What is employee relocation?
Employee relocation occurs when a company moves workers to a different location for business reasons. This move may take workers to a new city, state or country.
When relocation of employees occurs, these workers are still associated with your company. They may keep the same position or begin a new one with your business, and salary or benefits will likely increase. Financial incentives often motivate high-performing workers to consider a position with your company in a new area.
Types of employee relocation
Relocating employees can take many different forms. Your company may decide to relocate temporary workers, potential employees, new hires, current workers and employees with dependents such as children or aging family members. Relocation benefit packages may look different for each of the workers below.
Interns and independent contractors
Relocating workers often involves the relocation of employees, but some companies also pay interns or independent contractors to move. This may happen if an intern is shadowing an essential worker who is moving to another branch or if a company is closing a branch completely.
Independent contractors can receive relocation reimbursement and other perks if a company needs workers ASAP due to a lack of qualified applicants. Healthcare workers who identify as independent contractors, such as nurses or doctors, often move from state to state as needed. In mid 2020, many medical providers traveled across the United States to help treat COVID-19 patients in understaffed areas.
Talented professionals are scattered across the globe, so potential employees might live far away. That’s why many companies consider relocating employees who are a good fit for their company, regardless of their geographical location. This is common in hard-to-staff industries where finding local talent may not be an option due to limited educational opportunities in the area.
Current employees request relocation for different reasons. Some workers want to relocate so they can be closer to a significant other or family member. These workers often want to keep their same position and therefore do not require additional benefits or a salary increase as incentives.
There are also employees who request relocation so they can pursue or fill a new position with the company. For example, you may have limited management opportunities at one location, while another branch desperately needs supervisors and executives. Transferring these employees helps them reach their professional goals, and it also helps your business grow.
Employees with families
Many employees are hesitant to relocate without bringing along their spouse and children, and understandably so. Keep this in mind when you give a current employee the chance to relocate so you can budget accordingly. You may need to provide a bigger budget for housing, travel or meals if you are paying for the relocation of a family. Pet-related expenses, such as a kennel or pet-friendly lodging, are other costs you should consider paying.
Why might companies want to relocate their employees?
Relocating employees has numerous benefits for workers as well as their employers. In an ideal world, businesses could announce that they’re hiring and quickly attract a pool of qualified applicants. Unfortunately, it’s not always that simple to find skilled workers, which is why many companies consider relocating employees who meet their needs.
Hiring qualified applicants benefits everyone: your business, its customers and the employees at your company. When knowledgeable workers fill key roles, unqualified workers no longer have to struggle to complete tasks that are overly difficult or juggle multiple responsibilities due to staffing issues. Customers are satisfied because their demands are met by skilled workers and an adequately staffed workplace, which in turn helps your business thrive.
Relocating employees can also help your business build a team at hard-to-staff locations or new offices. Sending experienced workers to the new location can benefit your company as it grows. This gives new hires time to adjust to your company and shadow successful employees rather than trying to learn the ropes on their own.
Sometimes relocation occurs when there is workplace drama between creative, intelligent employees. Your company may not want to lose either employee, yet you may realize it’s not possible to continue having these workers in close proximity to one another. This often occurs when married couples who work together divorce or executives don’t mesh well with sales managers or other supervisors.
What should companies consider when creating a relocation policy?
Your relocation policy should reflect the needs of your employees or potential hires. Think about all the expenses workers may incur during a move, then provide appropriate compensation. You can do this via a lump-sum benefits package or a fixed-rate reimbursement plan. Regardless of how you distribute the benefits, here are some expenses you should consider including.
Travel can get expensive for employees who are relocating, especially if you send workers overseas or to another state.
When you offer reimbursement to another state, consider providing a rate based on mileage based on IRS guidelines. In 2020, the IRS recommended a rate of more than $0.57 per mile for individuals who operated a motor vehicle for business or moving-related purposes.
You should also consider other expenses employees may occur during the drive, such as gasoline, toll booths or parking meters. Ask workers to save receipts for all of these expenses so you can provide appropriate reimbursement.
