Relocation Allowances or Defined Benefits (or a mix): All Points’ Guidelines for Crafting an Effective Relocation Policy

Relocating employees can be a challenging process, especially without a well-defined plan in place. Establishing a robust Relocation Policy early on is crucial for a seamless transition. In this guide, we’ll walk you through the essential elements to consider, providing a checklist to aid in drafting a comprehensive policy.

The Foundation: Understanding Relocation Allowance

One of the fundamental aspects of any Relocation Policy is the decision of how to allocate financial resources. Two primary approaches are what’s called the “Naked Relocation Allowance” and the “Managed Relocation Allowance”.

Naked Relocation Allowance (aka Lump Sum)

This strategy involves providing employees with a predetermined sum for relocation, allowing them to manage the process independently. While this route offers flexibility, it may also result in increased stress for the employee.

Managed Relocation Allowance

  • The employee’s job level
  • Homeownership vs. renter status
  • Historical averages for similar relocations
  • Distance and family size
  • Discretion of the employee’s manager

Allow for some customization in the policy to accommodate unique employee needs and circumstances. Considering a flexible approach allows you to adapt the policy to different situations.

Defined Benefits: Adding Structure to Relocation

Defined benefits come with restrictions but without a cap on the amount. For instance, offering 30 days of temporary housing without specifying the cost. While the trend leans towards predictable relocation allowances, some companies still opt for defined benefits influenced by historical practices, demographic considerations, or industry competitiveness.

Tailoring Benefits to Job Levels

Job levels play a significant role in shaping relocation benefits. Higher-level positions often receive comprehensive packages, which may include housing and goods allowances, education support, tax equalization, and various defined benefits. Permanent relocations for these roles might involve a mix of defined benefits and relocation allowances.

Lower ranks are often awarded Relocation Allowances, virtually exclusive of other benefits, except for some Destination Services. Of course, again, this depends on your industry.

Relocation Policy Essentials: A Checklist

Review the following points while crafting your policy:

  • Allowance or Defined Benefits? Determine the balance based on your company’s history and industry trends.
  • Allow Practices for Different Job Positions: Tailor benefits according to the job level, keeping in mind industry standards.
  • Focus on Managing Moving Expenses: Address one of the most significant costs and stressors associated with relocation. Your relocation management company can help with this.
  • Destination Services: Provide essential support for international relocations, ensuring a smooth transition regarding new home purchase/rental, temporary housing if needed and settling-in services which helps provide integration into the new community.
  • Have a section dedicated to spouse and family: Offering support to the employee’s family allows for a holistic, positive, and more likely successful relocation experience.
  • Schools: If applicable, assist with educational transitions, helping employees with school searches and admissions.
  • Tax Assistance: Provide guidance and resources on tax implications, especially for international relocations.

Other Considerations for Your Relocation Policy

In creating your policy, you want to anticipate and address potential scenarios that may not impact every employee but are still prudent to include. These additional considerations ensure a comprehensive policy well-prepared for various situations should the need arise.

Some of those considerations are:

Cultural and Language Support

Recognizing potential difficulties in adapting to a new culture or language and incorporating provisions within your relocation policy is integral to policy development. Consider including language training or cultural assimilation programs to offer a personalized experience, aiding employees in overcoming challenges associated with relocation and fostering a smoother transition.

Communication Strategy

Establishing a robust communication strategy is pivotal for keeping employees well-informed during relocation. This involves outlining a transparent plan with regular updates to alleviate uncertainty and anxiety, fostering a more transparent and supportive environment for everyone involved in the transition.

Emergency Support

Ensure your policy encompasses vital information regarding emergency support services at the new location, especially for global assignments to challenging locations where such emergencies are more likely to arise (knowing that they can really arise anywhere). Additionally, provide clear guidelines to instruct employees on appropriate actions in case of emergencies during the relocation process, promoting a secure and well-prepared environment for all.

Feedback Mechanism

Implementing a feedback mechanism is crucial within your policy framework. Create an avenue for employees to share their experiences and valuable suggestions. This continuous feedback loop serves as a vital tool to enhance and refine the relocation policy, ensuring its ongoing effectiveness and responsiveness to the evolving needs of the workforce.

Crafting a comprehensive Relocation Policy requires careful consideration of these elements, ensuring a well-rounded and supportive framework for employees undergoing the relocation process. Incorporating these insights into your policy can enhance the company’s and its employees’ relocation experience. Many tips in this article can be found in our exclusive e-book, Relocation by Industry. Knowing how your competitors relocate can help you build a firm Policy.

Contact All Points and learn more about establishing a relocation culture at your company.

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