CapRelo Blog

What is a Relocation Package & What Should it Include?

Posted by CapRelo on Wed, May 30, 2018

WHAT IS A RELOCATION PACKAGE?

When a company offers an employee long-term employment in a location more than 50 miles from the current work location, a company may offer a relocation package. This 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.

relocation package helping with moving costs

 

Are Relocation Packages Common?

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 recent 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-

Another recent survey by Worldwide ERC® 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 ever 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 but also 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.

- Relocation Packages and the Modern Workforce -

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.

searching for relocation package information

  

Components of the Average Relocation Package

The average job relocation package will include the following features. Please note that this is a more subjective, than objective, list. Depending on the industry and their competition’s relocation packages, employers can tailor their programs to offer the most competitive and attractive packages to attract and retain top talent. 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. 

Successful assignments and transfers depend on competitive, comprehensive relocation packages. These 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, those that meet the needs of both the employer and employee will be most effective. Oftentimes, these components can be negotiated. But what are some of the features common to the average job relocation package?

Find more relocation package examples and features in our free guide.

  • Full pack and/or unpack services. The employee's household goods are packed by a moving company, saving the employee time and stress. After arriving at the new destination and home, moving company personnel unpack the household goods.
  • Quality moving company service with reasonable insurance coverage. Some moving companies are known for quality moves, some are not. Since moving charges are usually based on total weight, insurance for damaged or lost goods should be equal to your goods’ value.

  • Home sale or lease-breaking penalty assistance. Home sale help can come in a variety of ways, from company-sponsored reimbursement for money lost on quick home sales, professional marketing help to accelerate the timing of sales to the employer buying the home. Renters can expect employers to pay contractual penalties for early lease termination.

  • House-hunting trip, minimum one. Standard relocation programs commonly include at least one, preferably two, company-paid house hunting trips of short duration to give the transferee and family opportunities to find new homes. 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 housing. Standard relocations include at least 30 days of temporary housing for transferees.

  • Transportation, including auto moving, to the final destination. Most relocation packages include reimbursement for transporting your transferee and his/her family to the new location. If the transferee can travel by auto, reimbursing for mileage expenses is common. Should the move require plane or train transportation, standard packages often include reimbursing the cost of moving the transferee’s vehicle(s).

  • Miscellaneous expenses. As usual the “miscellaneous” category can encompass a lot of small costs. These can include driver’s license fees, pet registration and licenses, cleaning services at the new home, utility hook-ups and other move-related expenses. To keep this category cost controlled, identify or cap most eligible costs.

These are commonly included features of typical relocation packages, which we outline in our guideDepending on your industry and facility locations, there may be more features in the typical relocation package.

Popular features in a standard relocation package may also include:

  • temporary living expenses when transferees must meet hard deadlines to move
  • storage costs for household goods before employees can move into new homes
  • spousal employment assistance in the new location
  • childcare costs and elder help for transferees caring for elderly parents.
  • school location assistance for school-age children
  • a loss-on-sale allowance in the event your present home sells for less than its purchase price (not uncommon since the Great Recession)
  • trips home for those in longer-term temporary housing, usually limited to one every 30 days

Your typical relocation package may or may not include some or all of the noted features. However, in all cases, you should regularly compare your package with those of your competition. If your program is significantly deficient in some area, make senior management aware of the discrepancy, advising them to consider upgrades to keep your standard package equal to your competition’s packages.

While it can be true that the higher the level of an employee’s status within an organization, the more comprehensive and inclusive the job relocation package will be, 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 job relocation packages.

what the average relocation package includes

 

What Kinds of Relocation Packages are Available?

There 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 typical 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.

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.

the different types of relocation 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.

 

Relocation Packages are good for both sides

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.

relocation packages help transferees

 Editor's note: This post was originally published on February 11, 2014, and has been updated for accuracy and comprehensiveness.

