Runzheimer’s vision is to “be the leading provider of employee mobility services.” To help achieve this vision, we recently completed the 1st annual Runzheimer Total Employee Mobility Benchmarking Survey. The results produced benchmarking data from major corporations such as DuPont, Xerox Corporation, and Deere & Company that help highlight and define "Total Employee Mobility."

Runzheimer's view of employee mobility is intentionally broad, and includes programs that support domestic relocation, international assignments, travel, corporate aircraft, business vehicles, and mobile/home office services. These programs largely exist to support one or two important objectives:

• Filling job vacancies with the right talent, referred to as Event-Driven employee mobility, where the need for relocation or international assignment programs is determined by the physical location of the best candidate for the job and where the expenses associated with such programs are temporary as opposed to permanent.

• Enabling communication outside of the organization’s facilities, primarily to develop new clients and support existing clients, referred to as Ongoing employee mobility, where the need for mobile support is tied to a specific position (e.g., executive, sales, account management, field service) and is an ongoing expense associated with such positions.

Organizations realize significant benefits when viewing and managing employee mobility in a comprehensive manner. Today, this area is fragmented and managed by many different parts of the organization. Responsibilities are often split between the professional disciplines of finance, human resources, and procurement, and in the case of mobile/home office programs, ownership is often unknown or unclear, translating into a lack of management oversight. As a result, organizations are unable to see the whole picture of employee mobility and how the pieces intersect or overlap. This leads to inefficiency, sub-optimal processes, and employee dissatisfaction.

An additional by-product of this fragmentation is that most organizations don’t recognize just how expensive all of the pieces when they are combined. Finally, fragmentation makes it difficult to recognize patterns, including how further investment in a specific approach to employee mobility may impact another aspect of employee mobility. Examples include how expansion of the use of mobile/home office programs might influence the need for relocation or travel; and how travel might replace the need for some international assignments, etc.

Our survey results show that when total employee mobility costs are combined and averaged across the entire workforce (on a full-time equivalency basis), costs equal $4,000 - $5,000 per employee. Even though mobility programs are unique to a subset of the workforce, put in this context, the costs are significant and represent 8 – 10% of the average worker’s salary.

Costs for Ongoing Employee Mobility (e.g., Travel, Driving, Mobile/Home Office)

When viewing the costs above for a subset of mobile workers (e.g., employees that travel, drive a vehicle for their job, and incur mobile/home office expenditures), the costs are even more staggering, approximating $20,000 - $25,000 per year. As the following chart illustrates, for an employee making $100,000 per year, such costs are equivalent to those associated with providing employees with a standard benefits package.

-- Assumes typical mobile worker salary = $100,000/year
--*Benefits include insurance and retirement programs

   **Legally required benefits include paid leave, and supplemental pay
--Benefits information based upon U.S. Bureau of Labor Statistics, Office of Compensation and Working
Conditions, Private Industry Reports by Establishment Employment Size, 500 workers or more, June 2005.

Costs Associated with Event-Based Employee Mobility

Costs associated with relocations and international assignments are typically of a temporary nature. In other words, these costs are not tied to an ongoing job, but instead are unique to the individual filling an assignment vacancy. In the case of international assignments, the additional costs may continue for as long as five years, but in any event, are not intended to be permanent expenses. Here, the level of investment required to support a single relocation and international assignment is extremely high. Using an example of an employee making $100,000 per year, the direct spend associated with relocation and international assignments may represent 40% to 188% of annual salary. In the case of an international assignee, these expenditures represent annual costs that continue for the duration of the assignment.

Mobility Costs* vs. Employee Benefit Costs for Domestic Relocations and International Assignments
Relocation	Average Mobility Spend*	Annual Direct Benefit Costs Per Employee**
Per Relocatee	$40,142	$21,200
Employer Costs per Worker As % of Salary**	40.1%	**21.2%
International Assignments
Per International Assignee (in U.S. dollars)	$147,710	$21,200
Employer Costs per Worker As % of Salary**	147.7%	**21.2%

 

*Excludes indirect costs such as support costs (e.g., administration & management)
** Assumes worker makes $100,000 per year, represents organization costs above and beyond direct compensation, benefit costs exclude paid leave, legally required benefits, and supplemental pay. Benefits information based upon U.S. Bureau of Labor Statistics, Office of Compensation and Working Conditions, Private Industry Reports by Establishment Employment Size, 500 workers or more, June 2005.

Runzheimer will begin planning for the 2nd annual Total Employee Mobility Benchmarking survey early this year. Please contact us to find out more about how your company can participate and benefit from the survey results.

 

Effective October 31st, 2005, the General Services Administration amended the Federal Acquisition Regulation (FAR). The government now allows government contractors to use lump-sum reimbursements for home finding, temporary living, and final move costs. These costs can include home finding trips by the employee, the employee's spouse, or both, temporary living for the employee and their immediate family, and travel to the new location.

In order for a company to be reimbursed on a lump-sum basis, the relocation must be for 12 months or more, must be related to work performed under contract with the federal government, and costs must be "adequately supported by data on the individual elements," as found on a Runzheimer Lump-Sum Allowance report. In addition, the costs for the final move components of lodging, meals, and incidental expenses cannot exceed GSA Federal Travel Regulation maximum per diem rates, except in special or unusual situations. (For details on these special situations, see section 31.205-46 of the FAR.)

