U.S. Domestic Relocation Policy Essentials

by | Sep 12, 2024 | Resources

A well-crafted domestic employee relocation policy will improve the transferee experience, control costs, meet your employees’ needs, and help you win and retain new talent. Improving the employee experience means reducing stress so that employees can focus on work roles in their new locations.

Offering a comprehensive suite of relocation services is crucial in crafting a relocation policy that effectively benefits both the company and the employee. A holistic approach not only supports employees in managing the complexities of relocating but also streamlines the process for the company, helping to maintain productivity and reduce the administrative burden.

Regularly reviewing and updating the policy to reflect current market trends and cost-of-living adjustments contributes to overall employee satisfaction and ensures competitiveness.

The 8 essential relocation benefits should be a part of your policy strategy:
1) Home Sale Programs
2) Rental Assistance
3) Destination Services
4) Household Goods
5) Lump Sum
6) Cost of Living Assistance (COLA)
7) Policy Exceptions
8) Policy Tiers vs Core Flex Benefits
8.5) Compliance

U.S. Domestic Relocation Policy Essentials

1) Home Sale Programs

Offering a competitive home sale benefit can provide significant advantages to both the company and the relocating employee. By offering a standardized home sale process, companies can ensure a consistent and controlled relocation experience, reducing the risk of dissatisfaction or failed relocations.

The most common home sale benefit types include a Guaranteed Buyout (GBO) or Buyer Value Option (BVO) program and Direct Reimbursement (DR) program

Guaranteed Buyout (GBO) or Buyer Value Option (BVO)

  • Offering a GBO can be risky for your organization since it guarantees employees a home sale based on appraisal value,
    but if the home is not sold then your company takes the home into inventory and must resell it.
  • A BVO, on the other hand, significantly minimizes the organizational risks seen with a GBO since your company purchases the employee’s home only after the employee secures an outside buyer.
  • Some companies offer a GBO to their executives and a BVO to non-executives.

GBO

Some policies offer a Guaranteed Buyout Program (GBO), where the company or a third-party relocation service purchases the home if it does not sell within a certain period. This ensures the employee can move without financial strain.

Pros_Green-CheckmarkPros

  • Tax advantage for your company and the employee.
  • Employees are not required to attend closing.
  • Professional appraisers ensure your company is offering a competitive market price.
  • Guaranteed offer expedites the relocation process so that transferee can relocate faster.

Con-Red-CheckmarkCons

  • The company carries the risk of owning and maintaining the home until it is sold.

BVO

With the Buyer Value Option (BVO) program, the employee is responsible for marketing and selling their home on the open market, but once they secure a bona fide offer from a buyer, the company or a third-party relocation service steps in to purchase the home at the agreed-upon price. This approach allows the employee to sell their home at fair market value, while the company handles the closing and resale, streamlining the process and minimizing the employee’s involvement in the transaction after the offer is secured.

Pros_Green-CheckmarkPros

  • Tax advantage for your company & transferee.
  • Employees are not required to attend closing.
  • Minimizes company costs as buyer is secured by employee.
  • Broker Market Analysis completed by two real estate agents to establish an appropriate marketing parameter.

Con-Red-CheckmarkCons

  • If home sale falls through, homes go into corporate owned inventory.
  • Employees remain financially responsible for their home until an outside offer is accepted which might delay their move to the new work location.

DR

A Direct Reimbursement (DR) home sale benefit offers a flexible, cost-effective alternative to BVO and GBO programs, providing employees with the opportunity to sell their home independently while receiving financial support for key expenses such as real estate agent commissions, closing costs, and legal fees.

Pros_Green-CheckmarkPros

  • Lower financial risk since your company does not have to bring unsold homes into inventory and employees are responsible for selling their home and paying closing costs/commission fees up front.

Con-Red-CheckmarkCons

  • No tax benefit for your company or the employee.
  • Your company will incur additional gross up cost (assuming you offer gross up).
  • Employee is responsible for all costs up front (closing costs, commission fees, inspections, etc.).

Home Sale Bonus

A home sale bonus can be an incentive for employees to sell their homes quickly.

    • Beneficial to your company if you offer a GBO; offered less in a BVO program.
    • Decide where you will cap this benefit, and if the cap will vary dependent on employee’s role. Many companies base it on a percentage of the sale and/or offer a higher bonus for those that can sell their homes within a desired timeframe.
    • This is not required in today’s real estate market as homes are selling quickly as demand greatly outweighs the supply of available inventory.

