CapRelo Blog

Real Estate Tiers in Your Global Mobility Program

Posted by Amy Mergler on Fri, Sep 08, 2017

New HomeYour relocation tiers can be as detailed and nuanced as you need them to be. Some companies find it useful to establish specific real estate tiers as part of their packages. Real estate tiers feature different options that may incentivize employees to sell their homes more quickly or give them a guarantee that they won't be stuck paying an old mortgage long after they've moved to their new location

Guaranteed Buyout Program

Sample real estate tiers may include executive level home sale assistance and a Guaranteed Buyout (GBO) program. Executive level home sale assistance is typically reserved for high-level executives. It involves providing a buyout offer after a home has been on the market for a certain length of time. This gives your high-level executives the assurance that they can confidently purchase a new home without the constant worry of whether their old home will ever sell.

To offer a buyout option, your company needs to be prepared to be responsible for the costs associated with carrying a home in inventory until resold. This isn't the optimal situation, but it could be well worth it if it helps increase the productivity of a strategic employee.

Buyer Value Option Program

For mid-level employees, you may consider offering a Buyer Value Option (BVO) program, which offers similar advantages to a GBO once an outside buyer has been identified. This option often focuses on providing employees with sufficient marketing support they need to sell their homes. A BVO minimizes the risk of inventory costs and provides a high level of employee satisfaction.

Home Sale Bonus Incentive

A final aspect of real estate tiers for homeowners is the home sale bonus incentive, which can also be added to relocation packages at any level. This involves providing an additional bonus for employees when they 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 make it more cost-effective to invest in repairs and improvements and services like home staging.

Quick sale bonuses benefit employees because they deliver greater incentives to sell their homes faster and relocate without having their attention, focus and efforts pulled away by their old pieces of property. They're also more likely to bring in good prices on homes that are still occupied and that have spent less time on the market.

There are benefits for employers who encourage relocating employees to sell their homes quickly, too. The sooner your employee sells, the shorter the overall relocation process will be, which can save your company major costs on the relocation package. You'll also benefit from having your employees return to full productivity as soon as possible.

Renters

Not all relocating employees will be homeowners and may opt to rent in the new location as well. Additionally, current homeowners may not want to purchase a home in the new location, so it's important to include provisions in your real estate tiers for renters, as well as homeowners. These could include:

  • Lease cancellation penalty reimbursement
  • Connecting the employee with a rental specialist in the destination location
  • Rental finding trip, including transportation costs, lodging, meals and rental car
  • Temporary living assistance
  • Area touring fees or finder's fees, if required.

Save Time & Money Using Tiered Relocation Packages

Topics: Real Estate, Tiered relocation packages, relocation packages

How To Determine Fair Tiered Relocation Packages

Posted by CapRelo on Thu, Jul 13, 2017

tiers-resized-600

Companies offer relocation packages to their employees in tiers to help control relocation costs. Tiered packages are often established to address a variety of complex issues, but essentially it means that what is offered to one employee may not be offered to another. A company trying to retain existing employees or attract prospective talent may find they are able to offer more attractive packages using a tiered program. Determining a fair tiered policy is often merely a matter of weighing certain criteria against its value for the company.

You can learn how to save time and money using tiered relocation packages in our free guide.

Assign by Position and Experience

High-level services are usually considered much more valuable within a company than those functions carried out in lower level positions, which require fewer responsibilities and little need for certain skills sets. For this reason, employees who have reached certain levels in the company (professional, manager or executive level, for example) may be seen as more valuable within the organization and may be offered more robust relocation packages than others.

Examine Existing Living Status

Sometimes, an employee’s homeowner status could be one of the key factors in whether they are offered a higher or lower tier of relocation package. Employees who own homes may need to be offered additional benefits, especially when considering the complexities inherent in having to sell or rent their homes to relocate. Likewise, a company may determine that an employee who rents a residence will need less assistance and will have fewer difficulties moving.

Another factor that may be considered is if employees have families, in particular those with young children who might be more resistant to relocation than single employees. Offering employees with families a more attractive relocation package might help them overcome both practical and psychological barriers to moving.

Corporate policy and culture should always factor heavily into decisions that determine the features offered in tiered relocation packages. For some companies, financial factors may be the bottom line. Other companies may place higher value in employee morale, or in their public perception as an “employee corporation.” Senior management and Human Resources should therefore work hand in hand with the finance department to establish specific criteria when determining the features offer in tiered relocation packages.

