By Jeremy Clarke
Director, Executive Search Consulting
Getting top talent is still a critical priority… even in this economic environment. How so? Well, because business needs are still evolving, and employee turnover is still an unavoidable reality. All of this creates a demand for talent; albeit at a lesser level than four years ago. But incentivizing top talent to make a job change in today’s market is tough, particularly for firms that cannot rely on local talent pools due to their geographic location. If you’re one of these firms, your searches must often extend regionally or even nationally. Creative and innovative relocation practices are as important as the search itself.
It’s difficult enough to incent a candidate to take a position in Cheyenne, Wyo. This difficulty is exacerbated if a relocation strategy has not been thoughtfully designed to competitively capture talent (every HR person in Cheyenne is fervently nodding their heads in agreement right now!). If you are with a firm nestled somewhere along the Lewis and Clark trail, this article is for you. For readers in major metropolitan areas, don’t get too lax – an innovative relocation design will save you a ton of money, and will be an invaluable recruiting tool on those occasions when the right candidate isn’t in your backyard.
Building the right relocation protocol for your firm requires creativity, planning and, most importantly, empathy (one of my favorite words). It happens all too often: A company finds a great candidate and then haphazardly conjures up an uninformed relocation “lump-sum” hoping that provision will resonate well with the candidate. Of course, at the presentation of the lump-sum offering, the candidate feels like he’s just been served a midnight meal at Denny’s and is not impressed. If he has relocated before, he has probably seen relocation designs that are more thoughtful and has no intention of uprooting his entire family for what seems like a half-baked benefit. No creativity, no hint of planning, and no evidence of concern from his would-be employer. Clearly, this is not the way to attract someone to Cheyenne.
Here’s my advice: If you’re in the practice of issuing lump-sums, take this opportunity to build a creative and empathetic relocation formula that addresses various relocation related events, the extent of which depends upon the level of the position. This is typically called a “tiered relocation protocol” and it is designed with the intent to meet certain needs by allocating would-be lump-sums into distinct benefits within the total relocation architecture (again determined by grade levels within your organization). By doing this, you present a more sophisticated, attractive, and empathetic offering that is cost-neutral. You might even realize that your lump-sum issuances have been too liberal when you begin to allocate them across distinct benefits. Tiered relocation may end up saving you some money. Further, tiered relocation designs help to establish equity within your relocation program and foster greater fiscal accountability because they operate, to a great extent, on a reimbursable or direct-billing basis.
Let’s consider the example of a generic $15,000 relocation lump-sum (a somewhat average amount). How might this benefit be allocated in a more competitive, equitable, and accountable way? As you review, keep these key characteristics in mind (Note: these are features intended for a median relocation package. Again, benefits would be tiered according to position levels):
- Household goods transportation (Maximum benefit=$3,000): A very convenient and stress-relieving benefit. Either you contract the moving company or reimburse the transferee after the move. Funds remaining=$12,000.
- Temporary living at destination (Maximum benefit=$3,000): This provides 60 days of destination temporary living, either on a direct-billing or reimbursable basis. This benefit allows transferees and their families an opportunity to seamlessly settle into an area while awaiting their household goods shipment, and while seeking permanent housing. Funds remaining=$9,000.
- Pre-move visit (Maximum benefit=$2,000): This important benefit often provides a three-day visit to the destination city before the move, allowing families to begin arranging temp or permanent housing. The benefit typically includes hotel stay and airfare. In most cases, the pre-move visit is extended to the new employee and their spouse (if applicable) only. Again, this can be issued directly by the company, or reimbursed at the time of hire. Funds remaining=$7,000.
- Home sale closing costs/lease break assistance (Maximum benefit=$4,000 or $1,000, respectively): This benefit exudes sincere concern for the potentially stressful hindrances related to vacating or selling a home. My recommendation would be to issue this benefit on a reimbursable basis only. Funds remaining= $3,000-$6,000.
- Miscellaneous allowance (Maximum benefit=$1,500): This is a one-time allowance typically issued after acceptance of a job offer, and is intended to offset costs associated with sundry or unforeseen relocation-related expenses. Funds remaining=$1,500-$4,500.
Relocation is a recruiting tool! It is a critical feature for competitively capturing the best talent. Further, it’s an excellent negotiation tool that allows for moderate adjustments to various benefits in a way to encourage offer acceptance, without affecting salary in many cases. The advantages really are compelling when you begin to implement this important philosophy.