Loss on Sale

Some companies offer a loss on sale, whereby the company provides an additional benefit to employees selling their homes for less than the original purchase price.

This benefit is more prevalent with executives versus non-executives (usually at a capped amount).

Home Inspections

Most companies require a full home inspection for a GBO and BVO program. The home inspection is ordered by the Relocation Management Company (RMC).

An inspection helps reduce risks of the company purchasing a home with unknown significant defects.

The transferee is required to complete all necessary repairs before moving forward in a BVO or GBO program.

Some companies want to avoid being too picky about required repairs, so an alternative to a full home inspection would be a major component inspection.

Specialized home inspections may include:

  • Well
  • Septic
  • Radon
  • Termite
  • Stucco

If there are suspected issues in other areas, additional inspections might be ordered:

  • HVAC
  • Roof
  • Interior plumbing and/or electrical
  • Structural/foundation

2) Rental Assistance

Employees at different life stages have varied housing needs. Rental assistance benefits ensure that the company’s relocation policy is inclusive and supportive of diverse situations, such as younger employees or those relocating to urban areas where renting is more common.

Additionally, providing rental assistance helps minimize the stress of moving and eases the transition into the new work role. An essential component of this benefit is helping transferees with early lease termination.

If you choose to offer rental assistance, consider the following:

      • How many days of rental search you want to provide.
      • Placing caps on rental assistance ensures your company is containing costs. If an employee exceeds the cap, decide whether to provide an exception benefit on an individual basis.
      • Encourage employees to negotiate with landlords to insert a diplomatic clause into the lease that reduces future lease break fees.
Employee Relocation rental assistance

3) Destination Services

Relocating to a new location can be an overwhelming experience for employees. Destination services play a crucial role in easing this transition by providing support that helps employees settle in more quickly and comfortably. Essential destination services include temporary housing, home-finding assistance, settling in services, among others.

By offering comprehensive destination services, companies can significantly reduce the stress associated with relocation, allowing employees to focus on their new role and become productive sooner. A well-supported transition not only enhances the employee’s experience but also contributes to their overall satisfaction and success in their new position.

Essential destination services for a US Domestic relocation include: Home Finding including temporary housing or house hunting trips and destination closing costs.

Destination Services include house hunting, temporary housing, and destination closing costs

Temporary Housing

Relocating to a new location can be an overwhelming experience for employees. Destination services play a crucial role in easing this transition by providing support that helps employees settle in more quickly and comfortably. Essential destination services include temporary housing, home-finding assistance, settling in services, among others.

By offering comprehensive destination services, companies can significantly reduce the stress associated with relocation, allowing employees to focus on their new role and become productive sooner.

A well-supported transition not only enhances the employee’s experience but also contributes to their overall satisfaction and success in their new position.

Home Finding/ House Hunting Trip

Providing a travel lump sum will simplify the process and allow employees to book/pay for house hunting trips.

See below for more details on lump sums

Destination Closing Costs

Many companies will offer this reimbursement to executives versus non-executives.

  • Capping support is a way to control costs for this taxable benefit, especially if your company is providing gross up. This could be especially helpful when moving employees to high-cost housing destinations.
  • Only allowing reimbursement of typical closing costs is recommended to ensure your company is not reimbursing items that are non-standard.

Some employers offer closing cost assistance to current renters buying a home in their new location.

  • If you decide to provide this benefit, decide who will qualify. Only new-hire or existing employees, only executives or based on job level?
  • Although it is not the most commonly offered benefit, an incentive to rent can provide your company with potential cost savings on future relocations.
  • Good option for employees who relocate often, thereby your company can forego paying closing and future home sale costs on a repetitive basis for the same employee.

4) Household Goods

The HHG move is one of the most stressful stages of a relocation. Covering the cost and logistics of household goods shipping significantly reduces this stress, helping employees focus on transitioning to their new role.

    • Make sure your RMC is proactive in their communications and provides opportunities for employees to give live feedback so that any issues can be addressed immediately.
    • Verify that the RMC provides transparent pricing, detailed tracking of expenses, and comprehensive insurance coverage to mitigate risks.
    • Most companies will provide tax assistance with HHG moves, especially since the Tax Cuts and Jobs Act (TCJA) of 2018 was passed.
Household Goods Shipment

Vehicle Shipment

Create cost savings by basing the number of vehicles authorized on move distance. It is common for companies to offer at least one vehicle to be shipped if the distance will be over 500 miles, and up to two if the distance is over 1000 miles. This reduces the stress of requiring the employee and family to travel long distances in separate vehicles.