Save Time & Money Using Tiered Relocation Packages

 

Topics: Tiered relocation packages, attracting new hires

May Relocation Survey

Posted by Amy Mergler on Fri, May 19, 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.

April Survey Results

1. Does your company use rotational assignments?

Yes: 40%
No: 60%

2. For what purposes does your company use rotational assignments? (Choose all that apply)

Talent Development: 40%
Project Work: 0%
Unsure: 0%
N/A: 60%
Other: 0% 

3. What motivated your company to use rotational assignments? (Choose all that apply)

To help recruit and retain talent: 40%
Leadership development: 40%
To enhance your company's employer brand: 40%
To increase your company's competitive positioning: 40%
Unsure: 0%
N/A: 60%
Other (please specify): 0%

 

This month's survey addresses Tiered Relocation Packages.  

Topics: Tiered relocation packages, relocation packages, global mobility

Build a Competitive Advantage with Tiered Relocation Packages

Posted by Amy Mergler on Fri, Oct 07, 2016

competitive-advantage.jpgOffering market-driven relocation packages to potential new hires and current employees is one of the best ways to attract and retain the best talent in your field. Cost-effective relocation packages show employees that you’re prepared to invest in their future and that your team cares about making their transition as smooth and comfortable as possible.

For organizations in all industries, effective and attractive relocation packages can also benefit the bottom line by helping employees feel comfortable and confident in their new locations – which, in turn, allows them to return to full productivity much sooner.

Learn more about tired relocation packages in our free article.

How can tiered packages help?

As beneficial as top relocation packages can be for general employee satisfaction and a company’s performance and earnings, HR professionals and managers are often overwhelmed by how many details and considerations are involved with creating and executing a great relocation program. A great way to eliminate some of these relocation program frustrations is to use tiered relocation packages.

Having a list of set relocation packages to choose from saves companies the time and effort of having to customize a new package for every employee who requires relocation. Your employees’ relocations can also be executed more quickly because they’ll no longer involve a lengthy period spent determining the total relocation budget and choosing the individual combination of services that is appropriate for each employee or potential hire.

Perhaps most importantly, having a tiered relocation package in place can give you a major competitive advantage for recruiting the best new employees, increasing productivity and bottom-line cost containment. 

Save Time & Money Using Tiered Relocation Packages

Topics: Tiered relocation packages, attracting new hires, relocation packages

Corporate Relocation Policy: Relocation Tiers vs. Employee Status

Posted by Amy Mergler on Thu, Jul 21, 2016

blocks-tiers.jpgIf you are in the process of creating a corporate relocation policy for the first time or restructuring your current policy, one of the questions you may consider is how to differentiate your employees in a tiered policy.

Find out more about how to save time and money by using tiered relocation packages in our free article.

Designing Tiered Relocation Packages

There are many variables to take into account when developing your company's tiered relocation packages. Start by deciding what kinds of candidates and current employees should receive the most extensive and valuable relocation packages and what types of employees should get the more basic level packages.

Your highest tier may apply to top-level executives. You could then create another tier for middle managers, followed by a base-line tier that applies to everyone else in the company. Examine your hiring practices and trends and decide whether you'd like to have an even more pared down level for new hires, or if you'd prefer to assign tiers to recruits based on the levels of their future positions.

Relocation Tiers vs. Employee Status

As you develop your tiers, it's also important to understand how those tiers differ from an employee's moving status. While a current or prospective employee's moving status can certainly influence which relocation tier they receive, the two are not interchangeable.

Moving status refers to the employee's needs during a relocation. For example, is the employee:

  • single or married?
  • a homeowner or a renter?
  • a new hire or current employee?

It can also address more specific circumstances, including whether the employee has children in school, pets that need transferred or elderly parents who require nursing care.

Relocation tiers are certainly related to an employee's status, but you shouldn't necessarily base them on moving status. Instead, you should base the tiers on the employee's standing, or prospective standing, within the company. Basing the tiers on the seniority, salary, job title – or a combination of all three – ensures that more extensive relocation packages are justified by an employee's current and future contributions to the company.

Whatever policy you put in place, you can prevent resentment among employees by maintaining consistency when determining which employees belong in each tier. While it's important to remain consistent with your initial offerings, make sure your relocation policies include enough flexibility for you to move up a tier as a negotiation tactic or for any special circumstances that may arise.

