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Managing your employees' relocation project

How our programme helps you with relocation and supplier selection

Attracting and retaining talent is the main concern of companies. To attract and retain talented employees, human resources professionals must make sure they offer competitive relocation packages and effective relocation practices and policies. Relocation support can help attract new employees, retain current employees by offering them career development opportunities, and support business development and operations by ensuring that the right talent is in the right place at the right time. A well-designed relocation programme complements the employer's talent management programme.

As the economy continues to improve, organisations are expected to maintain or increase their relocation volumes and budgets. An employer's best resources, and at the same time its biggest costs, are the people who bring creativity, productivity and profitability to a company. A good talent management programme can improve an employer's competitiveness, yet it does not guarantee that talent is located where it is most needed. Employers may want new and current employees to relocate in order to advance their careers or bring their knowledge to different subsidiaries or sites. These moves can be a daunting task for the employer and a stressful situation for the employee. If a relocation is not managed successfully, it threatens the employer's ability to retain the employee, and the employer risks losing someone in whom it has invested time and money to train and move.

The role of HR

Human resources departments frequently manage employee transfer programmes within organisations. Transfers are no longer solely the responsibility of human resources or a hiring manager who approves moving expenses. Transfers now require strategic attention to the company's business activities and finances to ensure that the transfer programme advances the company's strategy. HR must work with other departments in the organisation to ensure consistent management of transfers.

The employee transfer process requires human resources or mobility managers to carry out the following tasks:

• Establish and manage policies by working directly with internal partners and operational directors.
• Identify the employees best suited to mobility opportunities by collaborating with talent managers and line managers.
• Select and manage a portfolio of external suppliers and service providers by working with procurement or finance managers.
• Identify and mitigate legal issues such as tax or immigration matters in collaboration with the legal department.

Human resources must consider the programme as a whole from a strategic, financial and operational point of view. As with any human resources programme, evaluations and metrics are essential to prove the strategic value of the programme.

Consistent and fair rules

Written policies establish clear rules to ensure that all employees are treated consistently and fairly. A written policy prevents favouritism and pressure from managers to grant different treatment to their own hires or preferred employees. A policy also sets out the information so that employees who relocate know exactly what is included and can make informed decisions.

Transfer policies generally have three levels of coverage, depending on the group to which an employee belongs:

• New hires, generally young recruits or those with limited experience.
• Experienced employees, such as those who have some seniority in working life and are more likely to be established with a home and/or a family.
• Executives and other senior employees, who are likely to be strongly rooted in their current location and to have family and community ties.

Employers establish policies tailored to their situation and may have policies for each of these three levels.

Employers want to offer attractive transfer packages to executives and senior employees, yet they face the high costs associated with such packages. The key question is whether the financial gain from hiring or transferring an employee will offset the cost of the transfer. There is considerable pressure on HR to reduce costs and adjust policies so that employees can still be transferred where they are needed. Using metrics such as cost-benefit analysis, for example when analysing real estate costs, helps create a picture of the total costs of the move.

More and more companies offer flexible transfer packages to contain costs, providing core transfer benefits and optional benefits depending on employees' needs.

Elements of a complete relocation programme

There is no magic formula when it comes to relocation packages, but organisations should consider certain elements when building a relocation programme.

Bonuses and salary adjustments

Financial incentives related to relocation are generally the "tipping point" for convincing employees to move. The state of the job market will influence the incentives employees need in order to decide to move. Cost-of-living adjustments and relocation bonuses are common. Organisations located in countries with high tax rates may need to use these incentives to attract employees to relocate. Otherwise, they could struggle to attract workers from other countries.

Site visits

Relocation programmes generally allow site visits so that the employee and possibly their partner can see the new office, visit the community and learn about schools, housing and other local services.

Help with buying and selling homes

Employers' relocation programmes include help with putting up for sale a house that an employee needs to part with, or with arranging the purchase of the employee's house if it does not sell within a specified period. Other types of help that policies can offer include legal and financial assistance to terminate leases or help for the employee to obtain mortgage pre-qualification. These incentives can make the difference between an employee accepting or rejecting the relocation offer.

Moving expenses

Employers can offer reimbursement of expenses related to house hunting, temporary housing costs and the transport of household goods. Some organisations forgo reimbursement and prefer to provide lump sums paid in advance to employees undergoing relocation to cover all expenses. Employees keep whatever may be left over or pay the expenses not covered by the lump sum. Lump sums spare human resources from negotiating over expenses or keeping detailed records of every employee receipt.

Repayment clauses

Organisations invest a great deal in relocations and frequently lose these investments when employees leave the company shortly after a move. A growing number of employers include a repayment clause in relocation agreements to recover these costs. Under a repayment clause, a relocated employee undertakes, for example, to repay the organisation all or part of the employer's transfer costs if the employee leaves the company within a specified period, generally from one year to 18 months. Sectors with high turnover rates use these clauses more frequently. Some employers choose not to include repayment clauses, fearing that they could be a deterrent to relocation. Employers must check that the country's legislation allows repayment clauses before implementing this practice.

