CapRelo Blog

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 Package Exceptions Burning Out Your HR Staff? (Part 3)

Posted by Amy Mergler on Thu, Nov 19, 2015

Stretched to the breaking pointA group move or other circumstance that requires many employee relocations take place at the same time stretches the resources of your HR staff even thinner. What can you do to keep relocation package exceptions from stretching them to the breaking point?

Learn more about developing relocation policies in our free guide.

Negotiation Exceptions to a Relocation Policy

Sometimes, a relocation policy exception is needed. Maybe a mid-level employee has proven extremely valuable in his position and your company is willing to go above and beyond to keep him. Maybe he has kids, aging parents or a hard-to-sell home.

Your relocation management company should understand your company’s main needs and core values to negotiate relocation package exceptions on your behalf. Of course, your HR staff will have the final word on exceptions to relocation policy. But your relocation company can hammer out the details to create a win-win scenario with the HR staff and upper management is likely to approve. Just think about how much time this can save your HR staff! Because all exceptions will be well justified, it will be easier to stay within budget and maintain company morale during the move.

Customer Assistance through Relocation Providers Who Understand

Beyond managing employee home sale details, another area your HR staff may falter is in lining up supply chain partners for relocation services.

Your HR staff may (or may not) have contacts in the relocation industry such as household goods movers to call on, but they probably don’t have the manpower to make sure those partners are providing the level of customer service needed to keep top-level executives happy.

A relocation company can act as the primary contact between relocating employees and relocation service providers to ensure your employees get the level of service they expect.

For instance, when furniture belonging to one top executive arrived at her new home damaged, the relocation management company was able to break standard operating procedure to schedule a service call for repair after hours. The executive didn’t have to miss work and sit around waiting for the repair team to arrive, nor did she have to be without her furniture for any length of time. These are the types of details your HR staff simply may not have the time or expertise to address.

Tax Gross-Up Assistance

Your HR staff is not made up of professional relocation service providers – or bookkeepers. Your bookkeeping staff may not be versed in the nuances of tax gross-up and relocation tax. A professional relocation management company not only maximizes your employees’ productivity during a move, it can boost the productivity of your bookkeepers and upper-level management by handling all tax details and coordinating with your bookkeeping department and tax accountants to file the appropriate paperwork.

Don’t let relocation policy exceptions drag down and burn out your HR staff. Re-evaluate your existing relocation policy to determine how you can leverage the expertise of your relocation management company to minimize the drain on your HR staff resources.

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Topics: relocation process, human resources

Are Relocation Package Exceptions Burning Out Your HR Staff? (Part 2)

Posted by Amy Mergler on Thu, Nov 12, 2015

A group move or other circumstance that requires many employee relocations take place at the same time stretches the resources of your HR staff even thinner. More and more companies are shifting to a tiered relocation package over a lump sum approach to minimize exceptions and ease the stress on your HR staff.

Find out more about tiered relocation packages with our free article.

How do you establish a tiered relocation package?

When you establish a tiered relocation package to minimize relocation policy exceptions, the tiers most often have to do with home sales and how they are managed. After all, costs for aspects of relocating like movement of household goods, temporary housing and moving people are often fixed. But how much home assistance you offer can vary based on how badly you want to keep an employee on your team, as well as considerations such as how quickly you expect an employee’s home to sell.

The key is determining which relocating homeowners may need the most help selling their homes and structuring tiers so that those people will fall into categories where they receive the assistance they need. Because it’s most often harder to sell the higher-priced homes of executives, a tiered relocation package works well to ensure employees can sell their homes quickly without suffering a loss.

Here are three examples of benefits tied to home sale (assistance):

  • Buyer Value Option: Part of the first tier in some tiered relocation packages, a Buyer Value Option helps keep the home out of your company inventory. Rather than relying on a home appraisal, a relocation company will provide complete home marketing assistance. After the employee receives an offer on the home, the relocation company buys it and then re-sells it to the intended buyer. A Buyer Value Option requires the expertise of relocation professionals to identify and qualify serious buyers. The key, however, is in the level of marketing assistance a professional relocation provider can offer to your relocating employees to sell their homes faster.

