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Global Consulting Group Survey Unveils Domestic Destination Policy Trends

Russ Haynie, Director Global Consulting Group, Prudential Real Estate and Relocation Services

In May 2009, Prudential Real Estate and Relocation Services’ Global Consulting Group conducted a survey of the company’s account executives to discover emerging trends and common practices among our top volume accounts.

Many of these same accounts were surveyed in the fall of 2008 on departure issues including marketing assistance, home sale, loss on sale, etc. with results summarized in the April 2009 article Strategies for Building a Firm Foundation for Domestic Programs: 2009 North America Departure Provisions Trends.

The questions for this survey focused on the participating organizations’ current destination provisions (home purchase, COLA, rental assistance, etc.) as well as profiles in terms of risk aversion, internal department structures and exception management. In particular, the survey examined commonly reported policy changes, either implemented or planned, and the motivations for these changes. With 100% participation, the survey provided some very interesting results.

Survey results indicate that of Prudential Real Estate and Relocation Services’ top volume accounts, only about one-fourth have made changes to their policies’ destination provisions in the past 12 months, although many more (44%) indicate plans to do so in the coming year. Generally, the survey results are consistent with the Global Consulting Group’s recent experiences guiding clients to reallocate spending in order to accommodate the pressing needs created by current real estate market issues.

Compared with last year, cost savings continue to motivate most policy changes and the likelihood that changes are made at the direction of senior management has doubled. This is consistent with the consulting team’s recent experience, which indicates that the cost of relocation activity in the current economy has increasingly gained the attention of senior managers. Additionally, survey results indicate that changes are less likely made in the context of formal policy reviews or benchmarking efforts and recruiting and retention efforts are motivating change at a significantly reduced rate. Downsizing has emerged as a stronger motivator for change this year.

Drivers of Recent or Planned Policy Changes

Adopting or increasing pre-decision counseling or support for homeowners continues to be the most common change among those organizations that have made, or plan to make, policy revisions. As real estate market conditions continue to impact benefits on the departure side, organizations are also focused on helping homeowners in particular effectively conduct risk-assessment that includes understanding the limits of relocation policy. Organizations are also increasingly focused on reining-in downstream cost exposure by encouraging homeowners to make purchase decisions that consider future consequences and policy limitations. Early counseling prior to a final decision to accept relocation offers can connect employees with information and resources to guide an informed decision.

Among other highly ranked changes, the continued migration away from direct reimbursement of taxable policy components such as temporary living, house hunting, miscellaneous expense allowances and certain final move trip expenses continues to represent an established trend. Demographic shifts in the workplace have resulted in worker profiles that increasingly demand flexible policy provisions. Therefore, it is not surprising to see migration toward lump sum payments to cover or offset these expense categories as a commonly implemented or planned policy change. Depending upon how structured, lump sum payments may also complement cost savings objectives as well.

Top Recently Implemented or Planned Destination Policy Changes

Conclusion

This year’s survey results indicate that organizations that are implementing destination provision changes are more likely motivated to do so to achieve cost savings targets as directed by senior management. Only time will tell if these changes are temporary measures in light of the economic recession and pressure to control costs or whether they are indicative of a longer-term strategy. An early indicator that they may be temporary in nature are the reported planned reductions in temporary living expense coverage which ranked highly last year as an increased area of support given the longer average times to sell departure location homes. Such a change would likely be a return to normal levels of assistance in tandem with market recovery versus a reduction below levels of support common prior to the market downturn.

The focus on pre-decision counseling seems to be emerging as the legacy change to domestic policies resulting from today’s extraordinary real estate and economic conditions. Only time will tell if this too will be disassembled once the markets stabilize, but the perceived positive impacts of this counseling support will likely be applicable to all market conditions and an effective tool to complement recruiting and retention strategies that will likely accompany eventual stronger markets.

For a copy of the full report, please contact your Prudential Real Estate and Relocation Services representative.

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