4 Core/Flex Relocation Policies That Will Make Your Life Easier
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This document discusses the development and implementation of core/flex relocation policies for various levels of transferees, including entry-level, mid-level, senior executives, and C-suite. It emphasizes a customizable approach where employees can select benefits suited to their needs while also addressing the complexities involved, such as tax implications and specific policy features. Ultimately, it aims to educate companies on effective relocation strategies to enhance the employee relocation experience.
4 Core/Flex Relocation Policies That Will Make Your Life Easier
- 3. They can either be your best friend, like this puppy
- 4. Or your worst enemy, like this tiger.
- 5. we’ll help make sure that you’re in the first group.
- 6. we’ll help make sure that you’re in the first group. (tigers aside.)
- 7. “But how!?”
- 9. we’re going to show you how to build core/flex relocation policies for 4 different types of transferees:
- 10. - entry level employees
- 11. - entry level employees - mid-level employees
- 12. - entry level employees - mid-level employees - senior executives
- 13. - entry level employees - mid-level employees - senior executives - the c-suite
- 14. first, how about some background?
- 15. Core/flex policies have been around for a while, but it’s the implementation of them that’s becoming much more prevalent
- 16. similar to the growth we saw with lump sum, we’ll see that same sort of traction with core/flex
- 17. why?
- 18. because there’s so much to consider when creating relocation policies.
- 19. what’s the new cost of living?
- 20. what’s the new cost of living? is there a gross-up?
- 21. what’s the new cost of living? is there a gross-up? what benefits do they need?
- 22. what’s the new cost of living? is there a gross-up? what benefits do they need? what about an expense allowance?
- 23. Creating relocation policies is time consuming, even before all the exceptions start coming into play
- 24. These are the areas that typically see the most exceptions:
- 25. they also happen to be the cities that companies relocate to the most
- 26. Core/flex alleviates these problems by encouraging a build-it-yourself approach
- 27. complex It does this by allowing transferees to pull in the pieces of a relocation policy that they need, and then build upon them as those needs become more
- 28. let’s take a look at our first tier, shall we?
- 30. this is what a sample policy for this level might look like:
- 32. “What are flex benefits?”
- 33. pet assistance spousal support temporary living homefinding trip in-transit storage
- 34. pet assistance spousal support temporary living homefinding trip in-transit storage It’s a list of anything from pet assistance, to spousal support, to temporary living, to homefinding trips, to storage—the options endless. A company would have a detailed list of benefits (along with what coverage is included in those benefits) and then based on the level of the transferee, allow them to choose more or fewer options.
- 35. Note: These benefits aren’t paid to the transferee, but rather something they use through the tool being used to facilitate the relocation (such as a relocation management software)
- 37. Get it?
- 38. Get it? Money goes from the employer, through the RMS, and is used on behalf of the transferee
- 39. Get it? Money goes from the employer, through the RMS, and is used on behalf of the transferee This person
- 40. you’re probably wondering how you decide on the amount of flex benefits you offer.
- 41. well… there are two different ways.
- 42. offer a set numerical amount of flex benefits (up to 3 benefits) SET A MAX dollar amount of flex benefits (up to $2,500)
- 43. numerical amount it’s cut and dry
- 44. numerical amount it’s cut and dry the transferee gets 3 flex benefits to choose from, and that’s it.
- 45. numerical amount benefits are not equal
- 46. numerical amount benefits are not equal one transferee’s 3 benefits might not equate to another transferee’s 3 benefits.
- 47. 3 flex benefits = $2,500 3 flex benefits = $8,000
- 48. This is why specific guidelines are so important.
- 49. Here’s an example of how detailed a flex benefit should be:
- 50. homefinding trip Expenses related to the homefinding trip for you and one other adult member The trip must not exceed 3 days/2 nights Round trip transportation Reasonable lodging – arranged through the company’s service provider A per diem for meals, not to exceed $55 per day per person
- 52. dollar amount cost effective ensures that everyone stays within the allocated budget.
- 53. dollar amount requires more monitoring
- 54. dollar amount requires more monitoring have to be much more on top of making sure that the transferee is staying within their budget.
- 55. Here’s an example of how that homefinding trip might change using a numerical-cap:
- 56. Expenses related to the homefinding trip for 1 person Trip duration of 2 days/1 night Round trip transportation Reasonable lodging – arranged through the company’s service provider A per diem for meals of $45 per day homefinding trip
- 57. As you can see, the transferee can manipulate the benefit a little bit more.
