Successfully relocating executives and professionals involves a combination of both obvious, straightforward relocation expense, along with some hidden costs. These increasing costs are doubly troubling as corporate profits remain flat or decline. While many companies continue to stay on the "sidelines" instead of entering the hiring game, businesses still must function, including the relocation of executives and newly hired talent.
Whether employers have in-house professionals or employ outside relocation specialists, identifying and managing the most burdensome expenses is a top priority. The average cost to move current employees, who are homeowners, is over $60,000 each, with new hires almost $50,000 per executive.
House Hunting Costs
House hunting costs are real, but subjective. Reimbursing these expenses is an expected benefit of relocation packages. Creating a fair balance for your budget and the tax considerations for your executive can be an effective method to help your transferee or new hire, while helping your company manage this cost.
Lodging and Meals
Lodging and meals are costs that vary widely with the new location. If you are accustomed to relocating employees to Oklahoma City or New York City, you are already aware of the wide spectrum. However, regardless of whether you relocate your executives to Durham, NC, or Boston, MA, these costs will be significant. Setting reasonable maximums (key word, "reasonable") will help your company control these costs while fairly compensating your executives for a necessary relocation expense.
Direct Moving and Transportation Costs
Direct moving and transportation costs remain burdensome. While furniture and personal possession weight is the primary variable, time and distance considerations strongly influence the magnitude of this expense. In some cases, your company may need to add the cost of personal property storage to the overall direct expense of moving items. Finding a new home, executing a sales agreement and closing on a real estate transfer often mandates storing furniture and personal property for timing reasons.
The stress factor cost is hidden, but cannot be overlooked as a burdensome cost of relocation. Many psychologists claim that the stress level from relocation is only less damaging than that felt by the loss of a loved one. Corporations that structure relocation packages to minimize their executive's stress level will enhance their productivity and create a successful transition for their new/transferred employee.
Helping your executive sell his/her current home and helping the transferee buy a new residence remains costly. The real estate crash of 2006 has increased this relocation expense. Depending on the to/from geographical areas involved with your transferee or new hire, these costs can be burdensome. Renters being relocated typically cost your company between $16,000 and $18,500 as compared to $52,000 to $65,000 for transferring a home owner. Negotiating competitive realtor commissions helps to manage this important expense.
Global relocation injects more variables and costs, including procuring proper visas, language education and culture integration assistance, all of which comes with a cost in dollars, time and/or psychological issues. Managing these costs while helping your transferee or new hire remain comfortable is an important challenge your company needs to overcome.