Building a Relocation Policy

If you are considering revising your current relocation program, or creating one for the first time, you’re probably wondering where to start. Just like building a house, you want to start with the foundation.
When building a relocation program, begin with the policy structure. Remember, you have a couple of options to consider when creating your program. If you’re looking for assistance, our benchmarking studies have uncovered key trends in building the right policy structure.

Building or Revising Your Employee Relocation Policy

A common trend among companies offering relocation assistance is to provide different levels of benefits to their relocating employees. This allows a company to be cost-conscious and flexible.

The Tiered Approach

A set, tiered policy gives a company the ability to easily select which employees will receive which benefit package. Our research indicates an average of four tiers within any relocation policy. This allows for sufficient variation among benefit packages without creating too much complexity across employee levels.
While a tiered policy allows a company to be selective about which benefits are offered and to whom, some benefits may be offered to all packages. For instance, a household goods move may be offered to all relocating employees, but only certain employees might receive a homesale benefit. You will need to consider which benefits make the most sense for your different employee levels.
 

Building Tiers

There are several different factors companies use when creating a tiered policy. In fact, most companies use multiple factors. The most common factors we’ve identified in our studies include employee position level, homeowner versus renter status, new-hire versus existing-employee status, and budget.

The most frequently used factor to create policy tiers is the employee’s position or level within the company. Companies will most often offer richer benefits to C-level employees compared to middle managers, as the C-level role may be considered more integral to the employer. Cash allowances may be larger, timeframes may be less stringent, and the policy itself may become less constrictive overall for higher-tier tiers.

Homeowner versus renter status is another factor commonly used in creating a tiered policy. For example, a homeowner tier will likely be richer than a renter tier. Homeowners have higher associated moving costs to complete home repairs and get their homes ready for the market. Longer househunting might also be offered for homeowner tiers, as more time is typically needed to purchase a home than to rent.

The A La Carte Approach

An alternative to a tiered policy is an à la carte, or menu, policy. This can be ideal for companies that like to be extremely selective about which benefits are given on an individual basis.

Building à la carte benefits

The discretion used in deciding which benefits to offer can be based on the employee’s need to relocate, the distance the employee is moving, or simply on budget.

Employees can also decide which benefits they receive. The company may offer an employee a specific lump sum amount or use a “points” system. The employee can then determine, based on the dollars or points received, which benefits he or she would like the employer to provide and which the employee would like to manage on his or her own.

This type of policy is currently more “on trend” due to several factors, such as more employees electing to retain their homes in their departure location and therefore not needing a formal homesale benefit.

Your company’s culture, talent development strategies, and much more need to be taken into consideration when you’re deciding how to develop your employee relocation policy. Offering too many benefits can be costly for your organization, while not offering enough can negatively impact your success in recruiting and retaining employees. Take careful consideration when determining which structure best fits your relocating employees’ needs.