Companies relocate employees for many reasons: to move an employee to an office where her particular skills are needed; to support the hiring process when a new employee is not where the company would like him to be; to expose an employee to a particular business activity or function; and to support a company move of a facility or operation to a new location. For most companies, even large ones, relocation is not an everyday activity. Nevertheless, when the need arises, it becomes extremely important to complete the task quickly and efficiently so that employees can be productive at their new location.
This is the primary reason why corporations typically outsource the relocation process to a Relocation Management Company RMC. Therefore, the fundamental value-add of an RMC is to minimize the downtime of the relocating employee. Relocation is Complex, Time-Critical, Personal, and Expensive Complex : Employee relocation can involve any or all of the following: selling a home, buying a home, renting an apartment, exploring a new area, finding schools for children, moving and storing household goods, locating temporary housing, traveling to and from the new location, and more.
In doing this, a company covers most if not all moving expenses. Employees should keep all receipts to show to their employer to be properly reimbursed. This type of relocation refers to when a company hires an outside relocation service to help transferees find moving services, transportation and storage options. In this case, the employer does not have direct involvement in the relocation process.
Direct billing is a type of relocation package closely related to—and sometimes used with—reimbursement and lump-sum packages. This package allows employers to direct bill moving services and other relocation aspects for their employees. This type of relocation package refers specifically to employees who are transferring to company locations in different countries. In this type of relocation package, employers cover expenses beyond moving and transportation.
They might help employees and their spouses obtain work visas and provide paid trips to their new work location to find housing prior to their move. They also might help employees with cultural assimilation once relocated. There might be certain aspects you consider important to your relocation experience that is not included in your relocation package. In this situation, you should be able to effectively negotiate your needs with your company. The following section reviews how to effectively negotiate your relocation package with your employer:.
Before negotiating your specific relocation needs, identify what is currently offered to you as a part of your relocation package. Go over what is covered, how you will be reimbursed or what type of insurance coverage is offered during the moving process.
By taking the time to review the terms of your relocation package, you can identify potential areas that you feel are not adequately covered by your company. Consider additional items that might be beneficial to your relocation experience. If you are allotted one paid trip to search for housing but there are no childcare reimbursement options, this is something you might want to discuss with your employer so you can be reimbursed for the expense of someone watching your children while you are house hunting.
After reviewing what your company offers you in your relocation package and identifying additional items that would be helpful to your situation, you can now review relocation packages offered by industry competitors to their employees. Do they include childcare as a reimbursable expense? How organizations administer relocation packages:. Employees have the flexibility to choose how and when they spend their relocation benefits and the ability to customize this for their own unique needs.
Ok, so, maybe not. What does tax gross-up mean? A gross-up is when you increase the total amount of a payment to allocate for the taxes you must withhold from said payment. When you then withhold taxes from the payment, the net amount should equal the amount you agreed to.
This number varies from employee to employee, executive vs. Rather than knowing what everyone else spends, it can be more helpful to create a price based on what you are willing to offer in your relocation package. More money and career advancement are the obvious incentives you can offer a candidate, but to stand out amongst the competition, you should consider offering personalized relocation services.
Because each recruit will be unique! Even a modest effort in this direction, such as discussing circumstances and offering a lump sum for a highly personalized moving experience , could make the difference.
Play your cards right and a relocation package should be a win-win for everyone. To choose your supplier, you only need to keep these three things in mind:. Your values Know your values and mission to align with a company that reflects the same. Aim to select a company that values and champions the operations you do within your own business. Flexible options and price Every employee will need and want something different. Employers know that employee retention rates drop after relocation.
Employees who adapt well find themselves in new locations with new opportunities that can draw them away from the employer. Employees whose moves go badly, or who conflict with their new bosses or clash with their new locations, can end up leaving the jobs they moved to take. Human resources departments frequently manage organizations' employee relocation programs.
Relocation is no longer a matter of human resources or a hiring manager approving moving expenses. Relocation now requires a strategic focus on the company's business and finances to ensure that the relocation program advances the company's strategy. HR must work with other parts of the organization to ensure relocations are managed consistently.
Human Resources must consider the total program strategically, financially and operationally. As with any human resources program, evaluations and metrics are essential to proving the program's strategic value. Written policies establish clear rules to ensure that all employees are treated consistently and fairly. A written policy prevents favoritism and pressure from managers to provide different treatment for their own hires or preferred employees. A policy also lays out information so that employees who relocate know exactly what is included and can make informed decisions.
Relocation policies generally have three levels of coverage, depending on the group to which an employee belongs:. Employers adopt policies to fit their circumstances and could have policies for all three levels. Employers want to offer attractive relocation packages to executives and high-level employees, but are faced with the high costs associated with such packages.
The key question is whether the financial gain of hiring or transferring an employee will outweigh the cost of the relocation. There is considerable pressure on HR to trim costs and tweak polices so employees can still be relocated to where they are needed. More companies are offering flexible relocation packages to contain costs by offering core relocation benefits and optional benefits based on employee need according to Aires, a relocation company.
There is no magic formula when it comes to relocation packages, but organizations must consider certain elements when constructing a domestic relocation program. Relocation monetary incentives are generally the "tipping point" in convincing employees to relocate. The health of the job market will influence what incentives employees need to make the decision to move.
Cost-of-living adjustments and relocation bonuses are common. Organizations in states with high tax rates may need to use these incentives to lure employees to relocate. Relocation programs usually allow site visits so the employee and possibly a spouse can see the new office, tour the community, and learn about schools, housing and other local services.
Policies can set the lengths of these visits, but a minimum of two days is common. Employer relocation programs include help with marketing a home an employee needs to sell or with arranging for purchase of the employee's house if it does not sell by a specified time. Other help that policies can offer include legal and financial help for canceling leases or assistance with getting an employee pre-qualified for a mortgage.
These incentives may make the difference between an employee accepting or rejecting the relocation offer. More about the impact the economy has on housing and relocations is in the subsection "Housing markets. Employers may offer reimbursement for expenses like house-hunting, temporary living expenses and transportation of household goods. Some organizations forego reimbursement and instead provide lump sums, paid upfront to relocating employees to cover all expenses. Employees keep whatever might be left over or pay any expenses the lump sum does not cover.
Lump sums mean human resources does not have to haggle over expenses or keep detailed records of an employee's every receipt. Organizations invest a lot on relocations and frequently lose those investments when employees leave shortly after a move. A growing number of employers include a payback clause in relocation agreements to recoup those costs. Under a payback clause, a relocated employee agrees to reimburse the organization all or part of the employer's expenses for the transfer if the employee leaves the organization within a specified period, usually a year to 18 months.
Industries with high turnover rates tend to use these clauses more frequently. Some employers choose not to include payback clauses, fearing the clauses may be a disincentive to relocate. Employers must confirm that state law permits payback clauses before implementing this practice. Families relocating need plenty of support from the employer.
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