22 May Pandemic Gives Global Mobility Time to Address Costs, Develop Countermeasures
Many companies are being conservative in terms of hiring people in these challenging times. Global mobility has also taken a hit, but a PwC pulse survey of more than 350 companies in April indicated an optimistic outlook. It found that 44% intend to continue the same number of international moves as before. That’s back in April.
For companies in between, though — those who hired workers but they’re stranded in their home US cities or countries — many are adjusting but not fully in control of the hurdles the pandemic has presented. The survey states that 86% had postponed international moves, while 57% had cancelled upcoming plans to move staff. Of those that had canceled moves, they had done so for around half of their planned relocations.
This is not unusual. Many companies did not expect a virus to shake the foundations of global mobility or globalization in general. Companies are still hiring but not getting their talents to report for work, on account of legal and travel restrictions, resulting in increasing incidental costs and costs of overall relocation packages.
It’s hard enough for recruiters and employers who have been affected and have not been able to bring in their talents to northern California; the costs incurred from preparing them to relocate, along with the incidental costs of assignees is another.
Suitcases bought by a relocating talent is one such incidental cost.
Assignees who incurred these pre-assignment costs now find themselves submitting reimbursement claims. Employers need to have a plan in place on how best to talk with their assignees and how they can assist in settling or managing their incidental costs.
These costs — others simply call them relocation costs — would typically be covered under the Miscellaneous Relocation [MRA) paid by the company which may only be paid once the employee has arrived in the host location, according to Airshare.
Assignees would do well to know what incidental costs they have incurred from relocating. Urbanbound boils it down to these 3 points:
- Moving company costs/shipment of household goods: Professional movers, packing and unpacking services, U-haul rentals and other moving-related expenses like boxes and tape are often the leading part of a relocation package.
- Travel to the final destination: Companies oftentimes pay for the travel expenses to the new location, including airfare, cost of gas, or train tickets.
- Short term housing: It’s common for companies to cover the costs of 30, 60 or 90 days of short-term housing while an employee searches for more permanent accommodation. This can include hotel stays, AirBnBs or corporate housing.
While corporate housing is listed as short-term housing in some media outlets, stays at California Corporate Housing tend to be longer, 6 months to a year or years. The advantage of living in a corporate rental is that it feels like home, compared to vacation rental marketplaces, which have quick turnovers, and were not designed for working remotely, as some don’t even have laptop space.
Not many say it, but corporate housing also makes it easy for assignees to focus on their assignments, instead of worrying about maintaining their home. The upkeep is easier because these apartments were prepared ahead of time based on a company’s requirements, to make their guests feel at home, especially in this pandemic now, where they don’t have to worry anymore about the cost of paying for it (if the company is taking care of that). But that’s when they have already moved in.
Assignees who were caught in limbo because of the outright ban on traveling from one place to another puts everyone in a tight spot.
Companies need to figure out if they need to reimburse the costs for those who were about to fly but couldn’t because of the lockdown. Should they reimburse these costs or pay a one-time allowance to cover all or part of these costs? If the latter, what is a reasonable amount? They may choose to pay a one-time sum but under a Miscellaneous Relocation Allowance, but this is normally done in the host location.
On an emotional level, assignees can feel stuck. Their minds may have already relocated to their host country. Or as what has happened in some cases, according to PwC, 58% have allowed their employees to start in their home country until such time that companies can bring them in; when is the question.
One respondent told PwC they were “only moving business-critical people” and will allow certain employees to work from a third country on “an exceptional basis”.
Many organizations have reportedly been forced to adopt remote and virtual working arrangements not just for the immediate, but possibly longer term.
However, physical travel for some employers is a “fundamental requirement” to address skills imbalances or deal with labour market demands.
Going back to the survey, only 12% of survey respondents thought the pandemic would lead to a fundamental rethink on mobility, and only a fifth thought international moves would decrease as a result of the crisis.
Many are using the pause in their activities to reassess their governance over business travel and examine mobility-related spend, the kind of packages they offer, and whether they can arrange for virtual deployments while travel restrictions are in place. These include addressing costs on the part of global mobility professionals, employers and the assignees themselves.