CapRelo Blog

What Does a Relocation Package Include?

Posted by Amy Mergler on Thu, Feb 09, 2017

home-relocation-1.pngDue to changes in the economic climate, many companies looked to cut costs by offering full relocation benefits packages primarily to higher-level employees, with newer hires and those on the lower rungs of the corporate ladder often left to manage the details (including many unreimbursed expenses) for themselves. In some organizations, employees were reimbursed only after the move for any but the most basic moving expenses. However, smart companies looking to recruit and retain top talent, are realizing the advantages of offering relocation expense coverage for even newer hires.

Learn more about developing relocation policies in our free guide. 

Many organizations either designate an in-house relocation manager to help oversee the move from beginning to end or, increasingly, turn this complex job over to a professional relocation management company.

What can today’s transferee expect in a relocation package? Much will vary based on position within the company, the industry and the location. However, in most standard relocation packages, a transferee can usually expect his or her company to offer some, or all, of the following provisions:

  • House hunting expense reimbursement for a new residence, which may also include childcare costs enabling parents to focus on the business of finding a residence without the distraction of little ones. Most companies pay for at least one or two house hunting trips in the new location.
  • Real estate and rental expenses for selling an existing residence are also covered by most employers as a basic benefit. These expenses usually include agent sales commissions and related fees, closing costs, transfer taxes and fees and other moving-related expenses. For renters who may need to break a lease, the company will reimburse for any penalties incurred.
  • Moving household goods between the old and new location, including packing, transporting, insuring and setting up furnishings and other goods in the destination location.
  • Storage expenses for household furnishings until a new residence is ready for move-in, usually for 30 to 90 days, depending on the policy and individual circumstances.
  • Transportation to the new location, whether airfare or reimbursement of mileage if the trip can be made by auto. For longer hauls when a transferee must travel by air or train, companies will often reimburse the costs of moving a personal auto to the new destination.
  • Temporary living expenses, such as interim rental housing for 30 to 90 days (depending on policy and individual circumstances), upon arrival to enable the transferee to meet critical starting deadlines.
  • Miscellaneous expenses associated with the relocation. These could include unexpected out-of-pocket expenses, costs of meals en route to the final destination as well as well as during house hunting, spouse employment assistance, new driver’s license and other fees charged by the new state or country, as well as for childcare, eldercare and other dependent care costs.

While it’s still true that the higher the level of an employee’s status within an organization, the more comprehensive and inclusive will be the relocation package, more savvy companies are offering to underwrite relocation costs even for newer employees as a means of attracting and keeping their top talent. Each company has its own benefit structure and policies vary, so potential transferees need to understand from the outset what is and isn't included (but could be negotiable) to secure the best deal on relocation packages.

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Topics: relocation packages, job relocation, standard relocation package, employee relocation

How Do Company Relocation Packages Work?

Posted by Amy Mergler on Thu, Jan 05, 2017


What Is a Relocation Package?

moving-in.jpgWhen a company offers an employee long-term employment in a location more than 50 miles from the current work location, a transfer is undertaken by the company, which usually covers the employee’s reasonable moving and other work-related expenses. By offering transferees a relocation package, employers provide comprehensive financial and other types of assistance to relieve the employee and their family of the expensive burden of relocation. A well-developed relocation package not only provides peace of mind as well as incentive to accept the job offer for the transferring employee but reflects positively on the company’s reputation for attracting top talent.

The Components of a Quality Relocation Package

Generally, a good relocation package can be expected to cover the expenses of a moving company, including packing, transporting and, if necessary, storing the employee’s goods if awaiting purchase or rental of a new home. If the employee needs to sell a current house, a relocation package may cover the costs of real estate agent fees and house-hunting expenses, such as ground or air travel, hotels and food.

Additional smaller expenses, often termed “miscellaneous expense allowance” for items such as driver’s license fees, en route out-of-pocket cash outlays and other costs associated with moving to a new location are considered standard in most packages.

Who Gets a Relocation Package?

While it is becoming more common for new, junior-level employees to also be offered relocation opportunities, typically the higher the employee’s rank within the organization, the more extensive the covered expenses of a relocation package. A recent graduate just starting their career may have only the basic expenses of moving, while a vice president will often have additional services covered, such as child care while house hunting, as well as airfare and car rentals, lodging and meals for the employee and his/her spouse.

