Articles & Whitepapers

How Global Economic Trends Are Driving Relocation

As the global economy shifts at an unprecedented pace, the role of global mobility managers is becoming increasingly complex and vital. Understanding the intricate web of free trade, technological advancements, and evolving workforce trends is crucial, given their profound impact on the nature and structure of today's work environment. This article explores the interplay between these variables and provides insights into their collective impact on job distribution and talent management.

‍

Global Trade Dynamics and the Movement of Jobs

The last decade has witnessed significant shifts in global trade dynamics. While free trade fosters growth in total income at the country level, it also influences the distribution of jobs within and between nations.

A notable example is the United States, where manufacturing accounts for roughly 11 percent of total output and employs 8.4 percent of the workforce.¹ Over the course of 40 years, the U.S. has seen a major migration of manufacturing jobs to countries with lower manufacturing wages. Manufacturing jobs have declined from 19.6 million in 1979 to nearly 13 million by November 2022, representing a 56 percent+ decrease when adjusted for population growth.²

As the manufacturing sector in the United States shrinks, this not only affects those directly employed in manufacturing but also results in a ripple effect, causing a substantial loss of jobs in secondary and tertiary industries. One study calculated that for every 100 jobs lost in durable manufacturing, 744.1 indirect jobs were lost through connections to sectors that provided materials for manufacturing and where manufacturing workers spent their income.³

Debate continues over the potential to restore these manufacturing jobs through policy changes, but the rising influence of technology and automation could irreversibly reshape the employment landscape in manufacturing.

‍

Technology's Role in the Changing Workforce

Automation in industries, especially noticeable in sectors like automobile manufacturing, have drastically reduced the need for human labor. A modern automobile factory now operates with significantly fewer employees than it did four decades ago. Additionally, as exemplified by a shift towards battery electric vehicles (BEVs) with simpler, less part-intensive plans, broader technological advancements in product designs have the potential to further impact manufacturing jobs overall.⁴

This shift, while diminishing the number of manufacturing jobs, has increased the demand for higher-skilled labor. Consequently, the compensation per job in the manufacturing sector has risen, reflecting the need for more specialized skills. A 2021 Deloitte study reports the U.S. is expected to have 2.1 million unfilled manufacturing jobs by 2030, citing that, with technological advancements driving efficiency and productivity, “companies are willing to pay top dollar for skilled workers who can help them stay competitive in the global market.”⁵

With organizations facing increased challenges incentivizing both existing employees and new skilled workers to accept roles that involve relocation, offering competitive and cost-effective relocation benefits can prove to be a useful tool.

‍

Economic Trends and Predictions

The current state of the global economy presents a mixed picture. While some regions experience modest growth, there's an overarching trend of slowing economic activity. This slowdown is partly attributed to significant increases in interest rates, the Federal Reserve’s response to a burst of inflation not seen in decades. The tightening of financial conditions by central banks aims to temper this inflation but comes at the cost of slowing down economic growth.

Predictions for the near future include the possibility of mild recessions in some areas. In a recent interview with NEI Global Relocation, Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, stated,

“In the first half of next year, still it's close to a toss-up, but we still think there's likely to be a mild recession starting sometime in the first half of next year… Right now, growth is pretty good, but we think it's likely to slow into next year.”

The reasons range from rising costs of goods and services due to increased credit costs to dampened employment and income growth. “Even though the rate of inflation is falling, it's still positive and prices have not come back down to where they were,” Duncan continued. “Of course, the Fed is concerned about the pace at which wages rise, which can be a contributor to inflation. So, there's going to be this period of frustration as time needs to pass with inflation at or below 2% and real incomes rising faster than that for households to catch up.”

Such economic concerns have profound implications for global mobility, affecting everything from talent acquisition strategies to compensation norms.

In the face of economic uncertainties, companies are sharpening their focus on roles crucial for enhancing operational efficiencies, such as HR business partners, process improvement specialists, and supply chain strategists. By focusing on strategic planning and efficient process management, these professionals help businesses navigate complex challenges, ensuring smarter and more effective use of resources. Simultaneously, with inflation impacting living costs, companies may reassess their compensation strategies. This could involve not only offering competitive salaries to attract key professionals, but also tailoring benefit packages to address the specific concerns of a workforce grappling with economic instability, such as increased healthcare coverage or flexible work arrangements.

As businesses recalibrate their talent acquisition strategies in response to economic challenges, understanding demographic shifts is the next essential consideration, given their significant impact on labor market dynamics and workforce availability.

‍

Demographics and Labor Force Implications

Shifting demographic trends, particularly in developed countries like the U.S., are significantly impacting the labor force and emphasizing the need for immigration and corporate relocation strategies. Between 2009 and 2021, the U.S. saw a significant decrease in fertility rates, dropping by nearly 15 percent from 66.2 to 56.3 births per 1,000 women aged 15-44, as reported by the Center for Disease Control.⁶  With the birth rate now below the replacement level, this trend points to a potential future decrease in the domestic workforce.

“The discussion of immigration is a flash point, but at some point there's going to have to be a realistic assessment of what it is that we would like to achieve,” conveyed Duncan. “We will not replicate our workforce absent immigration.”

That flash point may have been reached. Though Congress has traditionally capped the limits on annual H-1B visa numbers at 65,000, the program could significantly change in October 2024. The Department of Homeland Security U.S. Citizenship and Immigration Services (USCIS) published a 94-page Proposed Rule in October to modernize the H-1B program requirements beginning in October 2024.⁷

Talent acquisition professionals and relocation managers will have to balance workforce needs with shifting immigration policies, ensuring that their staffing and relocation strategies align with the evolving demographic environment and labor market demands.

‍

Adapting Talent Strategies in a Rapidly Evolving Global Economy

The interrelation between free trade, technology, demographics, and economic health creates a complex backdrop for Global Mobility and Talent Management leaders.  

In the manufacturing industry alone, jobs are likely to change significantly in the next five to ten years due to rapid technological advances, and the skills companies seek in their future workforce may evolve. Global Mobility and Talent Management teams, both in manufacturing and across all industries, will need to continually adapt, balancing the costs of relocation benefits with their effectiveness in recruiting and retaining employees who are requested to move.

Staying abreast of trends is essential for developing effective strategies for global talent mobility, workforce planning, and corporate relocation. In an era marked by rapid changes and uncertainties, global mobility and talent managers will remain critical to guiding organizations through future economic landscapes.

‍

Sources:

1. Maquiladoras, Mexico’s engine of trade, driven to navigate evolving demand, by Jesus Cañas
2. Forty years of falling manufacturing employment, by Katelynn Harris
3. Updated employment multipliers for the U.S. economy, by Josh Bivens
4. The stakes for workers in how policymakers manage the coming shift to all-electric vehicles, by Jim Barrett and Josh Bivens
5. 2.1 Million Manufacturing Jobs Could Go Unfilled by 2030, NAM News Room
6. Crude birth rates, fertility rates, and birth rates, by age, race, and Hispanic origin of mother: United States, selected years 1950–2019 and National Vital Statistics Reports, January 31, 2023
7. Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers

‍

Current Realities in U.S. Homebuying Trends

The home buying reality today is stark and record low inventory caused by high mortgage rates have “trapped” owners in their current mortgages. Experts don't predict home prices to revert to pre-pandemic levels anytime soon, so even those who were able to buy a home may find the idea unacceptable with their other financial goals.

‍

Rising Costs, Limited Options

Warren Buffett once said, "Price is what you pay. Value is what you get." This highlights the essence of making a wise investment, especially in terms of buying and owning a home.

Today, however, Buffett’s advice above may be hard to swallow for would-be home buyers:  the average house price is around $400,000, much higher than it was twenty years ago when it was roughly $170,000. Also, the interest rates for home loans are now higher than they've been in 20+ years.

Prior to the pandemic, a home buyer with a $2,000 monthly housing budget could have purchased a home valued at over $400,000. Now, that same budget can only stretch to a home valued at $295,000 or less with rates in the 7 percent range.

‍

This Time’s Different

Usually, when mortgage rates go up, home sales slow down, and sellers lower prices to attract buyers, but, as the saying goes, “This time’s different.”

Despite the pent-up demand, with home sales decreasing and bidding wars becoming less common, prices are still going up due to a home inventory shortage. Many homeowners who locked in low rates in recent years are reluctant to sell and corporate investors accounted for 26% of all single-family purchases in 2023, up from pre-pandemic levels of less than 20%, per Business Insider.

These statistics for different regions in the U.S., provided by the National Association of Realtors (NAR), corroborate what so many people are experiencing in the market right now:

• Northeast: Median price $439,200 (up 7.5% from last year)
• Midwest: Median price $285,100 (up 4.2% from October 2022)
• South: Median price $357,700 (up 3.5% from last year)
• West: Median price $602,200 (up 2.3% from October 2022)

In 2024, according to Money Magazine, some semblance of a buyer's market in real estate could be on the way, ending a period of low inventory and record high prices.

Despite the Federal Open Market Committee indicating that no rate hikes are anticipated for 2024, and rates could begin coming down, don't get too excited.

Housing market predictions from real estate companies Redfin and Zillow show both companies forecast that buyers will see some improvements in terms of inventory and prices in 2024, both also say mortgage rates will remain stubbornly high. This will hamper the speed at which real estate will return to normalcy. Redfin predicted that rates will only drop to about 6% at best; Zillow said rates will have some definite "staying power."

‍

A Keystone of Wealth

Understandably, many people feel discouraged or have given up on the dream of buying a home since moving to a new home with higher interest rates could mean paying hundreds of thousands more in interest over a 30-year loan.  According to a Zillow report, current homeowners are likely to stay where they are until mortgage rates drop back to 4% or 5% before considering moving to a new place.

However, Suze Orman, a well-known financial advisor, emphasizes that "Owning a home is a keystone of wealth — both financial affluence and emotional security.” This might explain why, even with such high interest rates today, first-time buyers were responsible for 28% of sales in October 2023, up from 27% in September, and identical to October 2022. Overall, about one-third of buyers were first-time home buyers in 2023, according to the National Association of Realtors.

This may be due to mortgage rates dropping from recent highs, sparking interest in buying; not to mention the first quarter of most calendar years typically sees higher interest from buyers, making 2024 a strong period for selling if interest rates fall.

NAR's Chief Economist Lawrence Yun believes that after this winter, more homes will be available for sale, leading to more purchases. "Fortunately, mortgage rates have fallen…stirring up buying interest," Yun stated. "Though limited now, expect housing inventory to improve after this winter and heading into the spring. More inventory will result in more home sales."

‍

Factoring in Renting and ARMs

Mortgage loan applicants in October signed up for a median monthly payment of $2,199, marking a 9% increase – or an additional $143 each month – compared to the previous year, according to the Mortgage Bankers Association. In contrast, renters are experiencing a decrease in monthly rents. The national median monthly rent in October was $1,978, down 1.6% from the previous month and a 0.29% drop year-over-year, as reported by Rent.com.

Adjustable-Rate Mortgages (ARMs) have resurfaced as a popular topic in the media, particularly due to their significant role in the Great Financial Crisis. In 2005, ARMs constituted about 45% of all mortgages. Despite offering potential short-term cost benefits, ARMs carry increased risks and have also seen a rise in costs this year. The popularity of ARMs has grown as mortgage rates have recently increased. By April 2023, ARMs represented 18.6% of the dollar volume of conventional single-family mortgage originations, a substantial increase from its January 2021 low, according to CoreLogic.

The usage of Adjustable-Rate Mortgages (ARMs) differs based on location and loan amount. According to CoreLogic, ARMs are more frequently chosen by homebuyers who take out larger loans. This is particularly true for "jumbo loans," as compared to borrowers with smaller loans. CoreLogic cites: “Among mortgage originations exceeding $1 million in April 2023, ARMs comprised 45% of the dollar volume, a 6 percentage-point increase from April 2022.”

‍

Strategies to Overcome

The landscape of homeownership in America is undergoing a transformation, presenting obstacles for many aspiring homeowners. The decision about whether to rent or buy in today’s real estate market is largely dependent on what one can afford. Nevertheless, with careful planning and adaptability, achieving homeownership remains within reach.

In the face of today’s challenges, prospective homebuyers might consider several strategies to overcome the hurdles posed by the present housing market:

• First, thorough research and financial planning are crucial: use qualified brokers and mortgage providers to help guide your financial decisions.
• Second, assess your budget, explore different loan options, and consult with financial advisors to make informed decisions.
• Third, flexibility is key: consider a range of alternative locations or slightly smaller homes within your budget range.
• Fourth, stay informed about market trends and be patient: doing so could pay off in the long run. While the market may seem daunting today, the situation can change, and opportunities may arise.

Buyers should not hesitate to seek guidance from real estate or relocation professionals who can provide valuable insights and guidance tailored to your specific circumstances. By combining these strategies, prospective homeowners can better position themselves to navigate the current challenges within their individual financial situations and achieve their homeownership goals when the time is right.

If you would like to discuss this topic further, please reach out to your NEI representative at any time.

‍

_{This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.}

Keeping You and Your Family Safe While Relocating Overseas

Moving globally brings excitement, growth, and challenges, but one must also be prepared to adapt to new surroundings and cultures while prioritizing personal health and safety. We explore important strategies and tips for employees relocating globally to navigate their new environment with confidence.