 

Topics: relocation management services, corporate relocation program, standard relocation package, employee relocation

Tips for Designing a Core-Flex Policy

Posted by Amy Mergler on Thu, Feb 15, 2018

Team MeetingDesigning a core-flex policy takes time and work. Nevertheless, by committing to creating a comprehensive program from the start, making periodic updates and adjustments becomes easier. It’s advisable to establish several factors up front:

Competitive Core-Flex Policies in Specific Industries

HR departments and mobility managers should begin by researching what their competition provides in terms of mobility benefits. Because mobility benefits are critical to attracting top talent, knowing what competitors offer will provide some guidance about the services to include, as well as the average budget for each. Of course, it may be challenging to find this information, so consulting with an experienced global mobility company to gain insights about the components of the average core-flex policy can be helpful.

Core Components

As we’ve seen, household goods moving, travel costs and other benefits the company considers critical are standard core components. Depending on the company’s needs and budget, relocation counseling, visa and immigration services, tax equalization, lease services, temporary housing and home-finding assistance may also be included, especially for long-distance and international moves.

Flexible Services Offering

Flexible benefits can include home finding trips, home sale and home purchase support, property management, mortgage assistance, temporary living, spousal support and career services, child and elder care assistance, language training, cross-cultural training, school search assistance, pet transport, vehicle transport, lump sum assistance and tax services.

Note that whether a service is categorized as a core component or an additional service depends entirely on the employer. Companies in competitive markets that want to surpass the competition may decide to include more services in the core component to attract more talent.

Policy Tiers

This is determined by factors such as employee seniority, family size, relocation distance, international travel and homeownership. It should be clear that most companies will allocate a larger budget to senior managers than junior employees, that homeowners need more support than renters and that international moves have different core and flex needs than domestic ones.

Flexible Services Selection

Given the sensitive nature of these selections, a global mobility management company can be a key resource in these discussions and in providing recommendations and guidance to both the employer and employee. HR professionals and even supervisors may not have a full understanding of their employees’ personal lives and their corresponding responsibilities. For example, a manager might not know that a transferee cares for a disabled parent or that an employee wants his or her children to attend a specific kind of private school. In short, it’s essential to give employees a say in determining which services he or she receives and come to an arrangement that suits both employee and employer. The expertise and experience of a global mobility management company can be helpful in providing advice on which flexible services companies may want to consider including in their policy.

Guide to Core-Flex Policies

Topics: core-flex policies, talent mobility, global mobility, employee relocation

January 2018 Mobility Survey

Posted by Amy Mergler on Wed, Jan 31, 2018

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 of the previous month's survey. 

Below are the results for October's survey and this month's survey questions.

December Survey Results

1. Does your company process mobility-related tax matters in-house or do you out-source?

In-House: 67%
Out-Source: 34%
Don't Know: 0%

2. What is your top challenge associated with mobility-related tax matters? (Choose all that apply)

Calculating/handling tax gross-up: 67% 
Keeping current on changes to tax laws: 100%
Payroll taxes and withholding: 34%
Tax reporting/forms: 67%
Other (please specify): 0%

3. If your company provides tax gross-up as a benefit to your transferees, which method do you use for calculating gross-up?

Flat Method: 0%
Supplemental/Inverse Method: 34%
Marginal/Inverse Method: 0%
Unknown: 67%
Do Not Offer Tax Gross-Up: 0%

 

This month's survey addresses executive talent mobility programs.  

 

Create your own user feedback survey

Topics: relocation packages, employee relocation

December Mobility Survey

Posted by Amy Mergler on Tue, Dec 26, 2017

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 of the previous month's survey. 

Below are the results for October's survey and this month's survey questions.

October Survey Results

1. Does your company measure employee engagement for your relocated employees?

Yes: 0%
No: 34%
Don't Know: 67%

2. How does your company measure engagement? (Choose all that apply)

Employee Engagement Surveys: 0% 
Observation of Day-to-Day Employee-Management Interactions: 0%
One-on-One Employee Meetings: 67%
Stay/Exit Interviews: 34%
Employee Net Promoter Score: 0%
Unsure: 34%
Other (please specify): 0%

3. Which of the following have you implemented in your talent mobility program to address employee engagement? (Choose all that apply)

Developed mobility policies that are employee friendly while staying within corporate budgets: 34%
Developing mobility solutions that align with your company's culture and workforce as part of your regular benefits program: 34%
Engaged actively with employees' family members to offer support and assistance: 34%
Worked out tax issues before relocations take place: 67%
Unsure: 0%
Other (please specify): 0%

 

This month's survey addresses mobility and taxes.  