How are Expenses Covered?

Assistance may consist of lump sum cash payments toward expenses, direct billing by the company for all moving expenses or reimbursement after up-front payment by the employee.

Relocation is an area where job candidates and new hires may have a bit more ground to negotiate, as it usually costs much less to move an employee than to pay a higher salary. In fact, a Worldwide ERC survey from 2015 reported that companies spent an average of $71,803 in 2014 to move newly hired homeowners and $23,766 to move newly hired renters.

The Takeaway

Most companies want to save as much money as possible in the course of job transfers while still ensuring that the employees and their families are comfortable and ready to get to work as soon as they arrive in the new location. When used a recruiting tool, a strong relocation package can make a difference in attracting the best job candidates – a critical factor in remaining competitive in a global job market.

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Topics: relocation packages, relocation process, employee relocation

Are Relocation Packages Common?

Posted by Amy Mergler on Thu, Dec 22, 2016

Relocation SearchRelocation Then and Now

In years past, relocation assistance was offered almost exclusively to higher-level employees or specialized contractors. Today, with a more global economy and better-educated global workforce, the competition for the best talent is stronger than ever; consequently, smart companies are jumping on the relocation benefits bandwagon to attract and keep their best employees.

A 2013 survey by Atlas Van Lines reported an increase of 13 percent over a three-year period among companies offering relocation assistance. Companies are finally catching on to the fact that having a strong, attractive relocation package in place not only makes excellent business and branding sense, but has become a reality for those companies that wish to remain competitive.

Learn more about relocation packages in our free guide.

HR Professionals are Optimistic about Relocation

A 2015 Worldwide ERC® survey indicated an upward trend in U.S. transfer volumes: a 4% increase in relocation for current employees and a 7% increase for new hires. And companies anticipated another increase in the next year 

The Role of Millennials in Corporate Relocation

One thing that can be said for sure about this demographic group that is quickly taking over the workforce: they like to be on the go. Already having overtaken the Baby Boomers in the workforce, millennials are arguably the most technology- and travel-adept generation to every show up on the scene.

Millennials are changing the face of workplaces around the world, as they demand work environments that not only acknowledge their contributions by their need for flexibility and a good balance between work and private lives. In an Urban Bound study, a full 71 percent of millennials also expressed a desire to work abroad at some point in their careers – a fact that shouldn’t be lost on corporate recruiters.

The Takeaway

Relocation packages are increasingly becoming used not only as a way to keep in-house talent happy in the event of a transfer, but as an effective recruiting tool – particularly for globe-trotting millennials, who often relish the chance to travel and broaden their business and personal horizons. If companies find that they’re losing talent, especially as part of a transfer process, then a review of their relocation policies and strategies may be in order to keep up with the changing faces of the modern workforce.

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Topics: relocation packages, relocation benefits, relocation policies, employee relocation

What Kinds of Relocation Packages are Available?

Posted by Amy Mergler on Thu, Dec 08, 2016

young businessman with moving boxes.jpgThere are almost as many types of relocation packages as there are employees needing the assistance and the companies that hire them. The company’s financial resources and situation, the length of employment, as well as whether the employee is a homeowner or renter also play roles in determining the size and coverage offered in a relocation package.

A core or standard relocation package usually covers the costs of moving and storing furnishings and other household goods, along with help selling an existing home and costs incurred house hunting, temporary housing if necessary and all travel costs by the employee and family to the new location.

Find out more about relocating employees with families in our free article.