‍

No One Plans on Safety Issues Occurring

“Safety is not a gadget, but a state of mind.” ~ Eleanor Everet, Safety Expert

It’s crucial for Human Resources professionals managing global assignments to prioritize the safety, well-being, and Duty of Care for employees/families relocating and traveling at company request to a new country. While international assignments or permanent relocations abroad offer exciting opportunities, they also require a proactive approach to ensuring personal safety.

“The mistake travelers make is believing the biggest security risk is some external force," said Adam Bardwell, a former U.S. Army Green Beret and a security operations supervisor at Global Rescue. "In reality, the biggest security risk travelers face is their poor planning, lack of knowledge about the location and ignoring indications of danger.”

Before embarking on a global move, thorough research is essential. Understanding the laws, customs, and safety concerns in the destination country lays a strong foundation for a safe relocation. Expats should familiarize themselves with local emergency contacts, crime rates, and basic phrases in the local language for effective communication in urgent situations.

• Cultural Sensitivity: Respecting Differences

In a diverse world, understanding and respecting cultural differences is not just about etiquette; it's a fundamental aspect of personal safety.

Respecting local customs, traditions, and societal norms helps individuals avoid inadvertently placing themselves in vulnerable situations. Keen awareness of local customs or norms, such as personal space, gestures, and appropriate dress codes, etc., can foster a safer and more harmonious integration into new communities.

‍

NEI Example – Cultural Training Success for China Joint Venture Partnership

A U.S. client promoted an employee to travel regularly to China for a new joint venture. She initially opposed any intercultural training because she had travelled to many countries prior, but the client felt the project was too critical to take any chances.

Result: The employee reported later that without the required cultural coaching sessions she could never have integrated as well or have established the local working relationships that helped the new China operations succeed. The client even approved additional coaching sessions for the rest of her assignment.

• Destination Country Healthcare and Medical Prescriptions

Researching access to healthcare and prescription medication in the destination country, especially in remote areas, is essential to reduce health risks. Find out this information in advance of arrival, especially if there are pre-existing medical conditions that might require regular doctor visits.  If repeat prescriptions are needed, research if they can be filled abroad or whether one should stock up before departure and how much can be brought into the country.

‍

NEI Example – Ensuring Children's Medical Needs in Jordan

NEI's Account Executive (AE) was assisting a family of four relocating on a long-term assignment to Jordan. The AE was asked to help find medical support in Jordan for the family's two children with ADHD, including acquiring medication locally.

Result: The AE adopted a dual solution approach: 1) asking our local Destination Service Partner (DSP) to assess local expertise in ADHD treatment for children; and 2) engaging the client to explore the support available from their global insurance provider. The client's global insurance provider offered access to local medical resources, ensuring the family could procure the necessary ADHD medication locally and receive ongoing treatment in Jordan. NEI’s DSP made introductions and arranged calls with local healthcare providers.

• Practical Safety Measures for Daily Activities

As the saying goes: “Safety is No Accident.”  Implementing practical security measures for daily activities is essential. This can include being aware of surroundings, avoiding risky areas at night, and using safety apps with GPS functionalities for navigation. Additionally, relocating employees should ensure  all necessary documentation – including identification as well as emergency medical and contact information – is readily accessible.

‍

NEI Example – Emergency After-Hours Support in Brazil

An employee who had just started an assignment in Brazil was driving home on a Friday night and, while at a red light, was held up by gun-wielding assailants demanding his wallet.  The employee was still able to drive off with his phone, but all cash and credit cards were gone. He could not reach his office, so he called his NEI Account Executive (AE) on her mobile number.  

Result: NEI’s AE immediately contacted the client’s Security Team and International SOS for assistance in the employee talking directly with his local bank as he was not fluent in Portuguese.  NEI worked with the client contact to supply him emergency cash until his credit cards could be replaced. He greatly appreciated NEI’s care and concern shown for his after-hours situation.

• Building a Support Network in the New Community

Networking isn't just for professional advancement; it's also a crucial aspect of personal safety when relocating globally.

Establishing a support network in the new country is invaluable. Building relationships with neighbors, colleagues, or fellow expats provides a sense of community and an additional layer of safety. Joining clubs, volunteering, or participating in local events facilitates meeting new people and fostering connections for support and guidance.

‍

NEI Example – South Korea-to-Israel Assimilation

A relocating employee, his spouse and children from South Korea accepted a long-term assignment to Israel. After arrival and being there for a few months, the family felt isolated and frustrated.

Result: Intercultural training that the employee had turned down originally was re-proposed and gratefully accepted. After completing the program, the family ventured out more and enrolled in local activities to meet people and network. The family began adjusting immediately – and even extended their Israel assignment an extra year!

• Prioritizing Safe Accommodations and Transportation

Personal safety should never be compromised, especially when settling into a new country, and safety should be one of the top priorities to research before traveling. Knowing the plan for areas  like accommodations and transportation that will affect daily life can help make safety concerns in a new country less intimidating.

Securing excellent accommodations and reliable transportation is paramount. Choosing accommodations in safe neighborhoods and utilizing trustworthy transportation methods are crucial steps toward ensuring personal safety. Individuals should opt for reputable housing options and reliable transportation services to minimize risks. Being cautious with personal belongings, especially in public places or crowded areas, can prevent theft or loss.

‍

NEI Example – Expectant Couple’s Health Concerns in Brazil

An employee and his wife, five months pregnant, accepted a permanent move from Buenos Aires to Sao Paulo. NEI’s Account Executive was empathetic to the couple’s requirement that any temporary living unit shown have special mosquito netting across all windows, regardless of air conditioning units in place. Initially, this request proved difficult as 1) appropriate property inventory was scarce; 2) apartments booked fast; and 3) sourcing specific netting was difficult.

Result: NEI’s Account Executive worked with our local temporary housing service partner, and once the couple selected their property, NEI and the partner immediately identified a local, trusted mosquito abatement company and had the services completed and reimbursed. The appreciative couple settled into Sao Paulo with less apprehension awaiting their newborn.

‍

Taking a Proactive Approach

“An ounce of prevention is worth a pound of cure.” ~ Benjamin Franklin

Global relocation necessitates a proactive approach to personal safety, as situations vary and even countries with fantastic reputations for safety can be problematic.

However, preparation and simple steps can help substantially mitigate risks. Individuals can survive and thrive in a new environment confidently by:

• performing research prior to departure,
• prioritizing safe accommodations and transportation,
• keeping emergency contacts’ info accessible,
• respecting cultural/international differences,
• implementing practical safety measures and have a ‘Plan B’, and
• building a support network.

‍

Always Here to Help

NEI will continue to help empower thousands of client professionals each year to embrace their global relocation experience with confidence, safety, and resilience.

If you would like to discuss global relocation and/or business travel safety or other mobility trends, please contact your NEI representative.

The above article is provided for informational purposes only. Please consult your tax, legal, immigration or accounting advisors before making any decisions or transactions.

‍

2024 Talent Mobility Trends | Immigration and Relocation in a New Global Economy

As global economic and political landscapes continuously evolve, the relocation industry is facing unprecedented challenges and changes in priorities. Immigration and compliance issues emerge as a pivotal element, influencing and being influenced by the shifting global dynamics.

The current global economy, marked by inflationary pressures and interest rate uncertainties, has led many corporations to adopt a cautious approach. This stance is influenced not only by current and forecasted economic factors, but also by geopolitical tensions that make cross-border movements more complex. Companies focused on cost control may be hesitant to approve relocations in these conditions.

This article will cover these evolving dynamics, addressing technological advancements, and how changing work models are reshaping immigration and relocation practices globally.

‍

The Transformative Power of Technology in Relocation

Amid these challenges, technology stands out as a beacon of progress, transforming the relocation experience for both service providers and clients.

“AI and automation technology can have a wonderful role in supporting some of the validation process in immigration, speeding up processes from what has vastly been a paper-driven process to a more digitized process,” says Michelle Moore, NEI Global Relocation’s Chief Global Mobility Officer.

From improving efficiencies behind the scenes to enabling real-time data tracking and predictive cost analysis, technological advancements are restructuring how relocation services are carried out. Integrating robotics/automation/digital platforms not only streamlines processes, but the advancements are freeing up relocation coordinators to focus more on the relational aspects of delivering excellent service, ensuring that the human element remains central to every relocation experience.

“Many countries are working to determine how to safely use technologies to support the processes while ensuring accuracy of information, preventing biases, maintaining transparency, supporting privacy and accountability,” says Moore.

‍

Emerging Global Mobility Trends

The shift toward remote and hybrid work models is one of the most significant trends affecting the relocation industry, prompting a reevaluation of traditional relocation services.

“Employers have an increasing challenge and burden to understand where their employees are working and be responsible for compliance,” says NEI’s Moore. “Companies are trying to strike a balance in being together within a workplace and employees’ desire for more flexibility with remote options.”

This trend, coupled with the evolving expectations of the workforce regarding flexibility and well-being, is driving the industry towards more personalized and adaptable relocation solutions. “This impacts the relocation industry as it tries to develop solutions for companies seeking compliance support,” says NEI’s Moore.

As companies navigate the balance between in-office collaboration and remote work, the relocation industry is innovating to provide compliance support, tracking, and immigration services tailored to these new work models.

Another challenge for short- and long-term assignments is the need to be prepared for delays due to unforeseen global events that often occur with little to no warning, such as regional wars or hostilities, immigrant/refugee influxes, political upheaval, etc.  Additionally, underfunded government agencies often extend processing times. NEI continues to recommend companies plan assignments as early as possible.

“Pre-planning and working with your immigration contact can help [companies] better understand realistic timeframes…allowing for more flexibility. While we have seen some approvals come in quicker than expected, often additional time is required, which is disruptive to the business. It’s wise to have contingency plans for any additional time or to understand what options there might be for remote work that are not in violation of immigration, tax, or other compliance needs,” says NEI’s Moore.

‍

Immigration at the Forefront of Relocation Challenges

Challenges such as processing delays, the impact of the pandemic on government operations, and the integration of hybrid work policies into immigration law illustrate the complex interplay between immigration and workforce mobility trends.

Economic pressures and labor market dynamics are prompting countries to adopt more flexible, skills-based immigration systems, aiming to bridge the gap between global talent needs and local labor markets. These changes, however, are not without their complexities, as mergers, acquisitions, and shifting legal landscapes pose additional compliance hurdles for companies and their relocating employees.

Governments are adjusting regulations for specific immigration routes, tightening restrictions on some while easing them on others. Consider these recent immigration changes that mirror the unique challenges encountered by each country and the diverse viewpoints held by each nation's population:

• Japan launched a new six-month digital nomad visa
• Australia completely overhauled its visa system, introducing a three tiered “Skills in Demand” visa
• China streamlined and relaxed visa entry requirements
• Canada extended its Temporary Foreign Worker program
• Indonesia introduces new sub-types for several visas
• As of January 2024, the UK will no longer allow dependents to travel with foreign students studying in the country

‍

Future Direction of Global Mobility

Across the world, discussions on immigration reform will persist, highlighting the importance of flexible strategies and cooperative endeavors to navigate the intricacies of global mobility.

Companies and countries will continue to search for the best way to navigate visa and immigration complexities going forward, but proper time and effort to develop one’s relocation policies can help with immigration challenges and using the right relocation technology systems can help with immigration complexities.

“Having a strong policy and procedures documented will go a long way to ensure employees can play the role in what to do – or what not to do,” said NEI’s Moore, “but technology can make tracking easy, while supporting updates, statuses and other information needed… to maintain records within one place. This increases the ease of secure data transmission and for data to be hosted and transferred securely with any external Immigration support.“

As the industry moves forward, the ability to consistently adapt to change—while maintaining a focus on compliance and the human aspect of relocation—will be key to ensuring companies are well-poised to thrive in a global context.

‍

Maximizing Talent Through Inclusive Relocation Programs

Inclusion is more than just a catchphrase—it's a necessity today for attracting and securing a new generation of recruits. In this article, we explore the significance of inclusive relocation and the steps organizations can take to promote diversity in their global mobility programs.

‍

Belonging, as an Outcome

“Diversity” and “Inclusion” have become common business buzzwords, but sometimes little thought is given to what they truly mean or what outcomes can be if they are prioritized.

One way to understand these concepts, as suggested by Ramona Blake in a 2023 AutoDesk article, is to consider:

• Diversity as a mix of employees,
• Inclusion as a proactive behavior, and
• Belonging as an outcome.

People feel their contributions are meaningful and their ideas are important to the company’s success. This makes them feel that they are a valued and valuable part of the company’s future,” writes Blake.

In fact, more than ever, research shows that organizations with inclusive cultures are more likely to attract and retain top talent.  

In a paper from Deloitte, researchers found that out of 1,300 employees and job seekers:

• 80% of respondents indicated inclusion is important to them when choosing an employer
• 39% said they would leave their current organization for a more inclusive one
• 71% said they prefer an organization that demonstrates inclusive behaviors, even if the company has inconsistent inclusive programs (as opposed to a company that has high-quality inclusion programming, but displays inconsistent inclusive behaviors)
• 23% of respondents indicated they had already left an organization for a more inclusive one (including 30% of millennial respondents)

‍

Inclusive Companies Perform Better

Recruiters for companies with a strong inclusion / belonging culture usually emphasize connecting with, interviewing, and hiring a diverse set of individuals through understanding and valuing different backgrounds and opinions. Not only can this help access a much broader talent pool, but it fosters a more innovative and high-performing workforce.

