Relocation help: Reduces the stress of moving

By Dan Emerson  Plants Sites & Parks Magazine: Workforce Solutions July 2003

According to psychologists, the three most stressful events in the average person’s life are the death of a loved one, divorce and moving to a new home. An employment-related relocation may be an especially stressful event, since an employee who is asked to move to a new state, city or foreign country is dealing with two major life changes simultaneously—job and residence. To help employees make the switch less stressful, some form of relocation assistance has become a standard benefit offered by many companies. “A relocation program is really designed to get the employee on the job faster, with fewer worries about what needs to be taking place,” says Susan Schneider, vice president of client relations for Plus Relocation Services, which has offices in California, Florida and Minnesota. Providing some form of relocation aid also makes sense for employers because it usually costs less than recruiting and training a new employee to replace one who has left the company. 

Relocation companies are paid consulting fees rather than commissions to handle a variety of tasks for transferring employees. In easing the burdens of relocation, “it’s not always a matter of money. Often, people are just looking for help from somebody who understands what they’re going through.” 
Susan Schneider, vice president of client relations, Plus Relocation Services

Common forms of relocation aid include: assistance in selling the family residence and finding a home near the new job site; temporary financial aid to help defray mortgage and other living-cost increases; helping with moving household possessions; arranging orientation visits; helping a spouse find a new job; and providing information on local schools and other community resources. The amount of financial and staff resources a company is willing to provide a relocating employee is usually proportionate to the perceived value of the employee(s), Schneider says. Companies generally offer more family-related help to executives and mid-level professionals. 

The Employee Relocation Council (www.erc.org) can provide more information on developing corporate relocation assistance policies.

Mortgage subsidies are another common relocation incentive. The employer may pay a portion of the monthly house payment for as long as three years. Direct payment to the mortgage holder has become the preferred method to avoid negative tax implications for the employee. So-called “trailing spouse” assistance is also a primary form of relocation help. According to Schneider, a recent survey indicates companies spend an average of $2,000 to help spouses adjust to a new location, which may include career counseling, including help with resume writing, job matching and introduction to local recruiters. “We may link them with a mentor or other spouses in the community, to surround them with opportunities,” she explains.

A relocation firm can also help an employer sort through the maze of tax issues related to employee relocation assistance. The IRS considers some, but not all, relocation assistance as taxable income. The cost of transporting an employee’s household goods, for example, is not taxable, but the cost of a plane ticket to the new city so the employee can look for a house is. Sometimes companies will “gross up” their employees—that is, give the employee an extra payment to cover some or all of the income taxes on their relocation assistance. 

Some corporations have set up home sale programs to help employees sell existing residences while providing tax shelters for both the employer and employee, Schneider says. One large employer that moves about 25 employees a year switched from a direct reimbursement approach to a tax-shelter real estate program and saved about $350,000 a year in taxes, according to Schneider. 

As a general trend, rather than “one-size-fits-all” policies, companies have become more likely to use relocation assistance guidelines, which implies a certain degree of flexibility to offer assistance tailored to individual family needs, Schneider says. However, companies usually opt to create a blanket policy to handle the specific needs of multiple employees who are uprooted by a merger or plant closing. Such policies usually include a time frame, she notes. 

Employers also differ in their outsourcing of relocation services. Relocation companies are paid consulting fees rather than commissions to handle a variety of tasks for transferring employees. In easing the burdens of relocation, “it’s not always a matter of money,” Schneider says. “Often, people are just looking for help from somebody who understands what they’re going through.”

Sherry Bromley, staffing manager for Minneapolis-based Toro Co., agrees that personalized service is an essential element of an effective employee relocation program. In the past, the equipment maker helped employees relocate to a new home by shipping their household goods through the company’s traffic department. It was a relatively impersonal approach to providing relocation services that would often involve several people within the company dealing with the relocating family. 

A few years ago, Toro’s HR department changed its approach, assigning one person to work with each family and ensure that their needs were met before, during and immediately after a cross-country or international move. Employees and their families clearly prefer the more personalized approach, Bromley says. “They like the fact there is a person here at Toro, or the relocation company, they can be in contact with all of the time. If they need to get something (specific assistance) authorized, they know who to call. It’s a more personal approach that really takes a load off their minds.”

SuperValu, the Minnesota-based grocery store chain, has a three-tier program providing specific relocation assistance to employees, depending on their position: executive level (vice president and above); middle management (managers and directors); and entry-level professionals. SuperValu also provides an allowance for “miscellaneous” relocation-related purposes for employees to use at their discretion, according to Nancy Stevens, director of staffing. SuperValu outsources much of its relocation assistance through consulting firms such as Plus Relocation, including real estate matters and moving of household possessions. Providing financial assistance to defray closing costs and other expenses through a third party helps ensure there are no tax consequences for the employee. Outsourcing also eliminates the ncessity “for our HR people to be real estate professionals,” Stevens notes. SuperValu annually reviews its relocation benefits package, comparing it to those offered by similar-size corporations, using information provided by various sources such as Wisconsin-based Runzheimer International. The goal is to provide relocation benefits that are competitive with other employers, without being an unnecessary drain on resources.