- 58. Make sense?
- 59. let’s dive into the next policy!
- 61. here’s an example of what this policy might look like:
- 62. mid-level policy
- 63. “How would I incorporate lease cancellation?”
- 64. “How would I incorporate lease cancellation?” Wow, really great questions today!
- 65. “If you are renting a home or apartment, you should understand the conditions for terminating your lease. You should obtain a copy of the lease to review your options and understand what the transfer clause is that you would have to break. You may be required to pay a lease cancellation fee, which is reimbursable for up to one month’s rent. You should provide the employer a copy of the lease agreement in regards to cancelling, along with proof of payment.”
- 66. see what we mean?
- 67. see what we mean? DETAILED.
- 68. Another big difference here is the van line.
- 69. Going from a rental truck to a vanline might be expensive… …but it can make a big difference
- 70. having a van line can take a way a lot of the stresses that come with relocation
- 72. Now let’s talk about taxes.
- 73. it’s the responsibility to educate employees on tax ramifications associated with relocation
- 74. it’s the responsibility to educate employees on tax ramifications associated with relocation non-deductible lump sum/mea temporary living car rental return trips etc.
- 75. it’s the responsibility to educate employees on tax ramifications associated with relocation non-deductible lump sum/mea temporary living car rental return trips etc. tax-deductible shipment of household goods, vehicles, and pets first 30 days of in-transit storage the final move
- 76. paying attention to this can save you a lot of money.
- 77. this is why:
- 78. Acme relocation policy Lump sum = $12,000 With lump sum With core/flex • $12,000 becomes $7,800 (Assuming a 35% tax) • Must gross-up lump sum to $16,200 for transferee to receive $12,000 Loss of $4,200 • Lump sum is used for less, so amount can be reduced • To provide a $3,000 lump sum, employer only has to gross-up to $4,050 Loss of $1,050
- 79. Back to those non-deductible expenses. Let’s see what the final move entails.
- 80. the final move includes costs incurred between the last night in current location to first night in new location Requirements - route taken must be the most direct - must be driving 350 miles per day - if distance is less than 500 miles, employee must drive - if distance is over 500 miles, flight must be purchased 2 weeks in advance - all mileage is reimbursed at current mileage rate provided by the IRS
- 81. on to the next!
- 83. here is where it can get a little tricky. let’s look at a sample policy:
- 85. You might be confused with MEA, lump sum, flex benefits, signing bonuses, etc.
- 87. You need to ask yourself a question.
- 88. “what do i intend my transferee to use this money for?”
- 89. Once you decide, you can then choose which option is best for you.
- 90. sum of money for untracked expenses sum of money for tracked, relocation-related expenses =MEA complete control, providing the most structure =lump sum =flex benefit
- 91. this will help you decide which form the money should come in.
- 92. believe it or not, these policies can span your highest levels to your Lowest levels.
- 93. let’s take a look at the final tier
- 94. let’s take a look at the final tier yay!
- 96. this is your most complex policy. here’s what it looks like:
- 97. c-suite policy
- 98. While you should always offer assistance with homesale, this is where it becomes critical.
- 99. here is how renters and homeowners differ in terms of benefits:
- 100. Renter - lease cancellation - lease acquisition - finder’s fees - guided tours or: flex benefits for renting-related costs for up to $1,000 Homeowner - closing costs - home inspection - loss-on-sale - loan fees or: flex benefits for homesale-related costs for up to $5,000
- 101. you can also offer more extensive flexible benefits, such as…
- 102. lifestyle transition assistance what’s included - Career assessment and coaching - Resume preparation and production - Cover & reference letters preparation - Interview training and networking strategies - Internet job postings and community research what it is Lifestyle transition assistance is available to you and your family during and after your relocation. You’ll be paired with a consultant to assist you, along with a career relocation service that will give help to anyone facing a career or job change.
- 103. this is expensive and can be difficult to administer, so it doesn’t need to be given to everyone.
- 104. Lastly…
- 105. “how do i know if core/flex is working?”
- 106. you should have some sort of system in place for tracking the effectiveness of each policy
- 107. this way, you can be sure you are spending your money in the most useful way possible for your transferees
- 108. That’s it! Now you’re an expert!
- 109. Well…almost.
- 110. Check out our webinar & eBook to complete the lesson!