North America: No slowdown in relocation

North
American countries continue to invest in a global future by sending staff
overseas, despite the economic downturn. Charlene Solomon reports

Despite
the current slowing of economies around the world, global relocation is still a
robust and growing industry. The Global Relocation Trends 2000 Survey report of
154 multinational companies with headquarters in North America states that 58
per cent of respondents believe expatriate activity continues to increase. In
fact, companies state that 43 per cent of their revenue comes from outside the
country where their headquarters are based, with 80 per cent of relocation
decisions made at company headquarters.

It
is no surprise to find that the most common reasons people are relocated are to
fill a skills gap, to launch a new business, to effect a technology transfer or
to build management expertise. Currently, assignments in greatest number are
for more than three years (42 per cent); two to three years (29 per cent) and
anywhere from six months to two years for 25 per cent. Short-term assignments
tend to be in the high-tech, pharmaceuticals and healthcare sectors.

Relocating
employees is an expensive endeavour, The one-time cost of transferring someone
can range in the tens of thousands, depending on your sources – and your
service providers. Components of a typical relocation package include:
homefinding fees, homefinding services, settling-in services, language
training, cross-cultural training, transportation, furniture moves, support
allowances for vehicles and other items, mobility allowances, spouse assistance
and visa/immigration assistance. In an effort to create more uniformity, 83 per
cent of companies are standardising assignment packages. Intra-regional
relocations are popular with 39 per cent within Asia, 35 per cent within Europe
and 25 per cent within the Americas.

In
an effort to deploy employees effectively, all organisations are searching for
ways to be cost-effective. "Thinking in terms of overall costs, one of the
most significant ones is the housing allowance," says Eric Stern, senior
vice-president of GMAC GRS, one of the sponsors of the survey (along with the
National Foreign Trade Council and SHRM Global Forum). "Rental costs vary
from city to city. Something reasonable from a US perspective in a reasonably
priced city could be $1,500-2,500 for a one-bedroom apartment to upwards of
$10,000 per month in higher cost areas."

But
there are additional things to think about rather than the obvious costs. Many
companies are so concerned about saving an up-front fee rather than pay for a
relocation service that they fail to examine the cost-saving outcome of the
service. In other words, if you select a good partner who can assist with
aspects of relocation such as home finding and schooling, you might save in
several ways. If the provider is a good one, it will find the best
accommodation, for example, within the budgetary allowance, saving the company
considerably over the course of the assignment. Because employees are not left
having to fend for themselves, they are likely to become productive as soon as
possible.

Some
firms are looking at other ways to be cost-effective. Paul Bailey,
vice-president of ECA International in New York, helps companies examine ways
to keep the costs of international assignments down. He says employers are
seeking extra flexibility through shorter international placements and commuter
assignments. This is partly for cost-savings purposes and to alleviate problems
with dual-career marriages.

Bailey
also states that cost-of-living allowances will have to be re-examined. He
says, "Cost of living calculations will continue to be an integral part of
the relentless search by employers to find the optimum balance between
attractiveness and affordability in expatriate packages. The situation is
fluid."

Indeed,
organisations are so concerned with finding about the best ways to approach
relocation that about a third of respondents to the ECA survey say they will be
reviewing all or part of their policy during the course of the next three years.

Companies
of all sizes and types are looking at the cost implications of global relocation.
While the components, individually and collectively, are quite expensive, the
overall cost of an assignment and the necessity of global mobility makes it
worth examining all the components as well as service providers to be sure your
organisation’s needs are met.

Typical
services and costs

Homefinding                             $2,678
Cross-cultural preparation         $3,940
Settling-in services                    $2,693
Repatriation counselling             $2,546
Spouse support                        $2,609

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