 

Create your own user feedback survey

Topics: relocation taxes, calculating tax gross up, relocation packages, employee relocation

October Relocation Survey

Posted by Amy Mergler on Wed, Nov 01, 2017

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 of the previous month's survey. 

Below are the results for last month's survey and this month's survey questions.

September Survey Results

1. Does your company have a core-flex talent mobility policy?

Yes: 42.9%
No: 57.1%
Don't Know: 0%

2. What motivated your company to use a core-flex policy? (Choose all that apply)

Cost Savings: 66.7% 
Customizable: 66.7%
Recruitment Tool: 33.3%
Exception Reduction: 0%
Unsure: 33.3%
Other (please specify): 0%

3. What challenges did your company face when developing your core-flex program? (Choose all that apply)

Determining precisely which benefits to offer: 66.7%
Balancing core and flexible benefits: 66.7%
Establishing reporting and metrics procedures: 0%
Ensuring consistency of policy application: 0%
Establishing streamlined processes to facilitate the implementation of the policy: 0%
Unsure: 66.7%
Other (please specify): 0%

 

This month's survey addresses employee engagement.  

 

Create your survey with SurveyMonkey

Topics: relocation packages, employee relocation, employee engagement

September Relocation Survey

Posted by Amy Mergler on Tue, Sep 26, 2017

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 of the previous month's survey. 

Below are the results for last month's survey and this month's survey questions.

August Survey Results

1. Does your company address employee retention after relocation in your mobility program?

Yes: 40%
No: 40%
Don't Know: 20%

2. Which relocation concerns affect employee retention in your company? (Choose all that apply)

How relocation impacts employees' families: 80% 
Tax/financial impact of relocation: 0%
Real estate concerns: 40%
Anxiety and acclimatization concerns associated with moving: 40%
Unsure: 20%
Other (please specify): 0%

3. Which of the following does your company's mobility program address to improve employee retention? (Choose all that apply)

Tracking retention rates following employee transfers: 20%
Fully interviewing, evaluating and screening employees prior to a potential transfer: 20%
Providing relocation assistance with real estate considerations: 60%
Providing tax assistance: 40%
Offering adequate spousal/partner support: 20%
Following up with employees regarding their relocation experience: 40%
Unsure: 20%
Other (please specify): 0%

 

This month's survey addresses Core-Flex Policies.  

Create your survey with SurveyMonkey

Topics: relocation packages, core-flex policies, employee relocation

12 Key Points in an Employee Transfer Letter

Posted by CapRelo on Fri, Sep 15, 2017

Employee Transfer Paperwork

Employee transfer letters are given to employees who are being transferred to a different branch, department or location of their employer. The reasons for the letters 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 employee relocations. Among the motivation and goals of these documents are the following: 

  • Create a written record of the employee's transfer for the personnel file.
  • Provide evidence that the employee's compensation account follows the employee accurately.
  • Track the personnel in each department to ensure 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 department or location to another

Transfer Letter Checklist

Consider the following items as a template from which to create appropriate transfer letters.

  1. The employee's full name and current address, with accurate contact information.
  2. Identify the reason for the transfer
  3. Name of the department or location from which the employee is transferring.
  4. Name of the department or location to which the individual is moving.
  5. The exact effective date the transfer will take place
  6. State the official start date in the new location, if the date is different from the effective date of the transfer
  7. The name of the supervisor in the new department to whom the transferee will report.
  8. The creation or issue date of the transfer letter.
  9. Note the details of the position in the new location, including any bonuses the employee is to receive as a result of the transfer.
  10. Use a standard letter or memo format, whichever is consistent with previous transfer letters issued by the employer.
  11. Closely proofread the letter to ensure accuracy.
  12. Ensure the letter or memo has the original signature of the appropriate person authorizing the transfer.

