For any HR team, detailing out an executive relocation package isn’t easy. More so, when it comes to relocating the owner or the CEO.
Relocation packages cover a wide spectrum and can come in a variety of forms. Quite often, with the difficult economic times, you may need to work with a tight budget.
To help you out, we have compiled the main features of a typical executive relocation package and how to put it together.
What Does An Executive Relocation Policy Include?
In most cases, relocation packages and policies for employees vary depending on the seniority or the position. Most companies offer a generous package that addresses all the concerns of an executive. The aim is to make it attractive enough for an executive employee to accept the offer.
Here are some important benefits that should be included in relocation packages for executives.
Real Estate Assistance
The issues related to selling a home are one reason that prevents many top executives from relocating. At times the mortgage balances tend to be higher than the market value of a house. A forced sale at a considerable financial loss for relocating is not something an executive will accept.
So you need to consider the real estate market conditions and include the necessary incentives (such as a relocation mortgage) in the relocation package. These can help in covering any losses, buyer incentive features, and other housing-related benefits. It should also include assistance in buying a new property in case the old one can’t be sold in time. Other features can include legal assistance for canceling leases and assisting in obtaining mortgages.
It’s also necessary to include rental support in typical executive relocation packages. In case you are relocating millennials, leasing a property might suit their needs better. Considering that renting a property is an affordable option in many US cities, employees might avoid homeownership in a new location.
The Movement of Household Goods
This is one benefit that is a must for any executive relocation package. Some companies pay lump sums as a part of the relocation package to cover these expenses. This saves the time and effort of the HR team. However, some employees appreciate direct support during this important phase of relocation.
Instead of making this part of relocation a DIY project for an executive, you can take the help of professional relocation services. This will help in reducing the stress of the employees and make the entire relocation process easier. It is also a practical choice if you don’t have the necessary experience in managing relocation services. In addition, this may give you an edge over your competitors.
That brings us to the point of choosing the right relocation company. Keep in mind employee dissatisfaction with the transportation of household goods can result in a negative impact on the company. It’s necessary to hire a trusted service that delivers the best results.
In reality, each employee has unique needs related to their personal possessions and pets. The right relocation company should come with deep experience in executive relocations. Also, the company should have a dedicated team of professionals who can work as an efficient team for handling the relocation smoothly. Ideally, there should be a single point of contact with whom the employee can coordinate.
Shipping household goods includes a wide variety of items and various categories require different methods of packing and handling. So the company should have sufficient resources for handling the entire relocation process of goods efficiently. At the same time, the entire process should be completed within the scheduled time frame.
Tax Treatment
For an employee, the relocation will involve various out-of-pocket expenses. While proper tracking of such expenses is necessary for annual tax reporting, it’s a cumbersome process. This may cause unnecessary stress for an employee and result in errors in the financial records.
A relocation package for executives can offer record-keeping and invoicing assistance that can help in tracking all the related expenses.
To make the process smooth, you can offer the management of tax filing, and tax gross-up benefits to an executive. It is also necessary to help an employee understand the tax implications of all allowances and reimbursements paid to them.
Other Features
A good executive relocation strategy should be designed to anticipate any problem the employee might face during the process. Such issues are more important for any executive with a family.
For such employees, you can think of engaging a service that can help in finding the best schools for the children or the best social support in a new environment. Since high-level executives have stronger community ties, they may need more support in a new location.
Since most employees will have a working spouse, spousal support can also be a part of the relocation package. This will help in making the spouse the best career choices in a new location.
Another important factor is to include free visits to the new location before the actual relocation. This will allow an executive to learn more about the new spot and get accustomed to it.
Is a Relocation Payback Clause Necessary?
While a top-level executive may demand an attractive relocation package, these packages can be costly. As an HR manager, you need to ensure that the gains from the relocation will outweigh the overall financial costs.
Once a substantial amount has been invested for the relocation, it will result in a considerable loss if the employee leaves shortly after relocating. For this reason, you can think about including a payback or repayment clause in an executive relocation package.
Under such a clause, the employer’s expenses have to be reimbursed if the employee leaves the organization within a specified time period. However, some employers prefer not to include such a clause as it might discourage a new employee from relocating.
Conclusion
While developing relocation packages for executives, keep in mind that there are no one-size-fits-all solutions. Basically, an executive relocation package should match individual needs. Personalization of the package based on needs is an important factor for any top executive.
As an industry leader in relocation services, ARC offers the complete spectrum of relocation services to its clients. From household goods shifting to tax and legal compliances, our professional teams are ready to tackle all the issues related to any executive relocation package in the best possible manner.
Feel free to get in touch with us for a consultation.