Employee moving and relocation programs are well-thought-out plans that align with a company’s corporate relocation policy. These programs help employees relocate to new locations for work-related reasons. A relocation program can simplify moving your company to a new location or hiring a new employee who lives thousands of miles away.
Many companies face problems when creating employee relocation programs because, when it comes to moving, one size doesn’t fit all. Employees have unique needs; you can set a defined budget, offer financial assistance, and help find a place to live, but without a flexible, comprehensive system, coordinating corporate relocations can quickly become overwhelming.
Just like the individuals in your company, relocation programs come in all shapes and sizes. When developing a relocation plan, you’ll need to ensure every base is covered.
In this article, we’ll put our expertise to use to walk you through everything you need to know about building a corporate relocation program.
What to Consider When Developing an Employee Relocation Program
If you’re responsible for crafting and overseeing your company’s relocation program, you know how confusing and challenging it can be. And if it looks complex from your end, imagine how it looks to your new hire or existing employee!
As you begin developing your employee relocation program, take the following factors into consideration.
The Overall Cost
Moves can get expensive. Whether moving a team from the West Coast to the East or a new hire to a new neighboring state, costs add up quickly. When developing your plan, you’ll need to consider the scale of relocation your company is willing to cover. It may be wise to offer a cost range instead of a predetermined amount to accommodate each move’s needs.
State and Local Taxes
Even if you’re only moving within the United States, state and local taxes vary, potentially impacting the relocation benefits you provide your employees. For instance, will your plan cover taxes associated with higher property values? What about payroll tax differences in the new location? Other state and local variables to consider include health benefits and cost-of-living changes.
Employee Relocation Benefits
Your employee relocation program should include benefits like housing support or reimbursement policies. However, these types of benefits may vary depending on the type of move, the destination (is the price of housing higher or lower in the new area?), and how long the employee has been with your company.
How the Benefits Differ By Employee
In all probability, a new recruit hired straight out of college won’t receive the same benefits as a C-level executive. How does your relocation program vary by employee? How will you handle policy exceptions and changes?
The Size of the Move
Someone right out of college or less than five years into their career will typically have a lot less to move than an experienced executive with a family. A whole-family relocation can require moving double or triple the items of an individual relocation, which can cost significantly more.
Why One-Size-Fits-All Doesn’t Work for Relocation Plans
Relocation benefits and programs aren’t all created equally. Companies relocate employees ranging from college graduates to high-level executives. On top of covering moving costs, companies may offer additional benefits to make the process more convenient for higher-tier positions. When preparing to relocate an employee, you’ll need to ask yourself:
- What does a new employee need to consider when being offered relocation benefits by a company?
- How much will the employee receive to cover moving-related expenses? What percentage of moving costs will the company cover?
- How much is the employee expected to cover?
- What are the tax implications of these benefits?
The Three Different Types of Billing Methods
There are three methods to consider for covering moving expenses and company policies:
- Supplier-Direct Billing: All allowable expenses are paid directly to the supplier. This includes paying movers for transporting household goods, landlords for temporary housing, and carriers for travel.
- Direct Reimbursement: The company repays the employee after the transferee submits the appropriate documentation for allowable expenses. Most direct reimbursement companies cap these benefits at a certain amount or reimburse the employee for all moving-related costs.
- Lump-sum Policies: A combination of the plans above. This hybrid approach allows you to free your employees from some of the stress of moving while still providing flexibility.
How a Lump-Sum Policy Works
The lump-sum method is popular for employee relocation programs, especially for small and mid-sized companies with infrequently used relocation plans. They’re also great for entry-level or trainee-level new hires. However, with a lump-sum policy, most of the responsibility for the relocation is on the transferee. The relocating employee typically receives no professional assistance with any aspect of the move — such as selling or buying a home, temporary housing, or hiring a moving company — even though the employee may have little or no experience with these processes.
Lump-sum relocation plans are still popular with smaller companies, but more commonly, a variation of lump-sum has been devised. This can involve a tiered policy with titles like Lump-Sum Provisions, Lump Sum Plus, and Lump Sum Only.
Before implementing these types of tiered policies, your purchasing and human resources departments must weigh their options carefully to determine the practices that best suit your company’s culture and needs.
Find a Solution to Fit Your Budget, Needs and Style
Ideally, the development and use of a relocation program should be straightforward. It should be professional and efficient while meeting the requirements of transferring employees and the company.
Many companies choose to start with a quality relocation program and customize it to meet each need as it comes. According to the Society for Human Resource Management, businesses today offer flexible benefits to employees who require relocation.
Moving service companies that offer flexible plans are today’s industry leaders. A flexible plan should be able to adapt to the company’s needs, the employee’s requirements, and any other unique circumstances surrounding each move. When researching moving companies, ask if they offer consultation services to human resources and purchasing departments; these services are invaluable when planning your program. They can provide the peace of mind and flexibility you’ll need to develop innovative relocation programs that align with the company’s and employee’s needs.
What Is a Flexible Relocation Program?
A flexible relocation program includes specific core provisions, frequently at different tier levels. For example, home rental assistance might be offered in every tier, but other options like lease cancellation, home sale, 30-day storage, and other perks may only be provided in higher tiers.
This type of program allows the company or employee to choose one, some, or all of a number of flexible options. These could include spouse/family reemployment assistance, return trips to the departure location, or temporary housing. While this is still not a one-size-fits-all program, it’s an attractive alternative many companies use to adapt their policies to most situations.
Developing a Relocation Program That’s Right for Your Business
There’s much to consider when developing a relocation plan that aligns with your company’s needs. Is your program fulfilling the needs of both the company and its employees? Is it flexible, or are you tied to one specific plan that leaves little room for customization? Does your company offer different benefit tiers based on employee level, or are you utilizing a one-size-fits-all approach to relocation?
To start developing a relocation program that aligns with both your company’s and employee’s needs, you’ll want to start by:
Asking for Employee Feedback
Your employees’ relocation experience is vital to your program’s future success. After your employees settle into their new homes, ask them to take a survey. Ask what worked, what didn’t, and what should be improved. Use this feedback to make adjustments for future relocations.
Consider Your Employee Exceptions
No matter how flexible your relocation program is, there will always be exceptions you’ll need to handle on a case-by-case basis. When you look at your current policy as more of a framework and not the law, you can provide your team with a higher level of care.
Different Policies for Different Relocations
Think about all of the different types of relocations you may need to consider. Greater care and attention are required when moving internationally than when moving locally. Create a plan for each type of relocation your company needs. This will provide a solid framework that you can tweak as needed.
Setting Your Company Up for Future Success
Moving to a new location for work is never easy. When developing a plan for your employees, always remember the challenges and disruptions employees are being asked to face for your company. You can help alleviate the stress by building a high-quality relocation plan that provides flexibility and convenience for everyone on your team — including yourself!
You and your employees will benefit from developing a comprehensive relocation policy, whether you develop a tiered program or decide to go with a lump-sum policy.