“Finding and hiring these employees is only the first step. For them to stay, develop their careers, and contribute meaningfully to the organization, they need to feel included,” reports consulting firm Bain & Company. Their 2023 research finds that employees who feel fully included are 14 times more likely to be promoters of their organization and up to 6 times more likely to stay with the organization.

As part of an inclusive / belonging company culture, team members are encouraged to challenge the status quo. This is critical for industries in transition. According to a September 2023 Harvard Business Review article, inclusive companies are:

• 73 percent more likely to reap innovation revenue,
• 70 percent more likely to capture new markets,
• up to 50 percent more likely to make better decisions, and
• up to 36 percent more likely to have above-average profitability.

In decades past, companies have designed “one-size-fits-all” benefits packages, but this may have inadvertently resulted in reduced access or opportunities for a wider talent pool and acceptance of company relocation offers.

To support inclusive recruiting efforts and business goals, there is a strong business case to be made for reviewing and adjusting relocation policies and benefits to address new family / employee needs and changing demographic trends.

Inclusive mobility programs recognize that the needs of a diverse group of employees differ significantly. Organizations might consider revisiting their program benefits and policy communications to ensure they reflect their companies’ inclusivity initiatives and maximize opportunities for success.

This could simply involve tweaking existing language to make it more inclusive or offering a wider, more creative range of support services tailored to today’s changing relocation needs.  For example, programs that can make a significant difference for individuals / families with different backgrounds and situations to accept a move could include.

• providing resources for spouse / partner transition assistance,
• addressing “sandwich generation” challenges,
• supporting families with special needs children,
• offering cultural and / or language training for those going to another country, etc.

‍

Confidence and Competency is Key for Belonging

Promoting inclusion in relocation policies / programs also might involve deeper cultural understanding, so teams that regularly work across cultures and employees taking assignments to other countries would both benefit from pre-departure cultural training to ensure a seamless adaptation.

After all, employees / families asked to relocate to new cities, regions or countries may face significant lifestyle differences that may challenge their personal and professional roles daily.

For instance, even in some moves within the U.S., we are starting to see more cultural training being offered by clients for challenging relocations (e.g., small town Midwest to New York City or vice versa) where living conditions and challenges can be vastly different. Training topics can include lifestyle and cultural changes, transportation, safety, education, spouse/partner career issues, how to make new friends, how to get things done, and more.

Cultural competency training equips them with the knowledge and skills needed to navigate differences effectively. Some of the most common themes that prevent participation in employee international mobility programs include:

• issues of cultural fit or language.
• career concerns/dual-career concerns.
• personal family challenges.

“Typically, the most common obstacles are visa and immigration requirements and timelines, language barriers, and cultural differences. Companies can mitigate these obstacles by planning ahead to align visa and immigration timelines with the timeline of the business need and by offering language and cultural adaptation services,” said Randy Wilson, President and CEO at NEI Global Relocation, in HRO Today Magazine.

“The fact that all employees feel valued and included in the success of the company as well as their own development is the biggest benefit to an inclusive relocation program,” said NEI’s Wilson.

Understanding and respecting different needs, cultures and challenges not only promotes inclusion / belonging, but helps:

• build strong, collaborative teams of employees across borders and cultures; and
• open global career opportunities for employees that never thought they would be capable of accepting an international assignment.

As highlighted in the NEI article “Helping More Women Accept International Assignments” in International Business Magazine, the faster employees and their accompanying families can adapt to new countries and cultures, the more productive employees are likely to be, increasing the chances of a successful assignment.

Such proactive assistance reduces relocating employee stress, assignment failures, and lost business opportunities for the company. Providing personalized support, services, and resources is key to accommodating varying needs. This includes local housing guidance, community information, or even mentorship programs to ensure a smoother transition for employees.

“Strength lies in differences, not in similarities.” ~ Stephen R. Covey

People want to work where they feel the organization is contributing to their growth and realization of their potential, and where they feel seen, valued, and respected and most business executives agree that the purpose of the organization should be to create value for workers as human beings.

Promoting diversity and inclusivity in relocation programs is not just a matter of corporate social responsibility, it's a strategic priority to be more competitive going forward. Whether it’s through redefining relocation programs, addressing cultural competency, or providing tailored support, organizations are taking meaningful steps that benefit companies and teams.

Tailored support initiatives contribute to a more inclusive, supportive work environment where all employees feel valued and empowered to make a positive impact.

If you would like to discuss this or any other global mobility trends or unique company challenges, please contact your NEI representative.

‍

_{The above article is provided for informational purposes only. Please consult your tax, legal, immigration or accounting advisors before making any decisions or transactions.}

_‍

2024 Forum for Expatriate Management | Americas EMMAs

AltoVita and NEI Winners: Best Partnership Between Two Service Providers  

Dallas, TX May 23, 2024 – NEI Global Relocation, in partnership with AltoVita, is proud to announce that they have been awarded the "Best Partnership Between Two Service Providers" award. This esteemed award recognizes our joint efforts in aligning our culturally driven mission and commitment to providing extensive global mobility support with a customer-centric, technology-enabled experience, demonstrating excellence in global mobility.

The "Best Partnership Between Two Service Providers" award, presented by Forum for Expatriate Management (FEM) honors outstanding achievements and innovation in our industry. NEI and AltoVita stood out among numerous contenders for their innovative approach and impactful results in corporate accommodations.

The technology teams from both companies co-designed multiple solutions encompassing API connectivity, AI in relocation, and price forecasting. The collaboration has strengthened reporting on accommodation spend and ESG metrics through the AltoInsights reporting dashboard and feedback sessions.

Guidance from NEI’s Global Service Partner Relations team, particularly from Lonn Kammeyer (Senior Manager | Service Partner Relationship), has been invaluable in enhancing AltoVita's cost-saving analytics and providing market insights, ensuring clients receive the best value in accommodation costs.

Randy Wilson, CEO / President of NEI, expressed her pride in this achievement, stating, “We are thrilled to receive the 'Best Partnership Between Two Service Providers' award in alliance with AltoVita. Thank you for the collaboration, partnership and, contributing significantly to the win. This award is a testament to the dedication and hard work of both our teams, and it highlights the strength of our partnership.”

Additionally, Karolina Saviova, Co-Founder / COO, AltoVita added, “Winning the 'Best Partnership Between Two Service Providers' award alongside NEI is an honor. Our combined expertise and shared vision are a testament to our passion, hard work, commitment, and strong partnership. Our partnership has allowed us to achieve remarkable outcomes, and this recognition underscores the value of our collaboration. We look forward to continuing our partnership and driving further innovation in global mobility.”

Read more about the event.

About NEI Global Relocation

NEI Global Relocation is a full-service, global relocation and assignment management company headquartered in the U.S. with regional offices and teams in Switzerland and Singapore.

To stay informed and ahead of the curve on topics that affect HR and Relocation, make sure you subscribe to our YouTube channel here!

‍

Tax Treatment of Housing and other Expenses for Interns vs. Short-term Domestic Assignees

While preparing for intern season, we were asked recently to explain why housing and other expenses, like traveling to and from the job location, are taxable for interns and not necessarily taxable for employees on domestic short-term assignments when they are both only temporary work situations. With the busy summer intern season upon us, we thought it might be a good time to revisit the subject.

The tax treatment of housing and other benefits for interns versus short-term domestic assignees are actually very different due to the specific tax rules and regulations that apply to each group. Here's a general explanation of why there are differences in tax treatment:

‍

Interns

Interns are typically considered employees, even if they are temporary or part-time. As employees, any compensation or benefits they receive from their employer, including housing and travel, are generally considered taxable income.

‍

Short-Term Domestic Assignees

Employees on short-term domestic assignments may be deemed to be on a temporary duty assignment away from their tax home. The IRS allows employers to provide tax-free housing, travel, and certain other expenses as a business expense, provided certain conditions are met:

• The employer must expect the assignment to last for less than one year.
• The minute an employer determines the assignment is going to extend longer than a year, the reimbursed expenses from that point forward become a taxable benefit to the employee.
• The employee must maintain a tax home at a regular place of business or employment.
• The temporary assignment must be away from the tax home, generally requiring the employee to work in a different location for a temporary period.

‍

The Crucial Difference: Tax Home

According to Mark Tirpak, Managing Director with Global Tax Network, the major difference between the two is their “tax home”. Interns will presumably not be incurring accommodation costs in a place that is away from their “home” – i.e. principal place of employment – as they will not have a principal place of employment (i.e. tax home) other than the location where they are undertaking the internship.  Their tax home is the location of the internship, so away from home rules applicable for assignees do not apply for interns.

There are conditions, however, where  the value of housing could be excluded from an intern’s gross income if the following three requirements are met:

• The employee is required to accept such housing as a term and condition of employment; and
• The housing is located on the business premises of the employer; and employer-provided
• The housing is furnished for the convenience of the employer.

Unless all 3 of the above requirements are met, the employer-provided housing is taxable.  

Please reach out to your NEI representative if you need support with your intern or assignment programs, or with assistance sourcing a tax firm. The tax treatment of housing and other benefits can be complex and may depend on various factors, including the specific terms of the assignment, the tax laws of the country or jurisdiction in question, and any applicable tax treaties or agreements. Therefore, it's always advisable to consult with your tax firm to understand the tax implications of housing and other benefits for interns in your specific situation.

The above article is provided for informational purposes only. Please consult your tax, legal, or accounting advisors before making any decisions or transactions.

‍

National Association of Realtors Found Liable

On October 31, 2023, a jury reached a decision that could potentially change how real estate transactions are conducted in the U.S., creating opportunities for significant changes to commissions paid to real estate agents. In the case, Burnett v. NAR et al, the Kansas City, MO, jury found the National Association of Realtors (NAR), and some of the largest national real-estate broker franchisors conspired to artificially inflate home-sale commissions.

The basis of the conspiracy is the condition that a home seller must agree to pay a commission to the buyer’s agent before the home can be listed on NAR’s nationwide Multiple Listings Service database – a database controlled by local NAR associations. And, since most home sales are through the MLS marketplace, the plaintiffs claim home sellers are forced to pay a cost that should be paid by the buyer.

Under the new model, sellers may no longer be responsible for covering the seller’s and buyer’s agents’ commissions, allowing negotiation of different compensation models, and having buyers assume the responsibility of directly compensating their agents.

The NAR believes this could be a substantial challenge for first-time and low-income buyers who might lack the upfront funds to pay an agent, potentially depriving them of valuable expertise.

According to Worldwide ERC, the resolution of this and other related lawsuits could potentially change today’s real estate business by bringing competition, cutting costs, and providing customers with more options.

With uncertainty on how the ruling plays out, and NAR planning to appeal the decision with confidence, NEI will continue to monitor the situation and will offer updates as they become available. If you have any questions, please contact your NEI Client Relations Manager or NEI Client Development Contact at 800.533.7353.

‍

‍

National Association of Realtors Lawsuit Update

On March 15, 2024, a significant development unfolded within the real estate industry as the National Association of REALTORS® (NAR) disclosed a comprehensive nationwide settlement addressing commission lawsuits initiated by sellers across various states. It is imperative to note that the settlement is not final; its final approval by the court is pending, and the court is unsure when this may happen.

The proposal includes two pivotal rule changes as part of this new settlement. Firstly, NAR has committed to implementing a new regulation prohibiting compensation offers on the MLS.  With the rule change, brokers and agents must directly negotiate compensation terms with their respective clients. Secondly, agents must formalize written buyer agreements with potential buyers before facilitating property tours.

These proposed rule changes would take effect mid-July, marking a significant shift in industry practices.

‍

Key Practice Changes:

• Consumers retain the right to opt for cooperative compensation, provided it is pursued off-MLS through negotiations and consultations with real estate professionals.
• A new rule barring compensation offers on the MLS will be enforced, effective mid-July 2024.

‍

Implications:

• Despite the prohibition of communicating compensation offers through the MLS, various avenues for compensating buyer brokers will persist.
• Compensation for buyer brokers will remain diverse and subject to negotiation between brokers and consumers. Compensation may include fixed-fee commissions paid directly by consumers, seller concessions, or a portion of the listing broker’s compensation.
• Negotiating compensation terms between agents and the consumers they represent will remain paramount.
• The industry may see reduced listing commissions and buyers responsible for paying their own representative.
• With these rapid changes to the real estate sales process, it is more important than ever to work with highly trained and qualified relocation agents for both selling and buyer.
• This announcement heralds a significant real estate paradigm shift, necessitating all stakeholders’ adaptation and diligence.

NEI has observed more locations implementing buyer agency agreements in recent months.  We increased counseling to buyers regarding these contracts with the early rulings on the NAR lawsuits and will continue to offer support to help avoid financial surprises at closing.  

Longer term, we anticipate a need for companies to review their policies to determine any benefit changes as the impacts of these industry disruptions become clearer.  

NEI continues to monitor the situation and will offer updates to our clients as they become available. Please get in touch with your NEI representative if you have any questions or want to discuss this further.

‍

Baltimore's Francis Scott Key Bridge Collapse Update

On 26 March, the Francis Scott Key Bridge in Baltimore, Maryland collapsed after one of its pillars was struck by a container ship. Vessel traffic into and out of the Port of Baltimore was suspended until further notice, but the port is still open for truck transactions.

