Organizations are actively looking for ways to create flexible and affordable relocation packages. In fact, research shows that 88% of companies are moving to core-flex policies as an alternative to traditional models. But what are core-flex policies exactly, and how can they benefit both employees and employers?
What is a Core-Flex Policy?
A core-flex policy consists of two key elements. The first element concerns relocation benefits that are applicable to all employees, such as travel costs, household goods transportation, and other benefits that your company may consider critical. The second element concerns a range of optional services that can be added depending on the individual’s needs, such as spousal and family support, home sale and purchase assistance, pet care and transportation, administrative and tax support, immigration services, language and cultural support, and more.
Advantages of a Core-Flex Model
For organizations of all sizes, core-flex models offer advantages over lump sum allowances and full-service mobility packages. There’s cost savings potential, as both the core components and flexible options can be customized to specific employee needs, resulting in a more accurate expense allocation for the move.
Let’s say, for example, that a company needs to relocate two equally-ranked managers to a new manufacturing plant. One is married with three children, and the other is single. Due to their varying household makeup, the first manager requires more benefits than the second manager. With a core-flex model, their employer has the flexibility to allocate more services and funds to the first manager’s relocation while still providing the second manager with all the services he or she needs—yet at a much lower cost.
There’s another advantage: by their very nature, core-flex policies reduce policy exceptions. When a company has well thought-out core and flex components, it becomes easier to ensure sufficient support for the myriad of different transferee needs.
A core-flex policy is also a powerful recruitment tool. Millennials and Gen Z workers are among the most mobile generations in the workforce – and they want to be valued as employees. Customizable mobility packages – as opposed to a one-size-fits-all solution – align with individual preferences and go a long way to attracting and retaining top talent.
All of this together empowers HR and hiring managers because they know exactly what level of support they can offer without having to wait for additional authorization. This contributes to faster, more efficient processes, and fosters employee engagement.
Disadvantages of a Core-Flex Policy
There are certain disadvantages to a core-flex policy. First, it requires a more complex administration than strictly defined policies. While every transferee receives the core components, managing and accurately documenting the flex policy components in each case involves a lengthier, more complicated process.
Core-flex policies can also be more time consuming to design and support than other types of policies. HR teams typically need to do more research when developing core-flex policies to ensure that the two elements either match or exceed what the competition is offering. Failure to do so could result in the loss of top talent to competition.
Additionally, time is required during the implementation of the plan to conduct a needs assessment for each employee. Without these assessments, there is a significant risk of failing to provide the best benefits, or in overspending for unnecessary services.
Finally, another important drawback is the possibility of dissatisfaction among employees. If an employee learns that a coworker received a benefit that they didn’t, there is potential for resentment, which could lead to diminished employee engagement and possibly, attrition. There is also an increased likelihood for exception requests and negotiation. A well-designed and properly executed core-flex policy with clear policy language regarding flex options, management and intention, can reduce these problems.
Tips for Designing a Core-Flex Policy
Designing a core-flex policy takes time and work. Nevertheless, by committing to creating a comprehensive program from the start, making periodic updates and adjustments becomes easier. It’s advisable to establish several factors up front:
Competitive Core-Flex Policies in Specific Industries
HR departments and mobility managers should begin by researching what their competition provides in terms of mobility benefits. Because these benefits are critical to attracting top talent, knowing what competitors offer will provide guidance about the services to include, as well as the average budget for each. Of course, it may be challenging to find this information, so consulting with an experienced global mobility company can be helpful.
As we’ve seen, household goods moving, travel costs and other benefits are standard core components. Depending on your company’s needs and budget, other services to consider including can be relocation counseling, visa and immigration services, tax equalization, lease services, temporary housing and home-finding assistance, especially for long-distance and international moves.
Flexible Services Offering
Flexible benefits can include home finding trips, home sale and home purchase support, property management, mortgage assistance, temporary living, spousal support and career services, child and elder care assistance, language training, cross-cultural training, school search assistance, pet transport, vehicle transport, lump sum assistance and tax services.
Note that whether a service is categorized as core or flex depends entirely on the employer. Companies in competitive markets that want to surpass the competition may decide to include more services in the core component to attract talent.
This is determined by factors such as employee seniority, family size, relocation distance, international travel requirements and homeownership status. It should be clear that most companies will allocate a larger budget to senior managers than junior employees, that homeowners need more support than renters, and that international moves have different core and flex needs than domestic ones.
Flexible Services Selection
Given the sensitive nature of these selections, a global mobility management company can be a key resource in providing recommendations and guidance to both the employer and employee. HR professionals and supervisors may not have a full understanding of their employees’ personal lives and their corresponding responsibilities; for example, a manager might not know that a transferee cares for a disabled parent, or has a child with special needs requiring particular schooling options. It’s therefore essential to give employees a say in determining which services he or she receives and come to an arrangement that suits employee and employer. The expertise of a global mobility management company can be helpful in providing advice on which flexible services companies may want to consider including.
Establishing Reporting Procedures and Metrics
Organizations need robust reporting procedures and metrics to track costs and the success of the program. Most mobility companies provide client dashboards where this data is collected and analyzed for review. Employers wishing to manage this aspect in-house will need to integrate relocation reporting and metrics into their existing HR management systems.
Ensuring Consistency of Policy Application
Consistency is critical in applying the core-flex policy to ensure compliance and employee satisfaction. Establishing clear rules regarding qualifying factors is a requirement to make sure all decisions to provide specific services to employees are based on data, not personal preference or guesswork.