This regulation change is welcome news to the segment of the corporate world with relocated employees working as government contractors. Those employees who have felt slighted compared to their corporate peers can now benefit from the discretion and control of the Runzheimer Lump-Sum Allowance Program. Corporations benefit from consistency, control, time savings, and now compliance as well.

For more information on Runzheimer's fully supportable Lump-Sum Allowance product, contact (866)271-6941 or email DCR-client support@runzheimer.com.

Runzheimer’s Lump-Sum Allowance reports provide the required data detail, and comparison to GSA Federal Travel Regulation maximum per diem rates for the appropriate final move components to to ensure that lump-sum allowances paid to government contractors are in compliance.

The sample Lump-Sum Allowance report below meets the requirements of the Federal Acquisition Regulation for a move from Fort Wayne, Indiana to Baton Rouge, Louisiana.

 

RUNZHEIMER LUMP-SUM REPORT Prepared For: ABC Company Report Base Date: 1/6/20XX
Relocation ID:102006Smith					Policy Name:	Policy A
Pre-Move: FORT WAYNE, IN					Adults: 2	Children: 0
Post-Move: BATON ROUGE, LA						Adult Children: 0
Distance: 966 miles
	RATE	UNITS	PARAMETERS	NON-TAXABLE	TAXABLE	TOTAL
Home Finding
Airfare :	415.00	2	Round-Trip Ticket(s)	N/A	830.00	830.00
Car Rental :	33.07	7	Day(s)	N/A	231.49	231.49
Lodging :	133.50	6	Night(s)	N/A	801.00	801.00
Adult/Adult Child Meals :	94.00	7	Adult/Adult Day(s)	N/A	658.00	658.00
Miscellaneous :	7.00	7	Day(s)	N/A	49.00	49.00
			SUB-TOTAL :	N/A	$2,569.49	$2,569.49
Temporary Living
Initial Travel Airfare :	415.00	1	Round-Trip Ticket(s)	N/A	415.00	415.00
Commutation Airfare :	415.00	2	Round-Trip Ticket(s)	N/A	830.00	830.00
Car Rental :	32.53	45	Day(s)	N/A	1,463.85	1,463.85
Lodging :	66.50	45	Night(s)	N/A	2,992.50	2,992.50
Employee Meals :	28.20	45	Employee Day(s)	N/A	1,269.00	1,269.00
Miscellaneous :	7.00	45	Day(s)	N/A	315.00	315.00
			SUB-TOTAL :	N/A	$7,285.35	$7,285.35
Final Move
Airfare :	371.00	2	One-Way Ticket(s)	742.00	N/A	742.00
Lodging :	71.00	2	Night(s)	142.00	N/A	142.00
Adult/Adult Child Meals :	66.00	2	Adult/Adult Day(s)	N/A	132.00	132.00
Miscellaneous :	0.00	2	Day(s)	N/A	N/A	N/A
			SUB-TOTAL :	$884.00	$132.00	$1,016.00
TOTAL LUMP-SUM ALLOWANCE			TOTAL :	$884.00	$9,986.84	$10,870.84

 

Due to uniqueness of the Manhattan, New York housing market, the majority of people living in Manhattan are not able to buy homes, but instead buy condominiums or rent apartments. For this reason, Runzheimer uses less square footage in its housing profile and tracks the price of condominiums to more accurately reflect the borough and its norms rather than those of the rest of the country.

Manhattan’s condominium market has been thriving as of late. In the third and fourth quarter of 2005, condominiums showed a 22% increase in median prices compared to one year ago, according to an article by RIS media. Runzheimer market trends showed annual appreciation at 12-20%. One main factor contributing to this appreciation is that demand for condominiums is still strong. Runzheimer analysts are monitoring the condo market closely as Manhattan contractors continue to convert hotels into high rise condominiums. The combination of rising interest rates and an increase in the number of condos units could result in a future cooling of the Manhattan condo market.

Runzheimer International is pleased to offer Relocation Advisor, a financial consulting service for relocating employees. This new service is designed to address the concerns of employees that are relocating or are deciding whether or not to accept an offer to relocate.

A major reason for failed and declined relocations is transferee uncertainty about their financial situation in the post-move location. Relocation Advisor enhances relocation programs by providing transferees with personalized, location-specific information in the form of a 10-year cash flow analysis. The service is designed to enable transferees to make informed purchase decisions based on their personal circumstances, giving them peace of mind about the move. The service also benefits companies by helping to reduce costly failed relocations.

With Relocation Advisor, transferees input relevant financial information and specifics on their pre- and post-move locations into a secure web portal. Runzheimer’s professional financial consultant analyzes the employee’s unique situation and develops a customized 10-year cash flow analysis. Then the financial planning professional will explain the analysis, adjust assumptions and answer questions during an individual web conference meeting with the transferee.

For more information on how how Relocation Advisor can enhance your relocation program visit http://www.runzheimer.com/Web/GMS/RelocationAdvisor.aspx or call (866)271-6941 to receive an online demonstration.