Not all relocation packages are created equally. However, they generally include 4 categories. This article discusses those categories and why you should go back to offering relocation packages in today’s environment.
Here's what you need to know about why companies should cover relocation expenses for new employees:
- 37% of people would move for a better career opportunity.
- Workers are increasingly looking for career opportunities that let them move between cities or countries.
- When people relocate, they are more likely to stay with a company because they have invested time and money into moving their lives across state lines or countries.
When hiring a new employee, companies often overlook relocation expenses as part of the initial total compensation package. But as more workers move around the country or world in search of better opportunities, employers need to add relocation expenses to their list of perks.
Although moving employees from one city (or country) to another can be expensive, the benefits far outweigh the costs. This article will explore common relocation expenses and why companies should cover them.
Relocation expenses for new employees
When an employer pays to move a new hire from their current home location to the company’s location, they have entered the world of relocation expenses. Relocation packages are designed to help employees, and their families ease the transition from one place to another. They’re typically offered to new hires when they move from out of state or internationally.
Relocation packages are usually determined on a case-by-case basis, depending on the employee’s position. Some companies offer relocation packages as part of their compensation package, while others do not.
Relocation packages are designed to help employees, and their families ease the transition from one place to another.
Sometimes, it’s up to the employee to negotiate their relocation package. The average relocation package for renters costs between $19,309 and $24,216, according to ARC (American Relocation Group). Even so, the benefits are worth it.
What does a relocation package include?
Relocation packages are not all created equally. However, they generally include the following 4 categories.
Housing — Housing assistance can include help with:
- Finding a new home
- Moving costs
- Temporary housing during the transition period
- Any other related expenses
Transportation — This might include expenses such as:
- Airline tickets
- Car rentals
- Train tickets
- Lodging while traveling
Education — Relocation packages sometimes include education assistance for children who will be attending a new school. This can include tuition assistance or paying for books and supplies at their new school.
Home Services — Some companies will offer home services such as lawn care or house cleaning during the transition period so that your employee doesn’t have to worry about these things while they’re getting settled in their new location.
How to pay relocation packages
Relocating employees is one of the most expensive and complex challenges employers face. From the employee’s perspective, it can be stressful and overwhelming.
A well-executed relocation package can make the experience more positive for both parties. Here are some of the most common types of relocation packages employers offer:
Lump sum payment — This is a single lump-sum payment made to an employee before their move and can include reimbursement for such items as:
- Travel costs
- Temporary living expenses
- Home purchase costs
Monthly stipend — This is an agreed-upon amount paid monthly after the employee moves, usually for one year or more, to cover living expenses while they’re settling in at their new location.
Relocation reimbursement — An employer-funded reimbursement for specific expenses incurred by the employee during their relocation processes. It may cover items such as:
- Moving fees
- Temporary housing costs
- Security deposits on new rental properties
Why employers should offer relocation packages
A recent survey by Allied, a national moving company, found that 37% of people would move for a better career opportunity, and 64% said they had received a compensation package to do so.
For many companies, relocation benefits provide an opportunity to help their employees feel more comfortable and settled in their new job roles and communities. But why should businesses pay tens of thousands of dollars to move workers?
For many companies, relocation benefits provide an opportunity to help their employees feel more comfortable and settled in their new job roles and communities.
We will cover some reasons why companies should consider offering relocation packages below.
Encourages diversity in the workplace
Relocation packages help companies attract people from different backgrounds and cultures into their workforce, which can lead to increased diversity and improved overall productivity. According to Forbes, companies with diverse teams tend to outperform those without them by 19% in revenue.
Helps you secure the right talent for the role
For some companies, relocation packages are an important way to attract and retain employees who might otherwise be reluctant to relocate. For example, if your company is based in New York City, but you’re hiring for a position in Atlanta and haven’t found strong local candidates, offering a relocation package can help ensure that you get the best candidates for the job.
Helps your company stand out
As the housing market has recovered over the past few years, the U.S. has faced a severe labor shortage. Many companies have struggled to fill positions due to a lack of qualified candidates who can, or are willing to, move to their locations.
Relocation benefits help companies stand out in a sea of other offers. The relocation benefit helps companies attract top talent by offering them a financial incentive to relocate to their cities and states.
Increases retention rates
A company is more likely to find the right people and retain them with an available relocation package. This can be because more candidates will apply if they know they have an opportunity to move their family and settle into a new environment without substantial out-of-pocket expenses.
A company is more likely to find the right people and retain them with an available relocation package.
When people relocate, they are more likely to stay with a company because they have invested time and money into moving their lives across state lines or countries. They’ll feel more invested in their job and feel like they belong there.
When an existing employee goes into a new assignment as part of a relocation, they transfer unique knowledge and skills to their new location. Interacting with new people also helps bring new ideas and perspectives that will help develop and strengthen the company’s abilities.
The process eventually leads to an international approach that enhances the organization’s functional capacity.
Enhances company culture
A company’s relocation package is integral to its employee retention strategy. When considering new job opportunities, employees want to know that the company cares about them as people, not just as workers.
A company’s relocation package is integral to its employee retention strategy.
The right relocation package can help a company build stronger ties with its employees by showing them how much they’re valued.
Reduces employee stress
The idea behind relocation packages is to help new hires settle into their new city so they can focus on their jobs instead of worrying about:
- How they can pack their household in a short timeframe
- Where they will live
- How they will pay moving expenses
The result is happier, more productive employees without financial distractions or worries.
Workers are increasingly looking for career opportunities that let them move between cities or countries. With that in mind, companies wanting to compete for the best candidates should include relocation assistance as part of their initial total compensation packages.
Ultimately, relocation expenses are part of the cost of doing business, especially for employers that want to hire top talent in their industries. When these expenses are considered along with salary and other benefits, new hires will determine if a job offer in a new state or country is worth it for them.
Employers should offer relocation packages to avoid losing a great candidate because of relocation costs. In addition to securing talent, relocation benefits increase workplace diversity, retention rates, knowledge, and company culture while reducing employee stress.