Despite increased costs because of new legislation, relocation volumes and budgets either held steady or increased in 2017 for businesses, according to an Atlas Van Lines survey. The “Corporate Relocation Survey” showed that about 90% of the 435 corporate relocation professionals surveyed expect similar projections for 2018.
However, far fewer small firms (499 salaried employees or fewer) expect increased volumes or budgets for 2018.
A key issue emerged in December 2017 with the passing of the U.S. Tax Cuts and Jobs Act, as the legislation eliminated the moving-expenses deduction for the next eight years.
Regardless of size, most organizations reported plans to implement policy changes in response to the tax law. Mid-size and large firms are likelier to have plans in place than small firms (79% and 87%, respectively, compared to 58%). Among organizations making policy changes in 2018 in response to U.S. tax reform, the survey found:
- The most popular policy adjustment across organization size is to gross-up taxable relocation benefits, with large firms being the most likely to make this policy change.
- About one-third of firms across all sizes plan to expand the use of lump sums.
- Roughly one-third or more of mid-size and large firms plan to streamline relocation processes to reduce costs and/or to restructure relocation policy/policy tiers, compared to around a fourth of small firms.
- Small firms are likelier than larger firms to plan to withhold on relocation benefits.
Family Needs Impacting Relocation Declination
For the past five years, family issues have ranked as the leading reason for employees to decline relocation, with spouse/partner employment steady as the second reason during the same time. Combine this with housing and mortgage concerns, and it paints a picture of the dual-income household with family commitments as the key issues why employees decline to take a relocation offer in their careers, according to the report.
To further cement this as a key challenge for firms seeking to relocate employees, six of 10 firms continue to indicate spousal/partner employment frequently affects employee relocations for the fourth year in a row. Firms continue to try and mitigate this issue, with the survey showing 59% of firms offering employment assistance to spouses/partners overall, and 76% offering the service when relocating an employee internationally.
Incentives for Relocation
86% of firms reported that for the past four years they have offered nonstandard incentives or exceptions to encourage employees to relocate. Extended temporary housing benefits, relocation bonuses and cost-of-living adjustments (COLAs) in salary at the new location continue to be the most popular ones offered. The majority of firms (82%) across company size also indicated they currently are using fixed/flex benefits in their relocation programs. The most popular methods are considering certain relocation benefits as fixed costs covered for moves, while other firms are offering employees options for how they use their relocation amounts in order to tailor the assistance needed on a more individual level.
With all the bending and flexing to make relocations more attractive and be creative in the implementation of relocation form, cost containment efforts continue to be top of mind. In the past four years, most firms across company size have been making specific efforts to control costs. Using lump sums and capping relocation benefit amounts are the top two forms used in the past two years overall.
However, there is variety in efforts, especially among large firms that review/renegotiate supplier contracts (30%), limit miscellaneous expense allowances (28%), offer short-term/extended travel/commuter arrangements (27%), or restructure policy tiers/eligibility for benefits (24%) nearly as often as the top two methods overall.