Save Time & Money Using Tiered Relocation Packages

Topics: Tiered relocation packages, corporate relocation program, Corporate Relocation Costs

Use Tiers to Avoid Exceptions in Your Corporate Relocation Policy

Posted by Rick Bruce on Thu, Apr 21, 2016

Tiered Relocation AgreementMany companies view a tiered corporate relocation policy as more work. It's true that your HR staff will have to take the time, and may enlist the help of a corporate relocation management company, to establish fair and appropriate tiers based on employee salaries or job levels and set the benefits offered in a corporate relocation package within each tier. But once that's done, a tiered policy actually decreases the work required by the HR staff or corporate relocation management firm.

Find out more about how tiered relocation packages can save you time and money in our free article.

3 Ways Tiered Relocation Polices Can Make Relocation Easier

Here are some ways a tiered corporate relocation policy makes individual relocation or group moves easier.

  1. Eliminate the need to negotiate every employee relocation package individually and/or reduce exceptions to your policy. If you don't have a corporate relocation policy at all, you'll find yourself reinventing the wheel with every employee relocation. Having a one-size-fits-all policy is better than having none, but you may be faced with so many exceptions to the policy, it's like creating a new policy every time you relocate an employee.

  2. Reduce resentment (or lawsuits) when employees discover differences in relocation packages. (And they will!) Remember, in the corporate world, nothing stays secret for long. When employees find out about exceptions made in corporate relocation policies, they'll resent their co-workers who negotiated a better package. If you upset the wrong employee and the exceptions can't be justified, you might even face a lawsuit, along with a drop in company morale and a sense of distrust amongst employees.

  3. Improve your retention rate for relocating employees. Faced with the above scenarios, you have a few choices if you want to keep good employees with a relocation package that gives them what they need. A tiered relocation policy where the tiers are clearly defined based on employee levels or salary sets the standard and reduces exceptions. Like a good employee handbook, it makes the process more cut-and-dry, and permits you to keep more employees happy with less work in the long run. That doesn't mean a tiered policy will completely eliminate exceptions to your corporate relocation policy, but it helps.

Save Time & Money Using Tiered Relocation Packages

Topics: Tiered relocation packages, employee relocation expenses, Buyer Value Option

A Buyer Value Option Program Can Benefit Both Employees and Employers

Posted by Amy Mergler on Thu, Mar 10, 2016

v--crs-kristins-blog_posts-blog_photos-sold-resized-600.jpgA Buyer Value Option (BVO) program is designed to aid transferring employees in the quick sale of their homes, with no obligation to pay real estate commission or closing costs. A BVO program offers benefits for employees and employers, as transferring employees will want a quick and easy sale of their current homes and the employer will want their employees’ focus to be on productivity rather that the hassles of trying to move and sell a home at the same time. Here’s how a BVO program works.

Our relocation policy guide can help you develop an effective relocation policy that incorporates a BVO program.

The Sale of the Home is in the Employee’s Hands

Your relocating employee is connected with qualified, approved real estate agents and home marketing professionals to help expedite the sale of the home. Once the employee, working with the approved agent, finds a verified buyer, the company purchases the property from the employee at the approved price. The company then re-lists the home to negotiate and close the sale with the approved buyer

Advantages of Buyer Value Option Programs

  • BVOs can fit in well with tiered relocation programs.
  • If the company normally directly reimburses home sale costs to relocating employees, they can avoid tax-gross up costs with a BVO program.
  • Your relocating employee is given a strong incentive to work toward a quick home sale at a fair price.
  • Unlike a guaranteed buy-out program, a BVO keeps the home out of the company’s inventory.

When a BVO is handled optimally, the employee enjoys a quick sale of their home and the employer doesn’t carry the inventory of ownership for an extended period of time, to the benefit of both parties. The faster a home sale can be finalized, the sooner the transferee can complete their relocation and return their focus to their work in the new location, increasing productivity and significantly reducing stress on both the employer and the employee.

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Topics: relocation packages, Tiered relocation packages, Buyer Value Option

Are Relocation Package Exceptions Burning Out Your HR Staff? (Part 2)

Posted by Amy Mergler on Thu, Nov 12, 2015

A group move or other circumstance that requires many employee relocations take place at the same time stretches the resources of your HR staff even thinner. More and more companies are shifting to a tiered relocation package over a lump sum approach to minimize exceptions and ease the stress on your HR staff.

Find out more about tiered relocation packages with our free article.

How do you establish a tiered relocation package?

