Table of contents
- Creating an international employee-relocation package
- Quality relocation support for expat employees
- Relocation package structure
- Which benefits to include in relocation packages
- How to administer an employee relocation program
- The bottom line
Relocation packages are an essential component of every global mobility program. They can range from being basic to comprehensive, depending on the circumstances and the talent. You don’t need an extensive budget to offer relocation support to international employees. That being said, they’re an effective tactic in global talent acquisition and for certain roles, higher investment is warranted. This short primer will provide an overview of how to structure global relocation support packages and what benefits to include in them.
Designing an international relocation package is challenging, but it's extremely worthwhile because it leads your company to new growth opportunities that leverage unique legal, financial, and physical advantages on a global scale. A well-designed employee relocation package is also instrumental in identifying current employees or new prospects who are boldly willing to go the distance to extend your company's reach and profitability.
Moving across borders increases the stakes for both your company and your employees. Thus, your relocation-support services must match that risk. Increased benefits and compensation should reflect this in direct or slightly higher proportion to the challenge. What exactly should be included in relocation packages varies, but there are key principles to keep in mind to ensure that the venture is lucrative for both your organisation and the employees considering relocation on your behalf.
Assimilating to a new culture is usually the most difficult challenge your employee(s) will face. Even when they already have some skills in that region's language, the adjustment to a new way of life can be very challenging for them and their family. These cultural challenges can easily impact an expat's mental health and emotional well-being as they find their way into a foreign land, sometimes for the first time.
Employees who express high adaptability, and even employees who are single, may be less inclined to report the private difficulties they encounter when making the transition. Proactivity will thus go a long way to make sure that they feel valued and respected as a member of your company's team and not just an instrument for its advancement. To this end, making accommodations with expat groups at the new destination proves to be a simple but highly effective way to give your employees a familiar social fabric and help them ease their way through culture shock.
Even though relocation packages will necessarily vary, there are tried-and-true structural models that simplify the process while allowing for circumstantial flexibility. Financially, the major difference to consider is how the benefits will be received:
- Lump-sum plans – giving cash payouts at predetermined intervals and/or after certain achievements;
- Reimbursements for expenses as they arise;
- Comprehensive plans that take a broader range of situations into account.
Because the latter will give more control over the use of relocation funds, it is most often the preferred method chosen by international relocation experts. The two most-often used models for relocation expenses are the core-flex model and the tiered model.
The core-flex model
The foundation of this model is that the employee must receive compensation for the most obvious and unchanging relocation expenses – this includes travel, shipments, food, housing, certain cultural integration services, and other foundational needs. In addition to these core expenses, the employee has access to further optional benefits that they can choose as their journey unfolds while acquiring the first-hand knowledge necessary to make well-informed decisions. This might include more option-based and culturally relevant considerations, such as local transportation methods, time off, insurance, medical services, etc.
When done wisely, giving your trusted employees wider discretion can accomplish two things:
- Your employees can research the best, most cost-effective strategies to fulfil less fixed needs when they are physically present at the destination, saving your company valuable research time;
- Each employee has a financial incentive to make the best decision for both themselves and the company.
Additionally, customising benefits in this way gives employees a greater sense of value, with their feedback and autonomy being an important part of the process. When done right, this results in lasting employee satisfaction and loyalty, which is essential when maintaining the highest-value candidates possible.
The tiered model
Tiered models also balance fixed and flexible benefits but do so with a tiered system built around how high of a position the employee has within the organisation and how expensive relocation is according to different regions. This creates more structure and allows even greater control over employee relocation costs, given the scalability of your relocation packages. Essentially, it is more accurate to say that a tiered model is a system of relocation packages. It is thus well-suited for companies that have extensive international relocation plans. For example, it allows a method to distribute funds just as quickly and easily to entry-level employees as to C-suite executives.
Which model is right for you?
The frequency of international relocation is the main consideration when considering which of the two models to adopt. If you are only relocating one or several employees, a core-flex model best suited for their needs will suffice. On the other hand, regularly relocating many employees means that your time and effort are best spent forming a tiered system of plans for ease and scalability. The exception to this is if you don't have the need to allocate relocation expenses differently according to seniority. For example, if senior managers were hired with an expectation of extended travel and already have such compensation worked into their salary, a non-tiered core-flex model would work even at scale.
