A well-crafted domestic employee relocation policy will improve the transferee experience, control costs, meet your employees’ needs, and help you win and retain new talent. Improving the employee experience means reducing stress so that employees can focus on work roles in their new locations.
Offering a comprehensive suite of relocation services is crucial in crafting a relocation policy that effectively benefits both the company and the employee. A holistic approach not only supports employees in managing the complexities of relocating but also streamlines the process for the company, helping to maintain productivity and reduce the administrative burden.
Regularly reviewing and updating the policy to reflect current market trends and cost-of-living adjustments contributes to overall employee satisfaction and ensures competitiveness.
The 8 essential relocation benefits should be a part of your policy strategy:
1) Home Sale Programs
2) Rental Assistance
3) Destination Services
4) Household Goods
5) Lump Sum
6) Cost of Living Assistance (COLA)
7) Policy Exceptions
8) Policy Tiers vs Core Flex Benefits
8.5) Compliance
1) Home Sale Programs
Offering a competitive home sale benefit can provide significant advantages to both the company and the relocating employee. By offering a standardized home sale process, companies can ensure a consistent and controlled relocation experience, reducing the risk of dissatisfaction or failed relocations.
Compra garantizada (GBO) u opción de valor para el comprador (BVO)
- Offering a GBO can be risky for your organization since it guarantees employees a home sale based on appraisal value,
but if the home is not sold then your company takes the home into inventory and must resell it. - Por otro lado, una BVO minimiza significativamente los riesgos organizativos que se observan con una GBO, ya que su empresa compra la vivienda del empleado sólo después de que éste consiga un comprador externo.
- Algunas empresas ofrecen una GBO a sus ejecutivos y una BVO a los no ejecutivos.
GBO
Some policies offer a Guaranteed Buyout Program (GBO), where the company or a third-party relocation service purchases the home if it does not sell within a certain period. This ensures the employee can move without financial strain.
Pros
- Tax advantage for your company and the employee.
- Employees are not required to attend closing.
- Professional appraisers ensure your company is offering a competitive market price.
- La oferta garantizada agiliza el proceso de traslado para que el trasladado pueda mudarse más rápidamente.
Cons
- The company carries the risk of owning and maintaining the home until it is sold.
BVO
With the Buyer Value Option (BVO) program, the employee is responsible for marketing and selling their home on the open market, but once they secure a bona fide offer from a buyer, the company or a third-party relocation service steps in to purchase the home at the agreed-upon price. This approach allows the employee to sell their home at fair market value, while the company handles the closing and resale, streamlining the process and minimizing the employee’s involvement in the transaction after the offer is secured.
Pros
- Ventaja fiscal para su empresa y el cesionario.
- Employees are not required to attend closing.
- Minimiza los costes de la empresa, ya que el comprador está asegurado por el empleado.
- Análisis de mercado realizado por dos agentes inmobiliarios para establecer un parámetro de comercialización adecuado.
Cons
- If home sale falls through, homes go into corporate owned inventory.
- Employees remain financially responsible for their home until an outside offer is accepted which might delay their move to the new work location.
DR
A Direct Reimbursement (DR) home sale benefit offers a flexible, cost-effective alternative to BVO and GBO programs, providing employees with the opportunity to sell their home independently while receiving financial support for key expenses such as real estate agent commissions, closing costs, and legal fees.
Pros
- Lower financial risk since your company does not have to bring unsold homes into inventory and employees are responsible for selling their home and paying closing costs/commission fees up front.
Cons
- No hay beneficio fiscal para su empresa ni para el trabajador.
- Su empresa incurrirá en un coste adicional de "gross up" (suponiendo que ofrezca "gross up").
- El empleado es responsable de todos los gastos por adelantado (gastos de cierre, comisiones, inspecciones, etc.).
Inspección de viviendas
Most companies require a full home inspection for a GBO and BVO program. The home inspection is ordered by the Relocation Management Company (RMC).
