A well-designed relocation policy is crucial for companies looking to transfer or hire employees from out of town. Relocating employees involves significant costs and coordination, so having clear guidelines and procedures in place is key to ensuring a smooth process. As a relocation professional advising a company, here are my tips for creating an effective relocation policy:
Define the Scope
First, outline who exactly is eligible for relocation assistance. Typically this includes:
- New hires moving to work at your location.
- Existing employees transferring to a new office/location.
- Employees returning from an international assignment.
You’ll also want to define any limiting factors like:
- Minimum distance required for relocation support (e.g. 50+ miles from current residence).
- Maximum relocation allowance for each employee tier/level.
- Timeframe when relocation expenses must be incurred.
Clearly setting eligibility parameters upfront prevents confusion down the line.
Choose the Relocation Package Type
There are a few main options for structuring relocation packages:
Lump Sum Allowance: The company provides a fixed dollar amount based on factors like employee level and family size. The employee manages the funds directly.
Reimbursement: Employees pay for relocation costs initially, then submit receipts for reimbursement by the company up to a maximum.
Managed Relocation: The company works with a relocation management firm to coordinate and pay for qualified expenses directly.
A managed program offers the most oversight and flexibility, but costs more to administer. Lump sums or reimbursement plans place more responsibility on the employee. Evaluate your budget and needs to decide which approach works best.
Determine Covered Expenses
The relocation policy should spell out every expense that the company will pay or reimburse for eligible employees.
Typical categories include:
- House hunting trips – Temporary housing – Home sale assistance
- Moving household goods – Final travel to new location – Car shipping – Pet relocation
- Utility installation – Mortgage assistance – Temporary storage – Miscellaneous allowances
Also indicate what isn’t covered, like luxury items or upgrades. Establishing clear guidelines on expenses will streamline administration and prevent misunderstandings.
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Outline the Process
Provide a step-by-step overview of the relocation process for employees. Key steps often include:
- Employee submits relocation request form.
- HR reviews request and confirms eligibility.
- Relocation package details are communicated to employee.
- House hunting trips and temporary housing arranged.
- Movers and real estate agents selected.
- Travel to new location booked.
- Reimbursement forms and receipts submitted.
- Resettlement allowance provided.
Having a defined roadmap sets consistent expectations and ensures nothing falls through the cracks.
Set Repayment Requirements
To prevent abuse of relocation packages, many companies require full or partial repayment if the employee leaves shortly after relocating. Typical clauses include:
- 100% repayment if employee resigns within 12 months.
- 50% repayment if employee resigns within 12-24 months.
- Pro-rated repayment schedules work too.
Seek legal guidance on developing a repayment agreement that protects the company without being overly punitive.
Communicate the Policy
Once finalized, distribute the written relocation policy to hiring managers, your relocation management firm, and current employees. Make sure the policy is easily accessible on the company intranet or HR site.
Providing clear communication upfront prevents confusion and ensures equitable support for all transferring staff.
Track Metrics
Analyze metrics like:
- Number of transfers/new hires utilizing relocation annually.
- Average spend per relocation.
- Employee retention rates post-transfer.
This helps spot trends and fine-tune the program to keep costs under control while offering the support employees need.
Allow Flexibility
While consistency is important, retaining some flexibility is wise too. For example, discretionary exceptions for cases like highly sought-after executive hires. Or additional temporary housing for employees with children changing schools mid-year.
Having options to handle unique situations helps attract top talent and support employee needs. Just be sure to document any exceptions approved.
Creating and optimizing a relocation policy takes time. Following this guidance will help craft an effective program tailored to your company’s specific requirements and budget. Please reach out with any other questions!
Create a Tiered Relocation Strategy
One size does not fit all when it comes to relocation benefits. Implementing a tiered approach based on employee level, experience, or position creates a more equitable and cost-effective program. Consider creating distinct tiers for different levels of employees.
Executive and C-Suite employees typically receive comprehensive packages including extended temporary housing, white-glove moving services, home sale/purchase assistance, and extensive family support services.
Mid-level management might receive moderately comprehensive packages with core moving services, limited temporary housing, and some home finding assistance. Entry-level employees and new graduates usually qualify for basic packages with essential moving services and perhaps a modest lump sum for incidentals.
Each tier should clearly outline maximum benefit amounts, specific services included, time limitations for using benefits, and any special considerations based on family size or homeownership status.
Tailoring benefits based on position not only controls costs but also aligns with standard compensation philosophy where benefits increase with seniority. Be sure to document the criteria for each tier to maintain transparency and fairness.
Provide Adequate Family Support Services
Successful relocations depend on more than just the employee’s adjustment – family satisfaction often determines whether the move succeeds long-term.
A comprehensive family support component should be a cornerstone of your relocation policy. The most effective programs recognize that relocating impacts the entire family unit and provide targeted relocation assistance accordingly.
Spousal and partner career assistance is a crucial element to consider, including resume services, job search assistance, or networking opportunities for accompanying partners who may be leaving their own careers behind.
Education support should be provided for families with children, including school search assistance, information about local school districts, and potentially education consultants to help navigate new educational environments.
Community integration resources about local neighborhoods, community activities, places of worship, and cultural organizations help families build new social networks quickly. For international relocations, cultural orientation sessions for the entire family can ease the transition to unfamiliar customs and practices.
Childcare resource information about local options, including daycares, after-school programs, and nanny services helps parents reestablish essential family support systems.
Studies consistently show that partner/spouse dissatisfaction is a leading cause of failed relocations and premature returns.
By addressing the entire family unit’s needs through comprehensive support services, companies significantly increase the chances of a successful transition and improved retention rates.
Define Policy for International Relocation
For employees relocating internationally, there are additional factors to consider:
- Will you cover the costs for obtaining visas and work permits?
- How will you handle tax equalization and preparation?
- Will you pay for language and cultural training?
- What about shipment of household pets?
Ensuring foreign transferees integrate smoothly requires more support. Outline all special allowances and benefits clearly in the policy.
Consider Group Relocation
When relocating multiple employees, you may be able to negotiate group rates on some expenses like corporate housing and household moves. This can help maximize your relocation budget.
Just be sure group moves don’t cause delays or limit personalization for individual employee needs. Maintain flexibility even within group relocations.
FAQs
Should we use a relocation management company or handle moves in-house?
Companies with regular relocations benefit from professional management. Relocation specialists provide expertise in cost management, tax compliance, and vendor relationships that most HR departments can’t match. In-house management works only for very infrequent relocations.
How do we balance cost control with employee satisfaction?
Focus resources on high-stress aspects like home selling/buying and family transition. Use a tiered approach rather than across-the-board cuts. Track both costs and satisfaction to identify the most valuable services. Remember that failed relocations ultimately cost more than properly supported ones.
How often should we review and update our company relocation policy?
Review annually with a more comprehensive evaluation every 2-3 years. Adjust for changing market conditions, housing trends, tax implications, and competitive practices. Gather feedback from recently relocated employees and stay informed about industry benchmarks.
What are the tax implications of relocation benefits?
Most relocation benefits are considered taxable income to employees. Companies can offset this burden through gross-up programs that cover the additional tax liability.
Certain benefits like qualified moving expenses for active military may be tax-exempt. Always consult with tax professionals to ensure compliance with current IRS regulations and to structure the most tax-efficient relocation program possible.
Plan Your Corporate Relocation With ARC
In summary, a well-designed employee relocation policy aligns with your corporate culture and values. It provides the right mix of structure and flexibility for your organization. With strategic planning, you can create an effective program that attracts talent while keeping costs contained.
Contact us today for more information and assistance with your corporate relocation!