‍

Bridge Collapse Continues to Disrupt Relocation Supply Chain

The closure of the Port of Baltimore, which ranks ninth in overall US trade volume, has significantly impacted the international trade traffic it processes. In 2023, the Port set a record for handling international cargo, with 52.3 million tons valued at nearly $81 billion.

The bridge collapse continues to cause disruptions to supply chains both in the immediate area and across stretches of the country:

• Cargo, which would otherwise have passed through Baltimore, will continue to be discharged at alternative ports (such as New York, Newark, Norfolk, VA and Brunswick, GA) and will reach its destination by truck or rail.
• Delays and/or restrictions should be expected on any shipments to/from the Port of Baltimore as well as at nearby ports.
• Freight rates have increased.

Port officials have said that a temporary channel (about 35 feet deep and 280 feet in length) created by the US Army Corps of Engineers is progressing and that the Port of Baltimore may be fully operational to ocean vessel traffic by early June.

Supply chains have faced mounting pressures from various sources, including incidents in the Red Sea and low water levels in the Panama Canal. The closure of the channel leading from the Port to the seas underscores the fragility of today's supply chain, especially after pandemic-related disruptions in shipping from 2020 to 2022. Unfortunately, the loss of maritime traffic in Baltimore is estimated to cost the US economy about $9 million each day.

“As long as the port is not fully functioning, the impact will be felt all over,” said Maryland Governor Wes Moore.

‍

Future Relocation Updates As Needed

NEI will continue to monitor the situation, provide updates, and keep clients advised of any specific shipments affected. We will also provide updates on future shipments and how the situation impacts the supply chain as we learn more.

If you have questions, please contact your NEI Representative  at 800.533.7353 any time.

This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.

‍

For the last three years, NEI Global Relocation has dominated the Trippel Relocation Managers’ Surveys with more #1 ratings than any other company surveyed. This year, NEI again finished at the top of the pack—achieving the highest scores among all individually ranked participants in six categories and the second highest scores in three more categories!

NEI #1 category scores among all individually ranked participants:

• Overall Satisfaction
• Best in Class
• Integrity
• Willing to Recommend
• Likelihood of Continuing Service
• Data Security

NEI second place scores among all individually ranked participants:

• Quality
• Team Personnel
• Responsiveness

In addition to the average scores detailed above, NEI also dominated the Net Satisfaction index showing great consistency year over year.

“These are amazing results for a year filled with record breaking client activity coupled with global supply, staffing and economic challenges.” said Randy Wilson, NEI President | CEO. “We recognize that all companies have faced these same challenges and appreciate our clients’ commitment to working closely with us for the benefit of their relocating families.  I’m also proud of our team members and grateful to our clients for recognizing their efforts with so many top scores again in the ©2022 Trippel Relocation Managers’ Survey.”

Of the 31 Relocation Management Companies (RMC) assessed, 14 companies received enough returns to be independently represented in the results.

If you would like to see the complete results of the survey, please reach out to your NEI representative, or click HERE

Prioritizing Wellness

German philosopher Arthur Schopenhauer aptly stated,

“Health’s not everything, but everything’s nothing without health!”

Globally relocating employees—especially those who accept a first-time assignment—often “don’t know what they don’t know.” Even before the COVID-19 pandemic, pre-assignment medical considerations and screenings were not usually top of mind for employees going to a new country, although they remain an important detail in preparing for any global assignment.

For successful global mobility management programs, proactive service and strict attention to detail are critical and result in a positive return on investment for companies and employees alike. Therefore, it is important to convey well before departure what the employee and family can expect in the host country.

Especially so, if they have any health issues, they should understand what medical options are available to ensure employees going abroad are empowered, are knowledgeable about the process, and understand unique country requirements.

‍

Proactive Medical Screenings

For those offered an international assignment opportunity, medical screenings may seem unnecessary or low on their to-do list with everything else on their plate. However, the effort can be well worth it to reduce the risk of avoidable health issues on assignment. After all, one of the most effective tools for a successful, stress-free international assignment or permanent move is proactive planning.

Medical screenings can supply proof of a company’s legal standing concerning duty of care, which presumes employers have moral and legal responsibility for the health, safety, and security of their employees— especially those traveling on behalf of their employer.

Proactive pre-assignment medical screenings that include interviews of the employee and family members help ensure information and action plans can support the success of the assignment or move and lower stress levels.

Such screenings—required by some employers and only strongly encouraged by others—can also result in proactive doctor recommendations that support a healthy employee and family while abroad. A well-designed plan will also clearly address and alleviate any data privacy concerns employees and their family members may have about their medical information.

Being more prepared for and in tune with managing the potential for health concerns is not only good business practice, but it helps assignees feel relieved when they know their employers are providing help and looking out for their family’s welfare while abroad. According to Mercer, medical conditions identified at a screening may not stop an assignment from happening, but rather, they can help the employee and family prepare.

In such a scenario, all international assignment candidates at a manufacturing client are required to undergo “pre-assignment medical screening checkups.” One employee’s screening resulted in the discovery of a serious undiagnosed condition. The doctor highly recommended that the employee and company delay the assignment to address and remedy the health situation at home. After six months, the candidate was cleared for assignment to the host country.

Efforts to discover medical issues and understand how they can influence an assignment’s success or failure should not focus only on employees. Health issues for spouses, partners, and / or accompanying dependents should be discussed upfront with each family considering an assignment.

‍

‍Productive Planning

An assignee about to fly from Turkey to the U.S. learned at nearly the last minute that his wife’s recently diagnosed health condition required her medicines to be refrigerated continuously. Special batteries for the ice packs needed to be used in flight and during their long airport layover. The batteries also required constant recharging during all periods of transportation. The family’s 20-hour journey was only two days away. When the assignee called his NEI Account Executive, it was clear by his voice that he was nervous.

The global relocation management company account executive helped arrange a successful journey from Turkey to the U.S. together, the account executive and the assignee worked with the airline to arrange refrigeration of all medicines during the flights. They located and purchased in advance additional freezer packs at the layover airport. These steps ensured that they could keep the medicines cool until they reached the destination hotel. Additionally, they took steps to ensure that the family would be able to obtain more medicine in the assignment location.

Before employees and families travel abroad, they should understand what medical services their health insurance will cover outside of their own country.

They should also:

• Schedule a discussion of any specific health concerns— illness, allergies, medications, etc.—with their medical provider eight to ten weeks before the anticipated start of travel and receive immunizations well in advance of travel to achieve optimal protection.
• Arrange eye exams for family members, and obtain duplicate prescriptions for glasses and contact lenses, or extra pairs of glasses or lenses in case these are not easily available on location.
• Request copies of medical records, X-rays, and prescriptions to take abroad.
• Schedule family medical checkups in advance for when they are on home leave.
• It is critical that employees going abroad understand how the company’s health insurance works in the destination location. Specifically, does the employer’s health insurance company in the host country cover the same prescriptions as under the home country’s health insurance coverage? Will prescription expenses far exceed the home-country cost of the same medicine? If so, will the company reimburse the employee for what is not covered, since he or she is taking an assignment at the company’s request?

Finally, employees should know the importance of carrying proof of health insurance and how to process claim forms, contact their health insurance provider, and make payments for medical coverage while on assignment.

‍

Prescription Restrictions May Surprise You‍

Employees should not rely on being able to access the same medicines in the destination country as they can in their home country. The medications may not be available or—depending on location—may not meet standards for approval.

Employees and their families need to be aware that the rules about moving medicine and prescriptions through customs or having them shipped to the assignment location vary significantly from country to country. As some travelers have found out, ignorance of local laws is no excuse to authorities. There can be consequences if such laws are violated while entering the host country.

Though each country’s rules change regularly and sometimes with little warning, consider that:

• Singapore requires a license to legally bring in Ambien.
• In Saudi Arabia and Japan, attention deficit disorder drugs such as Adderall and Ritalin are not allowed, even with a doctor’s prescription, as methamphetamines and amphetamines are active ingredients.
• Those entering Dubai must complete an online form detailing medication they carry, because many medications are banned, such as narcotic-based, psychotropic, and controlled substances. The banned list also contains medicines that are not registered in the UAE, herbal medicines that might contain some banned substances, medical devices that might contain banned medication, and pharmaceuticals that have been discontinued in the UAE.
• Going to Japan requires leaving over-the-counter cold treatments such as Sudafed or some Vicks products behind, as they contain the ingredient pseudoephedrine, which is banned there. Japan also limits common Benadryl to 10-milligram capsules.
• Some over-the-counter medicines commonly used in the U.S. and other countries are illegal to bring into Mexico, including inhalers and some allergy and sinus medications.
• In Greece and the UAE, diazepam, tramadol, codeine, and many other commonly prescribed medicines are considered “controlled drugs”—always check what the requirements are for taking them into a country.
•  Visitors are strongly encouraged to carry a doctor’s note with them for any personal medicine when visiting China.
• Those headed to the U.S. should be aware that personal medication may be subject to U.S. drug importation laws and regulations. In general, personal importation of a 90-day supply of medication is allowed, but only if the drug is not available in the U.S.

If there is no way to legally enter a country with one’s needed medication, some tough choices must be made. Employees can check with their prescribing doctors to see whether there is a legal alternative in the new location. If the destination’s government has a limit on the specific amounts of a medication that can be brought into the country at one time, an option is to use one’s home-leave trip benefit to acquire an additional supply.

‍

Vaccination Variances‍

Restrictions can also apply to vaccinations. One U.S. family in China that had a newborn in-country learned that a vaccination required for young children in the home country was not allowed in China. The company approved reimbursement for round-trip tickets for the mother and newborn to visit South Korea for the vaccination rather than wait until their next home-leave trip to the U.S. for the vaccination.

It may be possible to obtain the medication once the employee arrives in the host country, but consideration should be given to where it is purchased. Tullia Marcolongo, executive director of the International Association for Medical Assistance to Travelers, reminds readers that, “Fake medicines are common worldwide and can cause serious illness or even death. Always get your medication from a reputable, licensed pharmacist.” Additionally, employees should be cautious when sending medication through the mail. Says Marcolongo, “Extreme heat and cold during transit can alter the effectiveness of your medication. It is also possible that the package could be confiscated at the border.”

Finally, the U.S. Centers for Disease Control and Prevention recommends that when traveling, it is important to pack approved medicines in carry-on luggage so that if a suitcase is missing, the medications are not lost and out of reach when needed.

‍

Improving The Odds for Success

Failed assignments, according to one study, have an estimated cost of two to three times an employee’s annual salary. This doesn’t include the company’s lost business opportunities and the costs to recruit, interview, and establish a new replacement employee.

Improving the odds of assignment success and a global company’s return on investment can be accomplished by supporting employees through a proactive, consistent [and private] pre-assignment medical briefing program. Mobility managers should consider:

• Adding pre-assignment medical screenings to the employee’s checklist of things to do before departing.
• Establishing a checklist regarding pre-assignment health issues.
• Reviewing company policy to see if any reference to health screenings needs to be added.
• Understanding exactly what the policy covers and who, internally, can explain the importance of proactive, pre-assignment health planning to potential assignees.

When sending employees to other countries for work, it is prudent in the spirit of duty of care to reduce all risks for employees and families before they even accept the assignment. Health and safety should be at the top of the list for both parties—employee and employer.

Such proactive steps can not only result in healthy, productive employees and families while on assignment abroad, but also positively impact the company’s bottom line.

‍

_{The above information is for general information only and is not presented as legal advice. Please consult with your legal advisors and internal stakeholders before making decisions and taking any action.}

‍

Thriving During Mergers and Acquisitions

 Day-to-day business can be challenging on its own, but when Mergers and Acquisitions (M&A) are in the works, things can become especially interesting.

M&A activity is on track for another strong year, so questions Global Mobility, Relocation and Human Resource departments should be asking right now are:

“Are we ready for a fluid and potentially aggressive M&A environment?” and“ Where do we start when we learn about a merger or acquisition that impacts our business?”

‍

Awareness and Preparation Are Key

Benjamin Franklin wisely said,

‍“By failing to prepare, you are preparing to fail.”

Based on NEI Global Relocation’s (NEI) experience with M&A transitions, five key Action Steps that impact the successful integration of companies have been identified:

1. Ensuring Key Stakeholders are at the Planning Table
2. Addressing Cultural Differences
3. Assessing Global Mobility Needs and Implementing New Strategies
4. Managing Expectations and Working through Differences
5. Effecting a Calm Transition

These elements may feel as though they are occurring simultaneously, but NEI’s expertise with M&A can guide you through each Action Step to skillfully embrace the vital components necessary for you to thrive, rather than just survive.

Given the potential for increased M&A activity, awareness of these steps can help Global Mobility, Relocation and HR professionals play a more strategic role should your company head in that direction.

After all – when the M&A ink is dry and the lawyers and investment bankers leave the scene, confusion often reigns for those who are not primed for the challenge. Even normal daily decisions of the past can prove problematic in the new and merging environment.

‍

Ensuring Key Stakeholders Are at the Planning Table

Action Step One

Morgan Stanley’s ”M&A Trends Outlook” report confirms that deal-making is likely to accelerate going forward and factors cited as most likely to drive future activity include:

1. Well-capitalized companies making acquisitions in their core businesses.
2. Financial sponsors, which are holding record amounts of capital, deploying it in acquisitions.
3. Uneven performance among companies stoking shareholder activism.
4. Cross-border M&A making a comeback.

One of the most important factors in achieving a successful M&A transaction is effective integration. Who better to contribute to a successful integration than the company’s “people” people?