An inspection helps reduce risks of the company purchasing a home with unknown significant defects.
The transferee is required to complete all necessary repairs before moving forward in a BVO or GBO program.
Some companies want to avoid being too picky about required repairs, so an alternative to a full home inspection would be a major component inspection.
- Bueno
- Séptico
- Radón
- Termitas
- Estuco
- HVAC
- Techo
- Fontanería y/o electricidad interior
- Estructuras/fundaciones
Bonificación por venta de viviendas
Una bonificación por venta de vivienda puede ser un incentivo para que los empleados vendan sus casas rápidamente.
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- Beneficia a su empresa si ofrece una GBO; se ofrece menos en un programa de BVO.
- Decida cuál será el límite de esta prestación y si el límite variará en función de la función del empleado. Muchas empresas lo basan en un porcentaje de la venta y/u ofrecen una bonificación más alta para aquellos que puedan vender sus casas en un plazo deseado.
- Esto no es necesario en el mercado inmobiliario actual, ya que las viviendas se venden rápidamente porque la demanda supera ampliamente la oferta de inventario disponible.
Pérdida en la venta
Some companies offer a loss on sale, whereby the company provides an additional benefit to employees selling their homes for less than the original purchase price.
This benefit is more prevalent with executives versus non-executives (usually at a capped amount).
2) Rental Assistance
Employees at different life stages have varied housing needs. Rental assistance benefits ensure that the company’s relocation policy is inclusive and supportive of diverse situations, such as younger employees or those relocating to urban areas where renting is more common.
Additionally, providing rental assistance helps minimize the stress of moving and eases the transition into the new work role. An essential component of this benefit is helping transferees with early lease termination.
If you choose to offer rental assistance, consider the following:
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- How many days of rental search you want to provide.
- Placing caps on rental assistance ensures your company is containing costs. If an employee exceeds the cap, decide whether to provide an exception benefit on an individual basis.
- Encourage employees to negotiate with landlords to insert a diplomatic clause into the lease that reduces future lease break fees.
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3) Destination Services
Relocating to a new location can be an overwhelming experience for employees. Destination services play a crucial role in easing this transition by providing support that helps employees settle in more quickly and comfortably. Essential destination services include temporary housing, home-finding assistance, settling in services, among others.
By offering comprehensive destination services, companies can significantly reduce the stress associated with relocation, allowing employees to focus on their new role and become productive sooner. A well-supported transition not only enhances the employee’s experience but also contributes to their overall satisfaction and success in their new position.
Essential destination services for a US Domestic relocation include: Home Finding including temporary housing or house hunting trips and destination closing costs.
Alojamiento temporal
Relocating to a new location can be an overwhelming experience for employees. Destination services play a crucial role in easing this transition by providing support that helps employees settle in more quickly and comfortably. Essential destination services include temporary housing, home-finding assistance, settling in services, among others.
By offering comprehensive destination services, companies can significantly reduce the stress associated with relocation, allowing employees to focus on their new role and become productive sooner.
A well-supported transition not only enhances the employee’s experience but also contributes to their overall satisfaction and success in their new position.
Home Finding/ House Hunting Trip
Proporcionar una suma global para viajes simplificará el proceso y permitirá a los empleados reservar/pagar los viajes para buscar casa.
See below for more details on lump sums
Costes de cierre en destino
Muchas empresas ofrecen este reembolso a los ejecutivos frente a los no ejecutivos.
- Poner un tope a la ayuda es una forma de controlar los costes de esta prestación imponible, especialmente si su empresa proporciona el bruto. Esto podría ser especialmente útil cuando se traslada a los empleados a destinos de vivienda de alto coste.
- Se recomienda permitir únicamente el reembolso de los costes de cierre típicos para garantizar que su empresa no reembolse elementos que no sean estándar.
Algunas empresas ofrecen ayudas para los costes de cierre a los actuales inquilinos que compran una vivienda en su nueva ubicación.
