How to Create an Impactful Relocation Package
What if we said you can control costs within a relocation program while adding high value services that won’t have a negative effect on employee satisfaction. It can often lead to a better relocation experience overall. Too good to be true? Maybe not.
The downstream costs in our supply chain, especially in transportation are on the rise as we all battle inflation. We are all experiencing higher than normal prices in gas, food, and services and companies are starting to see the impacts on their relocation program invoices. While the natural inclination may be to add more money to a program and cut benefits to lower tier employees to combat rising costs, that’s a band-aid that can worsen the overall outcome.
Rather than raising budget caps or allowances, we recommend re-analyzing your entire program to adjust benefits holistically instead of cutting out individual services that may have a bigger long-term impact than you think. We’ve also done our part to enhance our parter ecosystem to provide valuable services that can make a big impression without breaking your budget.
The most impactful services for domestic relocations include the household goods move, real estate disposition costs, final trip reimbursements, auto and pet transport. Generally, if all these things go smoothly then the relocating employee and their family are happy with the move.
Household Goods Transportation
Currently, transportation of the household goods is using most of the funds available to the employee in a managed cap program leaving very little to cover other services. This is resulting in employees coming out of pocket to cover more costs on their move, resulting in lower quality and dissatisfaction with their employer and the overall experience.
To counter this, we advise looking at the program from a macro level.
Consider a Core + Flex policy with the household good move and final trip expenses as the core benefits and other services as an option for the employee to “flex” in up to a specific cap. There are common policy perimeters that can drive overall cost savings when covering the cost of household goods transportation.
Mortgage companies are already bringing back the mortgage subsidy programs. These subsidy programs help companies offer support to relocating employees when they have a low interest on the home in the old location and will need to purchase at a much higher interest rate.
One type of subsidy program is dollar-based where the employer pays the difference between the old mortgage payment and the new one for a set period. Another program is called a mortgage buy-down where the employer helps cover the upfront cost of buying down the interest rate for a new mortgage.
With the increasing costs of housing over the last couple of years, we have seen some clients avoid offering real estate benefits to relocating employees. However, we’ve found that offering home sale programs and limiting costs are not mutually exclusive. Just like with transportation, there are policy perimeters that can be put into place to drive savings on the home sale. While cutting real estate benefits may provide short-term cost savings, as the interest rates continue to increase it will likely be a challenge to compete with other companies in talent acquisition.
Temporary living is an area where we have seen one of the largest increases. This is directly related to the ongoing housing issues, rent increases, increase in median home price and overall housing shortage. With lack of housing available many cities have regulations on the percentage of units that can be used for temporary housing which increases the challenges of finding suitable housing in the short term.
For the clients that have temporary housing in the Core benefits, we are advising them to consider moving it to a Flex option and/or offer the employee more support towards finding permanent housing.
Adjusting your temporary living benefits can work in tandum with increasing real estate benefits. If you’re considering increasing real estate benefits, cut temporary living benefits or put more restrictions on it in order to focus on the overall goal of getting your employee in to their house sooner.
Travel: home finding, return trips and final move
Travel expenses have also increased, which has a direct impact on employee relocation when it comes to home finding trips to the new location, return trips back home if the employee is already in the new location and the final trip move for the entire family.
Cutting out benefits in this category can greatly decrease the overall move experience.
Rather, consider putting additional travel guidelines in place such as requiring travel to be booked at least 14 days in advance and with return trips as far in advance as possible and restructuring daily expenses such as per diems on hotel rates and meals.
Additionally, leverage your RMC’s volume by working with a corporate travel agency to access negotiated rates and travel discounts that are harder to obtain by going direct.
Destination services can include everything from an area orientation tour to customized school search and settling-in services. Generally, these services all flow through one provider in our partner ecosystem and are typically offered by hours or number of days.
Costs in this area are also rising and yet we are still seeing an uptick in the use of these services by relocating employees. This is another area where cutting these services can have a negative impact on the employee experience and overall retention.
Rather than decrease the amount of time and cost for these services, we advise offering them as a flex option for employees who really need the services.
As an RMC, our responsibility to our clients is to ensure our ecosystem works for these modern day challenges. We’ve onboarded partners that offer these services on demand and virtual to increase the flexibility and overall cost to our clients.