Domestic relocation practice is often complex given the wide range of employees and diverse locations. As a result, many of our clients find themselves evaluating extensive questions to define their domestic program and benefits. Is the employee a homeowner or renter? Where are they coming from and where are they going? Depending on the answers to these questions, employees may expect a certain level of support with their allowance. This can lead to difficult conversations since housing is particularly personal and varies greatly.
Companies can also deal with certain expectations. For example, someone moving to San Francisco will likely expect a large allowance to offset the high cost of living in this location. However, how will you provide this support fairly if the employee is coming from Sioux Falls, South Dakota versus New York City?
If you are managing a high volume of moves each year, these allowances can result in high costs and time-consuming cases. Domestic mobility is often asked to get involved in these individual allowances. AIRINC recently supported a company to streamline their domestic program allowances by leveraging our Geographic Differential Index.
Geographic Differential Index (GDI)
AIRINC’s Geographic Differential Indices reflect the gross index between two domestic locations. Not only do these indices take into account annual homeowner costs between locations powered by Zillow data, they also consider tax and goods and services cost differences between cities and states. AIRINC’s data considers both home location and the destination, so if the employee is starting from a high-cost or low-cost city, the allowance will reflect their origin in addition to their host. This helps ensure that a company is accounting for home location cost differences to avoid over or underpaying employees moving from different locations.
AIRINC partnered with a company that has hundreds of domestic moves each year. Previously, domestic transition support was based on host location only, so many employees saw relocation as an incentive, rather than a budget designed to offset costs. Our project goal was to streamline and create allowances that considered both home and host location. To do this, we analyzed the company’s domestic locations and provided indices that apply to employee salaries based on the route combination. The resulting database provided the company with an approach based on regularly updated data to reduce administration and maintain a market relevant benefit.
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