Support for families

Families undergoing relocation need considerable support from the employer. Organisations should not assume that an employee's enthusiasm about moving to a new office and a new home will offset the stress of the move for the employee and their family. Spouses or partners who move with the employee may need help finding a job. Children's issues related to relocation, such as the pressures of new schools and the loss of old friendships, are often overlooked. Cultural differences between geographic regions or countries can also unsettle the family, thereby hampering the success of the assignment.

A competitive and comprehensive relocation programme can include spouse assistance services to help them find a job, policies that grant employees undergoing relocation enough time off to visit schools and other services, or help finding elder care. Whatever form the employer's support for the family takes, human resources must involve both the employee and the employee's partner.

Communication

Once a policy is in place, it is essential to communicate it to employees. Communication about relocation must balance two needs: showing employees that they are valued and informing employees of the services they are entitled to. Poor communication about relocation can lead to stress, performance problems and high turnover rates for transferred employees. Employers must properly communicate to employees the services the transferee is entitled to, and they should continue to communicate throughout the process.

A formal relocation agreement letter is an important initial communication tool because it sets out the policy and the details of the move. Employee handbooks and intranet sites should make relocation policies available. Emails provide a written record of communications that human resources can refer to during relocations. Communication should include a debriefing process once the move has taken place, so that the employer can assess how the relocation went.

Special circumstances

This toolkit focuses on the permanent relocation of individual employees, but there are two special circumstances that human resources must take into account when developing relocation policies.

Group moves

Group moves involve entire organisations or business functions that move far enough that employees and their families must also relocate. They can strain an organisation's relocation resources and preoccupy a large part of the workforce over a long period, while trying to maintain the company's normal output. They have their own dynamics that human resources must respond to, such as explaining why employees are moving (usually not for a promotion) and managing employee rumours about the move.

Temporary relocations

Temporary relocations are increasingly common in the corporate world. Employers find that this strategy is an excellent way to reduce costs while increasing productivity around a specific business initiative. A transfer of less than a year is financially advantageous because a family move for such a short period is rare, and it offers significant tax savings to employers and employees because these expense reimbursements are often excluded as business expenses rather than relocation costs.

Outsourcing

Employers often outsource relocation because it allows them to reorganise their relocation programmes, improve services or reduce costs by cutting internal headcount. Although hundreds of companies offer services, it can be difficult to choose the right supplier, and this depends on the specific needs of the organisation. Employers should start by understanding their own relocation objectives. Adequate planning and preparation, such as forming an internal team comprising human resources, finance, recruitment and procurement, will make the supplier selection process easier for employers.

Negotiating contracts with movers

The process does not stop once the employer has chosen a supplier. Negotiating the contract requires information and planning. For example, organisations must consider several questions when negotiating a relocation contract with a household goods carrier: does the carrier have sufficient support in all regions of the country and can it be reached at any time? Does the carrier offer discounts for multiple moves? Knowing what to look for in a household goods mover gives the employer an advantage.

Communication with suppliers

Some of the most important tools needed to manage relocations and minimise the unexpected are a clear relocation policy, a reputable relocation service provider and good communication practices between all parties involved. Poor communication will overshadow even the best policy and the most competent supplier. The employer must understand the expectations of the relocated person in order to pass them on fully to the supplier.

Relocation involves costs, lower productivity and stress for both the relocated person and the employer. There is always room for improvement, for streamlining processes and for better supplier choices. Companies should survey their employees about the performance of their long-distance movers and other relocation service providers to help them select effective suppliers in the future. Surveys help assess whether the service provider delivered the promised results.

Legal issues

Relocating employees involves more than simply moving people and their belongings. Employers must also consider legal issues such as contracts, data privacy concerns and taxes.

Relocation agreements

Just as it is essential to have a contract between the employer and the relocation service provider, it is also imperative to have a written relocation agreement between the employer and the relocated employee. An agreement clearly states who is responsible for what and sets the limits of the employer's relocation policy. An agreement protects the employer by preventing managers from making overly optimistic statements about continued employment or advancement, which could be regarded as oral or implied contracts.

Personal information

Human resources must protect employees' personal information. Using a service provider involves the transfer of the employee's personal data, and human resources must carry out the necessary checks with their suppliers to ensure security.

Tax aspects

Taxes can be a complex matter when relocating employees. The tax considerations for temporary relocations of less than 12 months differ from the tax matters related to permanent moves. Taxes vary from one country to another and can be complicated by other factors, such as a house sale. Appropriate experts should review the tax and legal questions to ensure that policies and practices comply with the employer's legal obligations, in order to avoid headaches for human resources later.

Real estate markets

The real estate market has a considerable impact on an organisation's relocation programme, influencing both the relocation budget and employees' willingness to move. Some organisations help sell employees' homes, cover losses on the sale of a home and take on temporary housing costs. When considering the real estate market, employers must take into account additional costs such as double housing costs and the use of incentives to stimulate demand and home sales. Other tools to speed up relocations include buyer-value options, where the buyer sells the home to a relocation company. In some situations, employers even buy homes themselves to attract the talent they greatly need.

When making decisions, human resources must also consider the real estate market on a regional basis. Since markets vary by region, human resources may need to develop separate relocation policies for each region.