Relocation Programs Deliver Benefits for Employees and Agencies

Relocation assistance can be good for the bottom line, as well as for hiring and retention.

A little-discussed program that has big implications for those employees who use it also could be an area of cost-savings for agencies. Relocation programs used by federal agencies to provide the mechanics of geographic reassignments are seen as a procurement function and have faced budget cuts as agencies struggle to contain costs.

The Senior Executives Association (SEA) has long viewed relocation programs as an important human capital issue—one that agencies need to account for to ensure they have the right people in critical jobs. In 1983, SEA worked with Congress to change the law that restricted agency flexibility in implementing relocation programs. Senior executives are subject to reassignments and are, therefore, users of relocation programs; they also oversee a workforce and programs that may necessitate moving people around.

In a whitepaper released in March, SEA outlined concerns with the lack of coordination between relocation programs and human capital offices. Because relocation is a life-altering event for employees and their families, SEA found that relocation programs could affect recruitment and retention.

Broadening Relocation Assistance

When people think of relocation programs, they often think of the "3 Rs"—recruitment, retention, and relocation incentives that are available to some employees in limited circumstances. However, relocation programs are much broader. They encompass counseling, movement of household goods, rental services, direct reimbursement or guaranteed home sales policies, and other relocation support. Each of these pieces can play a factor in both the experience of the employee going through a move and the expenses an agency incurs during a move.

The federal government spends approximately $800 million annually on relocation expenditures for approximately 28,000 federal employees. Given the current fiscal climate, agencies already have signaled intent to cut funds typically used for these programs. However, much like other programs, when agencies cut funds in absence of a strategy discussion of the impact on the employees who use the system, or the policy drivers that affect the cost of the program, both the quality and the cost effectiveness of the program can suffer.

In 2004 the General Services Administration (GSA) coordinated an effort to conduct a comprehensive review of federal relocation policies and to identify best practices that would strengthen the system. The Government Relocation Advisory Board (GRAB) produced a lengthy report with findings and recommendations to create a consistent set of principles and strategies to guide both government-wide and agency-specific relocation programs.

Unfortunately, GRAB made these recommendations before the economic downturn, which began in late 2007 and ushered in new challenges for federal relocation programs. The recession also rendered some of the GRAB recommendations obsolete because the board had not considered the effects of a recession on federal relocation programs. In 2008 federal mobility decreased 15 percent as a result of the recession.

Agency relocation programs still have much room for improvement. SEA has heard anecdotally from relocation service providers about changes that could be implemented to the relocation process that would make the process more efficient for employees and potentially reduce the cost to federal agencies.

Areas of consideration include:

• Leverage outside relocation companies whose expertise can be valuable in knowing which type of relocation programs will be best for an agency's budget as well as for employees. For instance, many agencies have moved to direct reimbursement to employees for the cost of home sales. Although this may be an easier program to track in terms of direct cost to the agency, it often is more costly than home-sale programs.
• Create standardized data and training for employees in agency human resources offices so they understand the cost-benefit to various relocation services and have metrics by which to gauge the efficiency of programs. Many human resources offices lack personnel with the skills necessary to effectively manage these programs.
• Benchmark federal relocation programs against the private sector. Private-sector relocation companies have best practices data that would be helpful to federal agencies. By benchmarking successful examples from service providers, agencies can capture the cost savings of private-market competition.
  Further, agencies should move beyond low-performance penalties to a system that includes monetary incentives and rewards, established through service level agreements (SLAs), for making the moving experience a seamless and swift one for a federal employee. SLAs are a common practice in the private sector and save money for both the employee being relocated and the agency.
• Increase communication with employees on relocation programs. Many senior executives, human resources personnel, and typical government employees receive little to no training or information on how relocation programs work. Hiring managers often lack the knowledge to recruit an employee who needs to make a move, and employees do not receive adequate counseling on relocation options.
  By better engaging employees and their current and future managers throughout the relocation process, the broader organization will be best served.

Changes After the Recession

The relocation industry also adapted as a result of the recession. From 2008 through 2010 many companies changed their policies and philosophies to reflect conditions of the recession. Relocation services providers are moving from "transactional" thinking to more strategic thinking. Government agencies would do well to follow suit.

Such strategic thinking includes increased use of pre-decision programs to manage risk and return-on-investment and tiered programs to attract and retain high-potential talent, according to a Weichert Realtors 2011 benchmarking research study. Pre-decision counseling and support for employees subject to relocation allow that employee and his family to make an informed decision about accepting relocation.

This counseling can help employees examine the personal, financial, and career considerations related to the relocation assignment, according to employee mobility management services company Runzheimer International. Because a failed relocation can triple costs for a relocation provider, not to mention lost time and productivity for the employee and agency, the use of pre-decision programs increased.

The recommendations on page 11 are useful but require government-wide communication and standardization of relocation programs. SEA suggests that an informal workgroup comprise relevant stakeholders, including HR, budget, and relocation policy specialists from GSA, the Office of Personnel Management, and the Office of Management and Budget. This workgroup could highlight the negative impact on employees and agency budgets, while at the same time promote standardized guidelines for relocation best practices.

Although government-wide policies are helpful, employees also must be engaged in this process. As managers responsible for overseeing federal agencies and operations, senior executives have a vested interest in ensuring programs are successfully fulfilling their missions in a cost-effective manner. The members of SEA have shared anecdotes of the many challenges associated with fulfilling mission mandates due to the implementation of the current relocation system.

There is a trend toward posting vacancy announcements without covered relocation expenses for national scope jobs, which has the adverse consequence of discouraging many of the best eligible candidates. Without the appropriate relocation benefits, managers cannot effectively recruit nationwide. This restriction is especially problematic for national security personnel, whose security clearances are threatened by inadequate relocation benefits.

Furthermore, agencies may have to resort to more temporary duty assignments if positions cannot be filled through relocation, which would increase agency costs. SEA has consistently cautioned that cutting budgets in any program area absent a strong strategy may increase long-term costs and weaken program integrity.

People are an important part of an agency's bottom line, so ensuring that agencies have the right programs in place to ensure the right personnel in mission-critical positions is more important than ever. Shifting the government focus toward a more strategic human capital approach to relocation, rather than a procurement process, may allow the government to rein in costs related to relocation while providing employees with an improved relocation experience that lets them get back to work faster.