- Si decide ofrecer esta prestación, decida quién podrá optar a ella. ¿Sólo los nuevos empleados o los ya existentes, sólo los ejecutivos o en función del nivel de trabajo?
- Although it is not the most commonly offered benefit, an incentive to rent can provide your company with potential cost savings on future relocations.
- Es una buena opción para los empleados que se trasladan a menudo, con lo que su empresa puede renunciar a pagar los costes de cierre y de la futura venta de la vivienda de forma repetida para el mismo empleado.
4) Household Goods
The HHG move is one of the most stressful stages of a relocation. Covering the cost and logistics of household goods shipping significantly reduces this stress, helping employees focus on transitioning to their new role.
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- Make sure your RMC is proactive in their communications and provides opportunities for employees to give live feedback so that any issues can be addressed immediately.
- Verify that the RMC provides transparent pricing, detailed tracking of expenses, and comprehensive insurance coverage to mitigate risks.
- Most companies will provide tax assistance with HHG moves, especially since the Tax Cuts and Jobs Act (TCJA) of 2018 was passed.
Envío de vehículos
Ahorre costes basando el número de vehículos autorizados en la distancia del traslado. Es habitual que las empresas ofrezcan al menos un vehículo para el traslado si la distancia es superior a 500 millas, y hasta dos si la distancia es superior a 1000 millas. Esto reduce el estrés que supone exigir al empleado y a su familia que recorran largas distancias en vehículos distintos.
Almacenamiento temporal
La mayoría de las empresas proporcionan un almacenamiento temporal de los enseres del empleado hasta que se consiga una vivienda permanente.
- A well-defined policy that includes temporary storage provides clear guidelines for both the employee and the company, reducing ambiguity and potential disputes over what is covered during the relocation process.
- Para ahorrar costes, no proporcione esta prestación por motivos personales, por ejemplo, durante la remodelación de la casa, cuando el empleado puede querer almacenar artículos hasta que el trabajo esté terminado, o si el empleado se va de vacaciones y no puede estar presente para la entrega de HHG.
5) Lump Sum
Decide if you want to offer a partial or full lump sum policy to transferees. Some employees may enjoy the freedom of being able to use their relocation money as they see fit.
Pros for providing lump sums include the following:
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- Cost containment
- Easy budgeting and administration
- Market competitiveness
- Great for employees with less to move
- Internship programs
There are three main types of lump sums discussed below:
lump sum only (no counseling); managed lump sum (with counseling); and lump sum (in addition to other benefits).
Lump Sum Only Benefit
(no counseling)
El cesionario recibe un pago único. El empleado decide cómo piensa gastar esos fondos.
- Se utiliza habitualmente con los no ejecutivos, incluidos los contratados de nivel inicial y los empleados en programas de desarrollo que rotan con frecuencia de lugar.
- Normalmente, no se utiliza con traslados de nivel superior.
- La mayoría de las sumas globales son inferiores a 5.000 dólares
Managed Lump Sum
(with counseling)
Permite a su empresa mantener un control parcial sobre el uso del dinero por parte del empleado, pero con cierta flexibilidad. El RMC asesora al empleado sobre las formas aprobadas de utilizar su suma global gestionada, y los fondos se proporcionan como un reembolso después de que el empleado incurra en el coste o se facture directamente a uno de los socios proveedores de su RMC.
- Las sumas globales gestionadas se utilizan más a menudo como única prestación para los ejecutivos o los empleados de alto nivel, frente a una suma global únicamente (sin asesoramiento), utilizada más a menudo con los empleados de nivel inicial.
Lump Sum
(in addition other benefits)
Este es el tipo de prestación a tanto alzado más utilizado. Funciona bien porque las empresas pueden ofrecer otras prestaciones -adaptadas a las necesidades específicas de reubicación de la persona- al tiempo que proporcionan una suma global que el empleado puede gastar como desee.
This type of benefit will also allow your company to control costs, and it adds some additional flexibility for the employee.
