The goal of a corporate relocation program is to make moving easier for an employer’s new hires and transferees, as well as its HR staff. After all, a smooth relocation helps employees hit the ground running and lays the groundwork for a successful employer/employee relationship
There’s a reason that moving ranks high on every “10 Most Stressful Life Experiences” list. With so many balls to juggle, it’s easy to drop one or two—yes, even with a relocation program in place.
Take these terrifying tales of relocations gone wrong. Then, ask yourself this truly scary question: could one of these epic fails happen to you?
1. Beware the Hidden Hazards of Lump Sum Plans
Lump sum plans sound so easy-peasy: the employer gives the employee a stash of cash to fund their move, and the employee skips off to arrange it. He/she even gets to keep any unspent funds.
What could possibly go wrong?
Well, everything!
Take Adam, a young programmer. Eager to pocket some extra cash, he booked the cheapest mover he could find. Which proceeded to show up late…damage his stuff…and charge him far more than it originally quoted. Verbally, that is.
Adam got moved, alright. But he also got taken. When he showed up for work on his first day, he was distracted and resentful…which led his manager to wonder if she’d made a poor hiring decision. In this case, the employer’s good intentions weren’t enough.
How to Flip This Script
Fortunately, this is an easy rewrite: replace that lump sum plan with a smart managed budget plan. Managed budget plans offer similar flexibility, but any unspent dollars stay with the employer, so employees aren’t tempted to scrimp where they’d shouldn’t. Plus, these plans include relocation services—i.e., live specialists and prescreened vendors—ensuring employees choose reputable vendors.
2. Avoid Too-Strict (Haunted) House-hunting Benefits
House-hunting trips are very important to relocating employees. After all, finding a great place to live is most employee’s first priority.
However, in order to save money, some employers limit coverage for house-hunting visits, which can end up costing them in the long run, especially in hot real-estate markets.
Take Gabrielle’s story. Her new employer—a multi-state healthcare company—provided a single, four-day house-hunting trip. The problem: she was relocating to South Florida, which was in the midst of a record real-estate boom. Homes were snapped up the same day they went on the market, for way over their asking price.
Gabrielle couldn’t find a workable home for her family on such a tight timeframe, so her employer put them up in short-term housing instead—a helpful solution, except that it continued for a long, pricy 90 days.
How to Flip This Script
Offering generous—and/or flexible—house-hunting coverage not only benefits employees, but employers’ relocation budgets, too. It’s much less expensive than short-term housing, and it’s a great way to welcome new employees. Just work the numbers!
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3. Don’t Flee from Tax Gross Ups
Unfortunately, per the IRS, employees must pay income tax on their relocation benefits. While most employers cover the cost of these taxes—via funds known as tax gross-ups—some employers do not, at their own peril.
Take the case of Carlos, a promising manager. His new employer didn’t believe in paying tax gross ups. However, it also did a poor job of communicating this to its relocating employees. Because this was Carlos first relocation, it wasn’t until his move was well underway that he realized he’d be on the hook for a cool $4,000 in taxes.
That led to some frantic back-and-forth between the employer and Carlos, who came close to pulling the plug. Ultimately, the employer made an exception and paid his tax gross up—but not before creating stress all around and casting a shadow over their relationship.
How to Flip This Script
There’s only one way to avoid this inevitable disaster: pay the tax gross ups. A good relocation management provider will help you cut relocation costs without cutting benefits, so your program will remain cost-effective—and competitive, too.
3 Horror Stories, 1 Lesson Learned
As you’ve undoubtedly figured out, there’s a moral to these relocation tales of woe. It’s not enough to mean well; you need an airtight relocation program, ideally managed by an experienced relocation provider that will guide you around the pitfalls.
If you have a relocation horror story to share, we’d love to hear it. And if you’d like help avoiding them in the future, give us a holler. (Metaphorically speaking, we hope.)
