In a globalized world like ours, job-related relocations are a daily occurrence, but do we really know all the processes behind them? This article aims to help the reader to have a better overall view on the matter. Given that relocation occurs when an organization moves employees from one location to another, let’s analyse the basics of an effective relocation program. Here we will focus on the relocation of executives.
Hiring talented professionals for executive positions is one of the biggest challenges companies face today. “Failure to attract and retain top talent” was the number one issue in the Conference Board’s 2016 survey of global CEOs, even before economic growth.
The most crucial aspects to consider are policy development, communication issues, legal issues, and economic factors. Human resources professionals must offer competitive relocation packages and effective relocation practices and policies to attract talented managers. Relocation assistance can also help companies to retain current executives by giving them career development opportunities and simultaneously advance business development and operations by ensuring the right manager is in the right place at the right time. A well-designed relocation program complements an employer’s talent management program. If a relocation is not handled successfully, it threatens the employer’s ability to retain the manager, and it risks losing someone the employer has devoted time and money to develop and move.
Relocation policies generally have three levels of coverage, depending on the group to which an employee belongs:
- New hires, typically young recruits or those with limited experience.
- Experienced employees, such as those who have been in the workforce for some time and who are more likely to be settled with a home and/or a family.
- Executives and other high-level employees likely to be deeply entrenched in their current locations and with family and community ties.
Employers adopt policies to fit their circumstances and could have a different policy for each tier. Companies want to offer attractive relocation packages to executives and high-level employees but incur the high costs associated with such packages. The key question is whether the financial gain of hiring or transferring an employee will outweigh the cost of the relocation. There is considerable pressure on human resources to trim costs and tweak policies to still relocate employees to where they are needed.
Executives relocations are, for sure, much more complex to handle for various reasons. For example, from a practical viewpoint, someone in a top management position is generally at a stage of their life where they have a family, so the relocation can mean uprooting families, selling or buying a home, etc. They will also likely have a more established presence in their communities and less likely to pick up and move their lives. It is easy to understand how these kinds of relocations can substantially boost the cost of job-related relocation packages.
Generally, an executive relocation package includes:
- Physical Moving Expenses: typically, all moving expenses will be covered. This includes packing and household goods movements, car shipment, storage for a period of time, short-term housing and transportation expenses, as well as one or more home-finding trips.
- Assistance with Selling and Buying Homes: lease cancellation or the costs of a home sale are generally covered.
- Cash Allowance or Lump Sum Payment: employers often offer executives a lump sum allowance or signing bonus. The executive is given a certain amount of money for moving costs and may keep the remaining sum if any money remains. This amount can vary depending on a variety of factors.
- Site Visits: relocation packages usually allow site visits so the employee and possibly a spouse can see the new office, tour the community, learn about schools, housing, and other local services. Policies can set the lengths of these visits, but a minimum of two days is common.
- Family Support: spouses or partners who move with the executive might need help finding jobs. Children’s issues with relocations, such as the pressures of new schools and the loss of old friendships, are often overlooked. Also, a move could affect several generations if the employee has elder care responsibilities. Cultural differences among geographical areas in the United States can also disrupt the family, interfering with the success of the assignment. A competitive and comprehensive relocation program might include spousal assistance services that help a spouse find a new job, policies that give relocating e enough time off to scout schools and other services, or help arrange elder care. Whatever shape the employer’s support for the family takes, human resources need to involve both the executive and the executive’s spouse.
These are just some examples of the benefits. The overall goal of an executive relocation package is to create a comfortable moving experience for the executive and their family.
To provide a complete picture, we should add that temporary relocations are on the rise, particularly with large American corporations. They are gaining ground because they are a great way to reduce costs while increasing productivity around a particular business initiative. Having a transfer for less than one year is financially advantageous because a family move for such a short period is rare, and it offers significant tax savings to both sides as these expense reimbursements are often excludable as business expenses rather than as relocation expenses.
To conclude, convincing top managers to relocate is not easy, and companies have to make it worthwhile. Crafting competitive relocation packages designed to meet the executive requirements is the first step to attract top talent.
A.L. Assistenza Legale