WERC recently shared the results of a survey asking corporate and government mobility professionals how they’re responding to the National Association of Realtors (NAR) proposed settlement, specifically around policy changes related to U.S. buyer broker compensation.
As the impact of this proposed settlement develops, WERC wanted to continue the conversation and spoke with Christopher Chalk, global mobility leader at Graphic Packaging International LLC, and a key individual in helping create the WERC survey.
Below, he shares his thoughts on how results speak to current trends in corporate culture, the role relocation management companies (RMCs) will play in this evolving environment, long-term changes we can expect to see, and more.
What were the primary motivations behind conducting this survey? What insights did you hope to gain from it?
There are some highly intelligent individuals in this industry with unique challenges in each of their programs. By collecting their diverse knowledge and insight, we can start to formulate overall best practices and new industry standards that will be adjusted to meet specific program needs and company budgetary objectives.
The survey indicated that almost all organizations offer benefits for both home sales and purchases. How do you interpret this finding, and what does it say about current mobility practices?
This is a reflection of corporate culture in general and, to a lesser extent, competition for talent. How many people would go on a business trip if their company expected them to pay for their hotel room or some other portion of the trip? A relocation is the ultimate business trip. Companies are still asking people to relocate, and they understand the sacrifice and stress this creates. Hopefully, with this in mind, they are keeping their people relatively whole.
Companies that do not offer home sale or purchase benefits as part of their relocation program are probably much less concerned (or even aware of) the NAR proposed settlement, due to the diminished potential impact for them.
The survey found that nearly half of organizations plan to provide a tax gross-up for additional tax liabilities following the NAR proposed settlement. What are the implications of this for both organizations and transferees?
This ties into culture again—if you are going to ask employees to subsidize their own relocation, you better explain that on the front end, or you are going to negatively impact employee satisfaction.
All mobility programs are struggling to predict the impact of 1,000 variables at once, and the cost impact to the business. Making the decision to support buyer agent compensation but not gross-up is a shared risk approach to the NAR proposed settlement.
Given that almost all organizations currently work with RMCs and most are in contact with them regarding the NAR proposed settlement, how crucial is the role of RMCs in managing these changes?
RMCs have a new opportunity to demonstrate their thought leadership and overall value to clients because of the NAR proposed settlement. The training they provide to their relocation counselors is extremely critical. Relocation counselors and real estate agents, who are receiving similar critical training from relocation directors, will have a huge impact on how the NAR proposed settlement plays out.
I believe that RMCs and corporate clients that adopt a wait-and-see or manage-through-exception approach are not wrong and will need to track as many data points as possible to make future informed decisions around policy changes. In general, RMCs are doing their absolute best to guide clients based on the information we have today.
What long-term impacts do you foresee from these policy changes on organizations’ overall talent mobility and relocation strategies?
The next six months will reveal the direction of the long-term impacts we all know are coming. Referral fees and marketing credits back to corporate clients will change, and we will see pricing structure changes from RMCs as a result. Specifically: A referral fee going to an RMC from an agent that a relocating employee was required (by policy) to use and now pay—potentially out of their own pocket—and was selected by the RMC as mandated by the corporate client, is not a good look.
Corporate clients are actively looking for ways to shift, reduce, or offset NAR-proposed settlement costs. This may include paying a management fee to the RMC for household goods coordination or holding their own household goods contracts, rather than having the RMC keep discount points. Management fees are not taxable income to the relocating employee, whereas household goods fees are today.
Other approaches we will see include reducing miscellaneous expense allowances (MEAs). For example, instead of a $5,000 MEA, we may see a $3,000 MEA with $2,000 toward the buyer’s agent compensation, or as a home purchase bonus if the buyer’s agent compensation is covered by the seller. The elimination of home sale bonuses is another policy component I expect to see reduced.
What do you think are the most significant takeaways from this survey?
Two data points come to mind:
- The approach on how to handle each aspect of the NAR proposed settlement impact was mixed, with no single approach showing as a standout.
- More than 70% of respondents have over 16 years in talent mobility, and 55% have more than 20 years.
These two takeaways combined tell me that the talent mobility manager has an extremely complex role. We will continue to show our value to employers with customized approaches to meet the needs of specific programs and employers, similar to the impact of COVID-19.
The NAR proposed settlement impact will be dynamic. It impact programs differently and will require us to review data to predict future trends to adjust policy. Continuing with the COVID-19 analogy, I would also really like someone to develop a vaccine!
How do you envision the findings of this survey influencing future research and policy development in the field of employee relocation and talent mobility?
In the face of tremendous uncertainty, this survey can be used to support talent mobility managers as they present policy changes and procedural adjustments to their leadership. There is no such thing as a one-size-fits-all mobility policy—and there never will be—but understanding that companies are collectively responding to emerging conditions is tremendously valuable. Six months from now, it would also be interesting to learn what percentage of survey respondents had to adjust their original position due to emerging trends and data.
WERC will continue to engage with the broader membership on this topic, with potential future surveys to come. Roughly two months after the NAR process changes go into effect on 17 August, a concurrent workshop session at GWS (22-25 October) will take place, focusing on how to navigate policy and process changes.