Overseas travel expenses should include the cost of planes, boats, trains and other necessary transportation. There may also be fees for passports or customs. Do some research about the costs of relocating to a specific region if you don’t have a fixed-rate benefit plan for employees who transfer to new locations.
Home ownership may deter employees from relocating, especially if they fear they won’t find a buyer for their home. Consider covering the cost of buying or selling a home when employees relocate. This provides peace of mind for workers who fear they may not be able to sell their current home or find a new one quickly. You may want to partner with a local real estate agent so you can simplify the process for your workers.
Hiring a moving team can get expensive, but there are other costs to consider as well. In addition to the truck or team of movers, your employees may also need reimbursement for packing supplies such as tape, boxes or padding. If the move is unexpected or requires immediate relocation, a worker may also need packing or shipping services so they can leave the area quickly.
It’s scary to arrive in a new city with no place to call your own. Rather than expecting employees to live in a hotel during relocation, consider paying for temporary housing such as a condo or apartment rental. You should set up these arrangements in advance rather than expecting workers to find an adequate rental on their own.
During a move, relocating employees probably won’t have access to a fully stocked fridge. Make things easier on your workers by providing a daily, weekly or monthly meal allowance during relocation. You can provide reimbursement for food purchased at gas stations, restaurants, airport lounges or grocery stores.
Paid time off work
Preparing for relocation can quickly become tedious and time-consuming for an employee, even if your company has a generous relocation package. To make things easier, consider offering some additional paid time off of work for a week or two so workers can get everything done. This makes it easier for workers to pack their belongings and head to a new location, but it also provides time for necessary errands such as obtaining a new driver’s license or registering to vote.
How to decide between outsourcing and in-house options when managing employee relocation
Running a business can get hectic, even for the most seasoned leadership teams. Some companies find it helpful to outsource tasks commonly handled by the human resources team, such as scheduling interviews, completing paperwork or managing relocation plans.
If relocating employees is a common practice at your company, you may benefit from outsourcing services. This gives your business more time to focus on everyday tasks, such as executing marketing campaigns or producing new products. When an employee has a specific question about relocation, you can direct them to your company’s representative for help.
Even if you don’t relocate employees often, you may still find it helpful to outsource services. Relocating employees can get confusing and expensive, so it helps to hire a professional who understands the ins and outs of relocation. Someone well-versed in relocation benefit plans can help your company stick to its budget while still ensuring employees are compensated fairly throughout the process.
FAQs about relocating employees
Deciding whether to relocate current employees or hire new workers from other locations requires careful research about the pros and cons of employee relocation. We’ve compiled some questions you may have about the process so you can determine if relocating employees is the right move for your company.
How much does it cost to relocate an employee?
The average employee relocation costs anywhere from $20,000 to nearly $100,000. Several factors determine this rate, including whether an employee rents or owns their home, the distance of a relocation, and whether an employee has family members or pets that are part of the relocation.
How do relocation services work?
Relocation services help companies establish fair compensation for employee relocation. Services for relocation may also include real estate management, rental searches, and packing or shipping services for relocating employees. If your company relocates employees more than a handful of times each year, you may find it helpful to hire relocation services. Relocation companies can handle the paperwork and other essentials while you focus on the onboarding process for new hires or relocated workers.
How do companies handle relocation expenses?
The human resources team typically manages relocation requests, though it’s important to communicate with other departments so everything goes smoothly. Generally, companies handle employee relocation costs by offering a relocation package. This may be a fixed-rate package, such as a lump sum for moving-related costs, or it may be a tiered relocation model.
Some companies pay the same incentives regardless of distance or position. Others offer the best relocation packages to executives and pay smaller amounts toward the relocation of interns or new hires. This is not always ideal, as it may cause animosity among employees.
Relocation packages often have specific requirements for how employees can spend funds, and receipts may be required. For example, a package may cover the cost of hiring a moving team and staying in a hotel during the drive to a new city, but it might not pay for meals. Employees can negotiate with employers, so expect some pushback if your relocation packages only cover the bare minimum.
Relocating employees can get pricey, but think of it as an investment for your company. You may find that paying the relocation costs for a dependable, highly qualified employee benefits your business in the long run.