Everything You Need to Know
Employee
Relocation 101
Employee relocation occurs when a company chooses to move a new or existing employee from one location to another. This can include across the US or across the world! The reasons for relocating an employee have benefits for both the employer and employee including taking on a new role, support business expansion, or enhancing operational efficiencies. The relocation process typically encompasses various logistical, financial, and personal aspects, including arranging housing, covering moving expenses, and providing support to help employees and their families adapt to their new environment.
Employee Relocation 101 provides valuable information and resources for both U.S. Domestic and International assignments:
What is Employee Relocation?
Employee relocation, also known as global mobility and corporate relocation services, is an important task that allows employers like you to remain competitive in your search for top talent. Understanding the fundamentals of employee relocation is crucial for organizations aiming to retain talent and ensure a smooth transition for their workforce. The relocation industry exists to help you manage and move your best and brightest talent to wherever they need to be in order to increase personal performance and company revenue.
Typical benefits offered to employees for relocation (may differ if move is the move is U.S. Domestic or International) and often include:
Pre-Decision Counseling
Helps employees assess and plan for a potential relocation by providing information and guidance on feasibility, impact, and logistics of moving
Departure Services
These can include property vacating services such as
selling a home, renting,
termination of a lease
or purchasing a new home
Household Goods Move
Assistance for household goods moves can be via a rental truck (self-move), van line, or air freight (typically for international assignments)
Destination Services
Services include
Area Orientation,
Temporary Housing
and Settling-In Services
What is a Relocation Policy and why do I need one?
A relocation policy is a set of guidelines and procedures that a company establishes to manage and support the process of moving an employee from one location to another or on a temporary assignment overseas. It outlines what is covered and provided by the company, including financial support, services offered, and responsibilities of both the employer and employee during the relocation.
Essentially, a relocation policy is like a workflow that dictates what each employee will receive for benefits, typically based on what are commonly known as “tiers.” Tiers determine the level of benefits each relocating employee will receive based on criteria important to you, such as employment level (manager/executive), homeowner status (owner/renter), or any other criteria you deem critical.
A well written relocation policy provides consistency in your program, clarity as to what the employee can expect, and helps manage and control relocation expenses.
Visit our Relocation Toolbox for a wealth of information to help get your relocation program on the right track!
What are typical Employee Relocation Services?
Employee relocation services, or benefits, are typically outlined in a relocation policy.
This takes the guesswork out of handling each individual relocation and allows consistency within your program.
Services and policy tier typically differ for those employees who are relocating domestically or internationally.
U.S. Domestic Relocation Services
For employees relocating within the U.S., services might include a combination of 7 categories (based on the policy tier):
1) Employee Counseling
-
- Initial Consultation
- Policy/Benefits Review
- Needs Assessment
2) Household Goods
-
- Movement of Household Goods
- Storage (SIT/Long Term)
- Automobile Transportation
- Pet Transportation
- Claims Administration
3) Home Sale
-
- Home Marketing Assistance
- Buyer Value Option (BVO)
- Guaranteed Buy Out (GBO)
- Direct Reimbursement
4) Home Finding
-
- Rental Assistance
- Home Purchase
- Mortgage Assistance
5) Destination Services
-
- Preview Trip
- Area Orientation
- Temporary Housing
- School Search
- Spouse/Partner Assistance
- Settling In Assistance
6) Quality
-
- In Process Surveys
- Overall Satisfaction Surveys
7) Financial
-
- Exception Management
- Expense Management
Curious how industry specific relocation services compare?
International Relocation Services
For employees relocating internationally, services might include a combination of 7 categories (based on the policy tier):
1) Employee Counseling
-
- Initial Consultation
- Policy/Benefits Review
- Needs Assessment
- Immigration Assistance
- Language Training
- Cultural Training
- On Assignment Support
2) Household Goods
-
- Movement of Household Goods
- Storage (SIT/Long Term)
- Freight Forwarding/Customs Assistance
- Pet Transportation
- Claims Administration
3) Home Sale
-
- Home Marketing Assistance
- Buyer Value Option (BVO – US Only)
- Guaranteed Buy Out (GBO – US Only)
- Property/Tenancy Management
- Lease Cancellation Assistance
4) Home Finding
-
- Rental Assistance
- Home Purchase
- Mortgage Assistance
- Closing/Title Assistance
5) Destination Services
-
- Preview Trip
- Area Orientation
- Temporary Housing
- School Search
- Spouse/Partner Assistance
- Settling In Assistance
- Furniture Rental
- Home Leave
- Departure Services
6) Quality
-
- In Process Surveys
- Overall Satisfaction Surveys
7) Financial
-
- Exception Management
- Expense Management
- Lump Sum Assistance
Curious how industry specific relocation services compare?