Six of eight key internal factors that can lead to a failed M&A touch on areas related to HR including:

• Execution/Integration Gaps
• Talent Issues at the Target Company
• Not a Well-defined M&A Strategy
• Not Achieving Expected Cost Synergies
• Inadequate/Faulty Due Diligence
• Not Achieving Cultural Alignment

This illustrates how important it is to invite Global Mobility, Relocation and Human Resources to the planning table to participate in the extensive pre-planning discussions that need to occur before the announcement goes public.

While executives leading a merger or takeover may act more optimistically, impacted groups might be insecure about the potential for dramatic change. Forming strong relationships and cross-departmental teams improves M&A dynamics.

Internally, companies must identify key players from the merging entities to create an M&A project team. Because combining the assets of two or more companies involves employees, Global Mobility, Relocation and Human Resources comprise an important segment of an M&A implementation strategy and play critical roles on the transition team, as do Payroll and Accounting.

The first order of business for the M&A project team related to employees includes:

• Establishing Timelines for what can be shared and when.
• Sharing Known Dynamics, such as the number of anticipated relocations, locations affected, the new global footprint, potential group moves.
• Determining Budgets to contain costs of known dynamics.
• Identifying required Outside Resources, such as the relocation management company.
• Generating New Policies to retain critical talent.

Once the basics have been established and a general statement of work has been considered, it is time to arrange a confidential meeting with the relocation management company. Because every M&A has its own unique signature, what you did in the past may not fit the current situation.

Relocation management companies like NEI have vast experiences in helping numerous companies navigate the complexities of M&A integrations related to global mobility and can be a time and cost saving advocate for planning a successful M&A.

‍

Addressing Cultural Differences

Action Step Two

According to Aon Hewitt, 58 percent of companies reported they did not have a specific approach to assessing and integrating company culture in a deal.

A Willis Towers study of 190 CEOs, CFOs and top executives on global acquisitions found that cultural incompatibility is rated consistently as the greatest barrier to a successful integration. Unfortunately, it also found that due diligence on corporate cultures was negligible.

An assessment between key groups is often used to appreciate the differences. Understanding work style, protocol, etiquette, decision-making, and more is critically important in developing the organization’s new culture in a manner that helps everyone feel like a valued participant.

With the forecasted uptick in cross-border M&A activity and since cultural alignment is a major factor in a successful M&A, consider investing in cultural training for all stakeholders, including the HR and Global Mobility/ Relocation teams that may work together.

“Truly global companies around the world are securing supply chains and acquiring companies internationally to do so. We should expect even more cross-border volumes across borders and regions for the foreseeable future.”

Mollie Ivancic, VP of International Services, NEI Global Relocation

‍‍

Merging Cultures

NEI Thriving Example #1

When a North American firm was acquired by an overseas conglomerate, both relocation departments entered the process knowing there needed to be much planning, collaboration, and integration of teams to maintain a return on investment and a seamless transition.

NEI recommended intercultural and communications training for all groups working on or affected by the transition and provided additional area orientation support and integration planning for those who would relocate. This was a crucial step for members of the acquiring company’s overseas management team who were coming to live and work in North America where they would present a different culture and management style to the new workforce.

The company also used the resources of the foreign country’s local embassy and engaged their ambassador to speak about cultural customs and business protocols of the acquiring company’s country to key operational staff in the United States who would be working with new, high-level managers.

‍

Assessing Global Mobility Needs and Implementing New Strategies

Action Step Three

“A partner like NEI – experienced to recognize the opportunities – is crucial to the successful integration of talent agility, relocation and global mobility within the newly- formed company.”

Michelle Moore CPA, MPA, CGMA, Chief Global Mobility Officer , NEI Global Relocation

‍

Each M&A integration approach is different and tailored to the situation or even an outcome desired by senior management.

For instance, during clear “buyout” situations, leaders from both companies may publicly rename the takeover as a “merger” or a “synergy” to diminish the potential of employee anxiety and improve cross-organization collaboration. It is often assumed that the acquiring company’s policies will supersede the program of the company being acquired, but no hard and fast rules exist.

Group Moves within a new company are a common biproduct of M&A activity. Experiencing and managing a group move is one of the more challenging tasks a relocation manager and company can face. It typically involves targeted new policies, a very customized local approach, communication strategies, multiple meetings, support functions and ongoing collaboration.

Throughout our history, NEI has managed many group moves for our clients ranging from groups of five to 800 transferring employees/families across numerous industries and global locations. Through our experience, we know how to identify success elements to retain key employees, present the big picture, guide affected employees and manage the entire process proactively. We have found that a strategy does not have to be expensive or elaborate to succeed.

Many Global Mobility, Relocation and Human Resource departments that have experienced M&A events discover that it is also an opportune time to not only customize group move benefits, but also make desired changes to the overall relocation program. The timing of the M&A provides the additional leverage needed to obtain senior management agreement and support.

‍

Trust is Earned, Not Given

NEI Thriving Example #2

In the merger of two mega-conglomerate companies, NEI took the lead in successfully analyzing and integrating the two companies’ relocation benefits and policies into a comprehensive new program. The client specifically sought NEI’s expertise in offering creative solutions, presenting the agreed upon approach to impacted employees, and helping to relocate the combined company’s new headquarters to a new site.

Newly combined companies often consult with NEI to conduct an objective, detailed analysis and compare both companies’ policies against current best practices and the client’s industry peers. After the policy comparison, merging companies often choose to move forward with NEI’s policy suggestions because of the focus on cost effectiveness and NEI’s record of delivering high employee satisfaction.

Once finalized, NEI presents its findings at a kick-off implementation meeting involving all key stakeholders. This is an excellent time to cover new program improvements and procedures while ensuring everyone involved is on the same page going forward on both tactical and strategic levels.

When the plan is put into action, desired results are monitored, measured, and reported regularly so the program can be adjusted, as necessary.

Not long after the positive conclusion of this large project, the client merged, yet again, with another rival. NEI helped manage the resulting union of the relocation programs and all transferee/assignee activity continued as a seamless execution of the ongoing program. Communication, collaboration, and a consultative approach helped make both mergers a great success.‍

‍

Managing Expectations and Working Through Differences‍

Action Step Four:

Working through differences is not limited to companies combining work groups from different countries or regions of the world –internal company cultures can often be diametrically different.

NEI has helped the M&A of many companies with polarly opposite and well-entrenched, corporate cultures offering vastly different relocation benefits.

One company may provide very generous benefits, while the other very lean. If not carefully managed, a situation like this can lead to dissatisfaction and bitterness, depending on new corporate objectives.

‍

“Understanding” Helps Us Accept Change

NEI Thriving Example #3

Quickly integrating the relocation programs of two merging companies was complicated enough, but members of a small division of the purchased company were disappointed about adhering to a new policy, much different than the more generous, exception-friendly benefits to which they had been accustomed.

NEI effectively helped the two sides by using a collaborative and consultative approach to compare relocation programs against company announced objectives. An enhanced benefits policy grid for the merged companies helped NEI present the findings and discuss why the proposed solution was important to meet company objectives.

Once each division understood the reasoning behind the proposed changes, they moved forward as one, overcoming a potential “relocation roadblock” for the new corporate culture.

‍

Effecting a Calm Transition

Action Step Five

Employees in the process of moving are already stressed about relocating and new responsibilities. It is natural to become even more anxious when caught in the middle of a merger or acquisition announcement. Equally concerning are evolving internal processes and ensuring that everyone is on the same page.

Consistency is critical for benefits and processes to be carefully analyzed and clearly documented so details can be communicated to all without a need for later changes. This includes documenting processes for financial capture, tracking and reporting accuracy.

Taking the time to do it right the first time and preparing consistent documentation ensures that relocating employees and stakeholders will understand and correctly follow any new processes.

‍

"Consistency is critical for communications and documentation uniformity."

Looking at the big picture and analyzing the impact of a M&A on various work groups is also important to foster a calm transition. In the following example NEI uncovered a source of great internal anxiety related to new processes and increased workload.

By understanding the situation and listening to concerns, NEI was able to create an innovative solution that saved an enormous amount of time and removed a great deal of anxiety.

‍

Work Smarter, Not Harder

NEI Thriving Example #4

For an NEI client, one of the company’s relocation groups experienced a stressful period each year as they had to work extensive hours for a week over the holidays to complete the year-end “true-up” process. They had major concerns about how this would be accomplished with the combined entity and double the employees.

Concerns about the level of staffing, which was not increasing, were also raised – not to mention recognizing that this entire group of employees would be forced to work through the holidays while the rest of the company’s employees would be enjoying their time off.

NEI’s Chief Financial Officer met with all stake holders involved and proposed a new accounting process to run tax gross-up calculations more often and interface them electronically, since NEI was also managing Expense Tracking. This eliminated the need for the time-intensive true-up process at year-end because NEI would be reconciling for the company through out the year. The new process handled the task with ease, requiring less time and labor to accomplish a greatly increased workload.

As a result, the client’s team did not need to work that busy holiday week ever again – even with their company size doubling – which was much appreciated by everyone at the company!

‍

Finding Catalysts for Bold New Strategies

COVID-19 forced many organizations to step out of their comfort zones and make changes they would have previously resisted without the situation’s dire urgency, such as Work from Home, virtual meetings, working while social distancing, and more.

M&A announcements produce their own daunting challenges, but just as COVID-19 forced companies to act, a M&A event can also serve as a catalyst to implement bold strategies tailored to a new and greater company mission and vision including:

• eliminating process bottlenecks
• improving customer service
• addressing policy/benefit shortcomings
• demonstrating the HR/Global Mobility/Relocation group’s value as proactive consultants and
• leaders creating a more competitive company to increase profitability and grow market share.

NEI has found M&A situations excellent opportunities to help introduce progressive changes or savings measures for which a client had expressed interest or intended to make, but may not have had the internal support to implement previously.

‍

What’s Next?

The business world is operating in a swiftly evolving and very fluid environment; one in which certain trends are starting to appear, including a strong forecast for corporate amalgamations. M&A continue to bean important growth driver and a coordinated approach to integration is critical.

Simply put, taking early and deliberate steps can help foster a smooth transition.

NEI has mastered the key elements of successful M&A integration for relocation and has a passion for working with client leaders to solve business challenges that benefits everyone.

‍

_{Please contact NEI to learn more about how we can help your company, whether an M&A is in your future or not. Our global expertise and consulting services are available to help your company thrive in today’s challenging world of workforce mobility.}

‍

From Paws to Passports:

At NEI, we believe pets are family too! Here are five tips to consider before relocating internationally with one’s pets:

‍

A Pet Owner's Guide to International Relocation

#1 Meet with your veterinarian

Ask your vet to check on destination requirements for your pet’s vaccinations and quarantine rules. Ask your vet for advice on long flights with pets, microchipping your pet, and obtaining a supply of prescribed medications. It is not recommended for old, anxious, or sick pets to ride in an aircraft’s cargo hold.

#2 Understand travel rules before purchasing tickets

Travelers should call the airline(s) before booking a ticket to confirm carrier/crate limits, weight limits and space for their pet as they may limit the number allowed on a specific flight or not permit any pets on board. It is important to find flights with the fewest stops as layovers can be stressful for a pet.

#3 Prepare and organize all pet documents

Different airline rules and destination country Customs and Imports laws may require pet documentation for vaccinations and a vet’s letter clearing them for travel. Take a copy of your pet’s complete medical records while traveling.

#4 Consider using a professional pet transportation provider

At each client’s preference, NEI can direct employees to pet transportation experts. Fees vary by provider and situation. Most offer comprehensive services to manage the entire process!

#5 Always ask questions

Information received from airlines, veterinarians and pet transport firms can be overwhelming, so ask for clarifications well ahead of travel. NEI has helped many travelers proactively solve their pet challenges.

Examples of When to Make Other Arrangements

Advanced planning is the key to moving with pets internationally. When moving with an exotic or uncommon pet — snakes, birds, fish, turtles, insects, etc. — ensure you check for specific requirements about these creatures. Every country differs on what types of animals may enter. Missing a detail around their transport and laws would be an unwelcome surprise.

Consider these two examples when NEI Account Executives provided advanced pet problem solving for employees contemplating assignments with their pets:

Example 1 – Gerbils: from Canada to the UK

NEI managed the move for an employee going on assignment from Canada to the UK who was concerned about his two gerbils he wanted to take. NEI checked with a vetted pet transport service partner, inquiring about the latest quarantine period in London for gerbils.

When the employee was informed of the regulations, he decided to trust the gerbils' care to a family member while on assignment.

Example 2 – Five Chihuahuas from Japan to the US

A Mexican national and his spouse accepted an international assignment from Tokyo to San Jose, CA.  During a pre-move needs assessment, the NEI Account Executive learned the couple planned to bring their five dogs from Tokyo believing that, due to their small size, it should not be a problem.

Their NEI Account Executive advised them proactively that relocating five dogs could be a potential issue:  not only are more U.S. municipalities enacting regulations on the number and type of animals a person can keep on a property, but California had even stricter laws that varied county-to-county.  

Research conducted by NEI found the California counties the relocating couple was interested in only allowed two dogs at any given time and more than two dogs required a kennel license.

After NEI and the DSP discussed options with the couple, they decided to take two dogs with them from Tokyo and relocate the remaining three to Mexico to live with the assignee’s parents until the couple’s eventual home country repatriation.