Temporary Storage

Most companies will provide temporary storage of the employee’s household goods until permanent housing is secured.

  • A well-defined policy that includes temporary storage provides clear guidelines for both the employee and the company, reducing ambiguity and potential disputes over what is covered during the relocation process.
  • To save costs, do not provide this benefit for personal reasons, e.g., during home remodeling, when the employee may want to store items until the work is complete, or if the employee is going on vacation and cannot be present for HHG delivery.

5) Lump Sum

Lump sum benefits include the freedom of being able to use their relocation money as they see fit

Decide if you want to offer a partial or full lump sum policy to transferees. Some employees may enjoy the freedom of being able to use their relocation money as they see fit.

Pros for providing lump sums include the following:

    • Cost containment
    • Easy budgeting and administration
    • Market competitiveness
    • Great for employees with less to move
    • Internship programs

There are three main types of lump sums discussed below:
lump sum only (no counseling); managed lump sum (with counseling); and lump sum (in addition to other benefits).

Lump Sum Only Benefit
(no counseling)

The transferee receives one lump sum payment. The employee decides how they plan to spend these funds.

  • Commonly used with non-executives including entry-level hires and employees in development programs who rotate locations frequently.
  • Typically, not utilized with higher-level relocations.
  • Majority of lump sums are less than $5K

Managed Lump Sum
(with counseling)

Allows your company to retain partial control over how the employee uses the money while still allowing some flexibility. The RMC counsels the employee on approved ways they can use their managed lump sum, and the funds are provided as a reimbursement after the employee incurs the cost or is direct billed to one of your RMC’s supplier partners.

  • Managed lump sums are used more often as the only benefit to executives or higher-level employees versus a lump sum only (no counseling), used more often with entry-level employees.

Lump Sum
(in addition other benefits)

This is the most frequently used type of lump sum benefit. It works well because companies can provide other benefits – tailored to the individual’s specific relocation needs – while still providing a lump sum that the employee can spend as they wish.

This type of benefit will also allow your company to control costs, and it adds some additional flexibility for the employee.

See our SimpleMove website

Cost of Living Adjustment (COLA)

Some of your employees may be moving to an area with a lower cost of living and some may be moving to a much higher cost destination. If higher costs exist, some companies will provide a limited term cost of living allowance to bridge the financial gap. Options for payout could include monthly, quarterly, annually or a one-time lump sum.

  • Set an ending time-period for this benefit and decide whether the benefit will slowly decrease/taper during that time-period.
  • Companies should also consider the tax implications of COLA payments and ensure clear communication with employees about how the adjustment is determined.

It is best to only offer this benefit to those employees moving to higher cost destinations. If your employee is moving from one high cost of living area to another, consider withholding this benefit. Often employers will establish a threshold (typically a percentage), to offer the benefit. Others will identify specific areas/cities and only offer the benefit to employees moving to these pre-determined locations.

Cost of Living Adjustments COLA

7) Policy Exceptions

Decide how you want to handle policy exceptions and make sure you and your RMC are in sync. Develop a well-defined process for requesting and evaluating exceptions, including who is authorized to approve them and under what circumstances exceptions will be considered. Even though you may have a great employee relocation policy, it is not always one-size-fits-all! Individual cultures, specific needs and family dynamics may create the need for exceptions. Make sure your RMC is tracking all requests/outcomes. Regularly review the types and frequency of exceptions requested to identify patterns or gaps in the current policy, which may indicate the need for policy adjustments.

Some common policy exception requests might include the following:

  • Extended temporary housing or household goods storage
  • Additional crating of items, vehicles to be shipped or other services for a household goods move
  • Home listing parameters / Qualifying home requirements
  • Additional reimbursements for travel
  • Repair Requirements
  • Benefit extensions

8) Policy Tiers vs Core Benefits

Policy Tiers

With policy tiers, the company selects which employees receive specific benefit packages. Often, policy tiers categorize employees into different levels (tiers) based on factors like job level, seniority, or relocation distance, with each tier offering a predefined set of benefits.

For example, relocation benefits provided to an executive might be different than benefits provided to an entry-level employee. While a tiered policy allows a company to be selective regarding which benefits are offered to each level of employee, some benefits may be offered in all packages.

