Companies becoming more selective about relocation aid

By Peter Gray

As an employer, should you offer to reimburse a new hire's moving expenses? How much?

As a job candidate, should you ask for relocation reimbursement? What should you ask for?

When it comes to questions of relocation assistance, the stakes are higher than they used to be. With the nationwide slowdown in the housing market, people are skittish about considering new jobs that require a move, because they are worried about how quickly, and for how much, they'll be able to sell their homes.

According to the Atlas World Group's annual survey, in 2007 about 42 percent of companies paid in full for their new hires' moves.

About the same amount reimbursed selectively and/or partially, and only 8 percent of companies offered no relocation assistance to new hires.

In the last few years, the trend has been away from full relocation support and toward the selective/partial reimbursement approach.

Most of the companies in the first category -- those offering full reimbursement -- are larger companies with established relocation policies.

Case-by-case basis

Most of the companies I recruit for are smaller firms that don't often need to relocate new hires, so they don't have set policies or money budgeted for their new hires' moving expenses.

They end up determining on a case-by-case basis how much to offer new hires, usually in a lump-sum payment at hire.

The main decision factors are:

• How senior the new hire is.
• How challenging it is to find someone with the candidate's skills.
• How hard the employer had to compete for the candidate.

From the job candidate's perspective, securing reimbursement of relocation expenses is a matter of negotiating leverage, as dictated by the circumstances of the job offer.

A candidate who was not job hunting but was "headhunted" by the employer, and is ambivalent about moving to Madison, could reasonably hold out for a rich relocation package.

On the other hand, an out-of-town candidate who's job hunting at Madison companies because she hopes to move here has practically no leverage to ask for relocation assistance.

What's reasonable?

For companies weighing how much to offer a candidate for relocation, what's reasonable?

Here are a couple of recent data points from my own experience.

In one example, a small employer offered a candidate a $10,000 lump sum payment toward relocation expenses. This only partially reimbursed his moving costs. He found this dissatisfying, but still accepted the position.

In another example, a larger but still small company paid for a candidate's physical move plus 30 days temporary housing, at no cost to the candidate (cash value: $8,000-16,000).

On top of that, the employer initially floated a lump sum payment offer of $15,000 to cover other move-related expenses. The candidate countered and ended up winning a lump-sum payment of more than $30,000.
Her main concern was the anticipated realtor's fee of more than $25,000 for the sale of her home.

She was also worried that her home might sit on the market for a long time, and she might be stuck carrying two mortgages for months.

So in addition to the above, she negotiated monthly company payments to cover these costs starting three months out, in the event her prior home did not sell quickly.

I would probably recommend a happy medium between these two examples. My experience is that different candidates have different needs and sensitivities about relocation, so it can help for an employer to start with a guideline but allow for negotiation of details.

Relocation is a big financial outlay for the person moving, and new hires often need assistance just to stay on top of the expense of moving.

Employers who are unaccustomed or unwilling to pay for relocation might consider making a loan against future salary or bonus compensation, to help their new employee with the short-term cash flow impact of moving.

Recommendations

Finally, I'd advise everyone to keep an eye on the big picture. If you're an employer looking to bring someone on board from out of town, think about the future, and be generous in your offer to help with the move.
If you're a job candidate discussing terms with a prospective employer in another city, think about the future and don't be afraid to foot all or some of your own moving bill.

If you notice a pattern in my advice, I plead guilty to being a professional recruiter whose job is to help employers and candidates reach agreement. That's why I counsel all parties to be flexible and accommodating.

Peter Gray is the head of executive recruiting at QTI Professional Staffing in Madison.

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