Since the 1970’s, a large international industry has grown up around the needs of the globally mobile employee. This industry began in the US, where domestic moves across the continent can raise almost the same issues as an international one. Service based companies began to form, ran by people who had an understanding of the issues facing individuals and families who were being relocated with their jobs.
Today in the UK there are around 240 companies offering such services who are members of the professional and regulatory body, The Association of Relocation Professionals. For a full explanation of their rules of conduct, to which their members must adhere, go to www.arp-relocation.com.
It is now the norm for employees being relocated with their jobs to be provided with nominated relocation support. The costs of this are not small to companies, but the reasons why they fund outsourced relocation services are many and varied. Firstly, where an employee is settled into the destination smoothly and quickly and the settling in period is short, the company know that productivity from that employee will be high. As well as this, globally mobile employees and their families are well aware of the stress and disruption caused by badly handled relocations. Companies know that they will only attract the highest calibre staff if they are able to provide the highest levels of support. Employees who are frequently moved internationally will demand a high quality of relocation support. As outsourcing has increased as a business tactic, so it has become clear that leaving the provision of services to the experts in a given field, results in far higher quality services.
In larger companies relocations are handled by the Human Resources departments. In smaller companies this may also be the case, but frequently it will be line management who determine who will be moved where. In both cases they will act in accordance with the corporate relocation policy when deciding on the type of support to offer the employee being moved. Often, seniority within the company will affect the levels of support the HR department is willing to fund.
Nominated relocation support refers to those situations where the HR department will work with a relocation company to deal with all aspects of an employee move. Often the employee will have no responsibility for finding a relocation provider or dealing with any of the financial implications of the process, as this will all be dealt with centrally by the HR department. There are still some companies who frequently move staff internationally who do not provide nominated relocation support, but instead have a graded financial incentive scheme, where the employee is given a fixed sum to support the move. This is intended to pay for relocation support including temporary housing, a Homesearch and the movement of household goods, but inevitably gets used for other purposes such as replacing a car. In these circumstances the only part of the process dealt with by the HR department is the visa and immigration process.
It is interesting to note that Price WaterhouseCoopers now calculate the average cost of an international relocation, before salary, lasting three years in the destination country as around £650,000. This is a very significant investment by the company in the future of their globally mobile employee. They want this assignment to last for its entire planned length. How do they ensure that the employee and family will stay in the destination country and that the employee will be productive?
Professional relocation services are the obvious solution. When the family are well briefed in advance of the move and supported during the transition and the assignment, the chances of the success of the assignment are significantly improved. So although it may seem “touchy feely” for the company to provide such a high level of support during a very stressful life experience, it is in fact economics that drive the provision of professional relocation services.
What Can You Expect?
Firstly, the provision of relocation services will be in accordance with the companies’ relocation policy, which is held on file by the HR department and should be made available to the transferee. Companies vary significantly in the support they provide to their employees in the form of housing and schooling allowances, relocation services, household goods transfers, inter cultural training, spouse support and so on. Some, as noted above, will give the employee money and expect them to get on with it themselves but this can be a risky enterprise. Let’s take an example.
The Keys Family
The Keys family are being relocated from the Lowestoft in the UK to Assen in Holland with the oil company employing Mr Keys as a drilling engineer. This is a promotion for Mr Keys and involves more money and greater status within the company. The assignment will be for a two years. However, Mrs Keys has just returned to part time nursing, as her youngest child has just started full time education. The family have two boys aged 7 and 5. On the one hand the Mr and Mrs Keys are very happy about the prospect of living in The Netherlands – they have always wanted to live abroad, and would like their boys to have the experience of living in a different culture. The company offer the Keys £8,000 (€12,000) in relocation expenses, and the HR manager introduces Mr Keys to his new boss at a company function in London. They are given a moving date two months from today, at the start of September, and by this time the HR department will have started the process care of the residency requirements in The Netherlands.
Mrs Keys hands in her notice at work. Having spoken to other people within the oil company, the Keys decide they will rent their three-bedroom semi detached house in Lowestoft in Suffolk through a local letting agent. Mrs Keys’ mother lives locally and agrees to oversee this process. They decide they will rent a house in Assen. Mrs and Mrs Keys take time off work and go to Assen for a long weekend to find a house. They do not know the area and are dependent on the local real estate agents showing them around. They find a house they like, but do not know if it close to schools for the boys. They ask the real estate agent who assures them it is. Unfortunately, their house is between two school districts and they have to apply to each. As is the local norm, the house is unfurnished.
