July 30, 2007
Companies relocating employees to high-cost areas are realizing how important it is for transferees to fully understand their financial situation in the new location. Often the success of the relocation depends on the depth of that understanding.
According to a recent survey conducted by Runzheimer International, a Wisconsin-based consulting firm, 79% of relocation managers questioned indicate that they encounter resistance from employees being asked to move to high-cost locations. Of the employees questioned, 81% cited that the primary cause for their resistance was fear of reduced standard of living.
"Unfortunately, transferee uncertainty may cause employees to turn down transfers, forcing the company to find someone else who will,” says Jarvis Racine, Director of Business Development of Relocation Services at Runzheimer International. “But another, much more costly possibility is that the employee accepts the transfer, and because he or she didn’t understand what they were getting into financially, they end up requesting to be transferred again or worse yet, leave the company.”
Many organizations have been slow to make the connection between transferee uncertainty about their post-move financial situation and failed relocations. When asked what percent of transferees to high-cost areas request new transfers or leave the company, more than a third of survey respondents did not know.
But a growing number of companies are making the connection. As part of the pre-decision process, companies are providing potential transferees with tools to confidentially analyze their overall financial position. These tools take into consideration various financial components in the new location including living costs, income, investments, discretionary spending, and inflation rates as well as expenses anticipated in the future such as weddings, elder care, or college tuition, for example.
"Education is the key here,” says Racine. “These tools don't tell potential transferees what they can afford, but rather help them understand the implications of various financial decisions in the new location. This level of knowledge helps them feel at ease about either accepting or declining the move. When employees make informed decisions at this stage, companies will be relocating confident, committed transferees who will be more productive in the new location.”
About Runzheimer International
Founded in 1933, Runzheimer International serves 60 percent of the Fortune 500. Runzheimer International provides a full suite of employee mobility services in the areas of background screening, business travel, business vehicle reimbursement programs, corporate aircraft, relocation, international assignment, and virtual office programs.
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For more information, contact Luella Dooley at Runzheimer International, Runzheimer Park, Rochester, Wisconsin 53167, 262-971-2277 or ljd@runzheimer.com, www.runzheimer.com.
