Whether your company currently offers relocation packages or is starting to think about it, it’s essential to view relocation in light of our new normal—i.e., in the age of COVID-19. After all, you can’t offer a competitive-yet-cost-effective job relocation package without understanding relocation industry standards, trends, practices and options, particularly in light of our current environment.
For many employers, these questions are about to get even more pressing. As businesses develop new strategies to recover from the impact of COVID-19, having the right talent in the right place—right away!—is likely to become essential to their staying competitive and achieving new goals.
At the same time, reducing and controlling relocation expenses will be a high priority for companies operating on leaner margins. This is particularly true for those relying on traditional (aka, costly) Relocation Management Company (RMCs) to administer their programs.
At UrbanBound, we are all about offering employers and employees options. We pioneered relocation management technology—the cost-effective, tech-driven alternative to expensive, legacy RMCs. Frankly, it’s in our interest to share all of these facts with you.
Because the more you know, the more likely you are to reject the old way of thinking and choose the flexible, affordable, relocation solution: us.
At UrbanBound, we define a relocation package as an employer-sponsored benefit that is offered to employees who have agreed to move for work—or to prospective new hires as an enticement to accept a job offer that involves relocating to a new city.
In our lexicon, the term “relocation package” encompasses both the specific financial benefits an employee receives to offset the cost of their move and the logistical assistance provided to them, whether through an internal mobility department, external RMC, relocation software platform, or any combination thereof. Those financial benefits are often broken down into specific categories, which we’ll address in more detail later.
Relocation assistance packages come in all shapes and sizes. Some employers put a great deal of care into designing tiered, standardized packages for various levels of employees; others are more casual and case-specific.
Either way, relocation benefits are a business expense. If your company offers them, it’s in your best interest to be thoughtful in the way you create, manage, and negotiate these benefits—not to mention how you track and measure your program’s effectiveness.
For example, we recently sponsored a panel of talent acquisition and mobility thought-leaders from some of the country’s most-respected employers. There, we learned that these employers—who move hundreds if not thousands of employees per year—are continually reevaluating and restructuring their relocation packages and processes.
Relocation assistance packages are an ever-evolving tool that helps employers reach various, possibly evolving goals.
There are a number of reasons employers offer job relocation as a compliment to traditional employee benefits. Of course, the most common is to help companies achieve their talent acquisition goals.
Companies in specialized, fast-growing fields like technology and healthcare have been particularly hard hit by skilled labor shortages. As a result, they’ve had to expand the geographic scope of their recruiting efforts. Without an attractive relocation package, securing skilled long-distance talent is a long shot indeed.
Similarly, if a company is committed to building a robust internship program—in the interest of cultivating an ongoing talent pipeline—offering a modest-but-competitive relocation benefits to interns can set an employer apart from the pack.
There are other reasons, too. Perhaps, you want to diversify your workforce by hiring internationally, bringing people to the U.S. from all over the world—like MicroStrategy. Or perhaps you’re opening a branch in a new location. Strong relocation assistance packages give employees an incentive to move.
Whatever your company’s motivation, here’s one thing to keep in mind. Every relocation package you offer is a reflection of your company’s values and culture. No matter how much you spend (or don’t), at the end of the day, you want relocating employees to feel that you’re taking great care of them every step of the way.
This depends greatly on the employer, job position or title and current benefit packages. However, most assistance packages typically cover these costs:
More generous relocation packages may also include these benefits:
It is worth noting that sometimes the best relocation benefits are those that offer the most flexibility, allowing employees to pick and choose their benefits—in essence, designing their own personalized job relocation package based on their needs and lifestyle.
That depends on the employer. Obviously, high-level executives—i.e., C-suite officers, directors, etc.—have always been the most likely candidates to receive relocation assistance and the most deluxe relocation benefits at that.
However, due to skills shortages in certain specialized industries, more employers are offering relocation packages to attract valued individual contributors. The technology industry is a perfect example. Tech companies tend to offer very attractive relocation packages to keep pace with expanding hiring needs, as detailed in one of our recent case studies.
Some companies are now offering relocation benefits to entry-level hires and interns, with an eye toward long-term talent development. (To learn how GE Digital built an award-winnings internship program, check out this on-demand webinar.)
Who gets relocation packages? Whoever the employer wants.
Like everything else, the relocation industry sees various trends come and go. One of the advantages of today’s relocation management landscape is that employers can choose from a range of relocation packages and customize them as they see fit. Here’s a rundown of the main types of relocation packages you’ll find in the market right now:
The Lump Sum Relocation Package
Also known as “cash only” plans, the lump sum package is essentially like a signing bonus that’s intended to fund relocation expenses. The employer gives a pot of money to the employee, who can use it however he/she chooses, keeping whatever isn’t spent.
The advantage: it’s easy for employers to manage as well as budget, and, at least initially, employees like the idea.
The disadvantages: employees are on their own when it comes to planning their relocations. If they’re trying too hard to pocket some of the money, it can result in a very bumpy relocation. Furthermore, the employer has no way to know how the move is going.
One way to overcome the disadvantages of lump sum packages is to use relocation technology that gives employees support and direction while planning their move designed to keep employers in the loop.
Learn more—watch Lump Sum for a New Generation!
The Managed Budget Relocation Package
The “managed budget,” also called a “capped allowance” plan, is a variation of lump sum that’s designed to address some of that plan’s shortcomings. Instead of simply handing off funds to the employee, the employer sets a maximum amount he or she can spend—often accompanied by guidelines on how to use the funds. The employer may provide support to the employee in the form of a specialist or relocation technology—or both.
The big difference to note? UUnder managed budget plans, nder managed budget plans, if the employee doesn’t spend his or her entire allowance, he/she doesn’t get what’s left over.
The advantage over lump sum packages - more support for employees and more control from the employer, while still providing flexibility. These are more cost effective for employers, although not typically preferred by employees.
The Core/Flex Job Relocation Package
Core/Flex relocation packages strive to balance value with flexibility, by providing certain fixed core benefits—such as moving costs and portions of real estate transactions—with a menu of flexible benefits employees can pick and choose from. For example, while some transferees need a service to move their pets, another might opt for extra storage space.
Employers can create multiple tiers of core benefits with flexible options for employees at different levels, but the basic core/flex structure remains unchanged. The primary advantage of Core/Flex plans: they offer employees the opportunity to customize their relocation to meet their needs, while offering employers greater cost control. For a greater understanding of Core/Flex, download our ebook.
The Tiered Relocation Package
Tiered relocation packages are ideal for employers that offer relocation benefits to various kinds of levels of employees. Three-tiered programs have become the standard. Usually, they’re organized like this:
The advantage of tiered relocation plans is that they are a cost-effective way to offer competitive relocation packages to all kinds of employees. However, they do require more sophisticated administration. Utilizing relocation management technology can be very helpful in this regard.
The Fully-covered Relocation Package
Under the fully-covered relocation plan—usually reserved for the highest-level executives—the employer pays the complete cost of the relocation. These types of plans are invariably very expensive to offer and complex to manage.
In addition to broad benefits, most employers also provide personal support to these employees in the form of a relocation management specialist (either an inhouse employee or through an RMC). Fully covered relocation packages generally get high satisfaction grades from employees, but they are costly for employers, as well as hard to manage and predict.