You’ve survived two rounds of telephone interviews. You’ve met face-to-face with your new colleagues twice. You’ve been given every indication that an offer will soon follow. You even have your salary negotiation planned out.
But your work is not done yet. There is one other item you’ll need to negotiate that can be even more important than your initial salary.
You still need to think about what you need in your relocation package to make the move work for you and your family. Even though you’ve been told this employer has a generous plan, you still don’t know what that means.
Here’s what you need to know to make sure that the relocation package you accept is one that will help you prosper in your new city.
Why Companies Offer Relocation
Hiring new employees is very expensive for any company. The more time it takes them to find a qualified candidate who’s also a great fit for the company culture, the higher that price tag is likely to be. At the end of a long and exhausting search, it may turn out that the right person is the one who lives five states away.
Filling vacancies by moving an existing employee from one location to another is always a good option. However, most employees wouldn’t consider making that move without some increase in compensation to cover their costs.
According to the 2018 Atlas Van Lines Corporate Relocation Survey, 79% of companies offer domestic relocation and 77% offer international relocation packages. Also according to that survey, companies with more than 5,000 employees relocated an average of 200 and 399 employees in 2017.
Relocation Payment Packages
There’s a very good chance you could receive relocation assistance if you ask for it. There are four “standard” types of relocation payments that companies offer.
Some companies will ask what it will cost you to move and offer a lump sum payment based on that. This fixed payment can be given to you at the time you sign your offer letter, with your first paycheck, or at the end of a probationary period.
Be very careful with this option. That lump sum is fully taxable, so unless the company has “grossed it up,” it’s actual worth is going to be far less than you think.
We’ll cover some of the actual costs associated with a move a little later. Unless you but you’re also likely to find those costs add up to much more than you were expecting.
Some companies offer reimbursement for your move. In some cases, they may put a cap on the amount, but in all cases, the company will only reimburse you for the expense type they have agreed to cover IF you have receipts.
Relocation Partner Billing
A company that has a relationship with a relocation firm may insist that their partner handle your move. This moving coordinator will handle everything for you and bill the company directly for their services.
These services can extend beyond just handling your physical move. They can include arranging for temporary storage or temporary housing for you and your family and so on.
Perhaps the least popular type of program is a direct billing relationship. This is where the company would take over for you and locate and pay a mover for you. If it’s included in your package, they would also find you temporary housing, deal with the realtor selling your house, etc.
You’ll notice the types of relocation packages offered only referred to how the relocation benefits would be paid out. That’s because what is covered in the package is far more individualized.
What a company offers a newly-graduated data programmer is likely to be a lump sum relocation deal. For an executive who owns a home and has a family, the relocation package is apt to look much different.
Here are some of the items that can be covered in a relocation package:
As previously mentioned, most companies will offer some form of payment to get you from point A to point B. However, the costs and benefits here are not cut and dried. Moving costs can also include the cost of boxes, and help packing and unpacking.
According to the American Moving and Storage Association, the average interstate move cost $4,300 in 2016. This was for 7,400 pounds of items moved.
Moving costs also include your expenses on the road. Do you need to ship a second car? Are you traveling by car, train or airplane? Those costs should be included in moving costs as well as hotel room charges on the road.
Temporary Lodging Costs
Your new employer has spent a lot of time looking for you. Now that he’s found you, he undoubtedly wants you on the job as soon as possible.
If you’ve owned a home before, you may be anxious to explore your new city and either buy or build a new home. Because neither of these options can be done overnight, providing a hotel room or rental unit for you to live in when you first get to town is also a common piece of a relocation package.
Assistance with Home Selling
If you currently own a home, your new employer may offer some level of assistance selling your home. Paying your realtor’s commission and some or all of your closing costs are very common benefits.
At an executive level, it’s not uncommon to find a company offering to buy the new hire’s house. Typically these deals are set up as either direct reimbursement deals or a guaranteed buyout or a buyer value option. Here’s where you can find more info on these options.
In some instances, a company may also offer assistance for your partner or spouse who will need to find a new job in your new town. They may also offer help through a local relocation service that will help you find an apartment or buy a house.
Negotiating Your Relocation Package
The key to negotiating the right relocation package for you and your family is to have a good idea of what it’s going to cost you to move before you start talking. When you add up costs in all the areas above, this is a significant expense and well worth the effort.
If you’ve already accepted a job offer, it may be harder to get that conversation started. It’s still possible to go back and ask for assistance since this is a one-time cost for a business.
If you find yourself starting to stress more about this upcoming negotiating, here are a few tips to help you regain your inner peace.