Corporate Relocation: Creating Choice in Policy Structure

Man holding cubes The economy has recovered and job-hunters have more leverage than they’ve had in years. They are much more willing to relocate for the right opportunity if the employer is willing to offer relocation assistance that meets their unique needs. Gone are the days of strict, one-size-fits-all policies. Instead, the modern corporate relocation policy structure includes several tiers and offers flexibility to the employee to make the relocation as comfortable and simple as possible.

Tiered Policies

Tiered relocation policies still rule in most organizations. Tiers can be defined by employee position, homeowner status and family situation. Employees in upper management positions are generally given additional consideration, such as more time to complete the relocation, more or longer homefinding trips and perhaps an amended value or BVO homesale program. Entry-level employees might receive basic renter benefits or even a lump sum. These programs allow companies to offer standard benefits to defined groups, at least theoretically making the administration more consistent and equitable and controlling the budget. Under this model, any flexibility comes from policy exceptions. Exceptions allow managers to address the unique needs of the transferee, but they increase costs and can create an awkward precedent for future transferees.

Core/Flex

Core-flex programs typically include a core relocation benefit for which all of the employees within the tier are eligible and a menu of flexible, a la carte options to round out the benefit and meet the specific needs of the employee and hiring manager.  Like pure tiered policies, a core-flex program allows companies to segment overall benefit levels and expenses by job description, salary range and other internal factors.  However, by allowing some element of choice and personalization within those tiers, the core-flex program builds in flexibility and minimizes costly exceptions. Such a model can increase employee satisfaction and acceptance rates and give the company a leg up in recruiting and retaining talent. Recent Worldwide ERC® data indicate that about 20 percent of surveyed companies have a core-flex policy in whole or in part, and an additional 11 percent are considering implementing a core-flex policy in the near future.

Lump Sums

Lump sum programs have been growing in popularity. Many companies are attracted to the simplicity of lump sum programs, and many transferees appreciate the ability to spend their relocation benefit in the way that’s most useful for them. Accounting is simplified as well, as there are no expense reports to submit or process. Lump sums are particularly popular as an entry-level benefit in a tiered relocation program. Pure lump sum programs, with no receipt requirements or oversight by the company or relocation management company, give the transferee complete flexibility but there are potential pitfalls. With a lump sum, the transferee needs to coordinate every aspect of the relocation, which can be overwhelming during an already-stressful time. The employee has total flexibility and the employer has a fixed, capped expense, but there is definitely a higher risk that the relocation will not proceed in a smooth, timely way.

With a strong economy, relocation today can require more of a sale by the employer. The more flexible you can make your corporate relocation policy, the more likely you are to pique the interest of the candidates you want.

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