Santa Fe A/S : Relocation in a world of economic uncertainty

Relocation in a world of economic uncertainty

Posted: 31/07/2017 Author: Santa Fe Relocation

Global mobility has plenty of important upsides for companies: extending company culture, ensuring ethical standards are maintained, developing an understanding at the centre of the challenges in different territories.

The cost ofemployee relocation, on the other hand, can be exorbitant - and that is a significant risk factor in a world of growing economic uncertainty. In the UK, the lack of clarity around Brexit and negotiations with the EU make long-term planning harder. In other parts of the world, the election of presidents such as Donald Trump and Emmanuel Macron mean that international infrastructure may change rapidly and in unforeseen ways. So it's more important than ever for companies to keep relocation costs as low as possible so that they can react quickly to new circumstances.

Send fewer people

Organisations with a significant overseas presence sometimes use the possibility of relocation as an incentive. Many employees are motivated by the possibility of working internationally, both for the perceived boost to career prospects and the chance to experience a different culture at an intimate level.

Yet the benefits for the company can be limited. The transition is disruptive and it takes time for the assignee to reach full productivity and effectiveness. In hardship locations, a relocation can take several months to pay off and a revolving door of assignments ensues.

It's possible to cut the number assignees without a material impact on the business through better forecasting of talent needs:

· More local hires - ensure only the most senior roles require a relocation.

· More short-term assignments - make greater use of high-level visits by senior team members or postings of only a few months which can be done without a full relocation package.

· Extend assignments - encourage employees who are on assignment to stay longer. Instead of a two year assignment as the default, make it three years, and look for talent management opportunities for those already in position

· One way assignments - look out for employees who may want to make their international assignment permanent, whether that's through developing their career within the organisation or moving on after a lengthy period.

Reduce the costs of those you send

Many corporate relocations are not optional - companies that rely too heavily on local hires can discover that overseas part of the organisation loses touch with HQ or suffers from compliance or reputational issues. For these situations, there are ways of minimising the cost of employee relocation packages through policy changes.

By emphasising relocation as a perk in itself, employees see international assignments in terms of their personal development rather than a financial opportunity.

· Pare back benefits - reduce or remove housing allowances and international travel home, particularly for host locations where there are only superficial differences to the employee's home country.

· Reduce removals costs - employees may be expected to take on furnished accommodation rather than ship out all their belongings.

· Introduce tiered benefits -

· Compensation at local rates - keeping employees on packages that are tailored for their home countries is often more expensive and not necessary for more junior assignees.

· Stay on top of your data - only by maintaining proper records of your assignment costs and understanding your company's expenditure levels can you keep control of those costs.

Employers will always need to take care of issues such as visas and tax, but by giving employees more control over their relocation arrangements there are other opportunities to reduce costs. Although a fixed budget managed entirely by the relocating employee may be unrealistic, there are opportunities to for the assignee to make decisions about what they feel is important. Some might choose to spend more on shipping but reduce their temporary accommodation costs.

Despite significant levels of global uncertainty, the costs of inaction can often be greater than even a premiumemployee relocation. There is always advice and assistance available from Santa Fe Relocations on the best options for your company. To find out more, get in touch via ourcontactpage