Corporate relocation: When does it make sense to relocate an employee?

Today Living Group relocation corporate housing

Relocation is a big deal for employees and the organization.
How do you know it’s the right decision?

These days, we hear a lot about ‘global mobility’ and ‘world citizens’, but the truth is that relocating an employee from one country to another – even from one city to another – for a short- or long-term assignment is still a major move for most people, and for the organizations they work for.

Most of us know that moving is one of the most stressful activities a person can undertake. While losing a job is also considered to be one of the most high-stress events in  a person’s life, it’s also understood that simply changing jobs can also be a big stressor. And that’s just from the employee’s perspective.

For organizations, relocating a key employee can have a significant impact: The lost of short-term productivity, the potential gap left behind, the possibility of an unsuccessful (and expensive) assignment – all of these can affect the organization as a whole.

So how can HR professionals determine whether relocation is a good idea?

First, identify the opportunity

First, it’s crucial to identify the potential operational benefits and costs to the organization:

  • Can the relocating employee bring something to the new location that no one else can (at least in the short term)?
  • Does the employee have skills and/or experience that aren’t readily available in the new location?
  • Can the employee do a more effective job of translating the company brand/mission/business goals than a new employee in the new location could?
  • Can the relocating employee facilitate replication of their skills and experience to the new location?
  • Do the benefits of legacy knowledge outweigh the organizational costs of relocation?
  • Can business leaders see a clear win at the end of a specific amount of time?

Costs are always a consideration

It’s important to remember that ‘costs’, in the context of a corporate relocation, aren’t just how much the organization might spend on transportation or moving allowances. There are all kinds of other, sometimes hidden, costs that should also be considered.

  • Remuneration differential: The cost of living can vary greatly from country to country and city to city. An annual salary of $150k in a mid-sized Canadian city might equate to a salary of $350k in a high-cost city like Manhattan, or $50k in Thailand. (And it’s important to provide the relocating employee with sufficient remuneration to maintain the same standard of living they were enjoying in their original location.)
  • Moving costs: Some companies offer relocating employees a lump sum to cover moving costs; others use relocation companies who will arrange moving and housing and then bill the organization directly. Both options have advantages, so it’s important to know the details of both
  • Housing costs: Some organizations are able to provide the relocating employee with local housing or arrange for corporate housing for a finite period. In other cases, it may make more sense to allow the employee to choose their own housing, and let the organization accommodate this via a housing allowance or a remuneration adjustment
  • Relocation services costs: Some organizations, especially those with multiple employees working in locations around the world, outsource the relocation process (from moving to housing to settling in and language training) to specialized relocation companies. These can take the burden of relocation administration off HR, but tend to be more costly than trying to do it in-house

Examine the risks

Relocating a top employee can have great benefits for the organization in the short- and long-term. However, even the best-managed relocation assignments can go south, and it’s important to acknowledge the risks ahead of time, including:

  • Is the employee enthusiastic about the move? Talking a reluctant employee into a big move can mean a loss of productivity – or even the loss of the employee
  • Is the assignee’s family on-board with the relocation? If spouses or children are involved in the relocation, they’ll have a huge effect on the ability of the employee to settle in and be productive in their new location. Offering support for spouses and children can help offset the stress on the family
  • Are you providing sufficient incentives for the employee to stay with the company long-term? A poorly-managed relocation – or an employee who is initially okay with the move but becomes dissatisfied over time – can leave top talent vulnerable to poaching by competitors
  • Is there an exit strategy for the employee and the organization, if the relocation doesn’t work out as planned? Sometimes, relocations just don’t work out, even with the best of intentions and everyone trying their best. There should be a plan in place for next steps if things go south.

 

A bit of planning makes a huge difference

It’s a cliche, but it’s true: The most successful relocations happen when HR is given – and undertakes – a mandate to think through a potential relocation from a strategic, cost/benefit, and risk management perspective. The more pre-work is done, the better any relocation will go.