changes to talent mobility. Retaining Millennial Generation talent, a highly educated generation that has a strong desire to be challenged and move up the career ladder quickly, will certainly drive the evolution of mobility. This generation is known to change jobs every few years but also seems to be more open to relocation. The challenge for companies is to provide an appealing mobility career path which can be used as a career developmental and retention tool for this generation. BROOKFIELD GLOBAL RELOCATION SERVICES 2015 TRENDS & INSIGHTS U.S. DOMESTIC MOBILITY BROOKFIELDGRS.COM 3

4 Adopting a Tiered New Hire Policy Approach The use of a New Hire Policy has been around for quite some time and has traditionally been thought of as a policy for new hires with little or no prior work experience. The definition has expanded over the years to include recently graduated from a 4- or 5-year undergraduate university program with further expansion to recently graduated with a MBA or other post graduate degree with some limited work experience. Today, because there are different levels of new hires, companies are trending towards adopting a tiered New Hire Policy approach which may allow companies to reduce overall costs while meeting the differing needs of new hires. Tiered policies could create a more complex administrative process, however, companies will appreciate the flexibility and opportunity to customize their benefits offering to a new hire. This approach allows companies to offer a competitive policy, but in order to be successful, delivering a high quality yet cost effective mobility program is critical. Achieving balance among the varied complexities while controlling costs maximizes the company s investment in these new employees and ensures a more successful mobility program. Recruiting and relocating new hires is an important activity within companies who rely on the skills of these new employees to enhance their talent pool. And because recruiting new hires is often a competitive endeavor for companies, and sometimes involves a relocation, it is important for mobility and HR Managers to be aware of current relocation practices, along with any trends that may be surfacing. Because definitions vary and policy offerings vary, companies must develop a new hire policy approach that works for them. Whether it s a policy with generous benefits to attract highly specialized new hire needs, a Lump Sum Policy or a lean policy, tiered policies will allow a company to scale back their offerings with little negative impact. Things to Consider Developing tiered policies to accommodate the types of new employees they are hiring Modifying current policies to provide technology driven support which new hire college graduates expect (e.g. access to the policy or destination property search, offering mobile apps, etc.) Creating or revising new hire policies to more closely match needs (e.g. increasing flexibility in providing lease cancellation reimbursement in cases where the new hire has a roommate or allowing household goods to be picked up at locations other than where they were hired) Adding at least one low-cost tier such as a Lump Sum Policy or Self Move Policy BROOKFIELD GLOBAL RELOCATION SERVICES 2015 TRENDS & INSIGHTS U.S. DOMESTIC MOBILITY BROOKFIELDGRS.COM 4

5 Looking Beyond the Traditional Family Unit Determining dependent eligibility guidelines and the scope of assistance to be provided to the employee s dependents is an integral part of developing a comprehensive U.S. domestic mobility policy. As the composition of more employee households continues to evolve to include others (e.g. parents) beyond the traditional family unit (husband, wife and children) of prior generations, there is a growing trend for companies to give more consideration to enhance their definition of dependent and review their mobility policies to respond to these changes. Companies May Consider Reviewing policy to ensure the definition of eligible dependents is appropriate Determining whether they are paying unnecessary taxes on same-sex spousal benefits and whether to seek refunds Revisiting policy to determine the needs of an expanded definition of dependents (e.g. elder care, spouse/domestic partner assistance, etc) Additionally, the trend for companies to review their policies to determine the impact of the U.S. Supreme Court s decision in 2013 to strike down a provision of the Defense of Marriage Act (DOMA) that denied same-sex couples from gaining access to federal marriage benefits continues. Because DOMA was overturned, companies must treat same-sex married couples exactly the same as opposite-sex married couples for federal tax purposes, as long as they are legally married. According to Pete Scott, Worldwide ERC Tax Counsel, the IRS issued guidance holding that same sex couples legally married in one of the states that recognize same-sex marriages will be treated as married for all federal tax purposes beginning on September 16, 2013, even if they live in a state that does not recognize such marriages. Reflecting both company culture and legal shifts to the definition of family, companies will need to determine if they will expand their dependent eligibility to include others that may be part of the employees families, such as domestic/same-sex partner and multi-generational family members. Companies will also need to review the Supreme Court s decision with their tax and legal departments to determine the full impact of DOMA on mobility benefits. BROOKFIELD GLOBAL RELOCATION SERVICES 2015 TRENDS & INSIGHTS U.S. DOMESTIC MOBILITY BROOKFIELDGRS.COM 5

6 Ensuring Compliance with Home Sale Assistance Programs We continue to see compliance related trends in Home Sale Assistance Programs, mainly due to their potential for favorable tax treatment but also because of their high cost and visibility. The Internal Revenue Service (IRS) continues to be focused on compliance and Home Sale Assistance Programs. Companies are aware of the fact that an IRS audit could occur, yet many still deviate from the 11 Key Elements and Procedures (11 Key Elements) established by Worldwide ERC to outline steps they believe would be acceptable by the IRS and allow a home sale transaction to be non-taxable to the employee and company. With more companies understanding the full risks and implications of non-compliance, as well as an improving U.S. economy, we left 2014 seeing more companies move towards a more compliant program and believe that this trend will continue in Having a process in place that follows all of the 11 Key Elements is regarded favorably by the IRS and can help ensure compliance and favorable tax treatment. Since there is no ready-made solution that fits all companies for ensuring absolute compliance, it is up to each company to conduct their own due diligence. Many companies are reviewing pertinent IRS and Worldwide ERC information relating to a compliant Home Sale Assistance Program and assessing their company s risk profile. They then work with their Relocation Management Company to tailor the steps needed to ensure compliance. Things to Consider Gaining a complete understanding of the 11 Key Elements and the IRS Revenue Ruling , which will enable them to develop a compliant Home Sale Assistance Program The increased costs of compliance which may include the expense of completing buyer requested repairs or an occasional outside sale that does not close Ensuring their process for purchasing a home from the employee follows the 11 Key Elements BROOKFIELD GLOBAL RELOCATION SERVICES 2015 TRENDS & INSIGHTS U.S. DOMESTIC MOBILITY BROOKFIELDGRS.COM 6

7 Concluding Thoughts Our recent consulting engagements with U.S. companies suggest an increased commitment to consistent policy review and revisions. This trend will likely continue in 2015 and should contribute to U.S. domestic mobility strategies which are appropriate to the changing economic environment and evolving business objectives. The trends and insights presented in this paper explore many of the current issues in the U.S. domestic mobility industry and have an important role in mobility management. Mobility leaders should filter the trends presented in this report through the lens of their company s culture and consider that the best approaches may be, in some cases, quite divergent from the trend or common practice. Brookfield Global Relocation Services develops and implements comprehensive talent mobility solutions for corporate and government clients worldwide. With deep industry experience and unparalleled insights on the future of talent mobility, we enable our clients to craft mobility programs that will empower them attract, retain and develop top performers. PLEASE SEND FEEDBACK OR QUESTIONS TO consulting@brookfieldgrs.com BROOKFIELD GLOBAL RELOCATION SERVICES 2015 TRENDS & INSIGHTS U.S. DOMESTIC MOBILITY BROOKFIELDGRS.COM 7