Job relocation can be overwhelming and stressful for employees and their families, which is why many companies will provide some kind of relocation benefit. However, relocation can be costly for employers, and in many cases, relocation expenses can be hard to predict. There are a number of different moving expenses, and depending on how much a company is willing to help, the actual cost of the relocation can vary.
Major relocation expenses can include:
- Real estate expenses – buying and selling a home
- Moving household goods, automobiles and pets
- Short-term housing and storage
- Airfare, car rentals and miscellaneous travel
Not to mention the less obvious costs due to lost productivity from stress and distractions of getting settled into a new home.
How to Calculate Relocation Costs
While it can be difficult to predict the cost of relocation (especially since it is based on where the employee is moving to and from), having a comprehensive relocation budget can help you more accurately estimate employee relocation expenses. Your relocation budget should consider the following costs:
- Final travel to the new location
- Packing and moving costs
- Moving insurance costs
- Short-term housing
- Temporary storage
- Home sale and/or purchase
- Tax gross up of benefits
Careful real-time tracking of employee moving expenses can help you stay within budget for each relocation. Surprise relocation expenses are less likely to emerge when everything is calculated in advance. When they do occur, you can look at other areas of the budget to compensate.
Reducing Relocation Costs
Cost cutting has become a way of life in the business world. Reducing employee relocations costs is good for the company’s bottom line. The goal should be to cut back and control employee relocation expenses without compromising the experience of the relocating employee. Simple changes can result in substantial savings through reduced relocation expenses without sacrificing employee morale.
1. Lay Down Clear Parameters in Your Employee Relocation Policy to Lower Relocation Expenses
Ambiguities in the policy can mean additional costs for the company. Ensure your relocation policy is stated in simple, easy-to-understand language. The policy should allow for what is needed to facilitate a smooth, efficient move, without room for extras.
2. Establish Expense Caps on Certain Benefits
Put expense caps on some relocation benefits, such as loss on sale of a home. This can be a major expense for the company that should be capped, as many homeowners have experienced depreciation of their real estate assets. A relocation policy should clearly state a maximum amount for how much loss will be reimbursed, taking into consideration capital improvements when calculating value.
3. Utilize Relocation Management Software
Relocation management technology can help companies track relocation spend and pay for relocation benefits in a number of different ways. Relocation software allows companies to reimburse their employees for relocation expenses, disburse a lump sum of cash, or pay for moving services on behalf of the employee via direct bill. Relocation technology, like UrbanBound, allows employers to use a combination of these different payment methods, which provides them more control without sacrificing employee flexibility.
(In this blog, we cover a few other ways to control employee relocation costs that can further help reduce relocation expenses.)
UrbanBound relocation management software provides a seamless employee relocation experience while helping you manage and track relocation benefits from one central online platform. Request a demo to learn more.
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