Executive Relocation packages come in a variety of shapes and sizes to meet various corporate goals and budgets. In recent years, as a result of difficult economic times, many organizations were forced to scale back the size of their relocation programs. However, as the economy rebounds, it’s important for companies to re-examine their program, especially when trying to recruit for executive-level positions.
Current Relocation Concerns
The current job market and continued real estate crisis has generated concern amongst corporations and professionals alike. Corporations need to tighten the belt on their budgets while still working to offer job relocation packages that entice quality executives, and professionals are reluctant to relocate and make job changes for fear of the unknown.
Before an executive will consider relocating for a job change, he or she will carefully consider questions such as:
- Will I qualify for a mortgage?
- Can my family and I establish a home there?
- Are there rentals that meet my needs?
- Can I sell my current house in this real estate market?
- Does the school system meet my expectations?
Employers must creatively deal with these concerns in cost-effective manners. This can be accomplished by developing a progressive domestic relocation policy that includes real estate assistance, the movement of household goods, and tax treatment.
WHAT'S INCLUDED IN AN EXECUTIVE RELOCATION PACKAGE?
Executive relocation packages typically include real estate assistance, moving assistance and tax treatment. It is essential to include these benefits in executive relocation packages. This ensures employees or potential recruits have the tools to answer critical questions and minimizes stress of the unknown.
1. Real Estate Assistance
The challenge of selling a home is one of the top reasons employees don’t want to relocate. The real estate crash placed homeowners in awkward and untenable positions, and many find themselves underwater (mortgage balance higher than market value of homes). Companies offering an executive relocation package can fall short of executive’s needs. Homeowners should not have to risk losing thousands of dollars because of a forced sale for relocation.
A relocation package should include employer incentives such as loss-on-sale features, quick sale bonuses, buyer incentive assistance, and/or other creative housing-related benefits. Transferring employees find these benefits critical to relocation options and choices.
2. Movement of Household Goods
Whether a relocation package includes a lump-sum payment or full reimbursement of costs for moving belongings and family, this benefit should be a relocation package component. Some companies make relocating a DIY project, others offer the services of a van line, while others rely on a third party move management program to save work and stress on the employer and transferring employee.
With the real estate market flooded with short sales and foreclosures that require more time to close than the standard home sale, companies may want to consider extending standard storage times. It may also be beneficial and valuable to a transferring executive or recruit to offer a trusted and proven professional mover to manage their large and unique moves.
Simply arranging for a moving company to transport your executive's household goods isn't sufficient. You need to understand how the company handles executive relocations, and then thoroughly vet the company to assure it's up to the job. For example:
- Determine if the moving company has written policies and procedures for relocating top executives. Obtain a copy and review it to determine what services are included for executive moves that differ from more routine relocations.
- Does the mover have a dedicated team of highly-rated employees specially trained to handle executive relocations? How did those top-rated people obtain their ratings? What measures were used to determine which employees are best suited to providing quality service for executive moves?
- How does the moving company handle quality control issues? Do they have a 24x7 single point of contact for customer service?
- Does the moving company offer a Service Level Agreement (SLA)? What components are included in the SLA? For example, do they have sufficient resources (trucks, people and scheduling systems) to assure the loading of household goods will be completed on the date and time promised, without compromise?
- Is an On Site Manager (OSM) designated for the move? If so, does he or she oversee the entire household goods shipment? Is the OSM on-site at the destination to provide continuous supervision of the unloading process?
Household goods shipment is one of the most important facets of an executive relocation. If your HR department doesn't have deep experience in such relocations, it is possible – perhaps likely – that you'll hit “speed bumps” along the way that can lead to loss of productivity, dissatisfaction with the entire relocation process and negative impact on your company. Instead, you may wish to consider outsourcing the household goods transportation process to a firm that specializes in working with top executive relocations.
3. Tax Treatment
Moving costs money, and employees need their relocation-related out-of-pocket expenses reimbursed in a timely and accurate manner. If expenses are not properly coded or tracked, they could spin out of control. That burden, along with end-of-year tax reporting related to relocation expenses, can cause unnecessary stress.
An executive relocation package needs to include management of all invoicing, payments, tax filing, and tax gross-up benefits to make the process easy and hassle free.
At a minimum, HR professionals should consider including these three critical benefits in a relocation package. Employers will decide if any additional benefits, e.g. retention bonuses, are featured in a relocation package. If relocation policy design is an intimidating task, consider utilizing the expert services of a relocation management company like CapRelo. Relocation policies that are designed and measured to meet strategic objectives are essential to a company’s success.
ANTICIPATE PROBLEMS BEFORE THEY ARISE
The key to a successful relocation may be seen as having a staff of skilled relocation specialists on hand to put out fires and handle circumstances as they arise. This is largely true. But if you want the real secret to pulling off a flawless relocation, the key is in anticipating problems before they occur.
The great news is you don’t have to be psychic to tune into what these things may be. You just have to be sympathetic to the fact that relocation, especially for executives with families, can be a daunting experience. Consider offering the following destination services in your relocation package:
FINDING GOOD SCHOOLS
This requires a dedicated agent to perform in-depth research into the quality of schooling in the area where the employee and their family are to be relocated. Ultimately, school decisions are made by the parent – but all of the legwork can be done for them in advance and presented to them in a comprehensive report.
Today, it's the rare family where one parent works and the other stays at home. When offering relocation to an employee with a working spouse, equal consideration should be given to that person's career choices in the new location. Research into the local job market should be performed and delivered to aid in the employee's decision to relocate.
Uprooting a life can have significant consequences, including feeling cut off from friends and family. If that also extends to social and leisure interests, the relocated employees and their families may experience serious difficulty adjusting to their new environment. Providing information on personal or professional associations at the destination location can have a beneficial impact on that transition.
PLACES OF WORSHIP
People who attend churches, temples or mosques have a relationship with the leaders of these places of worship, was well as with the congregation. When offering relocation to any executive employee, it's imperative to remain sensitive to this fact by conducting thorough research on similar institutions in the destination city.
DON'T FORGET THE PETS!
Most moving companies have rules against transporting live animals or plants, and still more aren't qualified to move expensive items like fine art. In these cases, alternative arrangements have to be available to accommodate relocating employees whose belongings include more than just boxes of clothing and furniture.