How has the pandemic impacted relocation budgets and what should I do about it?
The COVID-19 pandemic has had a significant impact when it comes to mobility-related costs. Client Relations Director Kelsey Higgins takes a closer look in this Remote Relo Tip Tuesday.
Complete transcript: “Hi, I’m Kelsey Higgins, coming to you from my home office. Welcome to Relo Tip Tuesday where I’ll be answering the question, “How has the pandemic impacted relocation budgets and what can I do about it?”
There are many mobility professionals wondering if there’s anything the pandemic hasn’t impacted. From the start, we’ve seen costs fluctuate for a variety of benefits, sometimes quite dramatically. In a recent LinkedIn poll, 70% of industry respondents indicated they expect relocation costs to increase due to the pandemic.
There are a number of reasons we’re seeing this increased cost. Let’s take a look at three:
First, record level housing prices in the U.S. and in many destinations around the world have led to increased corporate spend on real estate related benefits. Low housing inventory has also created a challenging situation for employees looking for a new home, which has resulted in increased corporate housing stays, extended household goods storage and an increase in exception requests.
Second, household goods shipments have increased due to a shortage of several things, including labor, lumber, containers and fuel. Not only have these shortages led to a direct increase in cost, they have also created longer wait times to secure pack and load dates, longer transit times, and wider delivery spreads.
Third, there was a ‘Carpocalypse,’ where we saw rental car costs increase dramatically due to both a semiconductor shortage as well as a decrease in car rental inventory, which occurred in the heart of the pandemic.
How much costs will increase for your mobility program depends on what benefits you’re offering, your employee demographics, the number of employees you’re relocating, your destination and departure locations, as well as your company’s exception philosophy. A recent Forbes article claimed companies can expect relocation cost to increase by 15 percent per move.
So what should you do about it? First, prepare for things to get a bit ‘noisier’ as we see exceptions across all levels. If you have a lump sum program, understand the money won’t go as far as it used to. Work with your relocation management company to evaluate active moves and determine if you should be re-running any cost projections. Finally, make sure that you communicate the expectation of increased relocation cost to invested stakeholders internally. Thanks for watching!”