Relocation Resources
Global Mobility Benchmark Study
Homesale Benefits Guide
Relocation Toolbox
Relocation Request for Proposal Generator
U.S. Domestic Policy Designer
U.S. Domestic Relocation Cost Estimator
Sample U.S. Domestic Relocation Letter
Sample International Relocation Letter
What to expect from your Relocation Management Company?
When partnering with a relocation service provider (RMC), companies should expect comprehensive support that includes expert guidance on polices, best practices, and compliance, while offering customized services designed to meet the individual needs of your relocating employees. A reliable RMC will facilitate a seamless relocation by managing everything from household goods transportation to home sale, destination, and settling-in services, ensuring your employees have a positive experience throughout the relocation process.
Relocation Management Team
and Employer
When outsourcing your relocation program, your RMC will assign you an account manager. This person is your dedicated contact for program management, service performance monitoring, and ongoing policy consulting and benchmarking. Having this resourceful and knowledgeable point of contact is one of the most critical elements in a successful relocation program.
Responsibilities of your account manager might include:
-
- Account monitoring and quality assurance
- Knowledge of industry best practices, trends, tax, and legal
- Monthly, quarterly, and annual client meetings
- Reporting
- Policy consulting
- Policy benchmarking
- Third-party oversight (e.g., employees’ real estate agent or household goods mover)
You can expect your account manager to provide regular updates on VIP employees/relocating executives, exception requests to your policy (e.g., an employee needing an extra month of storage), and help coordinate custom reports.
Their main goal is to be proactive and work in your best interest throughout your relationship with the RMC.
Ready to learn how WHR Global can partner with you?
Relocation Management Team
and Transferring Employee
Relocating employees are assigned a relocation counselor to help explain, manage, and deliver all services being received as part of the employer’s policy. This relocation counselor serves as the transferring employee’s main point of contact throughout the lifecycle of the relocation, and their main goal is to provide consistent policy guidance, program knowledge, and to ensure that all services and timelines are managed to the satisfaction of the employee plus contract requirements. Leveraging relocation technology, counselors are guided through all outstanding tasks and deliverables from home marketing assistance to home-finding to helping your significant other find employment in the new location.
The relocation experience itself begins after you authorize an employee for a relocation—usually through the RMC’s technology or by email. Within 24 hours, the assigned relocation counselor will reach out to the employee, introduce themselves as the main point of contact, and schedule a time for an in-depth initial phone call.
Initial Employee Communication
During this call, the counselor conducts a needs assessment of the employee and/or family while explaining all services eligible. This provides the opportunity for the counselor to align the employee’s expectations with your policy, such as:
- Home sale or rental lease-break assistance
- Home marketing and homefinding
- Household goods moving process, whether through truck rental, full-service van line, or international freight carrier
- Destination services overview, including storage, temporary housing, and language training
- Final equity funding when applicable
- Expenses eligible for reimbursement or tax exclusions
After the initial phone call, the counselor ensures all information is stored and secured within the relocation technology to drive the process until close of the last service.
Ongoing Employee Support
Throughout the relocation process, the Relocation Counselor coordinates each service as the employee’s advocate, setting appointments, confirming status updates, and ensuring they provide consistent and timely updates on each service along the way, such as:
- Finding temporary housing
- Booking a real estate or rental agent
- Sourcing appraisers and home inspectors
- Booking and overseeing the household goods/freight forwarding crew
At the completion of service, your employee will have the opportunity to rate their satisfaction with the process, relocation counselor, and any third-party service providers. This process helps the RMC with maintaining quality standards and ensuring your employee has a positive relocation experience.
There are a lot of terms and jargon associated with employee relocation. We have assembled a comprehensive glossary with over 165 employee relocation and assignment management terms! See our Global Mobility Glossary.
What challenges are presented
in Employee Relocation?
Whether domestic or international, can relocation present several challenges for employees and employers.
