Making Employee Relocation Easier

Employee Relocation Overview

If you oversee employee relocations or have ever moved yourself, you know how overwhelming this undertaking can be. Your employees are your company’s most important asset, and a location change can be an extremely stressful and disruptive event – at worst leading to a loss of an important employee. If handled well, you will help minimize the stress and time required for your employee to complete a relocation, thereby maximizing your employee’s productive time and building goodwill.

Effective Employee Relocation Strategies:

In any job market, attracting and retaining high quality employees are critical functions. Too often companies don’t recognize the significant negative impact caused by stress and disruption that accompany a life change event like a relocation. Appropriate support services around such an event are important human resource benefits, often overlooked until the damage has been done. The objective of a successful corporate relocation is to transfer the employee and family in the most expeditious and cost-effective manner. This process should enable the employee to become quickly productive in a new job.

Relocation has a significant negative impact on productivity surrounding the move. Transferring employees spend an average of 10 hours per week on relocation issues at work and just over 9 hours at home (1999 University of West Florida study), at the start of their new job or assignment. The goal of an effective relocation strategy is to minimize the impact of relocation on the employee, making that person more productive.

No two companies have the same relocation needs. Corporate relocation policies are driven by numerous factors including corporate culture, employee need, and the competitiveness of the marketplace. Relocation programs may be offered in numerous tiers depending on employee level (new hire to executive) or home ownership needs vs. rental. Relocation programs may also be managed in house by a corporate staff, totally outsourced to a relocation company, or some hybrid in between.

Effective relocation management programs may address issues such as:

More advanced corporate services may include:

• Home buyout programs – corporate home buyouts allowing employees to forward equity quickly to help buy a new home in a new location and maximize tax savings for the employer
• Expense management and tax “gross-up” – administration and tracking of relocation expenses for tax adjustment purposes
• Lump sum calculation – determination of lump sum amount to be paid to relocating employees in accordance with company policy, industry benchmarks, and cost-of-living differences between cities
• Spousal/family assistance – special employment search assistance to family members
• Group move management – simultaneously coordinating multiple employee relocations to the same destination

One item often overlooked during this process is the tax benefit associated with using a third-party relocation company to bring the new employee to town. Companies that use direct reimbursement for relocation expenses are unwisely paying thousands of dollars in unnecessary taxes. It becomes a large cost that will be taxed according to the reimbursement amount and the employee’s tax bracket.

Working with a third-party relocation company ensures the most relocation expenses become a write-off instead of taxable income to the new employee. They become pass-through expenses, not reimbursements. This saves the new employee the tax consequences of a 1099 for reimbursement expenses. In addition, working with a third-party relocation company assures corporate compliance with mandatory IRS and state rules and regulations.

Providing the most appropriate and effective relocation services for each of your employees starts with developing a full understanding of your corporate and employee relocation needs. With this understanding, an appropriate relocation strategy and set of policies can be developed.

For more information on developing an effective relocation program, see the Employee Relocation Process Map.

Content provided by Promisor Relocation 

Promisor Relocation can help you strengthen and effectively manage the relocation benefits you offer to recruits and employees. Whether your business moves one or 50 people a year, you'll find significant cost savings with Promisor Relocation.

If you oversee employee relocations or have ever moved yourself, you know how overwhelming this undertaking can be. Your employees are your company’s most important asset, and a location change can be an extremely stressful and disruptive event – at worst leading to a loss of an important employee. If handled well, you will help minimize the stress and time required for your employee to complete a relocation, thereby maximizing your employee’s productive time and building goodwill.