They rent their UK house furnished, taking only a couple of packing crates with them to Holland. When they get to Holland, the first thing they do is buy basic furniture from the local Ikea. It feels like a fresh start in their modern new house. They buy a new car. The relocation allowance has now been spent.
Mrs Keys cannot work in nursing in Holland without taking a compliance exam to qualify her to the same level as is required. She does not speak Dutch and although everyone speaks good English, it is a requirement for working that she speak at least rudimentary Dutch. Mrs Keys enrols at the local college to take an evening class.
Mr Keys is enjoying his new role and has settled into the Dutch company culture very well.
The Keys oldest boy was not able to get into the school that colleagues of Mr Keys advised the family was the best, and instead has been enrolled in a school on the opposite side of town. There is a bus provided, but Mrs Keys feels he is too young to be so independent in a strange country and so drives him to and from school, a round trip of an hour and 20 minutes each way. The Keys youngest child is not able to transfer into primary school because the Dutch school system extends Kindergarten to the age of 7 years. This means he will be enrolled in a different school to his brother, also not close to the house. Because the Keys live so far away from the schools, none of the neighbours children are at the same schools and the boys have no one to play with locally. As the boys start to settle, Mrs Keys finds her time is increasingly taken up in running the children from one part of town to the other in order that they may attend after school activities and see their friends. Mrs Keys is not making friends locally and although she enjoys seeing her husbands’ workmates and families, she does not have the social network she had in the UK.
The end of the first school term is followed by the Christmas holidays. The family return to stay with Mrs Keys mother and enjoy meeting up with friends and family. On their return to Assen, Mrs Keys feels increasingly isolated and unhappy. When her mother phones to say that the tenants in their house are leaving at Easter, a full six months before the agreed tenancy was to end , Mrs Keys decides to take the children out of school in Holland and return to the UK. Mr Keys, agrees and decides he will commute on a weekly basis instead. However, they are tied to the minimum 12 month tenancy on their three bedroom house in Holland and also have a set of new furniture they don’t quite know what to do with. They decide that Mr Keys will stay in the house, and they will just have to pay the rent as well as cover the mortgage on their house in Lowestoft. For the next six months, they will have doubled outgoings. Mrs Keys however, returns to work and her mother agrees to take care of the children so they can afford to finance having two homes. As September approaches, Mr Keys decides he is not enjoying living apart from his wife and sons and approaches the HR department to see if he can be moved back to the UK. He can, but only on his previous salary and grade. He accepts, they move their new furniture back to the UK and life resumes.
The experience has cost them financially and emotionally and the company lost the right employee in the right place. Mr Keys was employed on a local Dutch contract by the oil company and not on a UK expatriate contract, which did not entitle him to a standard expatriate housing allowance. Not being able to compare his contract withy other expatriate contracts used by comparative companies has cost him a lot of money. Contact with a relocation professional would have given him access to this kind of information and potential leverage over the assignment with his company.
Where the employee transfer is supported by a relocation service provider, it is entirely determined by the relocation policy of the company moving the staff. Relocation policies are fairly standard and allow for more or less the same types of services. The HR department will always provide the relocatee with a copy of the policy as it will relate to their move. Normally before the relocation process starts, the employee also needs to sign an expatriate contract, which also spells out very clearly the salary, the housing allowance and what sort of help is on offer as well as what is covered/reimbursed by the company. There are often penalty clauses such as; if the employee resigns during the first year of the assignment, they will have to pay 80% of the relocation costs back, after the second year 40% and so on. Relocation service providers are able to provide a very broad range of services, but in most cases the relocation will follow a similar pattern. Lets look at another case study concerning a European, planned relocation;
The Blanc Family
Msr and Mme Blanc live in Louveciennes outside Paris. Mme Blanc is offered a two year transfer to London by her company, a French corporate bank. Mme Blanc is a talented corporate lawyer and has been asked to head up the London Legal Department of the bank. The job involves an increase in salary and status. Msr Blanc works in the marketing department of a large French multi-national, a job he will not be able to continue from the UK. The relocation policy includes two days spouse support for Msr Blanc to navigate his way around the British job market. As he does not speak fluent English, they will also pay for one weeks language training.
