CapRelo Blog

Build Bonus Incentives into Your Executive Mobility Policy

Posted by Amy Mergler on Wed, May 23, 2018

Businessman pressing business type of modern buttons with virtual backgroundA 2017 corporate relocation survey reported that nine out of ten firms that offer incentives in addition to the standard inclusions of a relocation package are far more successful in convincing an employee to relocate than those who don't. 

Some popular incentives among employees—and those that may be most likely to win over an employee who is having a hard time deciding—include the following:

Extended Temporary Housing benefits

While reimbursement for temporary housing is a standard inclusion of most mobility packages, being able to extend those benefits if employees have difficulty locating a permanent home can make a big difference in their decision.

Monetary Bonuses

Monetary bonuses continue to be attractive to executives when making a decision to relocate. Because the bonus is considered taxable income, a tax gross up is necessary to ensure the executive receives the full bonus amount.

Cost of Living Adjustments

Executives relocating from one area of the country to another, or from one country to another, may find their salary isn’t sufficient to cover the cost of living in the new location. Typically this is offset by a separate compensation package and not a relocation benefit, but in some cases, it may be included in the latter.

A comprehensive mobility program is critical to recruit and retain executive talent. If your program includes provisions for bonus incentives, it may encourage more executives to accept a relocation or transfer offer.

Download Our Executive Mobility Guide

Topics: executive relocation package, executive mobility program, bonus incentives

Address Real Estate Concerns in Your Executive Mobility Program

Posted by Amy Mergler on Tue, May 15, 2018

sold_home2-resized-600-2A comprehensive talent mobility program is essential to recruit and retain top executive talent. Offering a competitive mobility package is one way to attract and keep the best talent on your executive team.

Addressing concerns about selling a current home and purchasing a new home in your mobility program may play a large part in an executive’s decision to accept a relocation offer. Consider the following for your executive mobility program:

Guaranteed Buyout Program

A Guaranteed Buyout (GBO) program involves providing a buyout offer after a home has been on the market for a certain length of time. This gives your employees the assurance that they can confidently purchase a new home without the constant worry of whether their old home will sell.

Buyer Value Option Program

A Buyer Value Option (BVO) program offers similar advantages to a GBO once an outside buyer has been identified. This option often focuses on providing employees with sufficient marketing support to sell their homes.

Home Sale Bonus Incentives

A home sale bonus incentive involves providing an additional bonus for employees who sell their homes within a certain period of time. These bonuses – also known as quick sale bonuses – provide employees with motivation to sell their homes more quickly and relocate without having their attention, focus and efforts diverted by their former properties.

Loss on Sale Provisions

A loss on sale provision involves reimbursing employees for a loss incurred due to the sale price of their home. This helps assuage employees’ fear about losing money on a home sale.

Home Staging Assistance

Provide access to a third party company to stage your employees’ homes for sale to improve the chances for them to sell quickly.

New Location Orientation & House Hunting Trips

Conduct research on area neighborhoods, schools, child care, typical commute times, medical services, places of worship, etc., and provide that information to help your employees become familiar with the new location and assist them during paid house hunting trips.

Home Finding Assistance

Look for and provide access to real estate professionals in the area who have relocation experience. These professionals will be best suited to manage the time constraints of your employees’ house hunting trips to maximize the use of their available time.

Download Our Executive Mobility Guide

 

Topics: talent retention, executive relocation package, talent acquisition, talent mobility, executive mobility program, mobility package

January Relocation Survey

Posted by Amy Mergler on Fri, Jan 20, 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.

December Survey Results

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

100% of respondents out-source the processing of relocation-related tax matters.

2. What is your top challenge associated with relocation-related tax matters?

67% of repondents report that keeping current on tax laws is their top challenge. 33% indicate that tax reporting/forms are their top challenge. 

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

33% of respondents use the flat method for calculated gross-up. 67% did not know which method is used. 

 

This month's survey addresses executive relocation policy features.  

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Topics: executive relocation package, relocation policies, employee relocation

Executive Relocation Packages: Anticipate Problems Before they Arise

Posted by Amy Mergler on Thu, Aug 04, 2016

be-prepared.jpgThe 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.

Learn more about executive relocation packages in our free article.

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.

Spousal Support

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.