Had NEI not counseled the couple at the beginning, the result could have been much different and they greatly appreciated NEI’s guidance.

For more weekly information about hot topics and mobility trends, follow NEI Global Relocation on LinkedIn!

‍

Navigating Relocation Concerns

Relocating employees often face various challenges and concerns when considering a move. Understanding these common hesitations can help employers better support their employees during the relocation process. Based on data from 2022, we’ve identified the top five reasons why employees are hesitant to accept relocation assignments.

‍

#5: Undisclosed Personal Reasons

During a relocation, families may have sensitive personal reasons that they hesitate to disclose. As part of our commitment to supporting relocating employees, NEI's Account Executives are trained to observe and listen for subtle cues. By being attentive, we can address specific needs, such as accommodating a newborn with extraordinary medical requirements.

To help employees meet the needs of undisclosed concerns, many companies offer their employees more choice in selecting benefits that best fit their needs by using technology like NEI's iSelect tool or providing a “You” Allowance to access additional funds for needs unique to their situation. These types of actions bring peace of mind to relocating families and ensure smooth transitions.

‍

#4: Unfamiliarity with the Destination Location

Moving to a new area can be daunting, as families leave behind the comfort of their old home, family, and friends. Studies show that three out of four Americans express regrets after relocating, with acclimating to a new community being a significant stressor.

At NEI, we recognize the importance of personalization and strive to match relocating employees with real estate agents or service partners who understand their situation and can help minimize their concerns. Our city search tool allows your employees to explore their new location and connect with identified essential services, such as information about schools, shopping, parks, or community events.

‍

#3: Financial Considerations

Financial concerns are a common worry for relocating families. Rising housing costs and fluctuating interest rates pose challenges when purchasing a new home. If they are moving to a higher cost-of-living location, the concerns increase. NEI works closely with relocating families to help them thoroughly understand the available relocation benefits the company is providing to ease financial burdens.

We consult with our clients extensively in developing competitive benefits that lead to greater transferee satisfaction while minimizing corporate expense. Our Client Relations Managers partner with our clients for whatever they need, such as running cost-of-living analyses (COLA), advising them on various ways to support homeowners during challenging real estate markets, or offering significant insights on any topics of concern to aid acceptance rates.

‍

#2: Health and Safety

In an ever-changing world, health, safety, and security are paramount concerns for relocating families. One way that NEI helps to reassure them of the new location is to collaborate with local real estate agents or destination service partners for an area orientation. Advising them of the various neighborhood nuances and desired amenities is important prior to making any decisions. Obtaining this type of information helps relocating families feel confident they are making good decisions about relocating and where to settle. It prioritizes their sense of well-being so they can settle into their new environment with peace of mind.

‍

#1: Spousal/Partner Acceptance

The support and acceptance of a spouse or partner significantly influences an employee's decision to accept a relocation assignment. NEI recognizes the importance of spousal acclimation and recommends that companies provide this type of support because one of the top reasons for a failed relocation or assignment is an unhappy spouse or partner.

For example, if the relocating family needs to maintain a dual income household, helping that person acquire a new position can be essential to a successful relocation and a productive employee. Additionally, NEI continues check-ins with relocating families for extended periods, up to six months or longer, if needed, to ensure a smooth transition and address any concerns.

‍

Conclusion

At NEI, we understand that effectively relocating a family goes beyond finding them a new home. NEI founder, Chairman and former school psychologist, Kate Dodge emphasized, “The significance of supporting and grounding the family is critical during the relocation process. Our commitment to Service Exceeding Expectation means that we go above and beyond to ensure satisfaction from all parties involved.”

By placing proper focus on these top five concerns—undisclosed personal reasons, unfamiliarity with the destination location, financial considerations, health and safety, and spousal acceptance—companies can make each relocation a positive experience.

Should you like to discuss any of these topics further, please contact your NEI Representative.

Attention to Detail

Moving can be stressful for families in the best of situations, but one of the major considerations for accepting a relocation involves the impact to one’s children. For companies relocating families with a “special needs” child, the situation can be particularly challenging.

‍

More Preparation

There are 7.2 million students aged 3-to-21 studying under the Individuals with Disabilities Education Act (IDEA) in the U.S. today, making up about 15 percent of all U.S. public-school students.

Though awareness of child learning, health disabilities and other special education needs have increased dramatically, relocating loved ones with such needs usually requires more preparation and attention to detail to ensure the right support is provided before, during and after a transition.

Additionally, because health information about an employee / family is private, companies may never even know if relocation candidates turn down offers because they were either unsure if their child’s unique requirements could truly be met in the destination or if they would have access to necessary special needs support services similar to their current network of providers.

‍

Active Listening Makes a Difference

NEI has considerable experience assisting families with special needs children, be it learning disabilities or health concerns, and we navigate each situation to develop the best solutions. In fact, our experience led us to develop the You Allowance as a way for companies to provide additional support for unique situations just like this.

Our Account Executives are trained to conduct a detailed Family Needs Assessment to learn each relocating family’s priorities, needs and interests. They also learn how to recognize unspoken needs or concerns that could lead to employee/family reluctance to relocate.

NEI and client-approved service partners can provide guidance to families and work with resources in the destination to create a pre-move strategy and timetables to maximize the family’s time and address their home finding trip concerns. The following information provides two case studies involving the need for special assistance.

‍

Short Term Rental with a Pool for Therapy

NEI worked with a family with two children moving from Missouri to New Jersey, one of whom had special needs. The family’s original intent was to purchase a home, but due to other circumstances they had to secure temporary living for six months with one requirement: a pool for the child’s therapy, as well as a separate living space for him.

Identifying a real estate agent who specializes in short-term rentals was NEI’s first step. The agent quickly located a private residence that included both a pool and the exact accommodations requested so the child’s routine wouldn’t miss a beat.

‍

The Perfect Destination School

With the client’s approval, NEI partnered with a fee-based service partner to help a transferee find the perfect school for his child with autism when he was needed for an Atlanta to Los Angeles relocation. The service partner set up family appointments to visit each school based on the family’s unique needs, helped with the interview process, consolidated all documentation from the child’s previous program in Atlanta and even helped with school admissions paperwork.

‍

Planning, Research, Preparation

For families deciding to relocate with a special needs child, it is important to start researching and planning early. Gathering all documents necessary to obtain the services and support needed in the new location is critical. Letters from teachers, therapists and other professionals who currently work with the child should be requested as quickly as possible to save time and stress.  

Simultaneously, NEI provides links to school information in the destination city on our personalized NEI Cities website and, if client-approved, will recommend a contact for professional school search support. This is considered a best practice with NEI coordinating and managing expert service partners to advise employees on available schools, curriculums, and answer all questions. Here is a great example of how this type of support can help:

‍

Supporting a Child Not Happy about the Relocation

NEI’s service partner worked with a family who was going on a house hunting trip to South Carolina. The family’s 10-year-old autistic son was resisting them – at every step – and was very unhappy. However, he had a new passion: martial arts. Our service partner located several martial arts studios and recommended the family trip include exposure to the different facilities and instructors. Their son tried three studios and, from that point on, he was “sold” on their relocation, even volunteering to help with decisions regarding the move.

If professional assistance is not offered by an employer, transferees are encouraged to contact destination area schools well in advance to discuss their child's needs and share copies of any individualized education plans. It is vital to speak to school counselors in the new location to understand the options a school offers.

‍

Breaking the News

Acquainting a special needs child with the idea of relocating is important. Experts encourage families to:

• Announce the move with plenty of advance warning: weeks for a younger child; a month or more for teenagers
• Make a visual schedule of the move process
• Involve the child in planning and packing
• Show where the family is headed by viewing online photos and videos of their destination’s neighborhood, school, playgrounds, parks, library, and points of personal interest to the family.

The smallest details about transportation of household goods and temporary living for the families of special needs children cannot be overlooked. NEI worked with one family having very specific needs:

‍

Exceptions for Household Goods and Temporary Living

During the NEI assessment call, an employee indicated he had a child with special needs and one of his biggest worries about relocating concerned the transfer of his medical equipment and temporary living accommodations. Our Account Executive:

• Secured a client exception to move items that were a necessity for the child, including a hoist chair, hospital bed and automated wheelchair
• Worked with the client and temporary housing partner to accommodate the family in an Airbnb home environment, rather than a corporate apartment
• Arranged for installing a temporary wheelchair ramp at the home
• ‍

Patient, Proactive and Compassionate

Relocation success is so much more than just selling a home and moving household goods – it affects the entire family and requires everyone’s buy-in for the move to be a success.

Understanding how important it is to be patient, proactive and compassionate for all relocations, but especially for those which can be more complicated, has been engrained in our culture at NEI since our founding.

‍

If you would like to discuss proactive policy changes, such as our You Allowance, or options to help families with special needs children, please reach out to your NEI representative.

Inflation Decreasing, but Insurance Increasing

On the heels of high inflation costs, homeowners across the U.S. are feeling new financial pain when receiving their annual home insurance renewal bills.  

This in part due to rising costs of materials to repair or replace homes – the values of which have risen 37 percent nationwide over the last three years – and in part due to extreme weather – hurricanes, tornados, ice or hailstorms, and wildfires.

Analysts expect further insurance rate hikes this year and homeowners are feeling the impact. As reported in the New York Times, American homeowners have seen their bills for property coverage grow by 21 percent on average since 2015 with some individual state averages, like Florida, reaching as high as 57 percent with another 40 percent increase anticipated next year!

‍

Home Insurance Rate Factors

Rates can vary significantly based on where a home is, how much coverage one needs, and personal factors of an individual, like one’s credit and claims history.

According to Bankrate.com rates for $250,000 in homeowner coverage, by state, averages from $3,659 per year in Oklahoma to $382 per year in Hawaii. Although the national average is near $1,500 per year, it is a bit deceiving due to the wide swings in premium costs.

• The top five states with the highest average rates include Oklahoma, Kansas, Nebraska, Colorado, and Arkansas.
• The bottom five states with the lowest average rates include Hawaii, Vermont, Delaware, Utah, and Oregon.

High risk has made insurance companies pull back in event-prone areas. Insurance companies State Farm and Allstate recently stopped accepting new homeowner insurance applications in California citing risks from catastrophes. In Florida, ten insurers became insolvent in the last two years due to losses and more than a dozen others either left the state or placed moratoriums on writing new business.

For those employees considering a relocation, homeowner insurance in some states could be a shock and should be considered when developing a relocation package.

What to Do?

Homeowner insurance is not required by state or federal law, but mortgage lenders will almost always require insurance to protect their financial interest and despite two out of every three homes in America reported to be under insured already, a sharp rise in costs may tempt more homeowners to cut coverage back further despite the risks.

Consumer Reports says now is the time to shop around and a good time for an insurance checkup, ask about any discounts for switching, be financially prepared for storms and have the right types/levels of coverage.

Mark Friedlander of The Insurance Information Institute suggests in a report by WUSF News that homeowners might consider bundling home and auto insurance, increasing deductibles for a lower rate and asking about available discounts. He noted that a higher deductible can lead to lower premiums, but one will be responsible to pay more out of pocket for a loss, so weigh the pros and cons.

‍

Market Monitoring for Clients

NEI continues to be diligent about client costs for every single move, monitoring market and economic conditions to ensure the selected insurance provider offers competitive rates for clients who have inventory properties.

For more information, please contact your NEI representative.

The above article is provided for informational purposes only. Please consult your tax, legal, or accounting advisors before making any decisions or transactions.

The government of Canada passed the Ban on the Purchase of Canadian Residential Property by Non-Canadians Act that went into force on 1 January 2023 and is stated to be in effect for two years. The Canadian Employee Relocation Council (CERC) submitted a proposal to CMHC outlining their concerns and requested exceptions related to the relocation industry, but all exception requests were denied.

Notable Impacts on Global Mobility Programs

1. Relocation Management Companies (RMC) incorporated outside of Canada will not be able to offer any RMC home sale programs such as Guaranteed Buy Outs or Buyer Value Options in Canada:

• NEI will work with our clients to update their home sale program offerings in Canada.

1. A modification of home sale programs to a Direct Reimbursement program will allow clients to continue offering some type of home sale assistance:

• This type of program is non-taxable in Canada. However, if the move is cross-border, there may be tax consequences for the reimbursement.

1. Employees currently working in Canada can only purchase a home if they:

• Have a valid work permit.
• Worked in Canada for three straight years out of the last four, and
• Filed a Canadian tax return three out of the four years.

Should anything change, NEI will continue to provide our clients with updates and further policy recommendations.

‍

Making Relocations More Affordable for Employees

A recent report shows 78 percent of those surveyed associate home ownership with the American dream¹, yet one in two Americans see housing affordability as a serious problem.² What does this mean for companies who need to relocate their employees?

It’s an indicator that employees may be reluctant to relocate for several reasons:

1. They want stability for their family, given the challenges of the last few years.
2. Anxiety over rapidly rising inflation, higher housing costs and increased mortgage rates.
3. Fear of moving to a higher cost of living area with many unknowns.

These are all real concerns. According to Fannie Mae, only 16 percent of U.S. consumers believe that now is a good time to buy a home. Another alarming statistic: mortgage applications in November 2022 fell by 25.2 percent compared to the previous year.³

‍

Interest Rate Impact

Last year, U.S. 30-year fixed mortgage rates had the biggest year-to-date rate increases in over 50 years. In January of 2022, the average rate was 3.33 percent – in January 2023 it was 6.58 percent!⁴ Negative buyer sentiment is often linked to mortgage rate increases.  

