Negotiating your Relocation Package

What’s a Relocation Package?

Relocation packages are offered to employees moving to a new city or town that’s not within commuting distance from their home or office.

They may be offered to current employees and new hires moving 60 miles away, across the country, or around the world.

Relocation packages generally cover expenses related to moving and housing, but other items may be offered and negotiated as well.

It may come as a shock, but according to the Workforce Mobility Association:

the average cost of transferring a current employee who owns a home is more than $90,000

  • for new hires it’s nearly $70,000
  • for current employees who rent it’s over $20,000

They’re surprisingly big numbers, but not every transferee gets the same treatment.

Relocation packages vary greatly from one industry to the next.

Especially in lucrative high-profile sectors like tech, finance, and medicine, they tend to be very attractive.

They’re often multi-tiered, which means senior employees and those with special skills get more benefits than their junior counterparts.

Changing homes, moving, and enrolling kids in new schools can be stressful, expensive, and burdensome on families.

Relocation packages aim to ease the transition by giving transferees peace of mind, thereby increasing the likelihood that they’ll accept the position they’ve been offered.

Who Gets a Relocation Package?

Though they were once reserved for executive-level management types, relocation packages are now frequently offered to junior employees and new hires as well.

Savvy human resources staff understand that they’re key elements in attracting promising talent.

But whereas a recent college graduate may be offered a few thousand dollars to cover renting a U-Haul truck, A VP of finance may enjoy white-glove service more fitting of royalty.

Factors in relocation package availability include:

  • The company’s financial resources
  • Strength of the economy
  • Whether the employee is a homeowner or renter
  • The uniqueness of the employee’s talents
  • The desirability of the area they’ll be moving to
  • Age

Important Relocation Terms

  • Transferee–the employee who is moving
  • Lump sum–a fixed payment provided by the company to cover moving expenses
  • Reimbursement–the maximum amount the company will reimburse the transferee for all moving related expenses
  • Direct bill–when the company bills service providers like movers, realtors, and tax professionals directly (so the transferee doesn’t have to pay upfront and submit receipts for reimbursement)
  • Third-party relocation–when a company outsources its relocation functions to an outside provider that handles management and coordination of all move related services

Who Manages Relocation Packages?

Many large organizations have dedicated relocation teams including managers and coordinators who oversee the move process from beginning to end.

Though many companies, government agencies, and NGOs once handled relocations in-house, they’re increasingly outsourcing these functions to third-party relocation management companies.

The benefits of outsourcing include:

  • Easing reporting and tax compliance burdens
  • Freeing up staff to focus on the company’s core business
  • Putting functions like real estate and moving in the hands of professionals

What’s Typically Included?

Because they can vary so greatly, there’s really no such thing as an average relocation package.

However, there are some common elements worth knowing before formulating your negotiation strategy.

  • Packing and unpacking services provided by a professional moving company
  • Full-Value Replacement Coverage equal to or greater than the value of your household goods
  • Moving costs for household goods, cars, and speciality items like motorcycles, wine collections, and boats
  • Storage for a set period of time
  • Temporary housing while you’re looking for a home or waiting for a new one to be built
  • Travel expenses like airfare, lodging and meals for you and your family while looking for a new home and schools
  • Real estate services like:
    -marketing and home hunting assistance
    -employer compensation for terminated leases
    -covering realtor fees, closing costs, and reimbursement for homes sold below purchase price or market value
  • Culture and language training if you’re moving overseas

How to Negotiate a Competitive Relocation Package

Most of us don’t like negotiating, but when it comes to securing a top-notch deal it’s a skill worth honing.

Knowledge is key, so learning industry terms and understanding relocation packages are imperative.

Thankfully the negotiation process need not be contentious.

In fact, solid relocation packages usually benefit both parties.

Happy, well-rested, and stress-free employees are efficient workers.

Under the right circumstances, they can more than make up for the cost of their relocation with increased productivity.

But remember, negotiation must be done before accepting a position, not after.

Consider the following tips to ensure you’re getting the best deal:

1. Do your own research

First, ask for a written copy of the company’s relocation package or formal offer.

Take as much time as you need to read it carefully.

Highlight areas that need clarification, and make a list of important items that haven’t been included.

If you can, spend time online comparing your offer with others in your industry, and reach out to colleagues and coworkers for their input.

2. Assess the strength of your position

Though it isn’t easy, it’s best to take a step back and view your situation from an unbiased vantage point.

Consider the uniqueness of your skills, your track record of exceptional performance, how many people can do what you do and whether your attributes are in high demand.

If possible, get help in this area from disinterested parties who won’t shy away from giving you an accurate assessment.

3. Compile information about your destination

Here we’re talking about things like crime rates, property taxes, average salaries, median age and income, quality of schools, recreation activities, and overall cost of living.

4. Consider your motivations

Long before accepting a new position in a distant city, state or country, it’s wise to think about why you do and don’t want to move.

For the time being, make your personal feelings a priority.

Are you looking to make a fresh start and explore new horizons, or will you miss friends, family, and your favorite coffee shop?

Post-relocation regret and depression can be debilitating, and though striking out on a new adventure can be fun, it’s definitely not for everyone.

5. Establish minimum requirements

Before negotiating it’s a good idea to make a list of items that must be addressed before you’ll consider accepting a relocation offer.

By prioritizing each you’ll have a means of determining where you stand.

It’s easy to cave under pressure, only to realize after the fact that you could have (and should have) held out for more.

Make a list titled, ‘5 Things I Won’t Budge On.’

If each item isn’t satisfied, perhaps moving isn’t for you.

e made a tool to help you decide: Should You Move for Work?.

Things that Often get Overlooked during Negotiations

  • Meals in restaurants and coffee shops can get expensive when you’re between homes for extended periods
  • Spousal employment services are a huge help for families in which both parents work
  • Child and elderly care expenses caused by a relocation can be significant for families with young children and live-in parents
  • Miscellaneous expenses like driver’s license transfer fees, cleaning service, and initial set-up costs for things like cable, internet and utilities

How Common are Relocation Packages?

The prevalence of relocation packages rises and falls.

They’re generally more common in robust economies, but that’s not necessarily the case anymore.

In the hands of savvy recruiters and HR pros intent on attracting top talent, relocation packages may be worth their weight in gold.

Salaries and traditional perks usually steal the spotlight, but relatively obscure items may have just as big an impact on whether or not moving makes sense.

Trends in Corporate Relocation

1. Thanks but no thanks

According to recent studies, more employees than ever are unwilling to move regardless of the attractiveness of relocation packages.

2. Transferees are getting younger and younger

Millennials and employees without spouses and children are much more likely to relocate for work than their older and more established counterparts.

3. International relocations are on the rise

Surveys suggest that before the Coronavirus pandemic international moves were increasing by double digits.

Important Takeaways

1. Don’t cross the IRS

Remember, if your relocation package includes a lump sum payment, it’s fully taxable earned income.

Don’t be shy about asking for a ‘gross-up,’ which is when the company reimburses you for your tax liability.

To avoid this, request that the company bill service providers like movers directly.

2. Ask about payback timing

Will the company give you your lump sum payment before you move?

Three months after you move?

This is especially important if you have minimal savings and might experience cash-flow issues during your move.

3. There will probably be a payback clause

We’ve already established that corporate relocations aren’t cheap.

To lessen their risk and account for employees availing themselves of free moving services only to jump ship when they’re all settled in, most companies insist on payback clauses.

They typically require an employee to stay with the company for a set period of time after their move, usually a year or 18 months.

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