Besides the coverage itself, there are a number of ways to administer the package:

  • Direct billing: The transferring company hires and directly pays for a moving company as well as costs involved in selling a current home and all other services needed to help relocate the employee and family.
  • Lump sum: A set amount of money is given directly to the employee to pay for moving and related expenses. For tax purposes, the government considers this as income and therefore taxable, so to offset tax liabilities, companies often reimburse for those in the form of a gross-up (link to gross-up blog post), which frees the full amount of cash for the move. Another possible drawback is that it may be difficult to correctly estimate the total costs up front, due to unexpected out-of-pocket expenditures. If a mover’s initial estimate is lower than the actual costs, for example, the employee may have to dig into their own pockets to cover the difference.
  • Reimbursement: The employee pays for everything up from and is reimbursed by the company after the move. This requires careful record keeping by the employee, including tracking all receipts for expenses. Additionally, employers will likely set a limit above which they will not reimburse.
  • Third-party (outsourced) relocation: In this scenario, all logistics related to moving, including real estate or rental expenses are outsourced to a third party that coordinates a comprehensive array of services. Some of these may include marketing and sale of an existing residence, spousal employment assistance, storage of household goods, if necessary, and rental assistance.
  • Expatriation assistance: This is additional relocation assistance used by multinational companies for employees relocating outside the country, beyond the typical moving and transport of household goods and real estate help. Covered benefits may include overseas trips to search for suitable housing and assistance with obtaining spousal work visas, finding and selecting schools for employees’ children and finding the way around a city in a foreign country. Language and cultural assimilation instruction offered through a relocation package serve to help the employees’ comfort zone and confidence by adjusting to the new culture and its customs.

The Takeaway

Offering employees choices in relocation packages provides incentives for current and prospective employees to remain and pursue careers within a company. With competition among companies for top talent, offering attractive relocation packages is a win-win for both companies and employees.

Relocating Employees with Families

Topics: relocation packages, standard relocation package, relocating employees, employee relocation

November Relocation Survey

Posted by Amy Mergler on Fri, Nov 18, 2016

Thinking about changing your relocation program or just curious about what other organizations are doing? Each month, we'll feature a short survey and share our findings along with the next survey the following month.

First up, Lump-Sum Relocation packages!  

Create your own user feedback survey

 

Topics: relocation packages, lump sum package, global relocation

What Should be Included in a Relocation Package?

Posted by Rick Bruce on Fri, Nov 11, 2016

You offer a relocation package that HR and senior management believes to be outstanding. But, is it really attractive to current employees or new hires? Are you sure your relocation package is comparable to your primary competitors' programs?

Sometimes, a relocation program appears to be attractive, but doesn't resonate with the affected employees. They may be reluctant to offer their real opinions about your relocation policy for fear of offending HR or senior management. These employees may refuse transfer opportunities or clandestinely seek employment elsewhere.

Learn more examples of relocation package features in our free guide.

Here are some popular relocation benefit components you should consider to keep your relocation package competitive.

Popular Relocation Package Features

  • Auto transportation. Unless your transferee is driving to the new location, getting family vehicles to new homes is vital.

  • Childcare reimbursement. House-hunting trips and the moving process are more efficient and less stressful on the employee if young children are safely protected and occupied.

  • Packing and unpacking assistance. Packing and unpacking employees' personal property is often a physically-taxing additional responsibility for transferee families. Full packing and unpacking services are important features of competitive corporate relocation programs.

  • Home-related services:

    • Multiple house-hunting trips. When moving to an unfamiliar area, one house-hunting trip may not be enough. A second cost-controlled trip is a welcome feature.
    • Lease-breaking penalty reimbursement. Early lease terminations typically trigger penalties, which employer-mandated transfers create. Reimbursing transferees for these penalties is welcome and cost-effective.
    • Final destination home-buying and mortgage help. Another popular feature that may or may not result in an employer expense.
  • Temporary housing and personal property storage assistance. Even after transferees find acceptable new homes, properties may not be ready in time for their scheduled start date. Providing temporary housing and covering the expense of storing personal property is a valuable feature.

  • Spousal employment assistance. Connecting transferee spouses with hiring companies or search firms helps maintain employee family financial stability.

These are but some of the popular features of competitive relocation programs. If your package is missing one or more of these components, consider introducing them to increase the attractiveness of your program.

Even those features that appear to be corporate "budget busters," such as multiple house hunting trips or home sale assistance, can include monetary caps. These are valuable features you can add to your relocation package to make it more competitive and attractive, while still controlling employer costs.

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Topics: relocation packages, relocation benefits, Temporary Housing, Spousal assistance, House Hunting Trips

What Is a Typical Domestic Relocation Package?

