The Challenge of Expat Relocation

Relocating employees abroad presents a significant logistical hurdle. Expats need to adjust to a new environment, language, and culture, while simultaneously managing the practicalities of finding a home, navigating transportation systems, tackling bureaucratic hurdles like bank accounts and school enrolment – all in a short timeframe, especially for work-related moves.

Companies have two primary approaches to supporting their expats during this critical transition: lump sum relocation packages and managed services. Choosing the right option depends on your priorities and risk tolerance.

Lump Sum Relocation: Flexibility with Potential Risks

A lump sum package grants expats a set amount of money to manage their relocation independently. This approach offers maximum flexibility – expats choose the services they require, whether it's transporting pets, enrolling children in school, or securing housing. They can potentially save money by finding cost-effective solutions or pocketing leftover funds. This method is also cost-effective for companies, eliminating the need for dedicated personnel to manage the relocation process.

However, the do-it-yourself nature of lump sum relocations carries potential risks. Lost or damaged furniture, unreliable service providers disappearing with deposits, or cultural misunderstandings can significantly disrupt the relocation process. Expats are then solely responsible for resolving these issues, potentially leading to stress and dissatisfaction. In the worst-case scenario, a bad relocation experience could lead your assignee to terminate their assignment prematurely, incurring significant costs for the company. Studies by Society for Human Resource Management (SHRM): show that a failed international assignment can cost organisations anywhere between 1.5 to 3 times the employee's annual salary.

Managed Services: Control and Peace of Mind

Managed services offer a more controlled approach. Companies take responsibility for the relocation process, partnering with reliable service providers to manage logistics, immigration, housing, and other essential aspects. This approach provides several benefits. Firstly, companies leverage their established relationships and buying power to secure favourable terms with service providers and landlords, potentially mitigating risk and ensuring adherence to contractual obligations. Secondly, expats benefit from the company's expertise in navigating the host country's customs, processes, and best practices, fostering a smoother transition. Importantly, managed services offer peace of mind – if issues arise, the company can intervene and advocate for the expat, minimising disruption and ensuring their well-being.

While offering greater control, managed services typically come at a higher cost due to the involvement of service providers and company personnel. However, the potential cost of a failed relocation due to a DIY approach can easily outweigh the upfront expense of a managed service. Choosing the right service provider with a proven track record is crucial to ensuring a smooth and successful relocation. Here are some resources to help you evaluate potential relocation service providers:

• EuRA Global Relocation Consulting
• FIDI - The Global Alliance of Relocation Professionals

Finding the Right Fit: Core-Flex and Collaboration

The ideal relocation solution depends on the specific needs of the company’s international mobility policy. AGS Relocation recognises this and offers a range of options beyond the traditional lump sum and managed services.

1. Core-Flex/Capped-Move: This hybrid approach combines the cost-effectiveness of a lump sum with some of the security of a managed service. AGS works with you to design a relocation package that aligns with the company's global mobility policy, leveraging their expertise to create a tailored plan within a pre-defined budget. This ensures expats arrive focused and ready to contribute, while providing the company with peace of mind.
2. Collaborative Lump Sum: Prioritise cost-efficiency? AGS can directly advise the company's assignee, utilising their extensive experience to create a customised plan that fits their individual circumstances. This approach maximises cost-effectiveness while minimising potential risks.

While lump sum packages offer flexibility and cost-effectiveness, they come with the potential for unforeseen challenges. Managed services provide greater control and peace of mind, but at a higher upfront cost. By understanding the advantages and disadvantages of each approach, and exploring hybrid options like core-flex and collaborative lump sums, you can tailor a relocation strategy that fosters a positive experience for your expats, minimising disruption and maximising their success in their new roles. Remember, a successful relocation sets the stage for a productive and rewarding international assignment, ultimately benefiting both your employee and your company's global endeavors.

This article has been published with the help of AGS. For over 10 years, AGS has chosen EasyExpat.com to communicate about its international services and offers. You can find more information and request a free quote with the link below.

Recommended Partners