By Teresa Hundt
Congrats! You are through the interview process and have made a hire. The questions have been asked, the answers have been great, the tour went well, and a compensation package has been agreed upon. Then you get to the part no one likes: Relocation.
This is the next challenge that can pop up when finding someone for a tough search. Some companies execute this step flawlessly, making a new employee’s transition easy, but some are less successful. Poor – or nonexistent – relocation packages can cause a lot of problems, and unintentionally create a not-so-great start to a new employer-employee relationship.
The reality is that moving is always stressful. Whether you are single and just packing up a one-bedroom apartment, or part of a family with young kids and a giant house, moving brings challenges of all kinds. And after that nerve-wracking process, the candidate has to immediately turn around and dive into a new job.
One would think that companies would do everything in their power to make this relocation process as easy as possible on new employees, but that is not always the case.
Relocation Packages basically break down into four general categories:
1. Everything is Taken Care Of!
2. Lump Sum Before Start!
3. Lump Sum or Reimbursement After Start!
4. We don’t do that here.
The first two models here can be very good for new employees and allow the moving process to be a much more positive one. This means they are clear-eyed and ready to make an impact on day one.
The other two models are… less successful.
According to a Yahoo Finance Article published last year, 58 percent of Americans have less than $1,000 in savings, with as many as 32 percent – a third of Americans!- not having any savings. A year later, with the current economy during a pandemic, lots of Americans are in serious trouble with credit card debt and backed-up bills.
And this is where the potential difficulty comes with plans that involve reimbursing, giving a lump sum on the first paycheck after start, or not offering relocation at all. Most Americans cannot afford to pay for the move up front.
Lump Sum or Reimbursement on First Check
Reimbursement or paying a lump sum on the first check seems like they should be enough help at first glance. You are paying for everything!
But the snag is that if your new hire is part of the 58 percent of Americans with less than $1,000 in savings, they have to figure out where that money is going to come from before they can get reimbursed later.
Rather than being excited about starting a new role and the impact they can make, candidates are worried about how to come up with the money to move. Some can apply for a credit card and pay it off upon reimbursement, but even this takes time and can bring issues.
When this is the relocation model, I always have a prolonged conversation with candidates about whether they can make this work, and often, I hear that they cannot. Moving out of pocket is just not realistic for them, unfortunately.
If a client tells me they do not have any kind of relocation for new employees, that can be a big concern when taking a new search.
Not offering relocation means that even if a new employee can pull this off and move without assistance, they are immediately starting their new chapter in the hole financially, and that can be a big burden.
In my experience, candidates that take these jobs and move out of pocket don’t tend to stay at these companies very long. Whether it is frustration festering from having to move themselves, the need to make more money to recover financially from the move, or just that they were desperate and now something better has come along, these candidates typically move on within the first year.
So, if there is no relocation, I normally tell clients that we can only source local candidates.
However, only looking local can greatly limit the talent pool, and might increase the time it takes to find the right candidate. So, I ask them what their level of urgency is to get this position filled, and we have a conversation about the realities of recruiting this way.
Another thing to consider is that if a candidate makes a move that puts financial strain on their family due to no relocation package or money up front, it can force the household to split up for weeks or months even.
Since there is often not enough money to move the entire family in this situation, the new employee moves and stays in a cheap motel near the facility. Then, when they receive funds or save up enough, the rest of the family joins.
For some people, this can be great! They can focus on their new job while their spouse takes care of everything back home. But for others, the stress of being away from their family can cause a big strain on their marriage and parental relationships. This can have a huge impact on all parts of their lives, including their ability to focus at the facility.
So, to avoid all these potential stresses, I usually try to explore other options with my clients.
Is it possible to do a sign-on bonus instead of relocation? What can we do to make the transition just a little easier on a potential new employee?
At the end of the day, if your company can provide any kind of assistance to get the employee and their family safely and successfully moved to your area, that’s money well invested. A little help up front can be a huge step to start a long, productive employer-employee relationship the right way.
Our end goal in all of this is employee retention! We care greatly about our relationships in the industry, both on the client and candidate sides, and want both sides to be happy and content with the performances of each for many years to come. However, relocation is consistently the biggest stress point for our candidates. So, let’s do what we can to make that stress manageable and handle relocation in the best way possible for everyone.
Never Let the Boxes Get You Down!