Domestic Relocation vs. International: What You Need to Know When Extending Your Global Reach

International vs. Domestic: What You Need to Know When Extending Your Global ReachLet’s say you have two employees in the same position, with similar personal situations, who are both relocating with your company. One is relocating from New York to Los Angeles, and the other employee is relocating from New York to London.

You know that London is farther away than Los Angeles and requires additional services, like getting through customs, which will probably result in a more expensive household goods shipment. Aside from this, both cities have English speaking populations, both are large urban cities, and both are known for gridlock traffic at all hours of the day.

However, what other factors do you need to consider when offering relocation assistance to each of these relocating employees?

There’s more than just mileage and language barriers to consider when you’re relocating an employee to an international destination. In fact, mileage is just one of many factors that will contribute to the relocation experience for your employee. If you want to relocate employees internationally or nationally, it’s important to consider all of the aspects of both. Whether you’re relocating employees overseas or to another state, you’ll be able to plan ahead to keep the process running smoothly.

Some differences between domestic relocations and international relocations are more obvious (like distance and language), while others are more subtle. If you’re creating your company’s first international relocation program, it’s critical to be aware of these differences and the impact they have on the success of the relocation—these seemingly subtle differences can actually have just as much of an impact (if not more) as the obvious ones.

It’s essential to understand the nuances and complexities of an international relocation before you create your company’s international relocation policy. Your international relocation policy can maintain the integrity of your domestic policy, but there will be important discrepancies between the two to ensure the needs of your employees are satisfied.

Let’s take a look at some of the key differences between international and domestic relocation policies and, most importantly, the impact they have for your relocating employees.

The Length of Assignment and its Extensive Effects on International and National Employee Relocation

When relocating an employee domestically, there are usually a few different classifications. You might be relocating an employee for an internship, permanent position, or rotational employee relocation program. The concept of short-term and long-term assignments are present with domestic relocations, but typically relocations fall into one of three categories:

  1. Internship
  2. Rotational assignment
  3. Permanent full-time moves

The differences between these relocations can impact taxes and the relocation benefits employees might receive. For example, an intern may only receive short-term housing benefits, while a full-time employee who’s gone through the onboarding process may receive more benefits like household goods shipment, storage, home-finding trips, etc.

The differences in assignment type and length become even more important with international relocations due to:

  • The cost of relocating employees internationally
  • The fact that it’s less common for international moves to be permanent
  • The wide variation of benefits due to assignment length

Let’s start with the cost: international relocations inherently cost more than domestic relocations.

Assignment length and type affect cost due to different visa requirements, tax implications, and, of course, relocation benefits needed by the employee.

For example, an employee relocating for a long-term assignment (over a year) will need the appropriate visa for the duration of stay, will need to move the majority their belongings, and will require a long-term rental or house to live in. Compare this to a short-term assignment (less than a year) where the visa type may be different, and the employee only needs an allowance for shipping some belongings and short-term housing.

Because the costs of an international relocation are higher and the type of assignment is a major cost factor, you need to clearly define the goals of your international relocation program before you decide the different international relocations your company will support.

Is your goal to develop leadership skills within top performers? Are there key employees who need to manage the opening an international office? How long does the employee need to be abroad in order to accomplish the goal?

Whatever the case, be sure to have a clear understanding of the business needs required from your international relocation program, as it will subsequently inform the assignment types (permanent, long-term, short term) that your company will offer to employees.

International Employee Relocation Benefits Go Beyond Logistics

When relocating employees within a country, the major needs typically include moving personal belongings, finding a home to live in, and traveling to the new destination. Of course, there may still be some additional benefits needed like home-finding or temporary housing, but for the most part, domestic relocation benefits are tied to logistics— getting your employee from Point A to Point B.

Employees who are relocating internationally will also need help managing the cost of getting from origin to destination, especially with the introduction of visas and customs. However, international relocations typically need even more assistance with settling into the new location than domestic moves.

After the actual moving portion of relocation is over, there is still a lot of support an expat may need. Assimilating to a new culture is one of the most difficult challenges employees face when relocating to a city abroad. Even if the employee is familiar with the country’s language, they can face challenges when it comes adjusting to day to day life and navigating essential activities like setting up a bank account, finding a school, or identifying healthcare providers.

If your employee or their family fails to assimilate to their new location, it can be a very costly mistake for your company. For this reason, offering employees assistance from a destination service provider has become a common practice in international employee relocation policies. Destination Service Providers are third parties who specialize in helping employees assimilate to their new location. These companies can help deliver a broad range of services to your relocation employees, including but not limited to home finding, area tour, school search, utility setup, and bank account setup.

Benefit Communication Is Personalized During International Employee Relocation

Relocating to any location is a big decision—for both the employee and his or her company. The decision to relocate internationally has even greater impacts on the individual and the company due to cost and other reasons mentioned above. As a result, many companies choose to personalize the relocation benefits offered to international employees and communicate these benefits in a letter of assignment.

What’s a letter of assignment, you ask?

A letter of assignment is a relocation document that usually includes the length of the international assignment, the relocation benefits available to the employee, and any monetary caps. Utilizing a letter of assignment allows the company to decide which relocation benefits are applicable to the individual. This helps the employer control costs while ensuring the employee receives benefits relevant to their needs.

Companies are typically more hands-on with other aspects of benefit communication as well. For example, most companies offer expatriates a tax briefing. During the tax briefing (usually administered by the company’s tax provider), employees are educated about how the move will affect their taxes, along with the potential impact any tax assistance provided by the company will have as well.

These are just a few of the nuances between domestic and international employee relocations. To treat the two exactly the same would be a major mistake for your company and your relocating employees. Gaining a strong understanding of these differences will help you and your team make educated decisions about how to build your program and support your relocating employees in the best way possible.

International & Domestic Relocation: UrbanBound Has You Covered

If you want to make sure that international or domestic employee relocation goes according to plan, you can benefit from using UrbanBound’s employee relocation software and services, which are designed to streamline the relocation process. With UrbanBound, employees can review, make use of, and track all relocation benefits, giving them the support they need for a smooth transition to their new location. Contact us today to get started on implementing this software for your business today, and start simplifying the relocation process today, whether you want to relocate employees internationally or nationally.

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