In other words, a HHG move could be offered to all relocating employees, but the cost of the move could have caps for lower-level employees. Some companies will only offer home sale assistance to higher level employees, but all other benefits may be the same regardless of role/job level of the employee.

In addition to employee position level, other factors that could affect which tier an employee fits into might include whether they are a homeowner versus renter, or a new hire versus an existing employee.

 

Core Benefits

Core Flex benefits offer a more tailored solution by providing a core set of essential relocation benefits to all employees while allowing additional flexible benefits that employees can choose based on their specific circumstances.

While Core Flex offers greater customization and can enhance employee satisfaction, it requires more complex administration and careful communication to ensure employees understand their options.

8.5) Compliance

Compliance is an essential consideration when developing a U.S. domestic relocation policy, as it ensures that the company adheres to all relevant laws and regulations. This includes understanding tax implications, employment laws, and real estate practices that vary by state. Creating a policy that prioritizes compliance helps mitigate risks, avoid potential legal issues, and ensures that both the company and the transferee are protected.

In Conclusion

In crafting an effective US domestic relocation policy, it is crucial to consider a variety of best practices that address both employee needs and organizational goals. Regularly compare your policy with industry standards and competitors to ensure it remains competitive and effective.

Consider partnering with a good RMC who can help write your policy, benchmark it regularly, and administer it cost-effectively.

For more best practices, get our 2024 Global Mobility Benchmark Report.

WHR Global,a leader in global mobility, is an independent, full-service relocation management company with offices in the US, Switzerland, and Singapore. WHR strives to offer cost-effective relocation benefits without compromising empathy, ethics, or service

Company Benefits of Offering Employee Relocation Packages

by | Aug 21, 2023 | Resources

Searches for “Employee Relocation Package” have increased by 300% from November of 2023 to January of 2024. This article delves into the transformative power of these packages, shedding light on how they enhance the talent pool and contribute to a company’s success.

According to McKinsey & Company interviews with more than 100 chief human resources officers and people leaders, HR leaders are most focused on innovating the employee experience journey to win the race for talent. The data is clear: moving is the 3rd most stressful event a person can go through in their lifetime after the death of a loved one and a divorce. Therefore, your company must offer sufficient employee relocation program benefits to ensure your employees and their families have a positive experience (and perception) of your organization.

Offering company relocation packages to your employees will positively impact your recruiting efforts. Here are the top 5 benefits of offering comprehensive employee relocation program packages when hiring.

Benefits of Offering Employee Relocation Packages

Some of the benefits that employees expect include the following:

  • Relocation allowances
  • Temporary housing
  • Assistance buying and selling their home (in new and old locations)
  • Spousal/partner and family support
  • Packing services
  • Paid house hunting
  • Rental car reimbursement
  • Household goods shipments
  • Visas and other immigration issues
  • Cultural assistance

Let’s make a point clear with company job relocations; it’s not only the employees who have an advantage, but companies also find moves to be beneficial. It adds noticeable value to the company in several ways. Therefore, it is time we take a detailed look into how employee relocation program packages benefit an employer.

1. Candidate Pool Is Widened

Most companies are looking for a talented and diverse workforce, regardless of size. At times, it can be quite challenging to find people within the same geographic location who have the proper skills and experience to give the company an edge over others in the industry. Expanding the search beyond the geographic location to a worldwide talent pool will give you more candidates with the required skills and knowledge to select from. You will be able to attract talent that otherwise could be hindered by the costs of a new location or apprehensive about relocating. The cultural diversity of the workforce can dramatically change, fostering new ideas and ways of thinking.

2. Reducing The Vacancy

When you offer a robust company relocation program package to talent, the international market for quality candidates will open for your company. This allows you to fill vacant positions faster and more efficiently. As a result, the entire enterprise can work expertly and effectively. Ensure you work with a relocation service, such as WHR Global, that can accommodate international relocation packages.

3. Helps Positive Company Brand Promotion

While many consider corporate relocation packages an employee benefit, it’s time to look at it from another perspective. Although a good company relocation package surely attracts candidates to a company, it also speaks about the enterprise. When a company says it cares about an employee’s transition and comfort with robust plans and relocation packages, it puts the company in a good light. The relocation benefit adds value to the enterprise and works as an excellent promotional feature, eventually attracting more international and domestic talent. It can foster quicker onboarding and productivity, thus increasing bottom line and employee satisfaction.

