Every business, from the sole proprietorship to a global corporation, has a budget. Whether it's a complex, multi-faceted budget, employing the most exotic, cutting-edge software or written in pencil in a general ledger, business budgets are a necessary reality.
However detailed or simplistic your budget, there are two primary areas of concern: company income and expenses. How you manage both has a direct effect, either positive or negative, on your company's bottom line.
You understand that relocation services are necessary for most businesses, even if the company is a single location employer. Even one-location companies hire people outside of their area at times.
Relocation Budget Challenges
When designing a relocation budget, three or four factors work in tandem or in conflict to create financial challenges:
- Uncertainty of the number of employees needing relocation services.
- Predicting the number and type of exceptions to your relocation policy.
- Inflationary factors that may increase costs of relocation.
- Policies with home selling assistance involve timing uncertainties and potential shortfalls in selling prices.
Other expenses can increase or decrease your relocation budget line items. Try setting budget amounts for various policy components based on historical company relocation records, understanding the key word is fluidity, since you cannot predict unanticipated costs accurately in advance.
The Balancing Act
All relocation programs involve delicate balancing acts, regardless of company size. On either side of the scale are two issues:
- Having competitive relocation programs that attract the talent you need and encourage current staff to accept relocation assignments.
- Managing and controlling costs to stay within budget.
Economic conditions, the job and housing markets, and transfer locations influence the competitive and cost factors of your relocation policy. These factors exist when applying your policies to senior executives or other personnel.
While easier to estimate or cap actual moving costs, expense control difficulty spikes when factoring in changes to domestic or global economic conditions, along with the whims of the employment and real estate markets. These factors can enhance or discourage attracting and keeping the staff talent you need.
- The simplest way to control costs is to offer a single-tier policy that makes no distinction between executive and non-senior management personnel. However, unless your industry and your competition also offer similar programs, you'll be challenged to attract the best talent. Multi-tier relocation programs are always more attractive to new hires and current employees
- Many employers find that having third-party professional relocation firms manage their programs offers the best budgetary cost control, while providing transferees with enough attention to increase their productivity faster while minimizing the stress to HR or recruiting staff.
Exercising cost control, while still offering attractive, competitive features, such as real estate assistance, helps you attract the talented employees your company wants. Convincing senior management and financial departments that your relocation policy offers cost containment, along with competitive features, is vital.
Since the recession, some employers are adopting different approaches to control and reduce relocation costs. Offering more short-term assignments than permanent relocations, hiring more telecommuters and setting maximum reimbursements for specific features are among the more popular relocation policy components being employed today. Strive to offer a relocation policy that achieves the goals of attracting the best talent and controlling costs to fit budgetary realities and your strategic objectives.