  • Home Sale Bonus: Rather than buying the home from the employee, your company may offer a bonus to employees who sell their home within a specified time frame. To receive the bonus, the employee must use your relocation company’s recommended real estate agents and other services providers (mortgage, etc.). Again, your relocation provider acts as the primary point of contact, decreasing the burden on your HR staff.

  • Loss-on-Sale Reimbursement: You can minimize the risk to top-level executives who are relocating with a loss-on-sale program managed by a relocation service provider to ensure that the payout won’t stretch your relocation budget beyond what’s comfortable. This program, usually part of the upper tier in a tiered relocation program, can help increase the odds that you’ll retain more of your key executives before, during and following a move.

 

 A relocation management company can draw on their contacts within the real estate industry in your area to help create low-stress employee home sales and help you establish policies that work with minimal exceptions.

Check out Part 3, where we discuss negotiation exceptions, relocation providers and tax gross-up.

Save Time & Money Using Tiered Relocation Packages

Topics: Tiered relocation packages, relocation process

Are Relocation Package Exceptions Burning Out Your HR Staff? (Part 1)

Posted by Amy Mergler on Fri, Nov 06, 2015

Stressed StaffYou know you have an excellent HR staff. The team is expert at recruiting and hiring new employees, managing training initiatives, managing benefits (while keeping costs down), addressing employee concerns, building company spirit with team events… the list goes on. Your staff has a lot on their minds, a lot of balls in the air… and they’re expert jugglers – usually.

Learn more about developing relocation packages with our free guide.

But corporate relocations pose significant challenges to your staff. It feels like they have to negotiate every relocation package individually. There are no standards set so they can replicate the process each time. And none of the employees are happy with their relocation benefits package. You’ve already lost a handful of employees who simply refused to move, and you’re not surprised.

Do you need help with corporate relocations?

If you only move a handful of employees each year, relocation package exceptions may not be too much of a hassle. Maybe, until now, you’ve addressed each employee as an individual, structuring and negotiating customized employee relocation benefits each time a key executive changed offices or new talent moved to join your company. This extremely personalized, hands-on approach, managed by your HR staff, can work well if you don’t move a lot of employees. But is doesn’t fit every company.

If you are organizing employee relocations on a large scale due to a merger or acquisition, rapid corporate expansion, new product roll-outs, opening a new office, a group move to another location or any other company changes, you can’t afford relocation exceptions that may add unplanned expenses. In addition, exceptions to standard relocation packages can open your company up to lawsuits or a drop in company morale if other employees discover exceptions were made for others, but not for them.

A group move or other circumstance that requires many employee relocations take place at the same time stretches the resources of your HR staff even thinner.

What is the solution?

Tiered Relocation Packages Minimize Exceptions

More and more companies making group moves or conducting many employee relocations each year are shifting to a tiered relocation package over a lump sum approach. Tiered relocation packages:

  • Are favored by many employees, resulting in greater employee satisfaction, higher company morale and a faster return to productivity
  • Minimize exceptions because of the flexibility of the program
  • Can have as many or as few tiers as necessary, although most companies opt for three or four tiers
  • Can be established based on any number of factors, including salary, position/title or length of time with the company

 

Check out Part 2 of our series for a discussion on how to establish a tiered relocation package.

Save Time & Money Using Tiered Relocation Packages

Topics: Tiered relocation packages, relocation process

Three Strategies for Flexible, Cost-Conscious Relocation Management

Posted by Amy Mergler on Wed, Sep 02, 2015

cost-effectiveWhile flexibility and lower costs may initially seem at odds with each other, the two often go hand in hand in the field of relocation management. In fact, a recent survey found that companies are citing cost concerns as their top reason for adopting more flexible relocation packages

What relocation strategies can provide greater flexibility and lower costs, while leaving your employees with successful relocation experiences?

Learn more about developing relocation policies in our free guide.

Use Core/Flex Relocation Packages

While the standard pre-designed relocation packages may be easy to implement, they come with limitations. Because these programs already consist of set components, an employee might be stuck with a package that leaves out a key feature or includes benefits that aren't applicable to her specific situation.

According to the Worldwide ERC, about 25% of employers now offer core/flex relocation packages. Core/flex policies solve the problems with pre-designed packages by providing offerings that contain certain core components, but that also allow companies to add or remove benefits according to an employee's unique situation. This structure empowers HR professionals to save money by delivering exactly what their employees need and nothing more.