When you establish a tiered relocation package to minimize relocation policy exceptions, the tiers most often have to do with home sales and how they are managed. After all, costs for aspects of relocating like movement of household goods, temporary housing and moving people are often fixed. But how much home assistance you offer can vary based on how badly you want to keep an employee on your team, as well as considerations such as how quickly you expect an employee’s home to sell.

The key is determining which relocating homeowners may need the most help selling their homes and structuring tiers so that those people will fall into categories where they receive the assistance they need. Because it’s most often harder to sell the higher-priced homes of executives, a tiered relocation package works well to ensure employees can sell their homes quickly without suffering a loss.

Here are three examples of benefits tied to home sale (assistance):

  • Buyer Value Option: Part of the first tier in some tiered relocation packages, a Buyer Value Option helps keep the home out of your company inventory. Rather than relying on a home appraisal, a relocation company will provide complete home marketing assistance. After the employee receives an offer on the home, the relocation company buys it and then re-sells it to the intended buyer. A Buyer Value Option requires the expertise of relocation professionals to identify and qualify serious buyers. The key, however, is in the level of marketing assistance a professional relocation provider can offer to your relocating employees to sell their homes faster.

  • Home Sale Bonus: Rather than buying the home from the employee, your company may offer a bonus to employees who sell their home within a specified time frame. To receive the bonus, the employee must use your relocation company’s recommended real estate agents and other services providers (mortgage, etc.). Again, your relocation provider acts as the primary point of contact, decreasing the burden on your HR staff.

  • Loss-on-Sale Reimbursement: You can minimize the risk to top-level executives who are relocating with a loss-on-sale program managed by a relocation service provider to ensure that the payout won’t stretch your relocation budget beyond what’s comfortable. This program, usually part of the upper tier in a tiered relocation program, can help increase the odds that you’ll retain more of your key executives before, during and following a move.

 

 A relocation management company can draw on their contacts within the real estate industry in your area to help create low-stress employee home sales and help you establish policies that work with minimal exceptions.

Check out Part 3, where we discuss negotiation exceptions, relocation providers and tax gross-up.

Save Time & Money Using Tiered Relocation Packages

Topics: Tiered relocation packages, relocation process

Are Relocation Package Exceptions Burning Out Your HR Staff? (Part 1)

Posted by Amy Mergler on Fri, Nov 06, 2015

Stressed StaffYou know you have an excellent HR staff. The team is expert at recruiting and hiring new employees, managing training initiatives, managing benefits (while keeping costs down), addressing employee concerns, building company spirit with team events… the list goes on. Your staff has a lot on their minds, a lot of balls in the air… and they’re expert jugglers – usually.

Learn more about developing relocation packages with our free guide.

But corporate relocations pose significant challenges to your staff. It feels like they have to negotiate every relocation package individually. There are no standards set so they can replicate the process each time. And none of the employees are happy with their relocation benefits package. You’ve already lost a handful of employees who simply refused to move, and you’re not surprised.

Do you need help with corporate relocations?

If you only move a handful of employees each year, relocation package exceptions may not be too much of a hassle. Maybe, until now, you’ve addressed each employee as an individual, structuring and negotiating customized employee relocation benefits each time a key executive changed offices or new talent moved to join your company. This extremely personalized, hands-on approach, managed by your HR staff, can work well if you don’t move a lot of employees. But is doesn’t fit every company.

If you are organizing employee relocations on a large scale due to a merger or acquisition, rapid corporate expansion, new product roll-outs, opening a new office, a group move to another location or any other company changes, you can’t afford relocation exceptions that may add unplanned expenses. In addition, exceptions to standard relocation packages can open your company up to lawsuits or a drop in company morale if other employees discover exceptions were made for others, but not for them.

A group move or other circumstance that requires many employee relocations take place at the same time stretches the resources of your HR staff even thinner.

What is the solution?

Tiered Relocation Packages Minimize Exceptions

More and more companies making group moves or conducting many employee relocations each year are shifting to a tiered relocation package over a lump sum approach. Tiered relocation packages:

  • Are favored by many employees, resulting in greater employee satisfaction, higher company morale and a faster return to productivity
  • Minimize exceptions because of the flexibility of the program
  • Can have as many or as few tiers as necessary, although most companies opt for three or four tiers
  • Can be established based on any number of factors, including salary, position/title or length of time with the company

 

Check out Part 2 of our series for a discussion on how to establish a tiered relocation package.

Save Time & Money Using Tiered Relocation Packages

Topics: Tiered relocation packages, relocation process

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

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