Just like the many individuals hired and employed by your company, relocation programs come in all sizes and shapes. When it comes to your company's relocation plan, one size (or program) for every level or type of employee is really not ideal. Here are some things to consider when developing a mobility program for your company.
Years ago, my spouse and I spent some much-needed vacation time on a tropical island beach. One day, while blissfully sipping our piña coladas, a cheerful teenager strolled by selling shirts and shorts. Her hair was meticulously braided, her smile as bright as the sun, and her colorful sundress rippled in the warm island breeze.
"Oh, how cute. How much are they?" we asked.
"Very low price – three for 10 dollars." We were definitely intrigued.
"What sizes do they come in?" we further inquired.
"Oh, they are one-size-fits-all. They fit everybody!" she laughed.
We bought tons.
The next morning, we decided to wear our new duds. This blissfully ignorant couple was about to learn a lesson about buying touristy clothes from adorable young women on the beach. When it comes to one-size-fits-all… It doesn't.
This really should have come as no surprise. With all the body classifications that exist in today's world, how could one garment fit all of them? The idea itself is silly. Oh well, it seemed like a good idea at the time.
Does One-Size-Fits-All Truly “Fit”?
Just like the many individuals hired and employed by your company, relocation programs come in all sizes and shapes. So, as with the clothing worn by those employees, when it comes to your company's relocation plan, one size (or program) for every level or type of employee does not fit all – no matter how good of an idea it seemed at the time (during the budget meeting).
If you are the individual responsible for writing and overseeing the relocation program for your company, you know how confusing and challenging it can be. And if it affects you adversely, imagine how it will influence your new hire or impact an existing employee.
There are numerous factors to consider, i.e., the costs the company wishes to incur and the costs that will be incurred by the transferring employee. This also includes tax implications, administrative costs, and benefits to be paid to the employee for their relocation. Besides that, individuals at different “levels” - for example an executive or VP versus a manager, or someone hired right out of college versus someone with decades of experience - often receive different types or amounts of benefits. Besides the clear difference in experience and expectations, junior level recruits, like those right out of college or less than 5 years into their career, will typically have a lot less to move than an experienced executive with a family. So how can one straight-up policy be perfect for everyone?
Why Doesn't One-Size-Fits-All Work?
The reasoning here is simple. When it comes to benefits or relocation policies (or programs or plans), they just aren't all created equally. Numerous companies relocate employees ranging from college graduates to high-level executives. They then offer benefits to reflect that range, for differing job grades, tiers, or positions.
What does a new employee need to consider when being offered relocation benefits by a company? First of all, what will the entire cost of the relocation be? How much “benefit” (in terms of money) will the employee receive to cover moving related expenses? What percentage of moving costs will the company cover and how much is the employee expected to cover? And, when it comes to these benefits, what are the tax implications?
Various Methods and Policies
How do methods for covering expenses and company policies differ?
If, for allowable expenses such as household goods moving, temporary housing, and travel, the company provides payment directly to the supplier, this is referred to as supplier direct billing. When the company repays the employee after the transferee submits the appropriate backup documentation for allowable expenses, this is direct reimbursement. With direct reimbursement, some companies “cap” the benefit at a certain amount, while others reimburse the employee for all moving related expenses.
Lump-sum policies or a combination of the above-described plans also exist and may be used by companies for their relocation programs.
A Closer Examination of Lump Sum Policies
Although it depends on whom you talk to, the general consensus is that a lump-sum policy may or may not be the most desirable method of relocation. Once upon a time, lump sum was considered a growing, market competitive, viable relocation policy. It was particularly useful for the relocation of entry-level and/or trainee level new hires. It was also popular with mid-size to small companies that did not frequently find themselves in need of relocating employees. Why? Because it shifts the responsibility for the relocation completely to the transferee; with a lump sum benefit, the relocating employee typically receives no professional assistance with any aspect of the move – selling or buying a home, temporary housing, and hiring a moving company – even though the employee may have little or no experience with any of these.
Lump sum relocation plans are still popular with smaller companies; but more commonly, a variation of lump-sum has been devised. This can involve a tiered policy with titles like Lump-Sum Provisions, Lump Sum Plus, and Lump Sum Only. In the words of one experienced HR director with whom I’ve had the pleasure of a longstanding friendship, “That's a little like dressing up a pig – the outfit might be cute, but it’s still a pig!”
I smile and nod understandingly every time – knowing what’s coming.
“It's still a lump sum policy and not the most attractive option.” Here, she always draws a big, dramatic breath and then sighs long and loud. “However,” she counters, “under certain circumstances, I have seen it work very well for some companies who just insist on using it.”
How do you know if a lump sum mobility program is right for you? Purchasing and human resources must weigh their options carefully to determine best practices for their relocation program as they apply to a company’s unique culture and its needs.
Find a Solution to Fit Your Budget, Needs, and Your Company's Style
Ideally, the development and use of a relocation program should be easy and run smoothly. It should be both professional and efficient but still meet the needs and the requirements of not only each transferring employee but the company itself. To efficiently, effectively, and smoothly move employees, companies may choose to customize a quality relocation program. According to the Society for Human Resource Management, today’s businesses are offering flexible benefits for employees in need of relocation. And it’s happening on an increasing level.
Moving service companies that offer flexible plans that adapt to the needs of a company, each individual employee, and the circumstances surrounding each move are today's industry leaders. And if those moving companies go the extra step by offering consultation services to human resources and purchasing departments, it is an invaluable asset. It can serve to elevate the moving service (for providing stellar services) and the company in need of a new relocation plan (for being at the top of their game, or their industry, regarding mobility plans).
What is a Flexible Relocation Program?
If, within your company’s relocation program, your HR department wishes to revise mobility benefits, a flexible plan can be part of the equation. In a program such as this, specific core provisions are provided, frequently in different tier levels (home rental assistance may be offered in every tier, but other options like lease cancellation, home sale, 30-day storage, and others would only be provided in certain tiers).
Following the core provisions are a number of flexible options of which the company (or employee) can choose one, some, or all. These could include spouse/family re-employment assistance, return trips to the departure location, temporary housing, and much more.
It's easy to understand why this is such an attractive alternative to a one-size-fits-all policy. It can adapt to most situations and the precise needs of both company and employee.
What Size is your Mobility Program?
Are you trying to squeeze all of your employees into a one-size-fits-all T-shirt and shorts? Or, knowing how every person differs, are you readily supplying your employees with the appropriate, comfortable, and correct fit depending on the individual and employment tier?
It could be time to take a close, detailed look at your company's mobility program. How does it measure up to other companies of the same size? Is it fulfilling the needs of both the company and employees? Is it flexible or are you tied to one specific plan that leaves little room for customization? And, does your company offer different levels of employees different types of benefits?
Or are you utilizing a one-size-fits-all approach to relocation?
At northAmerican® Moving Services, we can help you develop the kind of mobility program that both employees and company executives can be proud of. Click here to ask us about our services which are customizable on a variety of levels to fit your company's unique needs, as well as being adaptable to different employees and their precise situations.