What Elements Should Every US Domestic Employee Relocation Policy Include?

Employee Relocation Programs today are often seen as a balancing act between high employee satisfaction and cost containment. Why are these two elements connected? The reason is that organizations need to strike a competitive balance between both elements. Maintaining tight cost controls may be meaningless if you cannot recruit and retain critical staff members needed to make your organization successful.

What are the main types of Relocation Policies and Programs?

Generally speaking, there are three types of relocation policies used by companies to support relocation programs. Then within the relocation policy types, there are further divisions made employee level called policy tiers. You'll need to work within these guidelines if your company already has actually embraced one of these policies.

Lump Sum Relocation Program

What is a Lump Sum Relocation Program?

Lump sum policies typically are administered by giving the relocating employee a lump sum payment. Typically this would be one check to cover transferee moving expenses, consisting of all associated details. The transferee has the main burden to sell and buy a house, find temporary living accommodations, fund house searching trips, and handling all other elements of the move.

What are the pros and cons of a Lump Sum Relocation Program?

Pros:

• It is easy for HR/Payroll to administer
• Costs are generally fixed for the company
• It gives the employee the flexibility to make their own decisions

Cons :

• Requires employee to use their time to manage the move themselves
• The employee may not feel very supported by the organization
• Lump sum payments are considered fully taxable income to the employee
• Exceptions to the policy are common because the employee underestimates the costs of the move
• The employee has to ask the HR/Hiring manager for help figuring out relocating to a new city

Direct Reimbursement Relocation Program

What is a Direct Reimbursement Relocation Program?

With a Direct Reimbursement relocation program, the organization would repay the transferee for each move expense. This provides less cost control but results in better, more productive staff members. This policy does involve more administrative work for you or your third-party relocation company.

What are the pros and cons of a Direct Reimbursement Relocation Program?

Pros:

• It gives the employee the flexibility to make their own decisions
• Employee's relocation expenses are not necessarily limited by a set budget
• Direct reimbursements of homesale related expenses are not at risk of being audited by the IRS

Cons :

• Requires employee to use their time to manage the move themselves
• Direct reimbursements of expenses are taxed as income to the employee
• Exceptions to the policy are common because the employee underestimates the costs of the move
• The employee has to ask the HR/Hiring manager for help figuring out relocating to a new city
• Direct reimbursements of homesale related expenses are considered taxable income to the employee, making homesale assistances much more costly

Professionally Managed Relocation Program

What is a Professionally Managed Relocation Program?

Professionally managed relocation programs are managed by relocation experts that typically work for what is called a Relocation Management Company (RMC). Using an RMC is attractive to both relocating employees and their employers. If your business is dedicated to recruiting and retaining the best personnel, this is the best approach for you. Having a professional relocation company handle all information will keep your expenses controlled and your personnel from stressing-out.

What are the pros and cons of a Professionally Managed Relocation Program?

Pros:

• Relocation Management Companies are experts at moving employees
• Relocation Management Companies reduce company time spent managing employee moves
• Relocation Management Companies include at no additional cost policy and program design as part of a standard implementation
• Relocation Management Companies provide technology to both the employee and the employer to make managing key milestones and next steps easier
• Relocation Management Companies provide reporting, expense reimbursement, tax calculations, and more, reducing spend and risk

Cons :

• Selecting the right Relocation Management Company often requires a formal RFP process which can be time-consuming

How can I make a Relocation RFP Process Easier?

Check out our guide on Employee Relocation RFPs . Furthermore, we've managed and replied to thousands of Relocation RFPs. Feel free to reach out to us with any thoughts or questions about structuring your Relocation RFP. We would be happy to point you in the right direction.

What are the key elements needed to relocate an employee?

Key Elements of Domestic Relocation

Unlike international relocations, which include foreign currency and visa issues, domestic relocation crucial elements depend predominately on the following items.

Homesale Assistance

Whether you provide "loss on sale" monetary assistance or marketing services to encourage a prompt homesale, this is the key element of domestic relocation policies. You can cover the closing cost through a buyout, Buyer Value Option, or direct reimbursement program. Many organizations offer their senior executives a Guaranteed Buyout Offer, as well.

Full-service moving help, from packing to unpacking.

This aspect lowers the stress-level on you and your transferee. Quality full-service moving suppliers help ensure all of the family's household goods arrive safely in the new location.

Home Finding Assistance

This aspect features recommending real estate representatives with relocation experience to help transferees discover relevant housing in the new area. This includes company-funded trips, usually two, for the transferee and family.

Do you need help creating the right relocation program for your organization?

Paragon Relocation has been in business for over 30+ years, helping organizations of all shapes and sizes build competitive relocation programs that support their business goals. We would love the opportunity to explore doing the same for your organization.

Contact Paragon Relocation today to learn more!