If there is a change in title or responsibilities, details about those changes may be described. Additionally, changes in titles and duties should be documented for inclusion in the employee's personnel file. The letter should refer to the the company's relocation policy and summary the portions of the policy applicable to the employee. 

The most vital feature of transfer letters is their clarity. They should be straightforward and direct. This will avoid misunderstandings or confusion regarding the transfer.

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Topics: writing relocation offer letter, employee relocation, employee transfer

August Relocation Survey

Posted by Amy Mergler on Tue, Aug 22, 2017

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. Below are the results for last month's survey and this month's survey questions.

July Survey Results

1. Does your company relocate employees globally?

Yes: 100%
No: 0%
Don't Know: 0%

2. Does your Global Mobility program include any of the following services? (Choose all that apply)

Area Orientation: 80% 
Home-Finding Assistance: 80%
Foreign Language Training: 100%
Cross-Cultural Instruction: 80%
Spousal/Partner Support: 40%
Financial Consultation/Support: 40%
Unsure: 0%
N/A: 0%
Other (please specify): 0%

3. Has your company undertaken any of the following measures to help control global mobility costs? (Choose all that apply)

Regulate cost of living allowances: 40%
Reevaluate host country housing allowance: 80%
Avoid zero-cost housing: 20%
Lower house-hunting trip reimbursements: 20%
Reassess costs of language training, coss-cultural training, home finding and familiarization trips: 40%
Regular review of your Global Mobility program: 60%
Unsure: 0%
Other (please specify): 20% (formal exception management process)

 

This month's survey addresses Employee Retention after Relocation.  

Topics: relocation packages, employee relocation, employee retention

July Relocation Survey

Posted by Amy Mergler on Tue, Jul 25, 2017

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. Below are the results for last month's survey and this month's survey questions.

June Survey Results

1. Do you offer destination services to address issues associated with relocating your employees' families?

Yes: 50%
No: 37.5%
Don't Know: 12.5%

2. Which destination services do you offer? (Choose all that apply)

Research on Schools: 57.14% 
Spousal/Partner Support: 14.29%
Social Assistance: 28.57%
Research on Places of Worship: 28.57%
Unsure: 0%
N/A: 42.86%
Other (please specify): 28.57% (Orientation, Home Search, Locating Banking)

3. Which of the following are included in your mobility program? (Choose all that apply)

Home-Selling Assistance: 62.5%
Home Purchase or Rental Assistance: 50%
Household Goods Packing and Moving: 75%
House-Hunting Trips: 62.5%
Temporary Living Allowances: 62.5%
Unsure: 12.5%
Other (please specify): 12.5% (Currently provide a lump sum)

 

This month's survey addresses Global Mobility.  

Topics: relocation packages, global mobility, employee relocation, international relocation expenses

5 Steps to Ease the Transition to a New School

Posted by Amy Mergler on Fri, Jun 02, 2017

Portrait of smiling little school kids in school corridor.jpegRelocating for a job is not only challenging for the employee and their spouse, it can be especially hard on children, who are going to be nervous about their new home and starting over and making new friends at a new school.

Ideally, a relocation will take place during the summer so the children can start school on time with the rest of their class. But even if that's not the case, there are some steps that can be taken to make the transition to a new school easier on kids of any age.

5 Steps to Help Kids Start Off on the Right Foot at Their New School

  1. Take a tour of the school. Arrange an orientation visit prior to school starting to introduce the children to the school and teachers, if possible.
  2. Be open and honest with teachers and administrators. Your employee should be prepared to provide additional information about their children to educators in the new school that might not be contained in test scores or transcripts.
  3. Find out as much as possible about the school. What clubs are available? Is there a winning football team? The more information the employee has about the school, the more they can share with their children.
  4. Help them prepare. Above all else, school-age children want to fit in. Use the orientation visit to identify the basics in advance like clothing styles or favorite after-school hangouts. Get a list of supplies so children have everything they need on the first day.
  5. Be honest, but upbeat. The employee should answer any questions children have honestly, putting a positive spin on things when they can. If the answer is unknown, encourage the children to help in researching the answer.

Relocating Employees with Families

Topics: Family Relocation, employee relocation

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