Cost of Living Adjustment (COLA)
Es posible que algunos de sus empleados se trasladen a una zona con un coste de vida más bajo y que otros se trasladen a un destino con un coste mucho más elevado. Si los costes son más elevados, algunas empresas ofrecerán un subsidio por coste de la vida de duración limitada para cubrir la brecha financiera. Las opciones de pago pueden ser mensuales, trimestrales, anuales o un pago único.
- Establezca un período de tiempo final para esta prestación y decida si la prestación disminuirá/se reducirá lentamente durante ese período de tiempo.
- Companies should also consider the tax implications of COLA payments and ensure clear communication with employees about how the adjustment is determined.
Lo mejor es ofrecer esta prestación sólo a los empleados que se trasladan a destinos de mayor coste. Si su empleado se traslada de una zona de alto coste de la vida a otra, considere la posibilidad de retener esta prestación. A menudo, las empresas establecen un umbral (normalmente un porcentaje) para ofrecer la prestación. Otros identifican áreas/ciudades específicas y sólo ofrecen el beneficio a los empleados que se trasladan a estos lugares predeterminados.
7) Policy Exceptions
Decide how you want to handle policy exceptions and make sure you and your RMC are in sync. Develop a well-defined process for requesting and evaluating exceptions, including who is authorized to approve them and under what circumstances exceptions will be considered. Even though you may have a great employee relocation policy, it is not always one-size-fits-all! Individual cultures, specific needs and family dynamics may create the need for exceptions. Make sure your RMC is tracking all requests/outcomes. Regularly review the types and frequency of exceptions requested to identify patterns or gaps in the current policy, which may indicate the need for policy adjustments.
Algunas de las solicitudes de excepción de política más comunes pueden ser las siguientes:
- Extended temporary housing or household goods storage
- Additional crating of items, vehicles to be shipped or other services for a household goods move
- Home listing parameters / Qualifying home requirements
- Additional reimbursements for travel
- Repair Requirements
- Benefit extensions
8) Policy Tiers vs Core Benefits
Policy Tiers
With policy tiers, the company selects which employees receive specific benefit packages. Often, policy tiers categorize employees into different levels (tiers) based on factors like job level, seniority, or relocation distance, with each tier offering a predefined set of benefits.
For example, relocation benefits provided to an executive might be different than benefits provided to an entry-level employee. While a tiered policy allows a company to be selective regarding which benefits are offered to each level of employee, some benefits may be offered in all packages.
In other words, a HHG move could be offered to all relocating employees, but the cost of the move could have caps for lower-level employees. Some companies will only offer home sale assistance to higher level employees, but all other benefits may be the same regardless of role/job level of the employee.
Además del nivel de la posición del empleado, otros factores que podrían afectar al nivel en el que encaja un empleado podrían ser si es propietario de una vivienda o inquilino, o si es un nuevo empleado o un empleado existente.
Core Benefits
Core Flex benefits offer a more tailored solution by providing a core set of essential relocation benefits to all employees while allowing additional flexible benefits that employees can choose based on their specific circumstances.
While Core Flex offers greater customization and can enhance employee satisfaction, it requires more complex administration and careful communication to ensure employees understand their options.
8.5) Compliance
Compliance is an essential consideration when developing a U.S. domestic relocation policy, as it ensures that the company adheres to all relevant laws and regulations. This includes understanding tax implications, employment laws, and real estate practices that vary by state. Creating a policy that prioritizes compliance helps mitigate risks, avoid potential legal issues, and ensures that both the company and the transferee are protected.
En conclusión
In crafting an effective US domestic relocation policy, it is crucial to consider a variety of best practices that address both employee needs and organizational goals. Regularly compare your policy with industry standards and competitors to ensure it remains competitive and effective.
Consider partnering with a good RMC who can help write your policy, benchmark it regularly, and administer it cost-effectively.
For more best practices, get our 2024 Global Mobility Benchmark Report.
