Here are six ways your company can save on relocation costs right now. Of course there are many other ways to make your relocation program more cost effective, but we hope this short list will help get you started.
1. Review Your Policy
When was the last time you reviewed your relocation program? Before you can start making decisions on how to cut costs, it’s important to understand your current program. What are you offering, what don’t you offer and most importantly, does your program reflect the real-life experiences and the needs of your relocating employees?
You’ll need to go through each step of the relocation process and analyze quantitative and qualitative data; look at the numbers from previous moves; survey employees who went through the relocation process and find out which benefits were most important to them; and which benefits did they use the most, and how? For example, if your program allowed for one house hunting trip, would a second trip have been helpful? Which benefits did they use the least? Were some benefits unused because transferees didn’t find them necessary or because they didn’t understand the benefit and its value? What changes to the program would they like to see and why?
Even if budget limitations prevent you from adjusting your policy to satisfy every requested change, having a thorough understanding of your relocation program will ensure you’re providing the right benefits, eliminating those that don’t provide value and ultimately cutting costs where needed.
If you are working with a Relocation Management Company (RMC), they can be a great asset in this process by helping you save costs in more ways than just what’s listed here.
2. Introduce Caps
If it’s policy to offer transferees benefits like a home sale bonus, a cost-of-living adjustment or a loss on sale allowance (for examples), consider placing caps on these. Caps will help reduce excess allowances that may not be needed.
3. Manage Exceptions
Hopefully, your current RMC is tracking all exceptions and analyzing both the requests and outcomes. This will help you determine where policy changes might be needed. If there is an exception consistently requested, you may want to consider adding this benefit to your policy. By designing a data-driven relocation program, you can minimize future exceptions.
When the unexpected occurs during a relocation, it impacts the logistics throughout the rest of the process. For example, if a home closing gets delayed, you may be asked to help with additional costs such as temporary housing or household goods storage. These exceptions result in higher costs.
4. Ensure You are Receiving all Available Tax Benefits
While moving expenses are no longer tax exempt, there are areas where you can still receive certain tax benefits, especially if you are offering a home sale program. Offering a direct reimbursement on home sale expenses may sound like the easiest option, but with no tax benefit it may not be the best option for your employee – and it will most likely be more costly if you choose to provide tax assistance on the reimbursement. A better strategy would be to use the Guaranteed Buyout or Buyer Value Options. Make sure your programs adhere to IRS requirements to benefit from other possible tax savings.
5. Stay on Top of Trends & Benchmark Your Policy
To stay competitive, you need to know how your policy stacks up against others in your industry. If your talent management strategy does not offer competitive relocation benefits, you may lose existing employees or potential new hires to other companies. Make sure your policy provides a choice of offerings since relocation policies are wrapped into job offers. If you don’t benchmark against your competitors, you won’t know if your offerings are good or not.
Benchmarking your policy can also uncover places you’re spending unnecessary dollars or giving away too much when none of your competitors are. In other words, benchmarking your policy against others ensures you are in line with the industry. It’s also important to look at other industries you compete with for talent. WHR’s 2020 Benchmark Report will help you see how your relocation policy stacks up. The report also provides cost saving tips and it discusses trends to watch for.
6. Hire a Relocation Management Partner
The bottom line is that having a dedicated and knowledgeable RMC partner is an invaluable resource and should be part of your talent management and cost savings strategies.