Take Advantage of Technology

Efficient, user-friendly technology helps relocations progress more smoothly – both for a company's HR department and for the employee. What many HR professionals don't realize, however, is that great technology also plays a major role in boosting flexibility and lowering costs.

When the HR team and relocating employees have quick access to real-time expense data, it's easier for them to stay within budget. This is the case whether a company is covering all the expenses as they occur or whether an employee is being reimbursed. If an unexpected expense arises during the move, HR professionals can quickly recalibrate the budget and keep costs low. 

Intuitive, real-time relocation software also gives HR departments the flexibility to assess an employee's needs throughout the process and determine whether other aspects of the relocation package need adjusting at any point during the move.

Turn to a Relocation Professional

Even companies that have handled their own relocations for decades can discover improved strategies and approaches. Joining forces with relocation specialists who are up to date on the latest developments and technologies helps employers enhance their processes while providing more flexible relocation experiences for their employees.

With relocations becoming more complex thanks to today's global economy, organizing a series of moves can easily command a large portion of an HR professional's time. Bigger companies may even need an employee or department that's fully dedicated to relocation needs. Working with a professional relocation company can greatly reduce the cost associated with in-house relocation specialists.

Relocation professionals also provide in-depth knowledge of legal requirements, tax considerations and regional concerns that allow companies to avoid expensive mistakes and benefit from volume-driven savings.

Whether you're making small adjustments to your relocation policy or overhauling it, taking these steps can yield significant benefits for your company's bottom line and growth. By delivering more responsive relocation options, you'll attract better talent and improve employee retention – all while saving money.

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Topics: relocation packages, Corporate Relocation Costs, relocation process

5 Tips for Helping Your Employees Settle into Their New Homes

Posted by Tamara Bianchi on Tue, Nov 20, 2012

My Move logoToday's post is courtesy of MyMove.com, the resource for stress-free moving, which offers free checklists, reminders, tools, inside tips and deals to the 40 million people who move each year in the U.S. Visit MyMove.com today for help with your move.


As challenging as a corporate relocation may be for company owners and the HR staff, it's just as tough for employees. Focusing on doing a job in a new location while managing moving stress and settling into a new home is a lot to put on anyone’s plate.

Your relocation firm should have done a good job during scouting trips of showing relocating employees around the city or town and spotlighting the best aspects, from local shopping to the best restaurants. But employees may still be overwhelmed prior to a move, and scouting trips give employees a lot to take in during just a few days.

One key to a low-stress relocation is helping employees get comfortable in their new neighborhood.  Short of helping your employees unpack, here are five ways you can help:

1. Introduce them to other professionals.

Chances are, as a leader in your company, you've already scoped out the networking organizations and professional events. Invite your top talent to a fun event and introduce them to people you think they'd like.

2. Be flexible about time-off requests.

In dual-income families, someone has to stay home and wait for the cable guy. Offer flex-time, a few extra days off, or work-at-home days to recently relocated employees to make the post-move period less stressful. They'll return to full productivity faster and be happier during the transition. 

3. Organize an office lunch at a local restaurant.

Rather than telling your employees about the best places in town to eat, take them there. Or have the best pizza or Chinese food place deliver a mid-day feast...along with a stack of menus to hand out.

4. Treat employees and their spouses to a night out.

Relocating employees are often busy with unpacking and home decorating, but few would say “no” to box seats at a sporting event or an evening at one of the city's most exciting tourist attractions. A gesture like this costs just a small fraction of the total relocation budget and will foster good morale companywide.

5. Be there to answer questions.

The most important thing you can do as an employer following a corporate relocation is to let employees know you understand their situation and are here to help. A corporate relocation firm can work with your employees following their move to help them settle in, but there's nothing like a boss with an open-door policy to help create a stress-free work environment.

Even if your relocation company is conducting post-move interviews, check in with employees personally to see if they have any questions or concerns—about the moving process, the new office, their new neighborhood or even where to find the best Thai food in town. You might find that your employees can provide a wealth of information to help you settle in, too.

