No matter the company, industry, or location, every HR leader who manages employee relocations shares at least one common challenge: how to ensure their transferees’ health, safety, and well-being while also keeping their relocation expenses in check.

The reality is there’s just not enough money to include everything on your wish list in the relocation process, so how do you manage costs without sacrificing duty of care? Here’s some insights from our relocation experts.

Global Mobility is Getting More Costly

Like most everything else, inflation has reared its head when it comes to moving costs. The fact is, relocating employees in today’s global economy is a significant investment. While costs can vary based on location and the specific benefits offered, on average, relocations for home owners tally in at $85,466. Relocating a renter averages $33,532, says a recent Worldwide ERC Report.

What’s driving the rising cost of relocation?  Significant housing challenges, for one thing. Housing inventory shortages persist, leading to multiple offers, elevated prices, and potential future resale issues. Rising interest rates affect purchasing power, pushing some transferees towards rentals.

As we noted last month in the CapRelo Insider, “The shortage of housing inventory, rising prices, and increased competition means (relocating employees) may encounter difficulties in finding suitable accommodations within their budget and preferences. These challenges may necessitate temporary housing extensions, increasing relocation costs and complicating logistics. Additionally, with limited housing options, the need for storage solutions for personal belongings during transitions becomes critical, adding further logistical and financial considerations for both employers and employees.”

And it’s not just the cost of getting a transferee settled into a new location. The cost of getting their household goods to the new destination is also increasing.

Maersk, a major player in the shipping industry, has adjusted its annual 2024 predictions upward for 2024 due to two main factors: high demand for container shipping and an ongoing crisis in the Red Sea.  Xeneta, a platform that tracks shipping rates, says that prices for shipping containers from certain regions, like the Far East to the US West Coast, could increase by as much as 57%. Similar price hikes are expected on other trade routes as well. And, as ocean freight costs rise, air freight rates are anticipated to increase accordingly. According to CNBC, air cargo shipping costs increased 9% month over month in May.

The takeaways for transferees and employees are two-fold. Transferees relocating for work assignments can likely expect delays in the delivery of their goods, requiring them to make temporary arrangements until their belongings arrive.

For employers who cover the cost of transferee relocations as part of their relocation package, these rising shipping prices lead to higher relocation costs to factor into their budgets.

Duty of Care Becomes More Complex

Since the pandemic, duty of care has taken on expanded meaning. Certainly, employers have a legal and ethical responsibility to ensure the health and safety of the transferee and their family. The reality is that relocating employees around the world comes with risks – and stress.

Case in point, last October, “the U.S. Department of State  issued a rare advisory  that Americans overseas “exercise increased caution” due to heightened tensions and chances of terrorism around the world, spurred by the Israel-Hamas war,” National Geographic recently noted. And an Oxford Review study found that 62% of organizations believe their mobile workforce is exposed to risks when travelling abroad.

In addition to safety concerns, in recent years, millennials in particular brought heightened attention to employers’ additional responsibility to care for the mental health of their employees. There’s no question that the relocation process can be stressful for transferees and their families, particularly if they are navigating it without a framework or trusted advisors familiar with the process and the destination they are moving to. Remote assignments, especially international ones, come with stressors that global mobility leaders simply can’t overlook. Things like the loneliness and isolation of being away from friends or family; adapting to a new culture or learning a new language; finding a home, community, schools, a job for the spouse.

Ensuring a transferee’s mental well-being is critical in ensuring a successful assignment. A recent AXA-Global research paper found that 11% of international assignments fail due to personal reasons, the most common being family concerns. The study also found that more than two-thirds of multinational companies reported concerns about their international assignments failing due to mental health problems. Another study estimated that more than half of international assignees are at higher risk for anxiety and depression.

Winning the Balancing Act

So how does an HR leader balance the duty of care imperative, providing transferees with the financial and social support for successful assignments, while keeping relocation costs in check? The watchword is flexibility.

When you are looking for a relocation management company, partner with one with a track record for baking flexibility into every aspect of their service.

Leverage flexible compensation options.

There are many ways to compensate a transferee for relocation costs, from lump sum to direct reimbursements and core-flex policies.

Many organizations are achieving the flexibility their transferees seek, and the budget control they need, by switching to core-flex policies. A core-flex policy consists of two key elements. The first encompasses those relocation benefits that are applicable to all employees and consider compliance elements. In this bucket are things like travel costs, household goods transportation, and other benefits critical to a smooth relocation for any assignee.  For cross border moves, immigration support and often tax filing support is critical.

The second bucket is where that all-so-important flexibility comes in. Here, your company can add a range of optional services specific to each assignee’s unique needs. Some examples might be things like spousal and family support, home sale and purchase assistance, pet care and transportation, child and elder care assistance, language training, cross-cultural training, school search assistance, and more. No two assignees’ benefits will look exactly the same.

Look for flexibility in shipping.

Another way some companies are attempting to contain relocation costs is through weight caps for household goods shipments. Before implementing them, though, involve a global mobility partner who knows how to navigate and manage the complexities of global relocation, including considerations related to weight restrictions. They may not be for every company, or every transferee.

While pricing is certainly a key metric in a relocation, remember that service is equally critical. Be sure your RMC has strong industry relationships that ensure that the transferee, and your company, are receiving the best service – and price – possible in all aspects of move management. In evaluating potential relocation management partners, look for companies with a track record for representing the client’s best interest and who hold accountable the companies they partner with.

Simply administrative overhead.

Streamlining processes isn’t just about saving time, it’s also about saving resources and cutting out unnecessary steps.

The right technology is key. Look for a core-flex technology platform that gives transferees flexibility in choosing benefits, yet enables the HR mobility manager to configure virtually every aspect of the benefits its employees will have access to. That type of customizable portal ensures that even in today’s more costly operating environment, HR leaders still have ultimate control over the spend.

Customize exception management

Make sure you have clearly outlined preferences for allowing exceptions, and establish clear approval guidelines. We recently helped one Fortune 500 company slash exception expenses from 7% to 3% of total spending, resulting in savings of around $580,000, simply by defining guidelines and educating their employees on what to expect.

Keep an eye on metrics.

The saying goes that you can’t fix what you don’t know is broken. Turn to robust reporting procedures and metrics to track costs and the success of the program. Many organizations are using dashboards to track expenses, but look to AI to dramatically change the data analytics landscape soon. Global mobility AI tools soon will give HR leaders real-time access to actionable data and an immediate picture of program performance down to the individual transferee level.

Learn More

It’s no wonder that nearly 99 percent of HR leaders who use CapRelo once, return again and again. They count on us for flexible, tailored solutions and personal service that put transferees’ first, within the confines of the relocation budget. Let our relocation experts go to work for you today.