When can a domestic COLA enhance your relocation program?

    Apr 15, 2020 @ 03:16 PM / by Christopher Bloedel

    COLA 3

    Analyzing the benefits of Domestic COLA [Cost-Of-Living Allowance]

    Worldwide ERC has consistently cited high cost-of-living as one of the main reasons why employees are reluctant to relocate. This issue can have real consequences on your company’s ability to recruit and retain talent in a highly competitive labor market. You may be addressing cost differences in your global assignments, but what about in your domestic relocation program?

    Fit with Philosophy

    Do we have locations on the coasts? Are we having trouble getting talent from lower cost areas to come to headquarters? Is talent walking out the door because the financial transition during a move is difficult? If the answers to these questions are ‘yes’ then a domestic COLA program could be beneficial.

    Fit with Budget

    The bottom line is…THE BOTTOM LINE. Ultimately a domestic COLA makes sense if your company is able to fund it and it yields the positive impact on talent that you’re expecting.

    The Complete COLA 

    We all know that San Francisco is more expensive than Tulsa, right? The key is knowing how much more. It’s important to look at the total cost-of-living impact between two locations. This should include an analysis of housing, taxes, goods & services, and transportation. Examining several different cost factors can help balance the impact of one or two elements.

    Translating a Number to a Program

    So you have a COLA number, now what? Many companies will pay the cost-of-living differential as a separate line item on an employee’s paycheck so that it’s not directly tied to base salary. This allows the company to change or completely remove the COLA. Typically companies will not tax protect a domestic COLA payment and will pay the benefits out over a three year period.

    Need help with domestic cost-of-living analysis?

    Reach out today to discuss how we can help design and implement a COLA approach to enhance your ability to attract and retain talent. You can reach me directly here or read more about our Domestic approach by clicking below:

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    About AIRINC

    Listen | Partner | Deliver.  For over 60 years, AIRINC has helped clients with the right data, cutting-edge technology, and thought-leading advice needed to effectively deploy talent worldwide. Our industry expertise, solutions, and service enable us to effectively partner with clients to navigate the complexity of today’s global mobility programs. As the market continues to evolve, AIRINC seeks innovative ways to help clients address new workforce globalization challenges, including mobility program assessment metrics and cross-border talent mobility strategy. Our approach is designed with your success in mind. With an understanding of your goals and objectives, we ensure you achieve them. Headquartered in Cambridge, MA, USA, AIRINC has full-service offices in Brussels, London, and Hong Kong. Learn more by clicking here.


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    Topics: Housing, Expatriate Housing, Insights and Experience, Salary Evaluation Tool, International Housing Guide, Domestic Mobility Programs, Site Summaries, Domestic Moves

    Christopher Bloedel

    Written by Christopher Bloedel

    Christopher rejoined AIRINC in June 2019 (he previously was with the company from 2011 to 2014) as a Relationship Manager and is responsible for engaging and consulting with clients regarding global compensation issues. Prior to AIRINC, he worked for over 20 years in the mobility industry with consulting and relocation management companies in various research, account management, and business development roles. His experience includes mobility policy review and consultation for various Fortune 500 companies as well as active roles in national and regional mobility groups such as Worldwide ERC and the Midwest Relocation Council. He has a Bachelor's Degree in Economics from the University of Wisconsin, Parkside and works out of his home office in Wisconsin.