Message from the President

Welcome to this edition of The Source and those "Lazy Hazy Crazy Days of Summer." I'm not sure about "lazy hazy," but these are "crazy" days indeed for the relocation industry!

Much of this newsletter is dedicated to being prepared for what's coming. No matter what lies ahead, we can be sure of one thing and that's that our world is changing…and it will have an impact on how we manage employee mobility.

In our Partner Highlight section, John Sculley's article "The Relocation Rebound: Is Your Policy Ready?" discusses the need for companies to retool their relocation polices to effectively address the current business environment. Today's focus is different than it was just a few years ago, and your polices need to reflect those changes and they need to keep up with your company's objectives and goals.

Our Policy Tips section offers an easy to use tool that can assist you in developing a customized policy, tailored for your company.

Enjoy the rest of your summer.

Eve A. Seib
President & Managing Partner

Policy Tips...

DIY - Online Toolbox Provides Step By Step Policy Development

OneSource Relocation is pleased to announce the release of Policy Builder, a simple to use, web-based, interactive tool that allows companies to easily build effective relocation policies. Policy Builder can streamline and simplify the policy development process and create a set of relocation guidelines for your company based on both industry benchmarks and your unique culture.

Policy Builder manages the complexities and unique business requirements around domestic relocation policies, ultimately developing a complete relocation policy prepared specifically for your company, by your company.

Faced with a tough economic climate, companies today must reevaluate policies and procedures to ensure they are providing the highest level of benefit available to employees. Policy Builder's powerful online tools will take you step-by-step through the relocation policy building process. Enriched with expert recommendations and industry data, this intuitive tool allows even a novice to deliver results like a seasoned professional.

OneSource Relocation's experts have preconfigured parameters and the appropriate language for each potential relocation benefit, which can be easily modified, added or deleted. Additionally, your policies can be downloaded and published to PDF, Word, or RTF at any time.

As in every other facet of your business, you want to maximize the value of your relocation benefits offered. By utilizing the most current data available combined with the years of experience and expertise of the staff at OneSource, Policy Builder takes the guesswork out of policy design.

Policy Builder is available free of charge.
Click here to access Policy Builder™.

Relocation Alert

IRS Employment Tax Audits Begin

Worldwide ERC reports, the IRS has begun to implement a plan to audit some 6,000 U.S. companies of all sizes for employment taxes to ensure compliance as part of a research program that began in February 2010. The IRS will conduct very complete audits, in order to gather information about compliance issues. It will contact the businesses subject to the audits both by telephone and letter, and expects to complete all 6,000 audits within three years. It is training about 200 examiners for the program, some of whom will be new hires. These audits are in addition to the employment tax audits the IRS conducts as a part of its regular compliance program, and are designed to identify issues that should be pursued more broadly. In 2008, the IRS examined 60,000 employment tax returns, proposing some $2.7 billion in additional taxes. But audit coverage (the percentage of returns examined) was a scant 0.2%. This new initiative signals a determination on the part of IRS to improve those statistics.

The workforce mobility industry has a significant interest in employment tax examinations. Most of the important tax issues that arise in workforce mobility are employment tax issues, either involving whether costs incurred should be part of wages (for example, homesale programs), or whether costs are being appropriately treated for purposes of withholding and deposits. For example, it is incorrect for companies to "cut off" accounting for relocation payments late in the year unless the payments themselves are actually stopped. It is possible that these new in-depth audits will unearth and identify that as an issue. The industry could also experience a new round of questions concerning homesale programs. IRS agents have continued to question the Buyer Value Option method, and there continue to be programs with features the IRS considers objectionable even after Rev. Rul. 2005-74.

Relocation Trends

Worldwide ERC's 2010 Pulse Survey

Based on data collected in May, the survey reflects on changes in U.S. domestic relocation programs and activity. The 165 member organizations that responded, reported the following:

• 47% are experiencing either a slight or significant increase in the number of current employees relocating
• 21% have increased the level of relocation benefits to current employees
• 35% are experiencing either a slight or significant increase in the number of new hire employees relocating
• 16% have increased the level of relocation benefits to new hire employees
• 23% are experiencing either a slight or significant increase in the number of homeowners relocating
  

Partner Highlight

The Relocation Rebound:
Is Your Policy Ready?
John B. Sculley, SCRP, Vice President
Managing Director of RIS Consulting Group

If you manage your company's relocations, you will need to be ready very soon to handle a big backlog and upturn in relocation volume. In the near future, you'll likely face much higher workforce mobility, fueled by a recovering economy.

