Message from the President

I'll open this edition with a sincere thank you for the warm reception, kind words and thoughtful comments with which last quarter's inaugural issue of The Source was met. In an effort to further connect with our clients, vendor partners and other friends, we received much back in return, and for that we are truly grateful. The ideas and commentary in our newsletter seem to be resonating with our audience, and it is nice to have yet another way to connect with you.

In our ongoing dialogue with our clients and prospects, we are hearing more and more about companies' desire to fully articulate the benefits included in an employee's relocation package. There has been a huge focus lately on strengthening and streamlining relocation policy and now, there is a shift toward making sure the employee and his/her family understand the value of those benefits. In an effort for overall cost control in organizations, management has the desire for an employee to fully understand the benefits being afforded him or her and to maximize the purchasing power of the dollars allocated to his or her relocation.

While relocation expense had previously just been viewed as a necessary cost of doing business, it is now being heavily scrutinized and used as a strategic workforce tool. The decision to relocate an employee, hire locally, delay a move, not replace a transferee at the end of an assignment, change the relocation package offering, or overall reduce the number of relocations is being made higher and higher up the management structure. Relocation is becoming a business strategy rather than a business function due to the increased focus on cost management.

In this, there is a lot of opportunity for those who advise, manage, participate in or who are invested in a company's relocation function. There is a need to recommend cost cutting measures, consult on current and anticipated workforce needs, and to offer input on the elements of success in a relocation. We have an expanded audience who view us as advisors of a very valuable business aspect capable of cutting expenses, helping to manage a workforce for the long term and ultimately generating additional profitability by appropriately, conservatively and thoughtfully managing the relocation function.

Eve A. Seib
President & Managing Partner

Policy Tips...

Faced with a tough economic climate, companies today are forced to reevaluate virtually each and every policy and procedure to ensure they are minimizing costs while maximizing service. There are several pieces to a market-competitive mobility program. It is critical for your domestic relocation policies to address real estate market conditions, regulatory and relocation trends, employee/family issues, talent recruitment and retention strategies, and last but certainly not least, cost and budget constraints.

When designing or reevaluating your program, the following areas should be taken into consideration:

• Current program strengths and weaknesses
• Benchmarks within your industry and marketplace
• Relocation costs analysis – How much are you spending on relocation?
• Homeowner needs and concerns in a depressed real estate market
• The diverse needs of your employees and their dependents
• How relocation fits in your overall talent management strategy
• Tiered policies to limit offering such benefits as home sale to selected groups only (i.e. grade level, job type, hard to hire positions or locations, etc.)

Relocation Alert

IRS: Lower Optional Standard Mileage Rates for 2010

The IRS implemented new standard mileage rates for use of an automobile in business or moving, effective January 1, 2010. (IR-2009-111)

The new rates, which the IRS said reflect lower costs of operating vehicles compared to a year ago, are 50 cents per mile for business use (down from 55 cents per mile in 2009), and 16.5 cents per mile for moving (down from 24 cents per mile in 2009). The reduction in the rate for moving is particularly large, and results in the lowest such rate since 2005.

Worldwide ERC® Tax Counsel Peter K. Scott noted that "companies are reminded that if they reimburse transferees for use of an automobile in moving at a higher rate than 16.5 cents per mile in 2010, they will need to include the excess in the employees' wages."

The new rates are discussed in detail in Rev. Proc. 2009-54, 2009-51 IRB 1.

Relocation Trends

HSBC Bank International's 2009 Expat Explorer survey found that 23% of U.S.-based expats are considering returning home, compared with 15% elsewhere in the world. The most frequently cited reason was increasingly limited career prospects, according to the survey of more than 3,100 expats, defined as anyone over 18 living outside their country of origin.

