5 THINGS YOU NEED TO KNOW ABOUT DESIGNING AN EMPLOYEE RELOCATION POLICY NRI. Taking Relocation Personally

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1 5 THINGS YOU NEED TO KNOW ABOUT DESIGNING AN EMPLOYEE RELOCATION POLICY NRI Taking Relocation Personally

2 ABOUT DESIGNING AN EMPLOYEE RELOCATION POLICY Your corporate relocation policy is a reflection of your company s mission and values, and it may be the first real introduction to your company that new employees have. So the last thing you need is a policy that alienates your top talent or entry-level new hire recruits, and gives your company a poor image. You may have already realized you need to re-design or update your employee relocation policy. Or you may be writing revised policy guidelines. You may even have been tasked with designing a completely new policy from scratch. Whether you re moving your employees within the Greater Chicago Area, across the United States, or internationally, it s important to make sure your policy is well-designed, sound, and accurately reflects what employees can expect. As professional relocation policy consultants, NRI Relocation often sees the same mistakes repeated in corporate relocation policies. Here are the top 5 things to review, to make sure you aren t hurting yourself with your relocation policy: DO YOU NEED A RELOCATION POLICY? You may be surprised to discover that not every company needs a policy! Depending on the nature of your transfer or relocation, and the frequency, range, and volume of your relocation program, you may not need a company relocation policy. You may actually be better served by a well-defined offer letter. If you rarely transfer an employee and your employee transfers are mostly domestic, or to the United States, an offer letter that clearly spells out the details of the relocation benefits being offered should suffice. The same applies to rare overseas assignments: if the assignment has a defined term, is specific to the locale or nature of the assignment, you might want to consider an offer letter. However, if you transfer a few, or a few hundred (or more) employees each year globally, or within the United States, your company should have a solid relocation policy in place. And if you move even a few employees globally, but routinely, you should have a corporate relocation policy in place. WHAT KIND OF CORPORATE RELOCATION POLICY DO YOU NEED? In the same way that your company mission statement defines your strategies and goals, your corporate relocation program components should encompass your relocation policy s strategies and goals. Furthermore, your relocation policy is a reflection of the value your company places on its employees. Customizing your program according to the acceptance rate you want to achieve plays a large part in policy design decisions. Are you recruiting and competing for top talent in your industry? Moving your senior managers? You will need comprehensive benefits that take care of their moving needs and also serve as an expression of the tremendous value that the company places on them. Recruiting new kids out of college? Their moving needs are far less - a lump sum that can be used for anything will be much appreciated. Many relocation programs become obsolete because they fail to keep pace with uniting the company s mission-critical strategies with current upgrades by the competition for the same talent, or by a failure to recognize economic changes. A policy restructure will result in more competitive and attractive relocation packages. Know the relocation policies of your competitors and ensure your packages are attractive to potential and transferring employees. If you re not current on competitive relocation policies, you are putting yourself at a disadvantage. Although keeping up with industry competition is timeconsuming, it is essential to do so. If you don t have this expertise in-house, you should seriously consider out-sourcing. You need to know the most attractive options necessary for recruiting new employees, or for motivating current employees to accept a transfer. 2

3 RELOCATION CAN BE A RISKY BUSINESS OR, NOT Each company has a different tolerance for risk, yet many companies neglect to consider their risk management strategies when designing their relocation policy. For example, some companies are able to offer to buy an employee s home if that employee is in located in a depressed selling market or just needs to move quickly. Some companies aren t willing to accept the risk of being stuck with a difficult asset, and don t want to assume that risk. In this case, the company might want to offer a direct reimbursement with gross-up for taxes, loss on sale if needed, or a hybrid qualified program that keeps the majority of risk with the employee until sold. There are several ways to minimize such risks, or even share that risk with the transferring employee. Examining your policy and aligning it to your company s risk tolerance should be done well before you make an offer, or even begin the recruitment process. Knowing what your applicant parameters are will help to winnow and streamline the recruitment process, saving you time, money, and maybe even a costly mistake. Relocation benefits can be costly! For this reason, relocation program best practices call for a payback agreement that could range from one to three years. Don t put your sizable investment at risk if it doesn t work out. BUILD FLEXIBILITY, EARLY One size policies rarely fit all situations. People are unique entities, and each relocation situation should be recognized as an opportunity to begin your relationship on a positive note. It s best to build flexibility into your policy from the beginning, or restructure your policy to be able to seize the competitive advantages of flexibility. Policy language should allow some flexibility to increase or modify relocation benefit offerings, especially when required to attract or retain top-tier employees. Flexibility also helps you recruit more effectively. Your company will be able to adjust benefit offerings and benefit levels, according to the needs of the individual or situation. You will also be able to use flexibility to match your competition s relocation offer, if necessary. And it s not necessary to sacrifice cost-protection for flexibility. Simply use appropriate language with stated reimbursement caps and controls to minimize cost, while still delivering attractive benefits to new hires and transferring employees. Developing flexibility with built in expense-controls will help your company s relocation program and policies stay relevant and current, while minimizing your risk of incurring runaway costs. BE SPECIFIC TO STAY OUT OF TROUBLE Whether your relocation program is a survival necessity or a smart, forwardthinking strategy, you ll want to anticipate and avoid some common pitfalls. When you write an offer letter or a relocation policy, it is important to be clear, concise and specific. For example, if you offer a home finding trip, be specific on what components are included, and to what extent. The number of hotel nights, size of the rental car, meal per diems, flying vs driving, if children can accompany the parents (if not will you pay for childcare?), are just a few of the issues that can cause confusion and negotiations for exemptions. Being specific will limit requests for exceptions and treat everyone equally. Another one of the areas in relocation policies that often traps the unwary or uninformed, lies in taxable benefits. There are taxable, non-taxable and excludable relocation benefits, and relocation reimbursements need to be kept separate from reimbursable business expense. Help yourself and your employees by providing clear guidelines for these items, and making it easy for them to keep track of, and report, the necessary items. Managing a corporate relocation program is a complex business. Some companies choose to allocate resources to manage their relocation program in-house. Other companies choose to outsource the timeconsuming tasks of combining oversight and management of talent acquisition, human resources, finance, payroll, accounts payable, and more. 3

4 Taxable payments need to be reported by payroll immediately (or at the very least, monthly) to be in compliance. Will you provide a tax gross-up benefit to keep your employee whole? The majority of companies do. Whether your company chooses to undertake its own relocation program, or to outsource some, or all of its complexities, professional expertise is critical in order to protect you from making costly mistakes. In order to remain competitive, your company needs to be able to attract and retain the best talent available. A comprehensive, well-designed, and informed relocation policy is the first step in creating a relocation program to enhance and support your company s goals and achieve your mission objectives. ABOUT NRI RELOCATION NRI Relocation is a full service corporate relocation management company. We offer personalized, tailored relocation solutions for U.S. domestic and global employee transfers. Our proven relocation services help our clients maximize their relocation investment, and protect their human and intellectual capital assets, while delivering personal care to our customers. We help HR departments manage talent more effectively, while streamlining documentation and processes. Our clients enjoy relocations that progress easier and more smoothly, and transferring employees that are happier, less stressed, and more productive. To make sure your policies are current with market trends and consistent with your recruitment and retention strategies as well as your corporate culture contact us: or visit us online at: ARE YOU REDESIGNING YOUR EXISTING POLICY OR CREATING A NEW ONE? Get a FREE review of your relocation policy now. Would you like to create a more productive, more engaged workforce? Get your free policy consultation! Your employees will be attracted by competitive components and your company will enjoy more savings, higher employee retention rates, and better results, and a more productive workforce. 4

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