This is a guest post, written by Darlene Mass, a writer for the apartment rental site, Zumper.com.
When an employee is offered a promotion in another city or a company recruits talent outside of its own city, employers will often offer a relocation package. While employers are not obligated to provide relocation packages, it can incentivize a valuable employee or candidates to move to (and stay in) a new city. As an employer, one of your top priorities should be ensuring that your employee has a smooth transition during their relocation. Here are a few tips on how to make your employees’ relocations as stress-free as possible:
How much should an employee relocation package be?
There is a lot of research out there that estimates the average cost of a relocation package. The actual cost an individual relocation can range anywhere from $3,000 to $100,000.
According to a Workforce Mobility Survey conducted by Allied in 2012, the average relocation package cost is $21,033. However, certain executive relocation packages labeled as “gold-plated” cost an average of $65,333. Keep in mind, this study was conducted was over 5 years ago—before US tax law changed, making relocation even more expensive. Depending on the options and what’s included in your employee relocation packages, the relocation cost will vary greatly. Jobs with relocation packages abroad are also likely to have higher costs as employers need to move employees internationally.
When building out a relocation package(s), an employer should take into account the level of the employee, whether they own a home/have a family and the origin and destination of the move. To learn more about this, check out How to Maximize Your Relocation Program Budget: 5 Insider Secrets for Doing More with Less.
What does a typical employee or employer relocation package include and what relocation costs does it cover?
While it’s difficult to know the specifics of the relocation package until you know the employee and the assignment, it’s important to have an idea of what you want the relocation package to include. Here are a few examples of relocation expenses commonly paid for by the employer:
- Transportation and Moving Costs: The most common benefit included in a relocation package is the shipment of household goods and final travel. Companies will pay for or reimburse for travel expenses to the new location including airfare, car rentals, gas or train tickets. Professional van lines, moving labor, U-haul rentals or other household good shipment expenses will also likely be a part of the package. Some companies may even hire professionals to do a full packing and unpacking of the employee’s belongings.
- Orientation Trip/Destination Services: Some companies will pay for employees, especially expats, to travel to the new location to familiarize themselves with the area and investigate accommodation options. The orientation trip costs generally include hotels, meals, airfare and ground transportation.
- Home Sale / Lease Breakage Costs: Any costs associated with either purchasing a new home or selling a current home are sometimes included in a relocation package, especially as part of a higher-tier relocation package. Money to cover the cost of breaking a lease is sometimes covered for high-renter populations like campus hires.
- Spousal Support: Again, in some higher-level employee moves, if the relocating employee is married, a company will provide spousal support. Which can include: helping the spouse find a job or establish their own business.
Benefits included in the package for employee relocation vary greatly depending upon the circumstance, company or employer. For more information about what factors to consider when building your relocation program, check out this webinar.
What is the average relocation lump sum amount?
Additionally, some employers offer a relocation bonus with the average relocation package (also referred to as a lump sum, signing bonus or flex benefit). These bonuses are typically paid as an incentive for the employee to agree to relocation or if the employer recognizes that the cost of living is higher in the new location compared to the employee’s current area. Relocation bonuses are a one-time deal and oftentimes have to be paid back if the employee leaves the company before a certain period of time.
Often times, the actual amount of the relocation lump sum may need a to be tweaked. You won’t know exactly what your employee needs until it’s time for them to relocate, so keep an open mind, and be willing to negotiate and adjust the package accordingly. Most employers choose to negotiate relocation packages instead of salaries. Relocation costs are a one-time expense whereas salaries are recurring.
Enlist help from a relocation technology company.
Looking for a place to live, hiring movers and flying to a new destination are all things that only add to the stress of an employee’s relocation. Relocation technology and service companies, like UrbanBound, can help streamline this process by automating moving to-dos in one central platform. Plus, relocation management software can also take the pressure off of your internal HR department.
A lot of behind-the-scenes work goes into successfully relocating an employee from one town or country to another with the average relocation package. If growth is in the air at your company, it’s time to start thinking about building out a your relocation program! Reach out to us for a free relocation program consultation.