Posted by Amy Mergler on Fri, Nov 04, 2016

question-mark-box-2.jpgA strong relocation package will help attract and retain top talent. But what is a typical domestic relocation package?

For more information on what to include in a relocation package, download our free guide.

A typical relocation package will usually include the following features:

  • Packing, transporting and unpacking household goods.
  • Storage of furnishings and other goods if necessary – usually for up to two months, until a residence is available.
  • A managed home sale program that allows for non-taxable expenses on the sale of the home.
  • House-hunting expenses incurred in looking for a new home: transportation, lodging, meals and in some cases, childcare so the kids can stay home (and out of the way) while the parents can house-hunt in peace. (According to the Illinois-based search firm Witt Kiefer, companies are increasingly encouraging families with younger children to leave them home, and reimbursing them for the expense, while looking for a new house.)
  • Temporary living accommodations for the employee, such as short-term rentals. Note that not all companies pay for the cost of feeding and housing families in addition to the employee, so this needs to be clarified at the outset, although family assistance is increasingly becoming the norm.
  • Miscellaneous expenses, usually in the form of an allowance (miscellaneous expense allowance, or “MEA”), to cover smaller but necessary costs such as driver’s license fees, pet registration and licenses, cleaning services at the new home, utility hook-ups and other move-related expenses. The allowance usually amounts to one or two months’ base income, minus taxes.

Additional covered services, especially if an overseas transfer is involved, may include:

  • loss-on-sale allowance in the event your present home sells for less than its purchase price (a not-uncommon situation since the Great Recession)
  • Spousal job assistance in the new location
  • School location assistance for school-age children
  • Trips home for those in longer-term temporary housing, usually limited to one every 30 days.

Hard-to-move items such as boats, large vehicles, horses or playground equipment are not normally covered reimbursable items. Unless the employee anticipates returning to the original area within a short period, it may be more cost-effective to simply sell anything that can’t be moved or stored.

Many third-party relocation firms offer additional concierge-type assistance with locating quality schools for the employee’s children, handling all aspects of real estate transactions, spousal employment issues, moving the employee’s household furnishings and other goods, all transportation and temporary lodging for the employee and family, both for house-hunting as well as the final move.   

The takeaway

With relocations on the rise, companies are offering more inducements to their transferees, making moving easier and less expensive, with savvy companies turning to third-party relocation management firms to ensure a smoother transition.
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Topics: relocation packages, standard relocation package

With Relocation Packages, One-Size Might Not Fit All

Posted by Amy Mergler on Thu, Oct 13, 2016

One-size-does-not-fit-all-tag.jpgA single all-encompassing corporate relocation program may be the simplest to administer. However, a one-size-fits-all package may be doing your company more harm than good.

Your relocation packages should be designed to meet your corporate strategic objectives and your policies should be targeted to meet these objectives.

Learn more about developing relocation packages with our free guide. 

What Are The Primary Goals of a Corporate Relocation Package?

  • Assemble the most talented staff possible
  • Make the best hires to help your company perform well
  • Transfer the right people to the right locations at the right time
  • Overcome employee or family resistance to relocation
  • Control and manage costs of your relocation program
  • Offer a relocation package equal to or superior to your competition's program to attract talented staff

Your company and its relocation policy should target these goals, at a minimum. You may have additional objectives that you can add to this brief list.

Problems with a One-Size-Fits-All Relocation Package

Ask yourself some revealing questions before you decide to use a single corporate relocation package that applies to all new hires and current employees, regardless of their needs or position on the organization chart.

  • Are all your employees at the same responsibility level in your company?
  • Are all new hires slotted for identical levels in the organization chart?
  • Are all new hires and current employees single? Married? Married with children? Homeowners? Renters?
  • Is your single relocation package equal to or better than the programs offered by your competition seeking to hire or retain the same talented employees?

If you answered "yes" to all of these questions a single relocation program may suffice. However, in most cases, a company hires and transfers people with different needs, responsibility levels and concerns.

