Employee relocation is an essential tool to make sure you have the right people in the right place. When an employee is offered a promotion in another city or the perfect job candidate lives in another location, companies will often offer a relocation package. While employers aren't obligated to provide relocation packages, it can incentivize a valuable employee (or candidate) to relocate to a new city and also help retain them.
While there are many ways to offer employee relocation, there are a few important things to think about when building out an employee relocation package.
- Be proactive. Build out a policy before you need one.
- Consider your company culture. How do you want to reflect that in your employee relocation package?
- Who will be eligible for relocation assistance?
- How much do you want to spend?
- What services do you want to cover?
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 build out your employee relocation package:
Building out an employee relocation package
Employee relocation tends to fall on HR/mobility and recruiting teams, since they're on the front line when it comes to connecting with current and future talent. Relocating one or two employees here and there might seem minor but doing it without a plan runs the risk of making reactive (and expensive) decisions around employee relocation.
That’s why, as mentioned above, putting a relocation policy in place before you need one is essential to ensuring your company is equipped with the right tools to scale.
If your business would benefit from relocating an employee to another city, you need to start thinking about relocation packages for your employees.
How much to spend on an employee relocation package
There's a lot of research out there about the average relocation cost, but a package can range anywhere from $2,000 to $100,000. How much you want to spend on an employee relocation package is entirely up to you and your company.
What factors into relocation assistance costs?
You must decide if you plan to cover the entire cost of the move, or if you simply plan to assist with some expenses. However, the actual cost to relocate an employee depends on a number of different factors:
- How far are they moving? Is it to a different state, or a different country? International relocation will always be more expensive than a US domestic relocation.
- Do they own a home?
- Do they have a family?
- How much stuff do they have? How much does all that stuff weigh?
Ultimately, your employees will appreciate any support you can provide. However, the more you plan to cover, the happier they'll be. Smaller companies or companies who relocate a lot of entry-level or recent grads, tend to provide less benefits.
To learn more about what typical relocation assistance costs, check out How to Maximize Your Relocation Program Budget: 5 Insider Secrets for Doing More with Less.
What does a typical relocation package include and what does the relocation allowance cover?
While it’s difficult to know the specifics of the relocation assistance 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 typical relocation expenses commonly paid for by the employer through relocation benefits:
Moving company/shipment of household goods: Professional movers, packing & unpacking services, U-haul rentals and other moving-related expenses like boxes and tape are often the #1 piece of a relocation package.
Travel to the final destination: Companies typically pay for travel expenses to the new location including airfare, cost of gas, or train tickets.
Short term housing: It’s common for companies to cover the costs of 30, 60 or 90 days of short-term housing while an employee searches for permanent accommodation. This can include hotel stays, Air BnBs or corporate housing.
Other services to consider covering in a relocation package:
Orientation trip and/or destination services: Less common but equally as important, many companies will cover the costs of an orientation trip that includes an array of destination services. That means an employee will go out to their new location before they move to familiarize themselves with the area and investigate accommodation options. The orientation trip costs generally include hotel, meals, airfare and ground transportation as well as the cost of the destination tour guide.
Home sale/lease break costs: Any costs associated with either purchasing a new home, selling a current home, or breaking a lease are sometimes included as part of a relocation package.
Spousal support: In some higher-level employee moves, if the relocating employee is married, a company will provide spousal support. This can include helping the spouse find a job or establish their own business.
Tax gross up: In addition to the above services, some relocation packages will also include the tax gross up on the covered services.
Remember, benefits included in a package for employee relocation vary greatly depending upon the circumstance, company or employee. For more information about what factors to consider when building your job relocation package, check out this eBook.
What is the average relocation lump sum amount?
Additionally, some employers offer a relocation bonus, also called a lump sum or miscellaneous allowance. These cash amounts are often paid as an incentive for the employee to agree to move or as a way to assist with miscellaneous costs incurred during the relocation. Relocation bonuses are a one-time deal and most often have to be paid back if the employee leaves the company before a certain period of time.
The actual amount of the relocation lump sum may need 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. Many employers choose to negotiate relocation packages instead of salaries because relocation costs are a one-time expense whereas salaries are recurring.
How to administer an employee relocation package
It’s one thing to have a relocation package in place, but determining how to administer it is another thing. There are a number of different ways to administer a package and manage a relocation policy.
First, you’ll need to determine how the company will cover certain costs. Will you pay the employee a lump sum on their first paycheck? Have them submit receipts for reimbursement? Pay for the services directly? A combination of all three?
You may find it preferable to outsource functions like relocation, so your staff can better focus on your core business concerns.
If you choose to work with a relocation management company, you can elect to go with a traditional relocation management company or a tech-based RMC. While traditional RMCs largely deliver their services through live specialists—just as they’ve done for decades—tech-based RMCs balance user-friendly software platforms with the support of live specialists to provide cost savings and better relocation experiences.
Conclusion regarding relocation assistance packages
A lot of behind-the-scenes work goes into successfully relocating an employee from one town or country to another. If relocation is in the air at your business, it’s time to start thinking about building out a relocation package! For all the answers you’ve been looking for about employee relocation, check out our 20 Frequently Asked Questions About Employee Relocation.