4. Improved Employee Retention 

A successful relocation package gives the employee a sense of commitment towards the company, knowing the company is taking care of them. Companies that pay for relocation can attract and retain talent by following these WHR Global six simple tips:

5. Knowledge Transfer  

When an existing employee goes to a new assignment as part of a company relocation, they will transfer unique knowledge and skills to this new location. In this relocation example, interacting with new people will also increase culture, experience, and expertise that will help develop new perspectives for the company. This type of relocation example eventually helps to make the enterprise stronger, have an international approach, and enhance its functional capacity. Companies that provide relocation assistance will have a leg up on the competition in an ever-competitive market for top talent.

Overall, a good employee relocation package gives your company a competitive edge over others by easily securing the industry’s top talent. Hire an employee relocation management company, like WHR Global, to take care of your global mobility program. Your company will reap the benefits in the long run if you support your employees throughout their corporate relocation package.

 

Strategies For Lowering Employee Relocation Expenses

by | May 19, 2023 | Resources

Since 1994, WHR has been helping its clients contain costs and lower relocation program expenses. Although there are many ways, below we share just three easy suggestions to lower organizational expenses. Explore three practical tips, from auditing your program to monitoring exceptions and staying ahead of industry trends. Discover how tailoring your approach to real-life experiences can minimize expenses while ensuring a smooth relocation for your employees.

Jar of Change

1. Audit Your Relocation Program

Does your program reflect the real-life experiences of your relocating employees? Go through each step of the relocation process and analyze both quantitative and qualitative data. Look at the numbers from previous moves, but also survey employees who went through the relocation process and uncover which benefits were truly meaningful to them.

It’s often said that relocating is the 3rd most stressful experience in a person’s lifetime, just after death and divorce. While it’s critical for employees to have a suite of relocation services to choose from, your company may not be in the financial position to provide certain ancillary benefits. It may be helpful for your global mobility team to stack rank which benefits are most critical to your employees, with the intention of cutting the least-critical services.

Here is a sample stack ranking from most to least-important:

      • Immigration
      • Tax Consultation/Preparation Assistance
      • Tax Gross Up Assistance
      • Reimbursement of Final Move Expenses
      • Household Goods Shipment
      • Temporary Housing…
      • …Language Lessons
      • Cultural Training

2. Monitor Policy Exceptions

When the unexpected occurs during a relocation, you can bet it will impact the logistics throughout the rest of the process. These exceptions result in higher costs. The first step to minimizing exceptions and the impact to your bottom line is by designing a thoughtful and data-driven relocation program. The more your program reflects the actual experiences of your transferring employees, the better you can plan around exceptions. The program execution is equally important.

WHR trains our Relocation Counselors to anticipate needs before they are requested, set expectations upfront, and regularly check in with transferees throughout the move. Should an exception be required, our Counselors review all possible alternatives first. Can a closing date be moved? Is there a more cost-efficient storage alternative? Can the cost be covered by a miscellaneous allowance?

3. Stay on Top of Trends

To find relocation cost savings, look at the dollars…and the pennies! With a little creativity and by staying current on what’s happening in the industry, you’d be surprised at the cost savings you can find.

Consider home sale bonuses, for example. Ten years ago, companies would offer employees $10,000 as motivation to sell their homes quickly. This is not required in today’s real estate market since homes are selling quickly as demand greatly outweighs the supply of available inventory.

Your Relocation Management Company can provide you with Benchmark studies and reporting identifying gaps or redundancies in your policy, as well as opportunities for savings.

While a relocation benefit is a significant investment, there are ways to implement it thoughtfully in a way that keeps your employees happy and minimizes costs. Tailoring your program to the real-world experiences of your transferring employees, monitoring exceptions, and staying aware of industry trends ensures a smoother move experience for your employees and helps keep your expenses down.

If you’re interested in learning more ways to cut costs, contact WHR Global.

Offering Tax Assistance & Tax Equalization Ensures Higher Employee Retention & Improved Recruitment Outcomes

by | Jul 14, 2022 | Resources

Many companies are struggling to find and retain good talent. It’s important that benefits, including relocation tax assistance and tax equalization, are very competitive. Offer employees what they need to have the best possible experience as they uproot their lives and move – be it a long or short-term move.