In recent years, many employers – maybe yours too – have curtailed and postponed employee relocations. Facing tough conditions in business economics and housing markets, they've deferred new hiring, promotions, reorganizations, acquisitions and capital investments – all resulting in far fewer company-sponsored individual moves.

Despite this sharp drop in relocation volume, commonly estimated at 30-50% nationally, corporate relocation program managers have not exactly been on sabbatical! They've had to contend with suddenly obsolescent policies, management's cost discontent, spiking transfer turndowns and untenable administrative burdens. Many have been too busy coping with present conditions to pay much attention to an eventual recovery.

Now that a relocation rebound is on the horizon, you may be tempted to find and dust off that 2006-vintage policy deck, going back to business as usual, but that would be a big mistake…

Your target has moved. The environments, needs and best practices of even a few years ago have shifted dramatically. That familiar pre-crisis policy may have delivered great results in its day, but it is almost certainly out of synch with the new expectations of your program sponsors and constituents.

It's time to recalibrate policy goals. You deserve to know, but may need to ask, what would constitute a successful mobility program at your company. Unless you know the specific results expected, in terms of performance, perceived service quality and costs, you will struggle to design ideal policies and to align your external partners in delivering them. Here are some key considerations…

• Will you be fulfilling different job types? At different locations? It's time for serious upward dialogue on corporate strategy and organization. You will want to know in advance if your business will be seeking new kinds of talent, or dispatching it to new locations. Your future policy can only be effective if it anticipates your business' priorities for getting the right skills to the right places and the relocation challenges arising from location differences and competitive hiring.
• How will your transferee population change? Your past policies had likely evolved toward serving the personal and family characteristics of your traditional transferee population, but at many companies, workforce profiles are changing fast. You can benefit by projecting estimates of your future transferees' attributes and by re-tuning policies to address their emerging needs.
  
  

  Get Ready to Change! Will your new mobility population be more…

  Female than male?

  New hires than transfers?

  Multi-cultural than homogeneous?

  Entry-level than long service?

  Renters than homeowners?

  International than domestic?

  Lateral than promotional?

  Metropolitan than rural?

  
  Any such expected shifts could warrant policy changes, particularly to add flexibility in benefits and services or to reallocate costs toward newly prevalent needs.
• What's in your wallet? Relocation policies exist to relieve the personal and family impacts of moving but no longer convey the sense of "keep whole" entitlement from older paternalistic policies. Of course, you've heard a litany of transferee complaints lately about personal financial impacts of moving. These are legitimate real-world concerns but most employers are not prepared to fully subsidize them. More commonly, companies seek to provide relocation assistance that is proportional to the job's value, whether or not satisfying all transfer candidates. Today, relocation policies are more demographic than democratic, with more tiered benefits by job grade or skill set. You might promote more management dialogue about the costs of relocation and their correlations to policies and market conditions. When you help drive conscious corporate decisions on relocation philosophy and transferees' financial responsibilities, you may learn that the firm's desired competitive position and "spend" tolerance are changing. Maybe you'll gain even more strategic spending for key positions and market areas, or establish overall cost-per-move reduction objectives reflecting job levels.

Start now and involve constituents. Adapting to so many potential new conditions can be daunting, but these are times that call for collaboration and strong data as decision inputs. Survey your executive team, business users, suppliers and end-consumers for a full 360-degree perspective and forecast. Engage your key service partners or other outside experts in evaluating policy alternatives and best practices. Connect to your corporate peers through Worldwide ERC and its regional affiliates. Consider sponsoring benchmark research within your industry group for policy issues that are particularly complex or sensitive.

For the foreseeable future, relocation professionals will face volatile markets, dynamic changes, and management redirection… nothing easy… but if we remember to aim at where our target will be, rather than where it has been, our policy results can still hit a bull's-eye.

About the Author: John B. Sculley, SCRP, is Vice President – Managing Director of RIS Consulting Group in Norwalk CT. His relocation-specialized firm advises employers on policy design, administrative processes, mobility services procurement and performance evaluation, and conducts market research for the mobility industry. A nationwide speaker and author, he is a 30-year relocation professional and recipient of Worldwide ERC's Meritorious and Distinguished Service Awards and President's Award.

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