Social Assistance

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.

Executive Relocation Guide

Topics: Family Relocation, destination services, executive relocation package

What You May Not Know About Lump-Sum Employee Relocation Packages

Posted by Amy Mergler on Wed, Sep 16, 2015

productivity.jpgThere's a lot to think about if your company is considering changing to a lump-sum employee relocation package rather than reimbursing moving expenses for relocating employees. Here are a few factors you may not have considered.

Employee satisfaction may be lower when employees are left to manage their own funds, as with a lump-sum relocation package. Employees hoping to save money (and pocket the difference) when they receive a lump-sum relocation package to pay for their moving expenses may end up unhappy with the service they receive if they shop by price for relocation service providers. This could result in a slower return to productivity as well as a lower employee retention rate following the move.

Learn more about lump-sum relocation packages by downloading our free guide.

Employees who are busy organizing and managing their move will not be fully focused on their job. Moving can be a stressful time. When employees are left to fend for themselves when selling their home, lining up household goods movers, and even finding a new place to live, their minds are not on their job. This could result in lost productivity.

A lump-sum employee relocation package may not save your company money in the long run. Letting employees manage their own move can result in relocation delays if a house won't sell, and can lead to lost productivity. While lump-sum packages save your company money in administrative costs and time, they may not represent the significant cost savings you believe, especially if employee relocation packages that reimburse expenses lead to all-around greater employee satisfaction and low-stress relocations.

We're not specifically advocating one type of program over another, but it's a good idea to evaluate your situation – or call on a relocation management company to help – if you are thinking of changing your employee relocation policy.

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Topics: employee retention, Home Selling and Purchase Assistance, Relocation Services, relocating employees, relocation management company, executive relocation package, lump sum package

Relocation Packages Designed to Attract the Right Executive

Posted by Jim Retzer on Tue, Sep 16, 2014

 

Are you trying to attract the right executives to your company? If so, you may want to look at the relocation packages your company offers. This video discusses why your company should use specialized relocation packages to attract the right employees.

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Topics: Home Selling and Purchase Assistance, executive relocation package

Employee Relocation Policies and Real Estate: A Tiered Approach

Posted by Jim Retzer on Tue, Sep 02, 2014

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Tiered Relocation Packages

An emerging trend concerning employee relocation is tiered relocation packages. These packages are tailored to each level of employee and offer benefits according to those levels. Corporations have started utilizing tiered policies to provide more flexibility for hiring managers and to cut the overall costs of relocations.

Learn more about cutting costs using tiered relocation packages.

Design Your Tiers

To organize a tiered relocation policy, first you must assign each transferee into categories. The options and benefits will be different for each category. For example, consider a corporation with a tiered relocation structure and four categories, or tiers, of employees being relocated. The first tier, Tier One might include a relocation package specifically for executives. Tier Two packages may apply to middle managers and Tier Three for all other employees. The fourth Tier might apply to college recruits and new hires.

How to Categorize Your Employees

In this tiered approach, the benefits allowance and options available in each category will directly correspond with the transferee’s position or level within the company. This is how the company uses the tiered approach to cut costs while still providing for the needs of each group of transferees.

Some companies devise tier policies according to whether an employee has been with the company or are a new hire. This approach would only save on over all relocation costs if the company has a regular stream of new hires coming in. If new hires are the minority, then the company would still be paying the full amount to relocate existing employees, i.e. fewer savings.

Relocating Homeowners

Costs to move a home owning employee are considerably more since homeowner transferees require assistance for closing costs on their sold home (direct reimbursement or Buyer Value Option) as well as reimbursement of the purchases costs of a new home in their new location. The company’s goal is to keep real estate out of company inventory whenever possible, but holding onto a house in order to hold on to a key player in the company is sometimes the better choice.

Buyout vs. Lump Sum

Recent college graduate new hires logically will require minimal pay out, as compared to a relocating executive who would most likely require a much more substantial package. Lower level employees or middle management might qualify for a Buyer Value Option (BVO) program which puts the pressure to sell the home quickly onto the employee. However, in today’s real estate market a guaranteed buyout may have to be offered as a last resort to ensure the sale of the home. Many companies have started providing lump sum payments for lower tiers/new hires since their relocation needs are typically much less.