Mme Blanc’s HR department outsource their relocations to an international relocation provider. The relocation packange is generous. She will not be given a relocation lump sum, but is given a clear report on what the relocation process will involve and what she is and is not entitled to. Her housing allowance is £3000 per month. This allowance under UK law is tax free if the assignment is less than two years. The company will also pay for the education of the children.
The first stage of the process is an orientation visit. Mme Blanc is to take up her new post on the 1st September. A month in advance, the company arrange for Mme and Msr Blanc to fly to London and stay for four nights in a hotel. During this time, a consultant from the UK relocation company, will meet with them and begin the face to face relocation process. Mme Blanc also takes this opportunity to meet with the London office and organise aspects of her work life. They fly to London on a Tuesday.
Before arriving in London, the homesearch consultant Susan has already started the process by sending the Blancs a questionnaire. They have also spoken at length on the phone about all their requirements, so Susan can plan the orientation day. Susan now has a comprehensive understanding of their needs. Primary among these discussions was the schooling of the children. Mme and Msr Blanc would like their children to attend a French school in London. Susan arranges for them to meet with the Dean of Admissions of two French schools, in Kensington and Ealing. Mme and Msr Blanc are very impressed with both, but prefer Ecole Primaire d’Ealing. On Thursday Susan arranges visits to four bedroom houses in the Ealing and Chiswick areas of London and Mme Blanc meets with her new London office. In the meantime, Susan also beings the admissions process for the school. On Friday, Mme and Msr Blanc meet with Susan to view the houses she has shortlisted for them. Mme Blanc has been given a housing allowance of £3000 per month. They choose a large Edwardian terraced house in Chiswick, but the rent is £400 over the allowance that has been agreed. Mme Blanc goes back to the HR department, who agree to split the overspend. The Blancs will pay £200 per month towards the rent. The house is unfurnished but is equipped with all the white goods in the kitchen
The Blancs fly home to Louvecienne and prepare for departure. In the interim, back in the UK, the relocation company’s legal department draw up the tenancy agreement. This involves liasing with the HR department of the UK office of Mme Blancs company to secure the appropriate references necessary for the tenancy. The time for the check in has been booked and Mme and Msr Blanc have been informed. An inventory clerk is employed by the relocation company. The purpose of this inventory check-in is to record an accurate statement of the condition of the property. This also forms the basis of the return of the deposit on the property when the tenancy comes to an end. If something is not as stated in the inventory the relocation company will record this to ensure there is no problem when the family check out of the property.
Back in Louveciennes the French HR department liase with their preferred household goods movers. They arrange for the Blancs to be put in touch with the removal company. Msr and Mme Blanc then instruct the movers as to what will be shipped. As they are moving to an unfurnished house in London, they decide to ship the majority of their furniture and store the rest. The Blancs house in Louveciennes has been rented out unfurnished – the Blancs have had to arrange for this themselves. Mme and Msr Blanc arrive in the UK with their children on the 1st of September and drive to the property where they are met by Susan from the relocation company. They move into their house, the children start school, Mme Blanc starts her new job, and the move has been as seamless as is possible. Msr Blanc is enrolled at a language school in Ealing for a one week, intensive total immersion language course. He then meets with the recruitment specialist from the relocation company who works with him as to the best way to go forward with his job hunting. They arrange for interviews with recruitment specialists who then take over the process of finding him appropriate work. The relocation company have also given the Blancs details of the local network of French expats. The Blancs decide to join the network and are introduced to many other people in situations similar to themselves. As the children settle in their new school, so Msr Blanc also gets to know other French parents. The Blancs are on their way to creating a new life in London.
There is no doubt that professionally assisted relocations are the only way to properly support both international and domestic transfers and companies who value their employees have known this for decades. For transferees to be able to settle, the best advice is to leave their relocation to the professionals.
The Association of Relocation Professionals – www.arp-relocation.com - the professional body for relocation service providers in the UK. A complete list of relocation companies and the bredth of services they offer can be found on our website.
Beder Harrison – www.bederharrison.co.uk - immigration and tax consultants