Relocation Myths
The myths surrounding relocation are vast, however you are not required to be an expert or work for a Relocation Management Company, (RMC), to understand everything.
The relocation industry is constantly changing based on current trends and best practices in the global workplace, which is why companies typically contract with an RMC like WHR to manage relocations for them.
What kinds of costs are involved in managing an Employee Relocation?
Relocation costs should be transparent. There should never be a surprise when you review a relocation invoice, which is why we have created this list of common fees to help you better understand and negotiate a reasonable contract for relocation services.
While fees vary from company to company, they are, in general, similar across all Relocation Managment Companies (RMCs). Costs charged by an RMC for overall program administration, including salaries, overhead, and profit.
Transparency in these costs is crucial to ensure that you understand what is being charged and why, helping you to avoid unexpected expenses and maintain a cost-effective relocation program.
Service Fees
Service fees are the actual fees for the actual services provided to the employee either directly by the RMC or a 3rd party provider. (i.e., Temporary Housing Provider or Destination Services Provider)
Referral Fees
Income received by you or the RMC for tasks like procuring a real estate agent or van line that specialize in corporate relocation.
Fixed Fee
Generally found in government contracts, this type of fee reflects the expected operating costs in the resale of the property and includes the costs found in servicing the move.
Non-Compliance Fee
Additional fee that may be charged when a property does not meet the stipulations of your relocation policy or RMC contract.
Other Fees
Takeover, cancellation, or extended market time fees.
WHR Global’s Pricing Methodology
Are International Relocation Policies tax compliant?
Regardless of whether an international relocation is permanent or simply a short-term assignment, all relocation-related expenses will likely raise tax issues in both departure and destination countries. This is why it is critical that the potential tax exposure from relocation reimbursements be monitored so that accurate tax returns can be filed in both the old and new country locations.
US citizens are required to file taxes on their global income regardless of where it was earned and in addition to the tax filings required in the country of assignment. When an employee transfers out of the US, they must still file a US Federal Income tax return. However, the US does provide a foreign tax credit that can be applied to the employee’s return, which means the amount owed in the US could be nothing or a negligible amount, but they are still required to file.
It is strongly suggested that the employer provides tax equalization for employees relocating internationally. This allows employees to pay taxes as they would in their original country, with you covering the difference.
Your RMC will work with you, your preferred tax provider, and employees to assist with maintaining a tax compliant relocation program.
Frequently Asked Questions & More
How do I build a Relocation Policy?
Now that you understand a bit more about the relocation industry, you can start thinking of how to structure those relocation policies. Two of the most common approaches in creating successful relocation policies are the tiered approach and the a la carte approach.
The Tiered Approach
A set, tiered policy gives a company the ability to easily select which employee will receive which benefit package. Our research indicates an average of four tiers within any relocation policy. This allows for enough variation between each benefit package while not creating too much complexity for administration.
While a tiered policy gives the ability for a company to be selective regarding 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 home sale benefit. You will need to consider which benefits make the most sense for your different levels of employees.
Companies also use policy tiers to keep an eye on relocation costs. Some companies offer home sale benefits to all relocating homeowners while others prefer to restrict that offering to higher-level employees, as home sale is one of the most expensive and complex (yet helpful) benefits you can offer.
Building Your Tiers
There are several different factors companies use when creating a tiered policy. In fact, most companies use multiple factors. The most common criteria for determining an employee’s relocation benefit is job level. This is largely tied into the rarity of the skill set required and impact the individual will make to the organization in the new role. The next most common factor is homeowner status, as the costs and timeline to move renters versus homeowners consistently differ.
The A La Carte Approach
An alternative approach to having a tiered policy is using an a 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 A La Carte Benefits
The discretion used in deciding which benefits to offer are up to you for each relocation. This can be based on the need for the employee to relocate, the distance in which the employee is moving, or simply based on budget.
The employees themselves can also be in charge of deciding 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 being received, which benefits they would like provided by the employer versus what the employee would like to manage on their own.
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 prove costly to your organization, while not offering enough can negatively impact your success in recruiting and retaining your employees.
Why should I outsource my employee relocation?
In the days of low volume, Human Resource professionals comfortably managed the relocation of a few key employees without the aid of a specialist. These moves might have been a generous lump sum with access to a preferred household goods carrier, but while this worked in the past, relocation best practices and the workforce industry itself have changed significantly.
