A Guide to Creating a Cost-Effective Corporate Relocation Program
Corporate relocation programs are a great tool to have in your organization's employee recruitment and retention arsenal, but the program can quickly become overwhelming and costly if it doesn't have a strong foundation or isn't managed properly. Procurement professionals have an opportunity to support their company's goals and bottom line by leading the way in developing an effective employee relocation program.
We’re here to help you with containing your employee relocation costs and creating an effective relocation policy. Here’s everything you need to know:
Setting Up a Successful Relocation Program
When developing a relocation assistance program, the first step is to determine what relocation support your employees will receive and what moving resources are necessary. Will you be covering the cost of a household goods move? Are you offering temporary living expenses? Will additional resources for home-finding or house-selling assistance be made available? The corporate relocation program should align with employee needs and provide value while being cost-effective for the business.
Understanding Employee Needs
Whether it's a move to a neighboring city or a cross-country journey, moving for work is stressful for everyone involved. To improve employee satisfaction and minimize stress, you'll want to set your team up for success by ensuring they have the tools and resources necessary for the move. To do this, procurement teams should prioritize developing a relocation program that is both valuable and cost-effective. If you're unsure what resources your team needs, consider conducting an employee survey. You can use this data to make informed decisions for your corporate relocation package.
Evaluating Relocation Package Options
Once you finalize a budget, it's time to explore different corporate relocation packages available. The three most popular options are the following:
Lump Sum
Employees receive a fixed amount they can use for general moving expenses. This package makes corporate relocation expenses more predictable and easier to budget for. Employees are also not required to front any of the costs or submit an expense report for reimbursement. They'll receive a lump sum that can be used for all expenses that are involved. With this option, employees are responsible for hiring movers and any other vendors necessary for the move. The lump sum option is recommended for lower-tier employees who typically do not have much to move (like entry-level college graduates).
Capped Allowance
A capped allowance is a more structured approach to lump sums. Companies set the rules and regulations for how the funds can be used. There's also a capped amount that the employee is allowed to spend on vendors and services. This makes it easier for corporations to manage expenses, but if the move exceeds the capped allowance, your employee must cover the rest of the employee relocation costs out-of-pocket.
Managed Support
With this relocation package option, the company is actively involved in the entire process. Companies will customize a moving package for each individual, helping vet vendors and schedule services. This is less stressful for the employee and fulfills a company's Duty of Care responsibilities. However, since services and needs vary from employee to employee, it can be more challenging to predict each employee's moving budget.
The Importance of Corporate Relocation Providers
If you are providing more than just household goods moving services, working with a corporate relocation provider is the most effective way to ensure all aspects of your employee relocation are handled with care. A corporate relocation provider will provide hands-on support throughout the process, so that your internal team is not burdened with managing every aspect of the relocation.
In this white paper, we share the steps procurement teams should take and the details to consider when creating an employee relocation program that is both valuable and cost-effective, including:
- Developing a budget that supports company goals and needs
- Choosing the best relocation package option for the organization
- Working with and selecting a corporate moving provider
Download our latest white paper, The Procurement Professional’s Guide to Creating a Cost-Effective Corporate Relocation Program.
What are the key components of a cost-effective relocation program?
A cost-effective relocation program should include a fixed budget, assistance programs, and a list of resources that employees can utilize.
How can companies measure the success of their relocation programs?
Employee satisfaction and budget adherence are the two most effective ways to measure the success of a relocation assistance program. To find success, you want to ensure the program provides value to the employees without exceeding the budget.
What are the common challenges in managing relocation costs?
If you decide to go with a lump sum, your team will be responsible for finding reliable vendors and managing their own budget. These programs don't always cover all expenses, which can be stressful for employees.
What is the average cost of a corporate household goods move?
The average cost to move the contents of an employee’s home is around $5,000 to $25,000. The exact corporate moving costs will vary depending on distance, home size, and services required. If your company is offering additional relocation benefits (i.e., temporary living, home sale/home purchase assistance, area tours, misc. allowance, tax gross up, etc.), the average cost can be in the range of $30,000 for renters and up to $85,000 for homeowners for a full-service relocation. Actual costs would be based on the benefits provided.
Do companies pay for relocation costs?
Yes, many companies pay corporate relocation costs for their employees. However, the specifics of the relocation package may vary based on the industry, value of employee (i.e., attracting unique talent for a specific business need) and/or employee level.
