Getting Employee Relocation Right

Your company has had an open position for months and you have found the perfect candidate for the role, but they live half way across the country.  Your company has agreed to relocate the new employee and you would like to make sure that it goes well.  How do you proceed with the new hire and make sure that they arrive the first day ready to start the ground running?  Here are several simple tips that you should make sure that your company is taking into consideration when they handle relocation:

  • Stop using Signing Bonuses to pay help pay for Relocation. Many companies that do not have formalized relocation policies use signing bonuses in lieu of a policy.   Bonuses of this nature are taxable income to your new employees.  If you give someone a $10,000 signing bonus then there is an immediate loss of 25-39.5% to taxes right from the start and your employee has not even started to move.  Relocation benefits are not always taxable, it is better to have your corporate funds used for what they were intended for, not extra taxes. 
  • Nothing says welcome to your new job quite as badly as having your new hire pay for their Relocation and wait for reimbursement.  One of the easiest ways to improve your policy without any additional expenditures is to set up a direct bill for household goods, which can be one of the most expensive parts of a Relocation.   For many employees, paying for a household goods move upfront and waiting for reimbursement can place them in an awkward financial situation that they may not want to discuss with a new employer and might discourage them from taking the position.   A Corporate account can provide additional guarantees and service level protection for your team without adding any additional fees. 
  • Relocation benefits come in all shapes and sizes.  Some companies have Relocation Policies based on benefits, some use financial allowances for relocation and many companies do not have any policies in place whatsoever.  When your company is providing a financial allowance for relocation it is frequently referred to as a lump sum policy. Counsel your transferees on how to maximize their relocation benefit under lump sum policies.  When a lump sum allowance is not going to be sufficient to cover all of the relocation costs, have your transferees plan strategically on how to use their funds, so they minimize their tax ramifications.  Discuss the taxable versus non-taxable components of relocation with the transferees.
  • When there is not a formalized Relocation policy in place, we find that monetary caps are being put on the relocation without knowing what relocation would really cost.  The household goods move is not the only cost that needs to be considered.  For non-homeowners, lease breaking and rental deposits can be very costly.  We always suggest talking to a Relocation company to help build a realistic relocation budget prior to presenting the relocation allowance to the new hire.

Need help maximizing the benefits for your employees and minimizing the costs for your company?  Please feel free to reach out to me with any questions.


Cathy Ware Partridge is a Client Services Manager with Interstate Relocation Services. You can connect with her at [email protected] or on LinkedIn