Relocation: a moving story

Money still talks with location-based rewards. But with greater emphasis on work-life balance, the quality of life agenda now has a major influence on what employers offer staff who are relocating.

Softer benefits in the form of support – and the cost need not be prohibitive – can make or break an employee’s decision to move as much as guaranteed home sale schemes and mortgage differentials.

“We want to make sure employees feel good about soft benefits. Hard cash might have done it a few years ago, but it’s about more than that now,” explains Lis Gray, personnel services manager at Waitrose. She believes the current emphasis on education and children is “the only thing that’s substantially changed” in relation to relocation perks in recent years.

Powerful incentives

In-depth neighbourhood and school searches, careers counselling for partners, shortlisting a selection of possible new homes – these high-quality support services are powerful incentives, says Simon Price, client services director at Sterling Relocation.

“The biggest challenge for any family is finding the right school. Getting a place for your child in a good state school is actually more difficult than getting a place in an independent one. Offer a reconnaissance visit, an orientation trip and, as part of or on top of that, a formal school search,” he advises. “A school search should be offered to everyone as a prerequisite to any move.”

Help with these softer issues need only amount to “a few pennies in the corporate structure”, says Stuart Mitchell, senior partner at Business Moves Advisory Centre.

But that’s not to say big money rewards don’t have their place. Indeed, they’re still critical to the mix. London weighting on salaries, for example, is still popular, according to Ben Frost, reward consultant at the Hay Group. “At a certain level – middle managers earning above £45,000 – you tend not to see it,” he says.

“London weighting is not being explicitly stated as it once was, but simply reflected in salaries. The fact someone is expected to work in London is equivalent to about £3,000 [on top of any salary],” he adds.

And London isn’t the only region commanding pay rewards. There are other geographical hotspots in which employers in particular sectors are having to offer premiums to get the right people in post – for example, IT and telecommunications organisations based along the M4 corridor from Heathrow to Swindon. “Effectively, companies are fishing in a London market and paying salaries as if they were working in London,” says Frost. “The Trafford Centre in Manchester is another. Some retailers need to go near [London] Oxford Street levels to get people.”

Alongside pay, offering support with house sales and property rentals continues to be a common reward.

“Some companies are offering key personnel a full home sale service, with a guaranteed home sale and the capital funds to put toward a new home purchase,” says Price.

Financial help

Likewise, companies are offering mortgage differential payments to employees moving to areas with higher property prices.

“Most employers will cover the extra cost of buying a same size house but cap it at, say, £50,000 or even more, and perhaps pay it over the course of seven years,” explains Mitchell, who says the norm for one-off ‘upset’ payments for moving can be as much as 15% of the employee’s salary.

The other potentially big cost item employers face is tax. Staff relocation benefits are tax exempt only up to £8,000 – a figure soon reached in the average move. Many firms are bearing the additional tax burden themselves as a necessary carrot to get people to move.

Support for partners

Careers support for partners is another growing trend. “Employers are increasingly recognising that dual careers [finding the partner a suitable role in the same location] are an issue. It can make a difference as to whether a family can pay a mortgage,” says Fiona Murchie, managing director of Profile Locations.

But companies need to be clear about what they are actually offering – for example, by giving a menu of the types of support they can offer. “If it’s in a group move situation, you can get spouses and partners working with career counsellors, and members of the group can support each other as well,” she suggests.

Benefits professionals should consult with the employee up front, and they must be able to take a flexible approach to designing a package, advises Gray. “Our own internal policies are structured to ensure staff are not out of pocket for moving to meet our own business needs. We slot each relocatee into the policy and then take their personal circumstances into consideration.”

Some location-related rewards can be costly, but as Mitchell points out, far better to invest in them properly than face the likely alternative. “If you look at the costs that stack up in relocating someone and their family as opposed to probable redundancies and recruiting, they can be quite substantial.”

Relocation facts

  • London remains the most common destination for relocations, accounting for around 60% of those in the UK.
  • The UK is the second largest international relocation market in the world after the US.
  • China is becoming an increasingly popular relocation destination.
  • More than half of relocations are for a period of one to three years.
  • One-fifth of relocations result in a permanent move.

Source: Sterling Relocation

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