Solutions to the One-Size-Fits-All Problem

While making constant exceptions to your policy for each transferee could become unwieldy from an administrative or cost perspective, having a more comprehensive program that provides different benefits for different employees may be more efficient. Consider the following suggestions to meet your recruiting and employee retention objectives:

  • Use a proven, successful relocation firm to relieve the administrative burden from overworked HR staff who currently manage relocation-related tasks
  • Develop a tiered relocation program, specifying benefits for employees and new hires that fall into different categories of responsibility levels
  • Create some relocation policy flexibility within those tiers to address the specific needs of employees

Each employee has a different personality, background, personal goals and a varied home or family environment. While it's impossible to tailor every benefit to each individual employee, creating a relocation policy with tiers and some flexibility to address specific employee needs is usually attractive to transferees. Setting reasonable parameters for this flexibility helps control costs and creates less stress for your staff and transferees.

Save Time & Money Using Tiered Relocation Packages

Topics: relocation packages, relocation policies

Build a Competitive Advantage with Tiered Relocation Packages

Posted by Amy Mergler on Fri, Oct 07, 2016

competitive-advantage.jpgOffering market-driven relocation packages to potential new hires and current employees is one of the best ways to attract and retain the best talent in your field. Cost-effective relocation packages show employees that you’re prepared to invest in their future and that your team cares about making their transition as smooth and comfortable as possible.

For organizations in all industries, effective and attractive relocation packages can also benefit the bottom line by helping employees feel comfortable and confident in their new locations – which, in turn, allows them to return to full productivity much sooner.

Learn more about tired relocation packages in our free article.

How can tiered packages help?

As beneficial as top relocation packages can be for general employee satisfaction and a company’s performance and earnings, HR professionals and managers are often overwhelmed by how many details and considerations are involved with creating and executing a great relocation program. A great way to eliminate some of these relocation program frustrations is to use tiered relocation packages.

Having a list of set relocation packages to choose from saves companies the time and effort of having to customize a new package for every employee who requires relocation. Your employees’ relocations can also be executed more quickly because they’ll no longer involve a lengthy period spent determining the total relocation budget and choosing the individual combination of services that is appropriate for each employee or potential hire.

Perhaps most importantly, having a tiered relocation package in place can give you a major competitive advantage for recruiting the best new employees, increasing productivity and bottom-line cost containment. 

Save Time & Money Using Tiered Relocation Packages

Topics: relocation packages, Tiered relocation packages, attracting new hires

Components of a Typical Relocation Package

Posted by Amy Mergler on Thu, Sep 08, 2016

question-mark-box-2.jpgEmployers offer a variety of different relocation policies, but most fall into one of two primary categories, sometimes with identical components.

Organizations may have a single "one-size-fits-all" policy for all transferees, regardless of their status, title or time with the company. A second, popular policy is a tiered program, with benefits that vary with the employee's status, pay level or tenure.

For more information on developing relocation policies, download our free article.

Typical Relocation Package Components

While policy component may differ from company to company, there are features that are typically included in many corporate relocation packages.

  • Real estate assistance. This component includes funding house-hunting trips, providing access to experienced real estate agents and assisting employees in selling their existing homes. Employers may also choose to include home sale bonuses or financial contributions for employee losses when rapid sales are necessary.
  •  Temporary housing accommodations. Whether on house-hunting trips or awaiting permanent housing, employers often provide assistance to transferees in securing temporary housing accommodations. Short-term hotel stays are relatively easy for transferees to locate, but longer-term temporary housing may be more challenging to find in unfamiliar surroundings.
  • Household goods moving. Organizing, packing and transporting household goods always pose challenges, stumbling blocks and logistical issues. Relocation professionals can smooth out this process to generate a coordinated, stress-free process of moving employees' personal items to a new community. If household goods must be stored for a period of time before a new home is available, relocation policies can provide for temporary storage of household goods.
  • Transportation to the new location. Most policies will include reimbursement for transporting the employee and his/her family to the new location. 
  • Miscellaneous expenses. Relocation inevitably generates other expenses that will fall into the "miscellaneous" category. Typically, a relocation policy will identify or cap eligible costs, and transferees will submit receipts for reimbursement.

Successful transfers depend on competitive, comprehensive relocation packages. Policies should be compliant with IRS regulations, and should also align with the organization's goals and objectives. Regardless of the type and number of relocation package components, policies that meet the needs of both the employer and employee will be most effective.

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Topics: relocation packages, standard relocation package, employee relocation concerns

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