In order to source the very best talent for the job, it has become essential for companies to have a global relocation program that adheres to today’s best practices while also staying up to date on tax and legal requirements.
Creating and successfully running a relocation program that competes in today’s global market is a demanding task that requires more time and understanding than ever before, which is why HR departments traditionally outsource the relocation process. Using an RMC eases the burden of meeting the demand for top talent by providing these fundamental benefits:
- Access to knowledgeable relocation experts
- More time for you to focus on your other job duties
- Connection to a vast network of third-parties, at discounted rates, for services like homefinding, temporary housing, and household goods moving
- Opportunities to benchmark your relocation program against other clients to ensure best practices and competitiveness for top talent
- Increased cost savings with the leveraging of discounted third-parties and tax benefits
- Access to a relocation-dedicated technology to keep your program operating at its most efficient
To better understand the advantages of outsourcing your relocation program to a relocation expert like WHR Global, check out our 7 Benefits of Outsourcing Your Relocation Program.
How should I select an employee relocation supplier?
Before you even begin looking for a employee relocation company, you and your business’ other decision-makers need to define what you’re looking for most in a supplier.
Make a list of your top wants and needs, and stick with this list throughout your selection process. Start by considering your own company: Is cost your company’s most important motivator? Is service satisfaction? Is it both, or something else entirely—like the RMC’s management structure or years of experience?
Also take into consideration your company’s size and anticipated number of relocations per year. RMCs range in size from thousands of employees across multiple continents or companies located in one office to streamline delivery and communications. Do you want to be a small fish in a big pond, or do you need to be a big fish in a smaller pond? Really get to the heart of what your company values most in a supplier.
To help get you started, here are some important elements to look for when selecting an RMC:
- If the RMC functions as just another vendor for your company, or a partner in your relocation efforts
- The RMC’s ability to remain flexible and responsive to change as your company or your employees’ needs evolve
- Efforts to go above and beyond when it comes to customer service, as it’s costlier to hire a new employee than relocate an exceptional one
- Ability to marry customer service efforts with cost savings initiatives to justify the expenditure of such an important resource for your employees
- Supply chain management experience, as RMCs use their own network of on-the-ground suppliers for tasks like apartment tours, pet transportation, and language training for your employees
For more help in selecting a relocation supplier, check out these 8 Things to Look for in a Relocation Supplier.
History of Employee Relocation
The employee relocation industry grew as a post-World War II movement following a skyrocket in business and increased staffing needs throughout the United States. Demand escalated in the 1960s with companies growing to assist the “transferee” who, at times, was expected to be in a new location with very little notice.
The Employee Relocation Real Estate Advisory Council (ERREAC) (now the Worldwide ERC®) was founded in 1964 in Chicago to address the growing needs of a nation that was increasingly moving employees for development and stronger productivity. The 1980s and 1990s saw the height of relocation volume as companies continued to grow and were relocating thousands of employees annually.
After the turn of the century, and due to enhanced technology and costs, relocation activity subsided, but it was still a strong benefit in many industries, especially the U.S. Government. International activity has grown substantially with extensive benefits and the need to provide extraordinary customer service to those willing to take on these unique assignments.
Today, forty-five percent of employers say they can’t find the skills they need. That’s why WHR Global supports its clients in expanding job searches beyond local regions, as the best person for the role isn’t always in your city.
Relocation Technology
RMC Technology
Most RMCs work out of some form of relocation-specific technology. This could be something their own developers created, or there are off-the-shelf products available for purchase, which are then customized to the RMC’s brand.
The employee’s relocation counselor works out of the technology, which typically triggers action items for each service authorized. From marketing assistance to spouse/partner services, each item is mapped with system touchpoints and triggers along the way to ensure consistent follow-through from the counselor.
Keep in mind that your RMC’s technology should not take the place of regular and consistent communication with the employee. Rather, it should allow for a proactive service approach rather than being reactive to the employee needs, wants, or concerns. The underlying factor in any relocation technology is to drive assigned services and deliver outcomes that avoid any missteps or lapsed timeframes before they occur.
| Employer Technology You and any other member of your relocation management team should be given secure access to custom client technology. This technology will provide access to features such as:
| Employee Technology
|