How to Negotiate a Relocation Package with an Employee

When your company hires an employee from another city, state or country, chances are a relocation package will be included. A relocation package covers some, most, or all of the cost of a new employee’s relocation. In fact, a competitive relocation package can help you seal the deal when it comes to recruiting top talent at your company.

That being said, when it comes down to actually deciding on what relocation expenses will be covered in your company’s policy, there’s bound to be negotiation. As the employer, you want to provide your new hire with a comfortable relocation allowance while also preserving the finances of your company. It’s important to know how to negotiate a relocation package that will benefit both sides.

UrbanBound has perfected the art of relocation package negotiating. We’ve put together a few tips for employers about to start this process and negotiate a relocation package.

Here’s everything you need to know about negotiating a relocation package with an employee:


What is a Relocation Package?

Let’s start with the basics of negotiating relocation assistance.

As prior stated, a relocation package is a package provided to your employees to cover the costs of relocating to a different city. The more expenses that are covered, the higher the probability that an employee will accept the offer and move to a new city. Potential employees will appreciate a generous relocation package, but sometimes that might not be in your company’s financial reach.

Relocation packages can range in worth from $2,000 to $100,000. What services and the amount of money you decide to cover is entirely up to you and your company. However, keep in mind that the more you are willing to give, the harder it may be for a candidate to refuse your offer when you negotiate moving expenses!


What Does a Typical Relocation Package Include?

It’s up to you to decide what’s necessary to include in an employee’s relocation package. What you include in a relocation package depends on 3 things:

  • Your new hire’s needs
  • The cost of living in your city
  • The financial abilities of your company

You need to find a balance between these three factors that guarantees the happiness and success of your company and your new employee.

A relocation package can include a variety of different benefits. A few common ones are:

Orientation Trip/Home Finding Trip

Some companies offer an orientation trip included in a relocation package to help an employee get a feel for the city before moving there permanently or to find housing before they move.

Transportation and Moving Cost

This can include the cost of airfare, gas, train tickets, rental cars and movers.

Home Sale/Lease Breakage

If an employee is required to pay a fee for a broken lease or purchase a new home, high-end relocation packages may cover these costs when negotiating relocation expenses.

It’s up to you what you think is necessary to include for your employee. Just keep your new hire’s needs, the cost of living, and your company’s budget in mind when negotiating a relocation package.

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How to Negotiate a Relocation Package with an Employee

When it comes down to it, you’ll need to throw your all into the negotiation process. You want to keep your costs low while also satisfying your new employee’s needs. This can be a difficult balance but here are a few tips:

Calculate the Costs

In order to be prepared for negotiations, you need to know the cost of relocation for your new employee. Calculate exactly how expensive it is for that employee to move. That way you know the exact cost when going into negotiations. Use this calculation to decide the maximum or minimum amount you can offer in the relocation package.

Set Clear Parameters

You’ll want to set clear guidelines in the relocation package when negotiating moving expenses. Make sure you use simple language so nothing is ambiguous. For example, your company could cover the cost of 2 weeks of temporary housing. Any time after the two weeks would need to be covered by the employee. This way you’ll ensure an efficient package without wasting any money.

Offer a Capped Allowance Plan

When deciding between relocation package methods, capped allowance plans are the most affordable for a company. As opposed to lump sums, capped allowances limit the amount an employee can spend on relocation. The employee doesn’t receive any leftover funds, unlike the lump sum method.

Be Open to Compromising

A huge part of satisfying your new employees when relocated is being open to their suggestions. You need to be willing to negotiate relocation assistance. If you go into negotiations with a stubborn demeanor and closed mind, you may jeopardize the recruiting process. Be sure to be open to offering some extra, more flexible funds to make your employee happy.


Get Help Building a Relocation Program with UrbanBound

Building out a great relocation program is the key to ensuring the happiness of your employees. After all, if they’re not happy with your offer, you risk them accepting another offer with a different company. At UrbanBound, we can help you build out a truly flexible policy that can work with any employee need. Contact us to learn more.



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