There are many benefits a company should consider for their employee relocation and global mobility programs. In this article, we discuss tax assistance and tax equalization. According to WHR Global (WHR) Chief Financial Officer, Jami Long, “By providing these tax benefits, employers help offset tax burdens for their employees. By doing so, some of the stress typically associated with relocations or international assignments can be decreased. When you consider that these benefits also help companies stay competitive in the hiring process, it’s a win-win for everyone.”

Tax Assistance versus Tax Equalization

Tax assistance also referred to as gross-up, means an employer grosses up an employee’s taxable relocation benefits. In other words, gross-up is the additional money an employer pays their employee to offset any additional income taxes the employee would owe the respective tax authority when that employee receives a company-provided cash benefit, like relocation expenses. This benefit alleviates some of the tax burdens on a portion of the employee’s income.

Tax equalization, on the other hand, neutralizes an assignee’s tax liability associated with a global assignment. This compensation approach means an assignee pays approximately the same taxes if they had remained in their home country. In other words, the assignee is not paying more or less had they not left their home country, regardless of the actual tax burden in the home and host country.

The following may be old news, but still important to review. In December 2017, the US government passed legislation that directly impacted taxpayers. Under the 2017 law, known as the Tax Cuts and Jobs Act (TCJA), taxpayers are unable to claim certain deductions, including job-related moving expenses.

Tax Assistance in Detail

Per the 2017 legislation, taxpayers must treat any direct payment or reimbursement of moving expenses received from their employer for job-related moving expenses as taxable income. Previously, employees only needed to pass the time and distance test (criteria 50 miles, 39 weeks, and 1 year), to be qualified to deduct moving expenses related to household goods moves, storage, and final moving expenses. Alternatively, an employee paying their moving expenses could deduct those moving expenses even if they didn’t itemize.

Under TCJA, all moving expenditures are taxed accordingly, at least until 2025. However, active-duty military members may still deduct moving expenses. For employers, this can have a significant impact because it could be a deterrent to attracting new talent, or current employees may be less inclined to take a promotion that involves moving.

Benefits of Providing Tax Assistance

If you’re competing for talent and your competitors are offering this benefit and you are not, you could be at a significant disadvantage. Tax assistance can take away some of the objections you might receive from current and/or future employees for relocation. In summary, the benefits of providing tax assistance can include:

  • Helps your relocation program remain competitive.
  • Improves employee attraction and retention efforts.
  • Alleviates some of an employee’s tax burdens.
  • Lessens employee stress, allowing the transferee to focus on their new role sooner.

Drawbacks of Providing Tax Assistance

  • Increases an employee’s taxable income and can change their tax bracket. This could increase an employee’s tax rate and phase out certain tax credits.
  • Increases company relocation expenses.

Tax Equalization in Detail

The transition from a home country to a host country can be difficult and could keep talent from taking expatriate assignments. Housing, cultural acclimatization, family adjustments, and entering a new work environment are just some of the challenges of international moves. Companies will often offer expatriates assistance to make the experience as smooth as possible, including tax equalization. For example, expatriates coming from the US have a unique obligation to fulfill and are required to file taxes on their global income regardless of where it was earned. They don’t have the benefit of being able to break their home country’s tax obligation. Additionally, they’ll have a tax filing requirement in the host country too.

Even though the US provides foreign tax credits that can be applied to the employee’s US return, it may not be enough of a credit to offset their entire US obligation. By providing tax equalization, expats whose combined taxes are higher than what they would hypothetically be without the assignment are reimbursed by the company for the additional incurred taxes. Conversely, if the combined taxes are lower, the assignee reimburses the company for the difference. When new opportunities arise overseas, businesses sometimes struggle to determine how they will fill positions. Many multinational corporations turn to their proven domestic employees and leverage those abilities to develop markets, monetize product offerings and grow the business overseas.

The recruitment/retainment process is even more challenging in highly specialized fields. Consider pharmaceuticals and bio-medical, for example, where there are a limited number of specialized candidates available, and oftentimes many companies are competing for the same talent. According to an article in Fierce Pharma, “Those technical qualifications become even trickier when applied to fields like cell and gene therapy.” Fabian Gerlinghaus, co-founder and CEO of Cellares said, “There simply aren’t enough humans in the highly specialized fields.”

Since the war for talent is even more competitive in specialized fields, providing the right benefits can make a big difference.