With clarity on the size of your relocation-expense budget, you'll want to advertise and allocate those benefits in the most attractive way. Doing so goes a long way in retaining the most qualified personnel and maintaining a more competitive position in your industry. Set your goal to deliver the support your employees need as easily and quickly as is reasonably possible while still giving them the motivation to remain dedicated to your company's growth. To create an international compensation package that keeps your employees secure and eager to serve your mutual interests, carefully balance the following elements:
- Moving expense reimbursements. Take moving services, mover's insurance, transportation, and shipment costs into account as precisely as possible. Base this on clearly established expenses for the region involved – but make a judgement call whether to give them a lump sum upfront or reimburse them after receiving a standardised expense report instead.
- Travel visas & immigration services. Most typically, it's the company that is expected to take as much initiative as possible to ease the bureaucratic and administrative work required to properly fulfil the destination country's legal requirements. This includes setting up appointments and handling paperwork wherever possible.
- Housing & living expenses. This could be quite simple or complex depending on whether the employee is willing to accept pre-selected housing options, the complexity of transportation arrangements, and how much temporary housing must be accounted for. Also, account for food, medicine, and hotel stays while searching for the right housing. If temporary accommodation (such as extended hotel stays) is a factor, most relocation packages cap this at 30 days.
- Family support. You must take into account whether your employee or candidate has people who depend on them. Assistance for childcare, helping a spouse find work, finding quality schooling, and related benefits go a long way in helping your employee minimise relocation tasks.
- Cultural training. Language classes and cultural events are important to help your expat employee make a smoother integration into their new culture and be happier while doing so. Your employee will experience fewer psychological disruptions and be more focused on their work.
- Cost of living. Some companies offer salary adjustments or relocation bonuses to cover the cost-of-living differences between countries. Alternatively, companies might remove or reduce obstacles to promotions or raises that will exceed the cost of living.
- Local orientation services. This is not to be confused with cultural training, as mentioned above. Local orientation services provide fast and efficient education in important nuances of local city life you are unlikely to fully inform them about. It helps expats feel more confident if they have a veritable tour guide to show them how to use local services and share tips related to local housing, shopping, entertainment, natural attractions, and public transportation. Your employees will need help doing things like opening bank accounts, obtaining insurance, setting up a phone, and other simple things that could become extremely time-consuming without local support.
The best incentive packages for international relocation are obviously going to be finely attuned to the local culture – but they also must stand out from similar packages offered by competitors in the same industry and location. You'll need to either dedicate a large amount of time researching these matters on your own – and possibly still fall short – or hire the services of a highly experienced relocation-services provider who can design the perfect relocation packages and written policies. Only then will the relocation process be as clear and efficient as possible for everyone involved.
Interdepartmental cooperation is key to administering employee relocation programs. When forming your relocation packages, frame what is and isn't possible from the beginning by compiling feedback from all relevant departments and decision-makers, and inquire with the major internal stakeholders, such as the CFO, COO, and CHRO. Then, get feedback from your talent acquisition managers, HR and HRIT department heads, your legal counsel, and external service providers.
Get their opinions on the following issues and more:
- Legal, tax, and immigration barriers
- Talent acquisition needs and prospects
- Available funds & resource mobility
- Relocation opportunities
- Partner organisations & corporate alliances
Although much can be gained working fully in-house, international relocations are most efficiently accomplished with an experienced relocation service provider. This alone relieves your business of an enormous burden of time and expense while giving you the incomparable advantage of having someone 'on the inside' of the destination you wish to establish yourself in. All the effort in the world likely wouldn't make up for the advantages achieved by hiring someone already familiar with the ins and outs of the local business climate, and your candidates will have a much smoother experience overall.
Creating an effective recruitment package can be quite confusing at first, but it doesn't have to be. The challenges of international relocation are more than made up for with the extremely wide range of options that open up to those who can effectively compete in global recruitment markets. By understanding the needs of your international candidates and partner organisations, your recruitment packages will stand out from the competition. This is the only hurdle to attracting the best and the brightest candidates that the entire world has to offer, not to mention ongoing employee loyalty and satisfaction.
Developing a high-quality international relocation and recruitment package is one of the most significant strategies you can do for the long-term success of your company.
Discover more about how you can maintain the sharpest competitive edge in a global economy with a custom benefits package from Localyze – your trusted source for international relocation services with a proven track record.