A good relocation policy doesn’t just give you consistency and efficiency with all of your relocations throughout the year. When taking the right questions and goals into account, your company’s relocation policy can have a serious impact on your talent management goals. In fact, SHRM notes 86 percent of new hires decide to leave within the first six months, so making a strong first impression as your employees relocate is critical.
Having a predefined relocation policy ensures consistency across each new assignment, and prevents repeated starting-from-scratch moments. Establishing a framework that covers the basic aspects of a relocation policy should address who is eligible, what expenses are covered and additional incentives. But remember, it’s important to develop a customized plan for your company that aligns with the following:
- Current industry needs
- Current economic environment
- Your company’s strategic intent and productivity goals
- Cost objectives
There’s a lot to consider when developing a relocation policy to ensure your company’s goals are being addressed while also giving the employee the best chance at succeeding in his or her new position.
Get a baseline for your relocation policy needs
Before you get started, you need to know what’s “normal” regarding your organization’s relocation needs. Here’s a rundown of some common baselines you should be capturing and how to review them:
- Average distance of your employees’ moves: Knowing the distance of your employees’ moves helps determine what’s appropriate to offer in your policy to help them and their belongings get from Point A to Point B. Take the transport of an automobile for example. Some companies may move one vehicle for moves over 500 miles, two vehicles for moves over 1,000 miles, etc. House-finding trips are another example. Is your average distance appropriate for a day trip? If so, you might not need to make as many allowances for those trips.
- Common requests: Most relocation policies have certain restrictions on what is and is not covered to keep costs down, with exceptions granted on a case-by-case basis. But if you’re finding everyone is asking for assistance with special items, you should consider adding those into your policy. For example, front-load washers and dryersrequire a specific service to move that is not always covered by a company’s relocation policy.
- Average move spend: It’s good to know how much your employees’ moves cost versus what you’re offering them. It’s understandable to not cover all of their relocation expenses, but if you’re seeing a rising difference between the average relocation cost and what you offer, you should consider raising the allowance cap. Otherwise, it could eventually have an adverse effect on your ability to recruit and retain top candidates.
- Top five moving expenses: In addition to knowing the average move spend, you also should be capturing the top five relocation expenses. More often than not, these are transportation, packing, storage, third-party services (such as crating antique and delicate items), and accessorial services (shuttles for difficult to access homes, miscellaneous charges), in that order. Some costs like transportation are dependent on outside factors like cost of fuel, but things like storage can be an area to make budget adjustments if necessary. For example, if you provide 60 days of storage, reducing that to 30 days can be a way to make your relocation policy reflect current budget and business needs.
What relocation perks should you consider?
Once you have a baseline of your organization’s relocation needs, it’s time to identify what perks you should include to help you recruit and retain top talent. Some common relocation policy benefits include:
- Traditional home sale programs:Less than five percent of businesses offer home sale programs. Those that do may opt to provide a direct reimbursement program rather than a Buyer Value Option or Guaranteed Buy Out, which could save on the cost of non-compliance fees as well as carrying costs when a home comes into inventory.
- Property management programs: Some employees may owe more on their home than it’s worth, which makes selling their house to take an assignment elsewhere difficult. An increasingly common policy offering is property management programs, where companies will help pay for property management companies to help employees rent out their former home.
- Rental incentives: Some companies need to move employees every couple of years. In those cases, they are finding it easier to offer monthly incentives to rent instead of buy. If the assignment only lasts for several years, it saves the employee by avoiding home sale and home purchase costs.
How to conduct a relocation audit
Even if your organization already has a relocation policy, industry best practices suggest reviewing it at least once a year to ensure it evolves with your employees’ changing needs. Here are two questions you should ask:
Does your relocation policy encourage (or discourage) talent mobility?
Between new technology and shifting generational preferences, more and more employees want – if not expect – to work in different cities (and countries) throughout their career. Having a relocation policy where employees believe they have an opportunity to grow and meet their personal career goals will help them remain invested in your company, as opposed to feeling like they need to look elsewhere. At the same time, be careful that they don’t treat your company as a free ride by leaving shortly after relocating. A repayment clause can easily address that, where the employee is required to pay back part of the relocation package should they leave after a certain number of months or years.
Are you offering enough?
Entitlements (i.e., temporary housing, pre-decision trips, etc.) in a relocation policy can be the deciding factor for many candidates who’ve received multiple offers. Are there common exceptions transferees have requested that you should make a standard inclusion? What are the current relocation trends? Has your employee base changed dramatically since your last policy review?
The answers to these questions will help ensure that your relocation benefits put you ahead of your competition. While the monetary value of the relocation package is important to evaluate, also ask yourself if your company is offering sufficient direct assistance to transferees. Giving employees all the support and answers they need during such a big life event can leave a lasting impact on them as they grow with your company.
How Flex Benefits Can Boost Your Relocation Policy
One area that’s grown in prominence over the past few years is the use of flex benefits. By their very name, flex benefits give your relocation policy flexibility to account for your employees’ unique needs, such as home-buying trips and temporary living assistance. These might not be necessary for everyone, but they can have a positive impact when it’s something that can make an employee’s transition smoother.
What are flex plans?
Flex benefits supplement the core aspects of your relocation policy – together, this is commonly called “core-flex plans.” For example, shipping household goods is a service virtually every transferee needs, and therefore, is included as a core benefit. This allows for greater consistency and generally a better rate for the services that every relocating employee needs.
Most companies set a cap for how much their flex benefits will cover. This also can vary if a company’s relocation policy is tiered by job function and/or seniority.
It also is common for companies to pre-select available flex benefits as more of an “a la carte” menu based on those extra services most frequently requested by their employees. Similar to core benefits, pre-selecting available flex benefits can make administering and negotiating rates for these supplementary services easier.
How do they differ from a lump sum?
While they might sound similar, flex benefits are not the same as lump sums. Lump sum programs essentially give employees a set amount of money to use for their move at their discretion. This approach carries obvious benefits to busy HR managers who don’t have the time to manage multiple relocations, but it does leave more unseasoned movers subject to some difficult situations.
Core-flex plans ensure that employees get the basic moving services they need with a more defined way to handle “exception requests.” This also highlights the need to do a regular review of your relocation policy – generally annually – to see what services and exceptions employees request most and what you should consider adding to your policy.
Should you implement a core-flex plan?
Just like your employees’ relocation needs, every company is different. Depending on your HR department’s bandwidth, hiring goals and other factors, you may be better suited for a core-flex policy.
A solid relocation policy can be a tremendous asset for you and your organization, especially as you look to expand into new markets or grow your talent base. You might be thinking, “This is great and all, but I’m a one-person HR department.” Believe us, that’s more common than you might think. Hiring a relocation specialist like Hilldrup Relocation can help answer many of these questions, even if it’s a simple review to make sure your policy covers everything it should.
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