Policy Development

Employee Relocation: Everything You Need to Know

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Photo of a young family with a little boy, unpacking essentials in the kitchen of their new home

An emerging trend among companies looking to develop cost-effective relocation policies is the tiered approach. Tiered policies are tailored to each level of employee and offer benefits according to those levels. Corporations have started utilizing tiered policies to provide more flexibility for hiring managers and to cut the overall costs of relocations.

Designing Your Tiers

To organize a tiered relocation policy, first you must assign each transferee into categories. The benefits will vary across each. For example, let’s consider a corporation deciding on four tiers for their relocating population. Tier One might include a relocation package specifically for executives. Tier Two may apply to middle managers, and Tier Three for all other current employees. Tier Four might be applied to college recruits and new hires.

In the tiered approach, the benefits available in each category will directly correspond with the transferee’s level within the company. This provides the opportunity to reduce costs while still providing for the specialized needs of each group.

Costs associated with moving a homeowner are considerably higher, as this population requires assistance for closing costs on their sold home (direct reimbursement or Buyer Value Option) in addition to the reimbursement of home purchase costs in their new location. A goal is to keep real estate out of company inventory whenever possible, but holding onto a house in order to retain a key employee can be worth it.

Relocation Policy Checklist

You can use these suggestions as a guide or checklist to ensure your company is offering the most attractive benefits:

  • Salary adjustments if the new location cost of living is higher than the transferee’s current home base
  • A relocation firm to work with you and your transferee to ensure a low stress, successful change of location
  • Loss-on-sale reimbursement benefits for the sale of the transferee’s home
  • Paid house-hunting trips, preferably two, enabling the employee and his/her spouse to view appropriate homes and become familiar with acceptable new location neighborhoods
  • Home buying assistance from a relocation-savvy real estate agent, and up-to-date resources for mortgage loan options
  • Moving and travel expense reimbursement so the transferee’s personal property is moved professionally and minimizes expenses for the family to travel to the new location
  • Compensation for time off needed for house hunting, moving days and getting settled in the new location

If feasible, consider offering financial assistance to transferees to assist with qualifying for a new mortgage or making the required down-payment. These key components reduce transferee stress and result in more successful relocations.

Find out more about developing relocation policies with our free guide.

Tips for Selling Relocations to Employees

Now that you’ve built an exceptional relocation package, the next step is convincing your employees to accept the offer. Remember that offering a salary or benefit increase isn’t the only leverage you have. Here are three ways to convince your employees that relocation is the right move for them.

1. Validate Employee ConcernsTwo business people speaking to each other

Listening to your employees’ concerns about relocation should be the first thing you do after bringing up the opportunity, even before you try selling them on all the benefits of moving. Let your employees know that you understand it may be a tough decision.

Listening to their concerns builds trust and helps them feel more comfortable with the idea of relocation. It is also a good way to determine if they’re a good fit for the opportunity; evaluating their enthusiasm or reluctance can be a good way of minimizing the possibility of costly failed assignments.

2. Offer Equity in Your Company

Offering stock or other equity can give you a lot of leverage when you want to convince your employees to relocate. In fact, equity is a great incentive for employees to work harder and stay with your company longer.

Some owners and board members of non-publicly traded companies object to this on the principal that they don’t want the employees making executive-level decisions for the company–something that can happen when employees own enough voting shares. The easiest way around this is to offer non-voting shares to your employees. That way, they share in the profits (and are encouraged to work hard for your company) while you keep control of your business.

3. Offer a Pay Raise

Salary is key when it comes to employee relocation. A pay raise is one of the top incentives you can offer to any employee to relocate.

When possible, try to avoid reducing the employee’s pay, or discuss how salary can be impacted by a move from higher cost-of-living locales (Boston, MA, for example) to a place with a much lower cost of living (Heavener, OK); in these instances, a small pay cut can actually represent a substantial raise. Keep in mind, however, that a smaller paycheck may itself dissuade employees from taking assignments.

Finally, you should have a positive attitude when discussing relocation with all potential transferees and new hires, to encourage an equally positive feeling about the upcoming move. These strategies can assist in hiring and retaining valuable employees.