Relocation policies play a vital role in supporting employees during their move to a new location. Each policy type offers different benefits and levels of flexibility, catering to various company sizes, budgets, and employee needs. Here’s an expanded overview of the three main types of policies: Standard (Core) Policies, Flex Policies, and Lump Sum Policies.
Key Relocation Policy Types
Standard (Core) Relocation Policies
Standard (core) policies represent the most fundamental form of relocation policy, making them an ideal choice for organisations with budget constraints or limited experience in managing employee relocations.
These policies provide essential benefits, ensuring a smooth transition for employees during their move. By offering a predefined set of core benefits, standard policies simplify the relocation process for both the company and the employee, allowing organisations to efficiently manage relocations without the need for extensive customisation or negotiation.
As a result, standard policies can serve as an effective starting point for companies new to the world of employee relocation or those looking for a cost-effective solution to support their workforce during a move.
They typically offer a set of core benefits, such as:
- Home sale and purchase assistance: This benefit may cover closing costs, home repairs, and marketing expenses to facilitate the sale and purchase of homes during relocation.
- Travel expenses: Companies may reimburse employees for airfare, car rental, and meals during their relocation.
- Temporary housing: Employees may receive an allowance for temporary housing or a rental allowance while they settle into their new location.
- Destination services: This can include orientation tours, assistance with finding suitable housing, and help with settling in at the new location (e.g., utility set-up, obtaining local documentation).
- Spousal/partner support: Some companies offer support for the employee’s spouse or partner, including job search assistance, career counseling, or access to networking opportunities.
- Education assistance: If the employee has children, the company may provide support for school search assistance, enrollment fees, or tuition reimbursement.
- Cultural and language training: For international relocations, companies may offer language classes or cultural training to help the employee and their family adjust to the new country.
- Household goods shipment: This includes expenses associated with packing, transporting, and unpacking the employee’s household belongings.
- Cost-of-living allowances: Cost-of-living allowances help employees adjust to a higher cost of living in their new location.
- Tax assistance: Companies may provide tax assistance to help employees navigate the tax implications of their move.
- Relocation bonuses: Companies may offer relocation bonuses to incentivise employees to accept a relocation offer.
Flex Relocation Policies
Flex policies offer more flexibility than core policies. They allow employees to choose the benefits that are most important to them. For example, employees are able to choose a set of services, such as home sale and purchase assistance, school search, and settling-in support.
Flex policies are a good option for companies that want to attract and retain top talent. They are also a good option for companies that are relocating a large number of employees.
Here are some benefits of a flex relocation policy:
- Personalised alignment of benefits and needs: This can help to tailor relocation benefits more closely to employee or candidate needs.
- Increased employee satisfaction and acceptance rates: Flex and core-flex relocation programs build in flexibility and minimise costly exceptions, and ultimately this model can increase employee satisfaction and acceptance rates for both international relocations and domestic relocations.
- Recruiting edge: A carefully considered flex program can help companies to gain a recruiting edge.
- Cost savings: There is a potential for cost savings using the flex approach when relocating employees.
- Faster and more efficient: Building in a flex element is faster and more efficient than a bureaucratic exception process.
- Additional benefits: Flex benefits can enhance the core components of your relocation policy. This approach is referred to as core-flex.
- Decision-making ability: A major advantage of flex policies is that they give the employee just enough decision-making ability to feel like their needs are being met.
Lump Sum Relocation Policies
Lump sum policies offer employees a lump sum of money to use as they see fit to cover the costs of their relocation. This can be a good option for employees who want more control over their relocation process.
Lump sum policies are a good option for companies that want to give their employees more flexibility. They are also a good option for companies that are relocating employees to high-cost areas.
Factors that may affect the lump sum payment include:
- The employee’s job level: Higher-level employees may receive a larger lump sum payment.
- The employee’s length of service: Employees with longer tenures may be eligible for more substantial lump sum payments.
- The cost of living in the new location: Higher living costs may result in larger lump sum payments.
- The size of the employee’s household: Employees with larger households may receive more significant lump sum payments to cover additional expenses.
However, there can be disadvantages to lump sum policies:
- Mismanagement of funds: Employees may not allocate the lump sum effectively to cover all relocation expenses.
- Insufficient support: Lump sum policies may not provide enough support for employees during their relocation, leading to a less satisfactory experience.
It is important to note that the cost of relocation can vary depending on a number of factors, such as the distance of the move, the cost of living in the new location, and the size of the employee’s household. When choosing a relocation policy, it is important to factor in the cost of relocation and to choose a policy that fits the company’s budget.
When choosing a relocation policy, consider the following factors:
- The size of the company: Larger companies may have more resources to offer employees in terms of relocation assistance.
- The number of employees being relocated: More employees being relocated can result in higher costs for the company.
- The company’s budget: The budget will determine the type of relocation policy available.
- The employee’s needs: Consider specific employee needs, such as assistance with selling a home or finding a new school for their children.
By carefully evaluating these factors, companies can select a policy model that best fits their budget and supports their employees during the relocation process.
Speak with one of our relocation experts today and find out how Klippa Relocation can support your relocation programme.