With relocation services, workforce mobility or employee relocation there is a range of included internal business processes associated with transferring an employee and their family members to new locations. There are situations that require relocating an entire department. Similar other employee benefits, the processes are typically handled by the human resource department.
The processes can include domestic residential services, relocating employees within the same state or country. It can also include international relocation services, sometimes required by managers, diplomats, and other positions that may need to work abroad. Agencies which provide a relocation service manages and directs the overall process, including the arrangement of required documents, such as accommodations, new school for children, travel visa, and locating a job for the spouse. In addition, a teacher may be arranged to teach the language and culture.
Currently, international relocation is referred to as ‘global assignment’ by human resource, but it dates back to a Dutch East India Company that would send employees to other countries. Although it requires a considerable expense, in theory it creates potential opportunities for financial returns for the company.
Typically, the expatriate compensation packages offered is two to three times the base salary of the home-country and includes housing allowance, tax equalization, cost of living adjustments and other benefits. For instance, if an expatriate has an annual salary of $100,000, it would cost the employee $200,000 to $300,000 annually, including the cost of relocating. There are less costs associated with short-term relocation, especially if taxation threshold is avoided.
There are different reasons companies assign employees with a global assignment, including employee development for upper management, fulfilling functional requirements, and developing the company in a foreign location. According to Ann-Wil Harzing with University of Melbourne, these employees can be categorized as “bears, bumblebees, or spiders”. Whereas, bears are long-arms of the company’s headquarters, bumblebees transfer corporate culture (cross-pollination), and spiders help weave the informal communication network which is critical with connecting every strategic partner, subsidiary and branch.
In 2005, a survey conducted with focus on global assignment management practices o a U.S 3rd party relocation management company indicated that 31% of employers surveyed stated they track exceptions for budgetary purposes on a per-assignment basis, 23% tracked exceptions on overall basis, while 39% did not track type or cost for granted exceptions. The last 7% were unable to respond.
The departments administered for relocation programs depend on the organization and size of a company. Some may not have formal programs, while the processes of another company is highly structure. Furthermore, various operating units could administer various program aspects.
Some companies could manage and execute relocation processes within the company, others may outsource the tasks. Usually, this is done to save time, allowing more focus on internal resources, or providing higher quality service to transferee’s. According to the 2005 survey, 43% stated tasks were either fully or partially outsourced.