Benefits of Providing Tax Equalization

  • Decreases expatriate stress and allows the assignee to focus on the new role sooner. The less economic stress an employee is under, the more they can focus on the personal and professional development of an international opportunity.
  • Improves employee retention and recruiting efforts since the assignee is less likely to decline a foreign assignment or transfer due to tax obligations.
  • Limits tax burden and maintains a comparable home country tax basis for the assignee while on a foreign assignment. This means the assignee’s tax gain or loss is minimized and equalized as much as possible and remains the same had the assignee stayed in the home country.
  • Facilitates positive corporate citizenship for tax compliance in every location the company operates and eliminates the risk of local law non-compliance, tax regulations, and exchange rate controls.

Drawbacks of Providing Tax Equalization

  • Increases company relocation expenses.

Your Relocation Management Company (RMC) can explain how tax assistance and equalization work and help facilitate the process. RMCs can also manage everything for your company, including providing a global statement of earnings to your tax partner and ensuring tax assistance is correctly calculated and implemented.

 

Collect Key Data Points for Success

by | Jul 12, 2022 | Resources

Read our article as featured in International HR Adviser. At its core, employee relocation is a human resource benefit and like all HR benefits, from health insurance to retirement accounts, organizations need timely and insightful feedback from employees. Click here

Buckle Up this Summer for Household Goods Move Challenges: Plan Ahead!

by | Jun 1, 2022 | Resources

International HHG Moves

Arriving just in time for summer, a familiar story; the household goods industry will have a difficult time over the summer months meeting consumer demand. While COVID-19 impacted how household goods suppliers had to perform their services, the need for moving was still great, plus increased levels of restrictions such as mask mandates, cross-border travel restrictions, quarantine periods, supply chain disruptions, and labor shortages, etc., provided even more hurdles. The list is extensive regarding additional burdens household goods suppliers need to overcome, and consequently, we are seeing a sharp increase in fees for services.   

Internationally, global supply chains have been impacted by the war in Ukraine which was already suffering due to Covid lockdowns. With China implementing additional lockdowns including Shanghai, the world’s biggest container port, this has only exasperated the problem. More than 8 million residents in Shanghai are still banned from leaving their residences and this means people that run logistics are not on the job. According to Project44, which tracks shipment times, the delays between China and the major US and European ports quadrupled since late March. According to Daejin Lee, an associate director at S&P Global Market Intelligence, the situation in China will push global inflation higher this year. Last year, inflation was driven by two factors: supply shortages of key parts led to supply chain bottlenecks; and record-high container freight rates.  Both problems continue into 2022, and the war in Ukraine will only make commodities prices rise as well. 

Not only is there an international shipping problem, but there are difficulties in the US. According to the American Trucking Association, they estimate the industry is short 80,000 truck drivers, and there is a fear this number could double by 2030 as more retire from the profession. To try and remedy this problem, the $1 trillion infrastructure bill includes a three-year pilot program that would allow commercial drivers as young as 18 to drive across state lines. In most states, you need to be 21 to receive a commercial driver’s license. However, this would be a band-aid approach and is unlikely to remedy the immediate situation. In response to the shortage, companies are raising wages for truck drivers and these increases are being passed on to consumers. 

How this translates to the relocation industry is that clients and employees must be extremely proactive. For example, according to the US Army and an article written by Chris Gardner, they have 36,984 soldiers that have reporting dates in 2022 during the peak summer season. Fort Sill’s property supervisor, Shirley Castle, stated, “Soldiers and civilians need to contact the local transportation office as soon as orders are received and keep their chain of command informed of any issues or challenges…waiting until 30 days or less before the move to contact the local transportation office could result in non-availability of DoD approved moving companies.”

The way to address all of this is to understand the situation and over-communicate to all involved in the logistics and household goods moving process. This includes clients and their transferring employees by implementing the following:

  • Work with a knowledgeable Relocation Management Company (RMC)that can navigate these challenges.
  • Plan for more shipment time, especially international moves.
  • 30 days’ notice is the minimum; try and plan well in advance.
  • Change to air freight versus sea freight if feasible and affordable.
  • Consider providing a furniture allowance rather than moving furniture.

At WHR Group, Inc. (WHR), our Supply Chain Management department builds and maintains relationships with quality network providers. We continue to monitor this ever-changing situation and its impact on the supply chain and logistics. Through our extensive and well-vetted supply chain network, we can find the right providers to navigate each employee relocation on a case-by-case basis.