Creating Relocation Policies

In my previous article, we explored various reasons to consider relocation assistance for the majority of your positions. I ended the article asking for examples of creative relocation ideas or polices to share, and was surprised by the lack of response. In fact, while researching this article, I noticed this same question has also been posted on the ER Forum several times in the last few months with very little or no response. Exploring relocation alternatives and policies is probably down the line on the long HR “To Do” list, but it is very important to the recruitment function. A strong relocation policy plays a key role in a company’s recruiting success. In a recent study performed by the Employee Relocation Council, 69% of employers reported they are having moderate or major difficulties recruiting new hires. These same organizations do not see improvement in the near future. The majority of corporations surveyed (80 percent) believe their recruiting difficulties will continue to increase during the next five years. Respondents cited continued low unemployment rates and a reduction in the labor force because of the changing of the guard from the sizable Baby Boomer generation (78 million) to the smaller pool of Generation Xers (48 million) as two major difficulties. Although corporations are benefiting from economic growth, they are, at the same time, faced with an increased demand for talent with very little in the labor pool from which to choose. “To combat this tight labor market those organizations report using their relocation policy as one means of setting themselves apart from their competition. Of companies surveyed, 82 percent report using relocation assistance as a recruiting tool.” In fact, approximately eight out of ten respondents (81%) in a recent corporate relocation survey performed by Atlas Van Line’s say they expect the number of relocations at their company will either increase or stay the same during 2000. This can become a very costly issue for organizations as expanding relocation policies increase! Relocation costs vary widely from company to company. According to a recent survey of corporate relocation professionals conducted by The Impact Group, costs for homeowners can range from $2,500 per move (for a food service company), to $98,700 per move (for a financial services company). The average amount spent per homeowner relocation in 1999 was $49,773–a $1,749 decrease from the 1997. The cost to move candidates who rent, on the other hand, ranged from $2,200 (for a food service company) to $38,000 (for a telecommunications company), with the average cost being $15,000. <*SPONSORMESSAGE*> Now that I have bombarded you with statistics, let me give you some trends that studies have shown to be more successful when creating a successful relocation policy:

One Size Does NOT Fit All. Don’t settle on one policy for all of your employees–but don’t drive yourself crazy administratively with too many policies. You may want to create two policies: one for entry-level recruits and another for “hard to fill,” mid-level to executive positions.

Lump Sum for Entry Level. What many companies have found extremely successful as well as less administrative is a smaller “lump sum” type of relocation package offered to entry-level individuals. This lump sum offers “basic assistance,” which covers household-goods shipping, temporary living, en-route expenses and a home-finding trip.
Allow for Exceptions to the Policy. In a tight labor market where flexibility is key, this is an important tip. Recruiters will be your best advice when it comes to what it may be worth to bend a little on a relocation package in order to save on further recruitment costs. Exceptions to the policy usually involve extending temporary living situations or household goods storage which is relatively inexpensive in the grand scheme of things.
Explore “Cafeteria Style” Policies. A new trend in relocation options, which provides increased flexibility while keeping costs in check, is a cafeteria style or menu-driven policy. This type of policy allows the company and/or new hire to select assistance options from a predetermined list.
Consider Outsourcing. There are several good relocation companies who can handle the whole thing for you at reasonable cost. If you’re too busy to create a policy yourself, consider outsourcing the job to experts who should work within your budget.

Hopefully this information will help to get you started on a new policy or help to revise an outdated policy. The important elements are to have a policy that is flexible, that can be used as a recruiting tool, and that is easy to administer. Good luck!