Topics: employee retention, relocation process, corporate relocation program, destination services, talent management

12 Key Points in an Employee Transfer Letter

Posted by George Herriage on Wed, Oct 31, 2012

11580itok5PheW4lT.jpegEmployee Transfer Letters are given to employees who are being transferred to a different branch, department or location of their employer. The reasons for these letters' existence is more than just common professional courtesy. Transfer letters provide employee and employer the "ground rules" of the transfer.

Learn more about how to write an employee transfer letter with our free article.

Foundation for Transfer Letters

The purpose and reasons for issuing transfer letters is central to successful intra-company moves. Among the motivation and goals of these documents are the following: 

  • Create a written record of the employee's transfer for the individual's personnel file..
  • Provide evidence that the transferee's compensation account follows the employee accurately.
  • Track the personnel in each department; observers can have a correct "head count" for staffing purposes.

Whether the transfer is employer-generated or a mutual agreement between employer and employee, the transfer letter offers visible, physical evidence of the move from one office or department to another. Since these documents are internal, they should be brief, to the point and devoid of legalese. Transfer letters should still contain pertinent information. 

Transfer Letter Checklist

Consider the following items as a guide to create appropriate transfer letters.

  1. The employee's full name and current address, with accurate contact information.
  2. Name of the department from which the employee is transferring.
  3. Name of the department to which the individual is moving.
  4. The exact effective date the transfer will take place.
  5. The name of the supervisor in the new department to whom the transferee will report.
  6. The creation or issue date of the transfer letter.
  7. Note perks or benefits, if any, the employee is to receive as a result of the transfer.
  8. Closely proofread the letter to eliminate any grammatical mistakes before issuing the document.
  9. Identify the reason for the transfer.
  10. State the official start date in the new department, if the date is different from the effective date of the transfer.
  11. Use a standard letter format or a memo format, whichever type is consistent with prior transfer letters given to other transferees.
  12. Be sure the letter or memo has the original signature of the appropriate person authorizing the transfer.

Along with the ability to use the format of your choice, it is not necessary to note whether the transfer is voluntary or involuntary. However, if there is a change in title or responsibilities, these items are material and may be described. While there is no mandate that this information be included in transfer letters, changes in titles and duties should be written on some physical document for inclusion in the employee's personnel file.

Should the employer commit to monetary support for the transferee, it should be described in the company relocation policy. If "special" support is part of the transfer, the letter could note this fact, although the details are not necessary in this document.

The most vital feature of transfer letters is their clarity. They should be straightforward and direct. The employee and authorized personnel, who may view the letter in the future, deserve this clarity to avoid misunderstandings or confusion that might be experienced by either party.

How to Write an Employee Relocation Letter

 

 

Topics: relocation process, corporate relocation program, writing relocation offer letter

What To Expect When Relocating Employees with Families

Posted by Rick Bruce on Tue, Jun 19, 2012

family_discussion.jpgMoving employees to the best positions in the company where they can offer the most productivity may sometimes require you to have that employee relocated to a different office. Based on the complexity of the move, a job relocation means more than just having the employee pack up his things on Friday and expect him to be in the office come Monday morning.

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

Employee relocation involves having the employee follow the company's standard relocation policy. Why do you need a relocation policy? Because this policy has to state what the company shall do to compensate the employee on his moving expenses, since the expenses for an employee to move may be more than what the employee can handle financially on his own. There are also other considerations.

Sometimes your company will not only be relocating the employee, but also his family. Employees will take this into consideration when deciding whether to accept the job at all. Job relocation requires the employee to enroll their children into a new school, requires the spouse to locate a new job, and may require the employee to sell his old home and buy a new residence. All these tasks take time, money, and cause stress to the employee.

Having a thorough relocation policy and accompanying paperwork can assist in accounting for the expenses the company will handle on the employee's behalf for the move, and gives the employee a checklist of all the things that he needs to do to make the job relocation the easiest of transitions for himself and for his family. The expenses that the company and employee has to consider.

  • Packing expenses -- including storage of items, hiring a moving company or renting a moving truck
  • Listing and selling the employee's old home.
  • Travel expenses for house-hunting trips.
  • Temporary lodging and meals for the employee and his family while they locate a new home.

