Sourcing and hiring top talent can be challenging across all industries, and today’s hot job market is making it more difficult than ever. This is why strategic companies will seek talent outside of the local pool and provide relocation benefits to candidates willing to move. At UrbanBound, we tend to see two types of benefits.
- A signing bonus. Also known as a lump sum, cash, or relocation allowance
- A relocation package with covered services. Often comes with the support of a relocation management company
Both of these benefits are attractive options to employees joining a new company; however, they both have their downsides, too. There are several important differences that everyone needs to keep in mind because they could play a role in any negotiation process.
What are the differences between a relocation package and a signing bonus?
The Relocation Package
The objective of a relocation package is admirable: to smooth and simplify the relocation experience, so new employees can show up on their first day ready to work. While relocation packages come in all shapes and sizes, the main goal is to provide relocation assistance for employees.
They do this by providing:
- A list of pre-determined services that are covered or partially paid for by the company. This could include but is not limited to: assistance with the sale and purchase of a home, final destination travel, the transport of household goods, and temporary housing.
- A list of pre-determined vendors: Under many traditional relocation packages, employees are required to choose from a group of pre-approved vendors.
- Orchestration of the move: Often, these services are provided by a third-party relocation management company (RMC); sometimes they’re provided by in-house mobility units. Either way, the work is conducted primarily via phone and email by live specialists.
Not every company is able to offer a comprehensive relocation package. The costs are incredibly unpredictable and depend on the employee’s specific situation, family size, and the extent of possessions. Additionally, relocation packages can be limiting for the employee. There may be some services not covered in the relocation package. Therefore, some companies will instead offer a signing bonus.
The Relocation Bonus
Some employers have turned to the opposite approach of a relocation package: awarding cash benefits, also called relocation bonus, lump sum or cash allowance, without accompanying services.
Under this arrangement, employees are given a fixed sum and directed to make their own arrangements. The employee is left to decide how to use the relocation sign on bonus to manage their entire relocation process. While this may sound like a dream come true, it can become a nightmare for employees who aren’t experienced movers or skilled planners and often leads to a less-than optimal relocation experience for the employee.
Choosing Between Offering a Signing Bonus or a Relocation Package
Choosing between offering a signing bonus or a relocation package can be difficult. Essentially, employers have to choose between relocation policies that please employees but are expensive and hard to budget…or a cash benefit/ relocation signing bonus that offers more flexibility to the employee but leavea them unsupported during their relocation - resulting in a bad relocation experience.
While both are valid ways to attract and offer incentives for candidates and existing employees to move to a different city for work, there is a third option.
The Best of Both Worlds
Flexible managed budget policies combine the best features of a relocation package and a relocation signing bonus into one. Imagine a policy that:
- Offers the flexibility and freedom of cash benefits, so employees can customize their relocation experience.
- Offers the high-touch, personal service of a relocation package, minimizing the risk of mishaps and oversights.
- Offers affordable, predictable budgeting for employers, plus opportunities to save if not all benefits are used.
- Leverages technology to give employees the faster, better, on-demand access they expect.
- Leverages technology to give employers real-time costs and data regarding each move, as well as analytics regarding their entire program.
As the employer, you choose which services to include, and can create as many relocation policies as needed to address different employee levels or needs.
Tips for Using Flex Relocation Policies
- Use technology to give transferees the power to choose how and where to spend their relocation budget. From pet shipment to lease breakage to an extra home-finding trip, employees get to decide which benefits they need.
- Include a vetted supplier network to ensure everything runs smoothly, or for even more flexibility you can let employees use their own providers while still being able to keep track of their budget in real-time.
- Flexible managed budget relocation policies (or Flex Plans) should also provide dedicated relocation consultants to assist with the move. This provides the best possible employee experience.
In short, employees get a personalized relocation experience, and employers create custom relocation policies with opportunities to reduce relocation costs. WIN!