Conclusion

The bottom line in employee relocations is going to be cost. If a company is paying lump sums of equal amounts to all transferring employees, chances are it is costing the company considerable amounts of money unnecessarily. With a tiered approach, however, the company stands to save significant costs related to relocating their employees. The key to a tiered approach is sorting the employees into groups and tailoring relocation packages according to the different requirements for each tier.

Save Time & Money Using Tiered Relocation Packages

 

Topics: Tiered relocation packages, Real Estate, executive relocation package

Relocating Employees: Benefits of Buyer Value Option for Home Sales

Posted by Shirien Elamawy on Tue, Jul 08, 2014

What is a Buyer Value Option? What are its benefits?

money_house.jpgBVO (Buyer Value Option) is a program designed to aid a transferring employee in the quick sale of their home, with no obligation to pay real estate commission or closing costs. There are many benefits to choosing the BVO option, as a transferring employee will want a quick and easy sale of their current home and the employer will want their employee's focus to be on productivity rather than the hassles of trying to move and sell a home at the same time. Choosing the BVO option is favorable, especially since it is a less expensive alternative to an AVO (Appraised Value Option) which for decades was the property sales standard program. BVO programs have become very popular within home sales options.

Learn more about real estate considerations in your relocation policy in our free article.

The Buyer Value Option offers benefits for both parties: the employer and the relocating employee. Here are a few examples:

Reduced Risk of Inventory: Inventory for the Company typically means carrying costs and the potential loss involved in the sale of the property, and a BVO program reduces (but does not completely omit) this risk. This reduction of risk stands to benefit the employer, by lowering overall relocation costs.

Flexibility: Because the risk of carrying inventory has been reduced, companies often believe in being more lenient regarding eligibility and marketing efforts. This does come with other risks, however. Allowing a transferring employee to list their property above market value could mean the property spends more time on the market and carries higher risk of fall through. Marketing a property realistically, priced to sell, limits the flexibility but reduces this risk significantly for the Company.

Eligibility: If the property does not qualify to be in a home sale program, a BVO will not help or change the likely outcome and the risk remains of the property becoming inventory for the Company. Setting and adhering to certain standards surrounding eligibility are crucial for the Company’s benefit.

Taxes: When a BVO is structured correctly, the program can offer the transferring employee significant tax savings on the selling cost of their home in comparison to a direct reimbursement.

When a BVO is handled optimally, the employee enjoys a quick sale of their home and the employer does not carry the inventory of ownership for an extended period of time. This makes the BVO program a win-win for both the Company and the relocating employee. The faster a home sale can be completed, the sooner the transferring employee can complete their relocation and return their focus to their work in the new location, thereby increasing productivity and significantly reducing stress on both the employer and the employee. 

 

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Topics: Home Selling and Purchase Assistance, Buyer Value Option, executive relocation package

Executive Relocation Packages - Household Goods Moving Services

Posted by Jim Retzer on Tue, Jul 01, 2014

The Challenge

C  Users selamawy Documents Photosthop Images globe boxesYou invest significant resources in recruiting and retaining top-level executives to guide your company toward growth and greater profitability. For those executives who accept a relocation assignment, transporting their household goods must be handled with the utmost care and much more detailed planning than would be required for a more typical relocation.

Learn more about how to develop an attractive executive relocation policy in our free article.

Providing top quality services that address their special needs can smooth the relocation process and bring your executive back to full productivity far more quickly than if he or she had to micro-manage the process; creating worry, stress and distractions from day to day business issues. Those unwanted outcomes lead to temporary losses of productivity and perhaps to job dissatisfaction. Unfortunately, most employers and their HR departments do not have significant experience in the special relocation needs of top executives. However, there are several key ingredients you should consider if you choose to take on the executive relocation yourself.

What to Do

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?

A Better Solution

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. 

Executive Relocation Guide

 

Topics: Low-Stress Relocation, Household Goods, corporate relocation company, executive relocation package

Lump-Sum Executive Relocation Package

Posted by Brian D'Orazio on Tue, May 06, 2014

Thinking about revamping your executive relocation policy? Watch our short video to get ideas on how to customize your relocation package. 

 

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Topics: Home Selling and Purchase Assistance, corporate relocation program, executive relocation package, lump sum package

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