Does your company need a relocation policy? According to workforce mobility association Worldwide ERC®, U.S. companies spend $12.2 billion annually on corporate relocations. If your company is heavily invested in expanding to other regions, developing a relocation policy that outlines the protocol for employee relocations, the benefits offered, and the proper points of contact for each logistical step of the process may not be merely a smart move, but an essential move. Here’s why.
- A relocation policy makes businesses more cost effective. The cost of relocating employees can be extremely high — there’s no two ways about it. It can cost companies anywhere between $25,000 and $100,000 to relocate a single employee, based on his or her role, family size, and status as a homeowner or renter. However, compared with the time and capital costs of recruiting, interviewing, hiring, training, and relocating a new employee (who may or may not ultimately be a good fit), relocation of existing employees is often a significantly more cost effective option. Having a firm and thorough relocation policy in place further enhances your company’s preparedness for the many questions that will arise during the relocation process… and allows you to be at the helm of determining the costs associated with relocations.
- A relocation policy ensures continuation of business as usual. Relocating experienced employees will allow for the smoothest possible company expansion into a new office, region, or country by eliminating the time and training required to recruit new hires who are less familiar with your operations. Yet even when these delays and hurdles are mitigated, relocating employees will often face some setbacks in their productivity level on the job during the relocation process. Having a clear and well-designed relocation policy that addresses employee needs in and out of the workplace will best position employees to meet the stresses of relocation while continuing to perform their roles efficiently.
- A thorough relocation policy supports HR professionals and hiring managers in their day-to-day work. When employees have questions about their relocation, your human resources team will be their go-to. Hiring managers will field numerous questions from candidates and recent hires in positions requiring relocation. Constantly fielding these questions — the answers to many of which may be ambiguous if a relocation policy is not firmly in place — can detract from the HR team’s ability to perform their day-to-day tasks and focus on optimizing job performance. A successful relocation policy will inform employees of what to expect prior to, during, and following their relocation as well as the benefits and assistance they’ll receive throughout their expatriation, thereby lessening the load on your human resources professionals and hiring managers.
- Developing a relocation policy early on makes future domestic or global expansion a viable option. Expansion isn’t something firms do overnight. It’s a decision that can take months or even years to reach, and often one that follows exploratory research, independent consulting assessments, and the creation of a long-term growth strategy. If expansion to other domestic regions or international posts is anticipated for the near future, it is advisable to lay the groundwork for a company relocation policy three to five years in advance of its formal implementation. This gives the company ample time to fully define the goals and associated benefits of its relocation policy and to thoroughly train human resources teams. It also gives firms the opportunity to pursue quality control measures (such as employee review committees to help to refine the policy) that serve the dual purpose of soliciting valuable feedback and showing appreciation for employee opinions and insight.
Clearly, there are significant benefits to be reaped from a well-designed relocation policy for companies in critical stages of growth. But it should also be noted that in some cases, a full relocation policy may not be necessary (or, at least, not yet). Here are three conditions in which a detailed offer letter for relocating employees may suffice in lieu of a formal relocation policy:
- The majority of your company’s relocations are domestic, or are for a limited time.
- Fewer than 5% of your employees are asked to relocate annually.
- Your company will not be relocating employees within the next 5 years.
In particular, if your company meets all three of these conditions, it may benefit more from a well-defined offer letter to new hires and relocating employees than a company-wide relocation policy. If your firm is relocating only a small percentage of its employees per year, or if the relocations are for a brief and clearly delineated period of time, the costs and time associated with designing a relocation policy may outweigh its benefits, especially if your human resources team is equipped to have a hand in the process. And as we mentioned, while it is both important and useful to establish a relocation policy significantly in advance of the start of employee relocations, it makes sense to wait until your anticipated large-scale expansion is within your five-year plan before developing a relocation policy.
If your company is growing its international presence through employee relocation, CORE Languages can help. Our team of dedicated destination services managers can assist your business through every step of the relocation process, from designing a relocation policy that meets your needs, to organizing look-see visits and leading area orientation. See our destination services page for more information.