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What Is a Reasonable Relocation Package?

Have your eye on an exciting work opportunity, but it’s in a new state? Ready to make a move within your company that requires relocating to an office in a different city? People relocate for jobs all the time for various reasons, yet one of the main things that people question is what the cost of the move will be.

 If you’re looking for a job out of state or are negotiating the terms of your contract, you may want to know, what is a reasonable relocation package? Primary factors often included are costs for: 

  • Transportation to get to your final destination
  • Temporary housing accommodations
  • Home sale or lease-breaking assistance
  • Storage unit(s)
  • Moving company or rental moving truck

As you determine the details of the job, make sure the costs of what’s covered under the company relocation policy are made clear. Consider what you think is reasonable for the position and proximity of where the job is from where you currently reside. Will the higher cost of living justify a higher salary? Are taxes higher in this new state? Does the package consist of corporate housing arrangements or fully furnished apartments to choose from? These are common factors to consider when it comes time to discuss relocation benefits.

Understanding the Types of Relocation Assistance Packages

With each moving expense that’s covered, ask if there’s a specific amount allocated for each line item or if there’s a lump sum that’ll be fully reimbursed as the relocation package amount. Common relocation packages include a lump sum, reimbursement, direct bill, and third party relocation. Moving can be an expensive ordeal, but if you know what to ask for and what to expect from common employee relocation packages, it’ll help you feel more comfortable with your final decision. 

Lump Sum 

This type of relocation package is the most popular and the most straightforward. In a lump sum or one-time payment scenario, the employer allots a set allowance for relocation costs in advance. The employee can use those funds however they wish and keep what they don’t spend on relocation expenses. It encourages the employee to research the most cost-effective moving services and solutions to meet the lump sum budget and/or have a bit of cash left over to save for another day. Given that the cost of moving can be a bit pricey, especially for those on a budget, being able to manage the moving expenses with a set allowance is a common and beneficial part of relocation assistance packages.

Reimbursement

Though the employer funds the relocation costs, the employee must pay for them first and be reimbursed at a later date. This requires budgeting for moving costs as well as organization to properly track associated expenses. It’s important to keep up-to-date documentation and receipts of everything to turn in for reimbursement. Speaking with the hiring manager ahead of time to clarify which items and how much of the costs will be reimbursed is crucial. Working off assumptions may result in a bill that’ll you have no assistance with paying. And you don’t want to worry about these out-of-pocket expenses right before you start your new job in a new city.

Direct Bill

Some companies prefer the efficiency of a direct bill model. The company hires and pays a mover directly, in addition to any other agreed-upon moving services. This is helpful to the employer if they have a contract or agreement with a certain company and receive a discount and it keeps the costs more equal across the board. It’s also beneficial for the employee since it eliminates the stress of researching moving companies and comparing the costs of relocation services. 

Third-Party Relocation

Similar to direct bill, the hiring company takes care of the moving expenses from their end, but they handle it through a third-party moving coordinator. This outsourced organization handles all of the logistics with regards to the relocation program, which may include assistance in selling a current home, setting up employment for a spouse, and other customized services based on the needs of the employee. The third-party relocation is the most flexible when considering the individual’s move and is beneficial in the sense that it is handled by those completely outside of the company, taking the burden off of the employee and employer.

Negotiating a Relocation Package

When it comes to negotiation and a new job, the first thing that typically comes to mind is negotiating salary, but what about the relocation package? Regardless of the type of relocation package your soon-to-be employer is offering, don’t be afraid to negotiate the relocation package to address your personal moving needs. Oftentimes, companies set a “one-size-fits-all” allowance that does not take into account that people live differently and will, therefore, have varying moving necessities. In addition, certain states, for instance, are more expensive than others. For example, a furnished apartment in San Francisco is likely more expensive than apartments in, let’s say, Montana. 

It’s just as important to negotiate the details of relocation when moving for a new job, and in doing so, the moving process will feel far less stressful. The relocation negotiation process may seem daunting when you don’t know exactly what factors go into the big move. Here are a few key questions to help you better understand and negotiate the contents of your relocation package:

What Will You Need For This Move?

Doing research and laying out a blueprint for the big move with everything in mind is vital – from considering how far the move will be and even down to moving assistance. Taking note of what the move will consist of and having a clear understanding of how to address your moving needs will make the negotiation process much easier. For example, if you know that the move is cross-country and will take multiple days and a decent amount of gas expenses to get to your destination, it is important to take these expenses into consideration and communicate them with your soon-to-be employer, among all of the other moving costs.

How Much Are You Looking at Spending For This Move?

The cost of a move will likely vary from person to person, especially when the move includes families. If you don’t have a ballpark estimate of what your moving costs will be, you won’t know what price to begin your relocation package negotiation. The last thing you want during your relocation for a new job is an additional stressor of underestimating relocation expenses and then being left with extra expenses that are not covered in the end. 

What About Your Current Residence?

In the process of up and moving to a new city, there are additional expenses when it comes to either selling your current home or breaking the lease at a current rental property where you are residing. Consider what these costs may be (real estate commission, agent commission, closing costs, or lease-breaking fees) and highlight these expenses in the negotiation of your relocation package. Will the employer cover these costs as well? And if so, to what extent?

By considering each of these questions and determining your needs, you will be able to better negotiate the relocation package your future employer has offered, and in doing so, tailor the package to your moving necessities.

Confirming the Details of the Relocation Package

Now that you know the various common relocation packages, what should a standard relocation package include? Well, it’s largely up to the employer to determine the relocation policy and benefits. Companies typically have a set relocation package as part of their policy, but some may allow the employee to choose or customize the option. You might even find that some include everything from lease-breaking fees of your current apartment to covering the cost of furnished apartments for temporary housing. Regardless of the type of relocation package, the number one thing to keep in mind is to confirm the specifics of payment and allowance. 

The amount covered is typically determined by the size of the company, the level of the position, and the full terms of the hiring agreement. Many times the offer of relocation preparation and assistance is indicated in the job description itself or within the first conversation about the position. If you’re moving roles within your own company but to a different location, speak to your Human Resources manager or relocation representative for clarity of what is available.

In a one-time payment situation, it makes it easier to address specifics than with other options, but if the amount seems lower than what you expected, be prepared to negotiate by researching the costs of moving expenses. Once you have a clear understanding of how much will be covered as part of the relocation program, you can cross that line item off your relocation checklist and start to budget accordingly to make the most of the money being spent. 

Relocation packages are part of hiring benefits that allow employers to stay competitive and attract top talent from around the country. Having a general knowledge of what to expect and the number of expenses you may incur will allow you to negotiate more freely or set your expectations to better align with what a company is offering in their standard or executive relocation package.

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