Move with the times
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23 December 2013
More people than ever are being moved around the UK by their employers. This is partly because of the sort of frenetic M&A activity that the legal profession has seen in recent years. But it is also because employers are paying greater attention to the career development of their staff. At a time when talent is scarce, employers are finding that juggling their human resources to get the most from them is increasingly important. The best employers offer staff new opportunities and experiences, often in different locations.
However, moving employees from one region to another is not always a smooth process, and employee resistance is growing. This resistance stems from a number of factors including more people with elderly parents to care for; fewer people expecting a job for life (and greater fear of being stranded in a strange region by a downsizing employer); and a sharp and growing divide between property prices in the south-east of England and the rest of the UK. But what can employers do to ensure relocation runs smoothly?
The answer is to turn to one of the myriad of relocation agents and concierge and counselling services that have sprung up over the past five years. But before outsourcing the problem to someone else, there are a few things to consider internally.
According to law firm relocation expert Andy Hodge, a partner in Arthur Andersen's human capital practice, the most important point is to select the right person to relocate. This sounds obvious, but often the wrong criteria are used. Hodge says: "It's about choosing people who are physically and personally robust enough to deal with the move. This is especially true for overseas assignments. A lot of organisations choose people purely on their ability to do the task rather than on their ability to handle the new situation."
Choosing high flyers who can't cope with relocation may cost a firm dearly. All that happens is that unhappy staff will turn elsewhere, either leaving straight away or, worse still, a few months after you have paid to relocate them.
|"We always make sure that there is a buddy to look after the new employee and to answer any questions they might have"|
Robert Halton, DLA
The right people will depend to some extent on the objective of the relocation. Hodge says that in many situations the real motivation for relocation is unclear. "Too many assignments and relocations fail to meet their objectives because they aren't measured," he says.
Communication is another factor that many employers underplay. Hodge says: "What happens is that the relocated employees fall into a sort of communication black hole. The sending office doesn't keep them up to date, and neither does the receiving office. This means that they very quickly lose touch with what's happening in the organisation and this hampers their performance."
Despite the best efforts of the IT department, technology is not always the answer. What is more important is the way that employees interact with the technology. With a company-wide intranet site, the right sort of employee will go and get the information they need. But where communication relies on employers pushing information through regular emails, it is easy for people to get taken off lists at one end and not be added to them in the new location.
DLA is one firm that relocates employees all around the UK, as well as having people on secondment from its European associates. The firm's human resources (HR) director Robert Halton says that not all the measures used have to be high-tech or expensive. "We always make sure that there is a named person or buddy to look after the new employee, answer any questions they might have and to generally make sure they are looked after and fit in," he says.
But Halton admits that the relocation process is complicated and stressful for employees. For this reason, DLA is one of a growing number of law firms to employ an outside company, in this case Ceridian Performance Partners, to help relocate employees.
Halton says: "The service makes it much easier for our employees to feel there is an independent, objective opinion they can get which is informed but which sits outside of the loop."
This reflects a growing trend for the use of outside help to smooth the relocation process. Tad Zurdinden is the chief executive of the Association of Relocation Agents and he refutes the idea that a firm's HR department could handle a major relocation in-house. "If you're going to move lock, stock and barrel, then don't try and tell me that your HR department can handle it, because it can't."
For employers moving only a few employees on an occasional basis, or for firms where expansion into new areas is only just beginning, the temptation to handle things in-house is understandable. The problem is that this trickle of relocations can quickly turn into much more and then problems can soon mount up.
Hodge suggests putting a policy together early on, outlining what services and benefits employees can expect on relocation. "You may feel it's fine to negotiate in detail with every person you employ. The problem is that as more relocations take place you have lots of people on different terms and conditions," he says. Worse still, the overall cost of relocating will continue to rise as each employee pushes the employer for as much as they can get. Also, these separate negotiations take up time for both the employer and the member of staff.
One of the dangers when a firm is sending employees to all sorts of locations around the world is that the upheaval involved in a domestic, internal UK relocation can be underplayed.
Halton says: "People think that it is easier than it is. Even relocating to Scotland means a whole new education system to get to grips with. But it's not just difficult for people with families where all the education issues have to be resolved. Anyone relocating is likely to be moving into an area where they don't have a support network."
With the weary voice of someone with first hand experience, Hodge also highlights the problems that the London property market causes. "People outside London have simply no understanding of the reality of London house prices," he says. But it is not just a London thing. Hodge is adamant that there are greater regional differences than many people anticipate. "People coming from a London office often have a cultural arrogance that they bring with them. But there are real differences in the regional economies and the local economies that will affect the type of clients they have been used to dealing with. Until they adjust, this may have a big impact on their confidence and ability to do the job. The issues faced by small or medium-sized manufacturing companies may be very different from the requirements of a service-based company. For example, there might be some very different attitudes about the way you present and discuss fees."
|Andy Hodge, a partner in Arthur Andersen's human capital practice, who specialises in relocation for international law firms, estimates that the cost of an international relocation is about three times that of a domestic one.|
Because of this he says: "You need to have an even clearer idea of why you are placing an employee overseas." More importantly, you need to be clear about how their career development will progress once they get back. "An awful lot of expatriates coming back from an assignment overseas leave the company within a few months because they get bored," says Hodge. "They have been used to a bigger challenge and if not handled properly they will get up and leave, taking their international experience with them."
Another difference is that greater information on the new location is required. The need to reassure parents that adequate schooling for their children will be available also increases. Employers may also need to offer some sort of cultural training for the employee and their family. That might mean more than simply explaining that it is polite to leave a bit of food on your plate so as not to offend your host. "Cultural training should be about providing a real understanding of how to go about business in the new location," says Hodge.
Besides the niceties of information and training, there are very real issues about the local tax and legal systems. Do you or your family need a work permit or visa? Do you have to register in the new country? What about your social security and pension payments back in the UK while you are overseas?
Local tax regimes will vary from the UK's, but once you agree to come back there is also the issue of relocation expenses and their tax implications. In the UK, for both domestic relocations and returning expatriates, there is a tax-free ceiling of £8,000 on relocation expenses. Above this amount either the employee has to pay the full amount of tax and National Insurance, or the employer has to be prepared to pay tax on both the original amount of the expenses that are more than £8,000 and on the tax they have paid for the employee. This complicated tax on tax means that an employer paying £20,000 for relocation expenses will end up paying £28,000.