A relocation policy will state whether the employee will be paid a lump sum amount to cover moving expenses, or be reimbursed for the expenses that the employee pays out of his own pocket. It may also require working with a real estate agency concerning the sale of the employee's old home. If the house is listed for too long, a company must decide whether to purchase the home on the employee's behalf, since the employee is carrying mortgage payments for every month that the house goes unsold.

Understanding all the details of employee relocation while drafting job relocation policies, paperwork, and allocating reimbursed expenses can be tedious. If you are a growing company who is now moving employees to the best job positions, you need to have all the appropriate paperwork for your employee, take time to work with a real estate agency, and ensure the employee's expenses do not exceed what the company is willing to pay.

This is why it's important to consult with a corporate relocation firm. The firm can assess the employee's relocation, address the proper resources that need allocated, and meet with the real estate company. By having the corporate relocation firm handling these important steps, it can make employee relocation easier on the company, the employee and the employee's family.

The Low-Stress  Relocation Guide

 

Topics: Home Selling and Purchase Assistance, relocation process, Family Relocation, lump sum package

Do-It-Yourself Relocation Management Can Cost Your Company More

Posted by George Herriage on Mon, Feb 20, 2012

Does your HR staff handle relocation management on its own? Have you ever considered hiring an outside firm to:

  • Line up the best vendors for providing employee relocation services
  • Act as a liaison between your company and those vendors, in the event of any customer service or communication issues
  • Organize the finer details of relocation management
  • Set benchmark relocation policies and standards
  • Provide guidance with complicated financial issues like tax gross-up
  • Ensure all employee reimbursement goes through in a timely manner
  • Make sure all necessary paperwork is in place
  • Help your company refine the process after each relocation to ensure a low-stress relocation for each employee?

If you think hiring an outside firm for relocation management is expensive, think about the costs associated with doing it yourself. Aside from tapping the resources of your HR staff, in-house relocation management can cost your company money if you:

  • Fail to find service providers that offer the best value for your money
  • Have to renegotiate relocation policies with each employee, because you don't have standards in place
  • Make errors calculating tax gross-up
  • Don't retain employees after a costly move

In the long run, hiring a relocation management company:

  • Saves your company time
  • Saves your company money
  • Increases retention rates for relocated employees
  • Makes employee relocation less disruptive to your workflow
CapRelo has a phased relocation process designed to increase employee retention rates, help employees return to full productivity faster after a move, and keep relocation costs down by managing the budget carefully. Real-time, online relocation management software gives your HR staff and other key personnel instant, 24-hour access to data related to a relocation, so you can spot problems quickly and compensate for surprise costs.

Topics: Home Selling and Purchase Assistance, relocation process, Relocation Services

Relocation Management Companies – Telling the Good from the Mediocre

Posted by Tamara Bianchi on Mon, Sep 26, 2011

Relocation management companies are known for making the business of transferring company employees to new locations easy. That’s what they do, and they do it well – some better than others. They accomplish this by deploying their considerable resources to tackle the logistical nightmare that picking up residence and putting it down elsewhere entails, giving corporate employees in the process of being transferred freedom from having to make their own arrangements.

smooth transition of workplace duties with minimal disruption of work productivity so that an employee can literally pick up work where they left off, in new surroundings, with all of the tools necessary to ensure continuity of businessThey also ensure the smooth transition of workplace duties with minimal disruption of work productivity so that an employee can literally pick up work where they left off, in new surroundings, with all of the tools necessary to ensure continuity of business. But if all relocation management companies do virtually the same thing, how can you tell if you’re connecting with an exemplary organization or a run-of-the-mill, average one?

One of the things that you don’t see offered by every relocation management companies is complete transparency in their procedures. There’s a difference between being told what’s going to happen and being able to check in on the progress at any time. With high caliber relocation management companies, you’ll have access to reports throughout the process of arranging and executing relocation that tell you the following:

  • Where funding of relocation resources has been allocated
  • How much funding has been spent and on what resources
  • The current status of documentation critical to relocation
  • The names and identities of all service suppliers involved in the relocation

Free Article:  A Guide to Developing  Relocation Policies
When making the important decision of which relocation management company to use to facilitate job transfers for your employees, transparency can and should be expected. A company that offers you any less should only be considered long enough to strike them from your list of potential partners.

Topics: relocation process, relocation management services, relocation management company

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