Other survey findings:

• Over half of expats (58%) questioned in 2009 have lived abroad for more than five years. The top three countries for settling down are South Africa, Thailand and Canada, where 55%, 53% and 52% of expats respectively have lived there for more than five years.
• The countries who produce the ‘expat-lifers’ (expats having lived abroad for more than five years) include those originally from Thailand (82% of expats living abroad more than five years), Bahrain (81%), South Africa (73%), Russia and the US (both 70%).
• Interestingly, while expats are staying away for longer periods of time, most expats only stay for between seven months and two years. Male expats also tend to live abroad for longer than their female counterparts, with two-thirds (63%) of men versus 46% of women having lived abroad for more than five years, possibly linked to work versus family commitments.
• Expats, on average, return home at least once a year with three-quarters (74%) saying that they make an annual trip home. Expats living in Brazil are the most likely to go home at least once a year, with almost all (94%) doing so. This contrasts with expats living in Australia, where a significantly lower number (43%) of expats living there go home at least once a year.
• The longer expats have lived abroad, the less frequently they return home. One-third of expats living away for more than 10 years have not been home for more than two years. The under 35 category craves home the most, with 79% returning at least once a year

Partner Highlight

School Choice International
A Global Educational consulting firm. Founded in London in 1998, School Choice has 90 consultants in 50 worldwide locations providing specialized educational assistance to families on the move.

Despite economic circumstances, companies have continued to relocate families. For families with school aged children, education will always be the make it or break it aspect of a move. Whether moving abroad or even from one US state to another, as there is no American national curriculum, relocating children will inevitably find they are ahead in some areas and behind in others and may not be able to meet entry or exit requirements of their new schools without assistance. Parents worry both about academic concerns and their children's ability to transition successfully to a new school environment.

The economic circumstances of 2009 made it more difficult for companies to address the education needs of their relocating families. Companies took a sharp knife to their policies, and increasingly moved assignees as locals rather than expats or provided them with lump sum allowances rather than tuition reimbursement. The result has been greater use of local schools and public or state schools, rather than the expensive international school placements that once were considered a right for families being relocated.

Although these trends are, at first glance, difficult for families to absorb, when the process is approached correctly, local schools can present an excellent option for internationally mobile children, allowing them to become far more attuned to the culture they are living in and preparing them for the global economy into which they will graduate. They will more easily learn new languages and develop a worldwide community. An added benefit is that local schools have a more stable population of families, compared with international schools which typically lose one third of their enrollees each year.

In order to make local schooling a rewarding opportunity for relocating families companies must give them the tools to make the experience a success. Some of these are:

Accurate and detailed information pre-departure about their school choices. This should include curriculum comparisons, assessments their children will need to be prepared for on the way over and when moving home, as well as cultural information about customs surrounding education in their new home. Knowing what to wear to school, how to address teachers and how holidays are celebrated in the host location is almost as important as what they will learn.

Specialized assistance in selecting the right school, taking into account the current and future needs of the student and family, both academically, culturally, socially and developmentally.

Tutoring or extra help for students in getting up to speed in the new language and unfamiliar subjects– both before and during the early months of the assignment. Some students who are actually ahead academically might require additional challenge if they are to attend a local school.

Adequate preparation for repatriation including tutoring to enable children to pass exams required for re-entry and to learn essential information they may have missed while away.

Special and individualized arrangements for children with special needs.

As the economy has changed the relocation paradigm, HR can feel confident transferring families with children even on a budget, as long as appropriate steps are taken to prepare families for what they will experience and minimize any negative impact that the transition could otherwise cause. An excellent web based tool which provides a wealth of information on education and schooling worldwide is Global Education Explorer™.

The Results Are In:

World's Friendliest Countries*

Bahrain has pushed Canada out of the top spot on HSBC Bank's annual ranking of countries that are the most expatriate-friendly. The list is based on a survey of 3,100 expatriates, who ranked countries on how easy it is to set up a new life there. Bahrain was noted for its access to modern healthcare, low-cost housing, and a strong network of social groups for expats. Canada moved to second place, followed by Australia, Thailand, and Malaysia.

Expats liked these countries because it is easy to make friends with locals and the quality of life is higher than back home. Bahrain did not score so well on making local friends, but expats liked the ease of finding a home, establishing finances, and locating good schools. Some say the survey results may be a fluke, though, as only 31 expats in Bahrain responded to the survey, compared to 450 in the United Kingdom, which received some of the poorest scores along with the United Arab Emirates. » Full story here

*www.forbes.com