While today’s rates are historically low compared to the October 1981 peak of 18.45 percent, the escalation in home prices during the pandemic from mid-2021 to mid-2022 per the provided chart have greatly impacted employees’ concerns about relocating.

You can see why when you look at how a monthly mortgage for principal and interest has risen in one year. On a $360,000 30-year fixed mortgage (P&I), payments at the beginning of 2022 would have been $1,583 per month. By January of 2023, that same payment increased by $711 to $2,294!

‍

Mortgage Rate Options to Consider

NEI helps client companies prepare for situations caused by market circumstances which are out of relocating employees’ control. Each company’s unique culture, budget, and drivers are taken into consideration when making suggestions to help retain talent while making your company attractive to new talent. Options to consider include:

Mortgage Interest Differential Allowance (MIDA)

MIDA programs were developed as a solution to assist employees when purchasing a home in the new location at a significantly higher interest rate. Popular options in the 1980s and 1990s, such MIDA policy benefits are getting dusted off again for consideration by some companies. As this benefit was rarely used over the last twenty years, any industry information or statistics are obsolete.

In this program, if a specific interest rate threshold is passed (e.g., 8 percent with at least 2 percent differential on the employee’s existing mortgage), the company would temporarily pay the difference in interest between the relocating employee’s former mortgage rate and their new one for a determined amount of time. The allowance is sent directly to the lender by the company and reflected on the employee’s payment.

Some companies require employees to invest their full equity from the sale of the old home into the purchase of the new home to be eligible. In addition, caps are sometimes placed on the total differential.

MIDAs can be difficult for companies from a budgeting perspective, however if the employee moves to a different home while the benefit is in effect, the coverage ceases and the company is no longer assisting.

3-2-1 Interest-Based Mortgage Subsidy

An appealing option for companies to consider is a subsidy program that supports mortgage payments over a set period of time to help the employee ease into the higher mortgage payment. Many companies use a three year period with the subsidized rate decreasing each year until the company would no longer be subsidizing interest. For budgeting purposes, some companies prefer to define a maximum subsidy dollar amount spent per year for the benefit.

Prepaid Interest

Companies can pay for loan discount points to assist relocating employees facing higher rates on a home purchase. Using a sliding scale, one point could equal one percent of a borrower’s mortgage and is interest that is paid upfront at closing. This lowers the rate for the life of the loan.

Some corporate mobility policies have a sliding scale for points coverage tied to the current market rate. If one uses a sliding scale, it may make sense to lower thresholds. Companies might offer to pay for one point when interest rates reach seven percent, two points at eight percent, and so forth. Thresholds help keep pace with changing mortgage environments and help make moving more agreeable.

Because this benefit impacts the life of the loan, this may not the best option for an employee who could be relocated again within a few years.

‍

Unpredictable Markets and Economic Conditions

Prospective home buyers today face expensive ownership costs and prospective sellers contend with lower price expectations as well as unfavorable mortgage rates if buying again.

NEI constantly monitors market and economic conditions to proactively discuss various options with our clients that may assist them in adapting to meet volatile market challenges so recruitment and retention goals can be met.

For more information on the above programs or other needs, please reach out to your NEI representative. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

‍

Sources: 1) Mynd Consumer Insights Report; 2) Pew Research Center; 3) Fannie Mae; 4) Mortgage Bankers Association; 5) CNBC.

‍

Diverse Cultures, Challenges, Opportunities

Latin America (LATAM) generally refers to territories in the Americas where the Spanish or Portuguese languages prevail: Mexico, most of Central and South America, and in the Caribbean, Cuba, the Dominican Republic, and Puerto Rico. It covers approximately 13 percent of the earth's surface, and its population is about 600 million people. It's a region known for its diverse and rich culture, natural resources, and developing markets.

Despite economic challenges, the region continues to attract both in-region cross-border and global company relocations. The flow of expatriates into the region has increased significantly during the past ten years as political institutions increasingly become more open, democratic, and stable.

Economic activity in LATAM remains on track as the global economy gathers steam. The long-term growth outlook has LATAM's focus on priorities such as:

• Closing infrastructure gaps.
• Investing in human capital.
• Encouraging female labor force participation.
• Reducing labor market informality.
• Enhancing governance and curbing corruption.
• Furthering trade and financial integration.

As LATAM markets continue to grow, relocation activity should also keep pace with economic activity.

Yes, NEI Has Handled That!

Experienced mobility professionals usually agree that managing successful relocations in LATAM can prove more challenging than in other parts of the world. The need for patience and flexibility is paramount here.

NEI has three decades of experience consulting and servicing clients who deploy employees into, from, and within LATAM. Our own Account Executives – the single point of coordination for client global assignees –have personal experience abroad, language skills, and knowledge of cultural differences. We also partner closely with experienced on-the-ground service partners with expertise, skills, and knowledge of what's required to successfully support client relocations in each unique LATAM country.

Our LATAM experience goes far beyond common LATAM relocation "hot spots." Urban, rural, and in between, NEI has managed all such locations for our diverse client base across Mexico, Central and South America.

Consider an example of two dozen employees from the U.S. and Mexico heading to a remote, coastal area of Brazil. In addition to facing culture shock, the local market had limited housing availability, schooling challenges, and complex visa, payroll, and immigration requirements. Many in the group faced a different lifestyle than accustomed to at home and, with limited options, many also found themselves moving from large homes to very small apartments.

Because face-to-face meetings in LATAM are so critical to establishing trust, several members of NEI's global leadership team personally traveled with the client contact to Brazil to meet with local client HR stakeholders, immigration, tax and payroll partners, client expats currently on assignment, and DSPs to gain firsthand understanding of challenges and housing/living conditions near the work site.

NEI's team collaborated with client team members to streamline information, gather feedback, and find practical, on-the-ground solutions. NEI also coordinated two days of local cultural training and on-site language training at the work site. Furthermore, NEI addressed all employee relocation concerns directly and acquired answers to all employee questions from involved parties where needed.

By NEI leadership traveling directly to the site and investing ourselves in the outcome directly, strong, face-to-face relationships were built, a clear understanding of both business and cultural practices at the work site were gained, and our full commitment to the client's project success was clearly demonstrated.

‍

Setting Expectations, Being Proactive

NEI Account Executives manage relocating employee expectations right from the start of each move. Doing so for LATAM relocations is especially important. Delays are commonly at the top of the employee/family's list of concerns and need to be considered appropriately.

The reason that household goods shipment coordination in LATAM can be challenging is that there are no "open borders" between the countries, such as in the European Union. What seems to be a simple land shipment from one country/state to another can take longer than expected, and many LATAM countries have strict but fluid rules around when a person is eligible to bring a shipment into or out of the country.

For instance, a client assignee relocated from Ecuador to Argentina, but he was unexpectedly repatriated two years later. Because of his business travels and the time he spent out-of-country, Argentina restricted him from relocating his goods back to Ecuador. NEI worked with the client to provide a creative solution to allow the employee to bring back some of his goods and compensate for the goods that were left behind.

NEI also proactively prepares our clients' mobility teams for the unique nuances of each LATAM country and even individual cities within countries. When all involved parties are aware of these challenges, participants' expectations can be established early on.

Consider this intra-LATAM example when flexibility was key: An assignee and his wife, who was five months pregnant, accepted a permanent move from Argentina to Sao Paulo, Brazil. The area of the city they needed to be in had limited temporary living options and numerous severe cases of a mosquito-borne virus that was a serious concern for the expecting couple.

NEI's Account Executive was highly empathetic to the couple's requirement that any temporary living unit shown to them have mosquito netting across all windows – regardless if units had air conditioning.

Initially, this request proved difficult as 1) appropriate property inventory was scarce; 2) apartments were being booked extremely fast; and 3) it was a challenge to source netting appropriate for keeping out mosquitoes. The couple sought creative options.

Our Account Executive worked with our temporary housing service partner, who was resourceful and understood the family's concerns. Once the couple selected a property, NEI and the temporary housing partner helped them immediately identify a local, trusted mosquito abatement company. NEI quickly coordinated reimbursement, approved by the client contact, and the appreciative couple settled into Sao Paulo eagerly expecting their newborn with much less apprehension.

‍

Potential Corruption Concerns

One of the biggest challenges of doing business in LATAM has been the perception of fraud and corruption. According to the World Economic Forum's Global Risk Report, fraud remains a serious issue, though considerable efforts have been made to lessen it due to efforts of companies, governments, and the wider international community. Anti-fraud legislation, such as the US Foreign Corrupt Practices Act and the UK Bribery Act, have helped to increase awareness of the potential for corruption and fraud in LATAM.

Assignees need to be briefed on potential risks both prior to any LATAM trip and, once in the country, with their DSP. By being mindful of this, they can be prepared to understand potential in-country situations they might face and how to avoid them.

Consider the example of an assignee and her family who were relocated to a city well north of Santiago, Chile. NEI's Account Executive collaborated with the client, the immigration service partner, and the local DSP to avoid two corruption situations that were well known locally:

• Because it can take up to three months for a work permit in Chile and up to four months for a residence visa, the assignee entered under a Special Tourist Visa for Work Purposes. This allowed her to work until the work permit was received, but the immigration firm and DSP recommended to NEI that the family travel south to Santiago because of known corruption issues at the local consulate. NEI secured approval from the client for this plan to cover the family's round-trip flights to Santiago and avoid the local consulate.
• As there was also known corruption in the local driver license agency, where both the assignee and husband would have to take a lengthy driver's test offered only in Spanish, NEI and our on-the-ground DSP worked with the client so the couple could take the test in Santiago when acquiring their visas. There, the requirements were a certificate of one's latest education, a valid license, and proof of residency – and no reputation for corruption.

‍

Key Cultural Considerations

LATAM is one of the most beautiful, dynamic, and welcoming places in the world. Its diverse cultures, growing markets, and resources make it a superb area for global companies to explore and conduct business. With this diversity, it is important for companies conducting business there to remember – just as in EMEA or APAC – that all Central and South American cultures are not the same, and local modifications need to be made accordingly.

We encourage assignees to fully appreciate cultural differences with pre-move training on items such as how citizens in LATAM countries view time. In today's world, understanding time orientation in the destination country is critical to business situations.

It is recommended in LATAM to arrive on time for meetings, but also be prepared for schedules to dissolve and agendas to go out the window. If a dinner is arranged at a restaurant for a specific time, often after nine or even 10:00 pm, expect that the meal often will not start until an hour later after drinks and appetizers.

Likewise, LATAM communications can be much more "indirect" than some are used to, and there are plenty of non-verbal signs one should be mindful of.

Business casual wear is generally not appropriate in LATAM. Rather, business meeting attire is considered a cultural indicator signaling that "if you look powerful, you will be treated as powerful." Women typically dress in fashionable business suits, men in suits and ties.

As in EMEA or APAC, more young professionals in the region have English competency, but English language competency should not be assumed. NEI strongly encourages pre-departure language training be maximized as it can result in faster integration on LATAM assignments and maximize each assignment with a return on investment.

Finally, NEI also advises clients and assignees that, inmost LATAM cultures, family is one of the most important considerations. On our calls with assignees, NEI Account Executives adjust the communication style on the call to ensure they are connecting with the employee and asking the right questions which may lead to addressing any unspoken issues about the family's expectations. This connection fosters an open discussion to ensure their needs are completely met.

‍

Security Spotlight

Safety is also a frequent concern and pre-move discussion topic for moves into or within LATAM. NEI takes security extremely seriously, but despite the best security briefings and precautions, unfortunate events can happen anywhere.

Like other regions of the world, assignees/families living or traveling abroad need cultural awareness, risk planning, security awareness, and heightened situational awareness.

For instance, some LATAM countries are going through challenging political situations. This is especially prevalent in Venezuela where ground travel outside of Caracas should only take place during daylight hours. This needs to be taken into consideration for those who transit to work outside of the capital city. Additionally, shipping trucks do not travel at night, increasing transit times.

NEI fully appreciates that assignees can have emergencies at any time of the week – not just Monday through Friday. Consider the situation of an assignee in Brazil driving home from work on a Friday night. Stopped at a traffic light, he was held up by a gun-wielding assailant demanding his wallet. The employee was fortunate to drive away unhurt and keep his cell phone, but his cash, credit cards, and license were gone. Unable to connect with colleagues at his local office, he called his NEI Account Executive at her home in the U.S.

NEI immediately connected the assignee with International SOS that evening for assistance speaking with his local bank, as he was not fluent in Portuguese. He was offered temporary housing at a nearby hotel and provided emergency cash. While he turned down the hotel offer, he greatly appreciated the after-hours care and concern NEI showed for his situation.

‍

Helping You Achieve Your LATAM Goals

NEI provides expert consultation on LATAM mobility practices, including billing and currency restrictions that vary between countries.

Our goal for each assignment is Service Exceeding Expectations and to reduce employee frustration, anxiety, and the number of surprises or delays a family might face. Helping employees focus on their new job responsibilities, assimilate seamlessly, remain productive, and contain costs are our top priorities.

NEI can help overcome unique legal, logistical, and compliance challenges and has the right balance of experience, language skills, cultural understanding, and local service partners and experts at local regulations to successfully do business in this exciting region, to make moves less complex, more cost-effective, and more rewarding for all involved.

