Relocation Policies – Mobility vs. Expense

by Ryan Carrell

Most corporations use a relocation policy to outline the benefits and resources available to their relocating employees. Throughout my career, I’ve worked with many different types of organizations from retail sales giants like NIKE to government agencies such as the Secret Service and FBI. Relocation policies often mirror the culture of the corporation or organization – some are limited, stringent, and detailed in their do’s and don’ts. Others provide a lump sum of cash and little guidance…while still others are an ever-evolving, strategically utilized plan that accounts for market conditions as well as the employee’s tenure, position, and geographic location. The one commonality that all relocation policies have is the correlation between mobility and expense. The more mobility or faster you want your employee to move, typically the more it will cost. If a corporation provides a relocating homeowner a simple lump sum payment, the direct cost is limited but the employee may not be able to move until her house is sold.

The indirect (and often unforeseen) costs can be unlimited as the transferring employee is less productive and more distracted in her new role during the extended time to complete her relocation. On the other hand, a full home sale program with a guaranteed buyout exposes the corporation to higher risk and direct expense, but provides for a fairly quick move. In today’s “cost control” environment, the trend we are seeing from many of our corporate clients is tweaks to relocation policies in an effort to balance this mobility vs. expense trade off. Small changes such as moving a required marketing period from the onset of the move to AFTER the guaranteed offer is extended are being made. The idea here is to ensure the transferring employee is marketing her home for a significant period with the knowledge of what her worst case scenario or guaranteed buyout is. The result is typically a slight longer timeframe for the move to be completed, but a lower number of properties going into the corporate inventory and thus lower expenses. Another trend is first time movers or those employees with less tenure who in the past did not receive buyouts, but were reimbursed all the expenses related to the sale of their real estate are now receiving a capped amount or lump sum to complete their move.

Navigating the current real estate market with the guidance of an expert is tough…doing it while relocating to an unfamiliar area in a compact timeframe and with limited financial help is pure stress. If you or someone you know needs relocation assistance or policy consultation, we are here to help.

Posted by:  Ryan Carrell

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