10 Jan Achieving Cost Savings in Global Mobility Through Strategic Policy Design

Managing relocation costs is a top priority for global mobility professionals. While some expenses are unpredictable, many can be estimated and controlled through planning and process improvements. 

Here are seven areas where costs can be reduced, according to Global Mobility Insider:

1. Planning – Develop standard processes for repetitive tasks to increase efficiency. Have guides to help assignees complete forms quickly.
2. Estimating – Calculate expected costs upfront for compensation, benefits, housing, schooling, taxes, etc. Accurate budgets enable better resource allocation.
3. Processing – Automate repetitive processes with relocation management software instead of jumping between systems. This saves significant time even with affordable solutions.
4. Partnering – Build long-term relationships with reliable local service providers. Negotiate discounts through repeat business. Explore other partners like schools.
5. Tracking – Monitor costs throughout assignments to identify unexpected changes. Address increases promptly and capitalize on savings.
6. Reviewing – Evaluate each completed relocation through a standard template. Compare costs over time. Provide digestible insights to stakeholders.
7. Re-evaluating – Learn from reviews to improve future planning. Update policies and procedures. Leverage completed assignments as a data goldmine for cost reductions.

These savings come from planning, process improvements, automation, strong partnerships, vigilant tracking, thorough reviews, and continuously optimizing based on experience. With focus on these areas, global mobility teams can significantly control costs across the relocation lifecycle.

However, as Cartus learned in its own study, showcasing cost-effectiveness transcends mere spending reduction. It entails optimizing the value and impact of mobility expenditure, striking a delicate balance between quality service delivery and financial prudence. 

Cartus came up with a two-part report that delved into the art of reconciling mobility costs with the imperative of providing a positive relocation experience for assignees and their families. 

The report includes varying cost-effective approaches, contingent upon factors such as industry dynamics, the profile of your international assignee cohort, destination locales, overall relocation volume, and an organization’s adaptability to change.

Outlined below are three methodologies:

Holistic: Begin by aligning your mobility program with your organization’s overarching business objectives. Evaluate the synergy between your mobility and talent management initiatives, discerning the components that yield optimal value in the assignment experience while curbing costs. Assessing assignment ROI is pivotal within this holistic paradigm.

Embrace more flexibility: Enhancing program flexibility can yield cost efficiencies without compromising the assignee experience. Flexible design models cater to individual stakeholder requisites or overarching business principles. Implementing tiered policies or core/flex frameworks empowers relocating employees while capitalizing on cost-saving opportunities.

Policy-benefit driven: Suited for organizations averse to extensive change, this approach focuses on optimizing existing policies. Analyze expenditure data to identify high-spend areas, streamline processes, and reinforce clear communication channels with assignees.

After determining your preferred approach, implementing robust measures to guide decision-making is essential for your next steps. 

Understand the viewpoints of senior business units and global mobility leaders regarding your mobility program through internal surveys. Align stakeholder perceptions with empirical data to inform strategy. Leverage data-driven insights to comprehensively evaluate your mobility program, including assignee demographics, service utilization patterns, and satisfaction levels.

Then compare policies against industry standards to gauge competitiveness and identify areas for improvement or alignment. Revisit organizational goals to ensure policy changes align with desired outcomes, balancing assignee satisfaction with cost considerations.

For example, benchmarking household goods support. In Cartus’ analysis, it revealed that while household goods shipments constituted 6% of the client’s total relocation program cost, they were utilized by 93% of assignees with high satisfaction levels. Benchmarking against industry standards revealed that the client’s entitlements exceeded market norms. 

Analysis further revealed correlations between family sizes and container sizes, prompting the implementation of a local “discard and donate” program, resulting in cost reduction and community support.

Here are some tips:

Restrict storage in transit: Consider restricting storage in transit, as most assignees typically secure rental properties promptly upon arrival. Exceptions may be granted in challenging housing markets.

Benchmark Miscellaneous Expense Allowance (MEA): Benchmark the MEA amount and scrutinize exception approvals to ensure alignment with market standards and effective cost management.

Evaluate non-standard Household Goods (HHG): Evaluate policies concerning the transportation of non-standard household goods, considering whether costs could be covered by the MEA rather than costly third-party services.

Monitor air shipments: Evaluate air shipment policies, considering alternatives such as excess baggage for single assignees and standardized air container references for families.

Facilitate block bookings in temporary housing.  In response to limited availability and high rents in the temporary housing sector, Cartus facilitated block bookings to secure favorable rates and control over accommodations, delivering significant benefits to clients.

Renegotiate long-term housing. Clients have capitalized on currency fluctuations and demographic insights to renegotiate leases and offer shared accommodation options, resulting in substantial cost savings.

Cap school fees. Data-driven analysis enabled a client to cap school fees, resulting in significant cost savings without compromising family satisfaction.

Effective mobility cost containment requires strategic planning, data analysis, and innovative solutions tailored to organizational needs. By optimizing policies, organizations can achieve valuable cost savings while maintaining assignee satisfaction and fulfilling their duty of care.