‍

Should you have any questions on how we can help your relocation activity in LATAM, please contact your NEI representative or Mollie Ivancic, VP, International Services.

‍

Upcoming Changes from the US IRS for 2023

With the new year comes new caps, tax tables and allowances from the U.S. Internal Revenue Service (IRS). Listed below are the areas related to relocation for 2023.

‍

Standard Mileage Rate

The U.S. Internal Revenue Service (IRS) announced an increase of the optional standard mileage rates in mid-2022 to 62.5 cents per mile for the second half of 2022. On 1 January 2023, the rate increased again to 65.5 cents per mile driven.

Most companies follow the IRS guidelines to calculate the mileage reimbursements for final move expenses when driving to the new location.

This rate increase will affect mobility programs:

• If you are an NEI client who has elected to follow IRS guidelines for your expense administration, nothing is needed at this time.  NEI will incorporate the mileage change into your expense reimbursement policy, as agreed.
• If you are an NEI client who has not elected to follow the government established mileage rates in the past, NEI will continue to follow your prescribed rates unless you advise us that your company is changing the rate. Please contact your NEI Client Relations Manager directly, if you would like to confirm or update your current rate.

‍

Supplemental Rates

As some companies gross-up non-salary relocation benefits at supplemental rates for federal and state levels, most companies also withhold at supplemental tax rates for non-grossed items. Keeping on-top of supplemental rates and explaining the potential tax implications to your relocating employees can aid them in knowing what to expect when taxes are due.

Federal supplemental rates remain unchanged, holding steady at 22 percent withholding for supplemental wages under $1 Million and 37 percent withholding for non-salary wages over $1 Million.

For easy reference, we are providing the current state supplemental rates in the table below:

‍

Federal Income Tax

While federal income tax rates remain unchanged from the 2022 tax year, 2023 income tax brackets have shifted dramatically to accommodate an over 40-year high inflation rate. Additionally, the 2023 standard deduction amounts have increased.

Due to these adjustments, most relocating employees can expect a modest reduction in their tax-liability. New grads stand to benefit the most from the changes, as the majority of graduates earned less than a full year’s wages when starting in the summer or fall.

See below for 2023 adjusted tax brackets which reflect an approximate nine percent increase from the prior year ranges:

Standard deduction amounts have also increased:

‍

Social Security Wage Limit

The Federal Insurance Contributions Act (FICA) requires companies to withhold three separate taxes from the wages paid to employees.  The largest tax of these three is the Social Security, also known as the Old Age, Survivors and Disability Insurance Program which is set by statue at 6.2 percent for both employees and employers to pay on the first $160,200 of wages in 2023.   This is up from $147,000 in 2022.

The second element referred to as the Medicare Tax, is also split evenly between employees and employers, is not subject to a wage limit and remains at 1.45% for both parties.    There are no changes to the remaining element called Additional Medicare tax.   This rate is 0.9% for the employee with wages over $200,000 for single filers and $250,000 for married filing jointly.   The employer does not get charged for this additional tax.

In Summary

As your relocation partner, NEI is here to explain year-end tax questions for your relocating employees. If you have any question about these changes, please contact your NEI Client Relations Manager at 800.533.7353.

‍

‍This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.

NEI Global Relocation is pleased to announce that our Service Organization Control (SOC 1 and SOC 2) audits achieved ZERO findings for the second year in a row and in five of the past six years.

SOC 1 – Compliance with Financial Laws and Regulations to Combat Fraud

A SOC 1 audit is for service organizations and assesses the internal controls and procedures which are in place to protect client data and ensure controls around processes are operating as designed – more specifically related to financial reporting. A SOC 1 report validates the organization's commitment to delivering high quality, secure services to clients.

This report provides customers with an independent opinion so they can be confident that financial laws and regulations comply with corporate responsibilities to combat corporate and accounting fraud.

“This is an amazing accomplishment! We are so proud of our employees who always stay focused on the details and following our established processes,” said Michelle Moore, NEI Chief Global Mobility officer. “As a service organization, there is no higher compliment than to go through an extensive SOC 1 audit with ZERO findings. Thank you to all our employees for recognizing the importance of being consistent with processes and accurate with data.”

The AICPA clarifies that this type of SOC report for service organizations provides a level of assurance to the organizations’ clients that financial reporting is practiced in accordance with the Statement on Standards for Attestation Engagements SSAE No. 18.

SOC 2 – Availability, Security, and Confidentiality

The SOC 2 report addresses a service organization’s controls that relate to services, operations, and compliance. NEI’s SOC 2 reports on the criteria of availability, security, and confidentiality – that which is often categorized under data security.

“We are very excited to receive this kind of recognition with our SOC 2 audit,” said Greg Keith, NEI Chief Information Officer. “The fact that we have achieved “zero findings” so often means NEI employees are performing extremely well with our data security processes and controls. Privacy and liability concerns have increased the demand for assurances of confidentiality and privacy with customer data. These results clearly demonstrate our commitment to protecting confidential information.”

The SOC 2 report is connected to the SSAE 18 standard and was created in part because of the rise of cloud computing and business outsourcing of functions to service organizations.

In addition to our excellent SOC 1 & 2 Type 2 ZERO findings results over the years, NEI was recognized with more #1 rankings than any other relocation management company in the 2020, 2021 and 2022 Trippel Relocation Managers’ Surveys.

Should you want more information about our SOC 1 and 2 Audit results, please reach out to Michelle Moore, NEI Chief Global Mobility Officer or Greg Keith, NEI Chief Information Officer. We are always here to help.

‍

Returning to normal causes an increase workload for the IRS

The Internal Revenue Service’s (IRS) workload has been increasing for years as its headcount has been contracting. Like other employers facing labor shortages, the IRS is having its own difficulties finding qualified job applicants, but there’s been signs of progress:

• Congress provided the IRS with $80 billion in additional funding over the next 10 years to increase hiring. More than 5,000 new customer service representatives were hired in October 2022 with training expected to be completed by February 20, 2023.
• The 4.7 million original individual returns backlog (Forms 1040) in January 2022 was reduced to about 400,000 by December, but is still anticipated to impact customer service.

‍

Difficulty Reaching IRS Customer Service

Of the 173 million calls the IRS received during FY 2022, only 22 million or 13 percent got through to an IRS employee after an average wait time of 29 minutes. As a result, most callers could not get answers to their tax-law questions, receive help with their account problems, or speak with an employee about compliance notices.

Telephone service for tax professionals hit an all-time low of 16 percent to a Practitioner Priority Service (PPS) hotline after an average 25-minute wait time for those who got through.

What to Do

If you need to call them, some say they have better results reaching the IRS in the morning, starting as early as 7 a.m. Eastern time, and Wednesday through Friday seem to be the best days to reach a representative. However, one should still expect long waits.

The IRS admits phone service wait times are often longer on Mondays and Tuesdays, on weekends and the closer it gets to April’s filing deadline. It is important to:

• be patient,
• be polite, and
• keep good records of contacts, attempted contacts, and one’s discussions.

The IRS has encouraged people to establish an online account at www.IRS.gov to help access information quickly. The IRS has invested in online capacities to provide taxpayers with a quick and easy way to access information so the calls for more complicated issues can be answered in a timelier manner.

If a call is necessary, the IRS encourages people to have all the information they need before filing a complete and accurate return. Organize and gather 2022 tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers and this year's Identity Protection Personal Identification Numbers valid for calendar year 2023.

Relocation Families

For relocating families, it is important to understand how relocation expenses are reported on various countries’ tax forms from the company. In most cases, NEI provides information about relocation-related expenses directly on the relocating employee’s NEI website and have access to any summary reports of tax related expenses in this one place.

NEI helps answer questions related to relocation expenses as reportable income. Employers can help manage employee expectations by reminding employees who are “surprised” about the tax implications from their relocation that:

• The policy they were provided indicated the tax implications.
• The details of their expenses are available on their NEI website.
• If they still have questions, they can reach out to their NEI Account Executive for more information.

For those moving cross-border, where two countries might be involved, tax expertise is always recommended, but here is some general information:

• One-way moves: Most companies offer a tax briefing to help the employee understand the nuances of the tax regime to which they are moving. Some companies might help with the first year of professional tax preparation fees.
• Assignments: It would be typical for companies to provide the tax preparation services for home and host countries.

In most cases, NEI coordinates with the company’s payroll or international tax provider to ensure they have all mobility expense information from the assignment to appropriately include in the home and host country payrolls.

Tips for Filing Taxes

“This filing season is the first to benefit the IRS and our nation’s tax system from multi-year funding in the Inflation Reduction Act,” said Acting IRS Commissioner Doug O’Donnell. “With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year.”

The IRS encourages everyone to have all the information they need in hand for a complete and accurate return.

As with any tax year, filing for your taxes with accurate information is the best way to eliminate potential frustrations down the road, whether you are reporting child tax credits received or relocation expenses. NEI can’t help with the former, but we certainly can assist with the latter. Help for questions is just a call away…and NEI answers our calls!

The above article is provided for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors before making any decisions or transactions.

‍

The Art of Housing Supply and Demand

Low home inventories, high housing prices and interest rates have slowed younger, first-time buyers from both becoming homeowners and the potential wealth-building aspect of owning a home. Consider that:

• About 65 percent of American households own their own home.
• Between 2010 and 2020, the total value of owner-occupied homes in the U.S. rose from $8.2 trillion to a staggering $24.1 trillion, according to the National Association of Realtors.
• Unlike rent, a homeowner with a fixed-rate mortgage provides more stability in knowing the principal and interest payment will not change, regardless of inflation.
• First-time homeowners may qualify for tax credits.

Historically, first-time home buyers made up about 40 percent of sales; but that percentage has dropped this year.

‍

An Up Hill Climb and a Moving Target

Increasing mortgage interest rates and escalating home prices have become a high hurdle for home buyers, especially for first-time buyers. Now, they are forced to stretch farther. Consider that:

• The average rate on the 30-year fixed mortgage -- the most popular product today –started this year around 3 percent and is now approaching 7 percent.
• According to Realtor.com, in 2021, Millennials in the 23 to 31 age range paid a median price of $250,000 – today it is $280,000;  and those 32 to 41 paid a $315,000 median purchase price in 2021 vs. today’s median of $350,000.
• Per Redfin, the typical homebuyer’s monthly mortgage payment has climbed $337 (15 percent) over the past six weeks to a new high of $2,547.

As qualifying for loans have become more stringent to secure, there’s been a significant uptick in adjustable-rate mortgages (ARMs) which have lower monthly payments. At the start of 2022, ARMs made up just 3.1 percent of loan applications. More than 12 percent of borrowers applied for ARMs in June and July – the highest percentage of ARM applications since 2007 -- according to Zillow.  9.1 percent of September’s loan applications were also ARMs, according to the Mortgage Bankers Association.

Taking out an ARM may be seen as a “gamble” on what rates will do in the future. Though rates could decrease during the adjustable-rate period of the loan, monthly payments would be higher should they increase.

‍

Cash is King

Economists expect home prices will start slowing, and even dropping, in some of the most overheated markets in the country over the next couple of years.

Though sellers may lower asking prices, their homes may be listed on the market longer. This could benefit buyers who can afford to wait, but bidding wars put first-time homebuyers at a disadvantage since they usually have limited savings compared to investor buyers who are offering cash or other buyers who benefited from strong markets.

In fact, according to Redfin, homebuyers who offered all cash were more than four times as likely to secure a deal as those who did not, making it the most effective approach.

Though bidding wars may have slowed in competitive U.S. markets, they leave first-timers at a disadvantage. To secure a property, some buyers opt out of typical inspections or protection clauses. “A buyer’s odds of winning a bidding war,” according to Redfin, “increase significantly by waiving the financing contingency or conducting a pre-inspection”.

Buyers who used those strategies “were 31 and 25 percent more likely to win than those who didn’t, respectively.”

However, waiving inspections can have consequences. If an employee moves on their own or relocates with their employer again later, they may be required to complete those repairs out of pocket. NEI provides counsel to help avoid future property eligibility concerns such as excessive acreage, environmental issues or building / material defects to help mitigate future risk.

‍

Helping Relocating First-Time Buyers

Given how volatile markets have been lately and because nobody’s housing market predictions are sure things, NEI counsels relocating employees about the emotional ups and downs when buying / selling a home and the necessary negotiations today. We help clients prepare for possible exceptions due to market circumstances out of relocating employees’ control and to brainstorm unique solutions that fit each company’s culture, budget and drivers.

Companies can also help relocating employees who are renters who want to fulfill their dream of homeownership. NEI increasingly sees more companies offering relocating renters destination home closing costs reimbursement and direct-billed mortgage partner assistance.

Another method companies can use is contributing to home purchases for first-time homebuyers by offering funds towards new home down payments or closing cost assistance or other incentives in the form of forgivable loans that don’t have to be paid back unless the employee leaves the company within a certain period, perhaps two or three years.

‍

More of the Same

New residential construction slipped again in June as challenging financial conditions discouraged potential buyers. With home construction constrained by labor and supply chain issues, the housing problem isn’t going away soon.

“While we do expect home price growth rates to decline, we don’t expect prices to fall much at the national level. For home buyers trying to determine the best timing this year, the main benefit of waiting is that there may be less competition as supply starts to build up,” says Chen Zhao, Redfin’s economics research lead.

If you would like to discuss this topic further, please reach out to your NEI representative at any time.

‍

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.