| Relocation
- a necessary inconvenience or an inconvenient necessity? |
Are
you an owner operator with a good management candidate living hours
away, or a VP of Operations in a multi plant organization thinking
about promoting and transferring a successful employee? Perhaps
you're contemplating moving to a different part of the country for
career or family needs.
Although most companies in our industry don't have a formal relocation
policy, as the temperature increases many professionals consider
relocating. Approximately 50% of moves take place during the summer
to minimize family disruption with school age children, says Sanderson
Doyle, of Nelson Westerberg, a Chicago Atlas agent. So now is the
time to explore this topic. |
Real
Estate Woes
Real estate can turn a routine move into a stressful event. If the
transferee is renting there may be a lease break penalty and loss
of security deposit at departure, plus monies needed for deposits
at the destination. But if there is a home sale it's a different
process. Not only is the real estate brokers' commission an expense,
but also until the home is sold there can be two monthly payments
to contend with.
A $175,000 home will generate about $13,000 in sale closing costs
(brokers commission and attorney fees), and about $3000 (1.5 to
2% of purchase price) in purchase closing costs. A common question
regarding the relocation of a home owning new hire is "who
(employer or candidate) pays the closing costs?
Like most ambiguous negotiable questions, "it depends".
Does the candidate need to move for family reasons; does the employer
need a general manager who can turnaround an unprofitable plant;
does the employer need a plant manager who can reduce productive
labor a few points? |
Financial
Options
There are some financial options that can be considered to make
the move an economic win-win. |
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The
employer reimburses the real estate commission while the transferee
accepts the tax liability for the reimbursement. |
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Employees
can forfeit an arbitrary portion of first year bonus opportunity
to off set any reimbursement of closing costs. |
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The employer and candidate could split the closing costs, however,
the candidate should negotiate for a 6% broker's commission. |
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Consider using a third party relocation company to orchestrate the
process. They can restructure the broker's commission, monitor the
agent selling activity, and even use an I.R.S. allowable procedure
that can eliminate the need to "gross up" the reimbursement. |
Relocation
Tips
Following is a list of common terms, their meanings and/or things
to consider when making a move for both the moving employee and
the company moving them. |
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Offer
(or promotion) letter
Spell out the basic details in a letter. There should be some language
regarding repayment of the expenses incurred by the employer should
the transferee resign within the first twelve months following the
move. |
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Craig Lloyd is the managing
principal for laundrycareers.com , a management search firm specializing
in the laundry industry. He holds a degree in Industrial Relations from Rider University and has been a Certified
Personnel Consultant since 1979
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THE
RECRUITERS CORNER - JUNE 2000
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Lease break penalty
Instruct your key employees to include a "transfer clause"
into their lease when they move, renew a lease or get transferred
by your company. |
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Pricing a home
Susan Levy, president of Relocation Connection, an Atlanta relocation
company recommends having several real estate brokers provide a
market analysis. Listen to the selected agent's suggestions on improvements,
giving allowances to a buyer, and elimination of clutter in and
around the home. |
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Household goods transportation
This is a non-taxable item if the employer pays the mover directly.
Get three estimates and consider a moving company that lets you
pack the goods, charging only for the move itself. If the transferee
has minimal goods, orchestrate a rental truck or trailer -
perhaps some plant employees can be hired for the unloading stage. |
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Temporary lodging
A home renter may only need a motel for a week, but a homeowner
will probably need at least two months. Kitchenettes minimize food
expenses. If the laundry has lodging accounts perhaps a trade-out
is available. Funds provided the transferee for this expense are
considered income (taxable). |
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Day of travel
If a third party mover is chosen for the final move, their timetable
of travel may be longer than the transferee since they typically
fit two or three customers into the same truck. |
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Goods in storage
A moving company will assess an additional charge to store goods
- then deliver them. |
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Return trips home
A home selling transferee will need to return home about twice a
month to see the family (a happy employee is a productive employee)
and monitor the home sale. If distance prevents driving, research
the best airfares - "back to back" ticketing, creative
airport locations and advance ticketing. |
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Spouse income
Often the ideal transition is a temporary part time job for an employee's
spouse while they get acclimated to the new location. The hiring
employer should inquire about their needs and provide a list of
contacts. |
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Lump sum payment
Many employers prefer to provide an arbitrary amount of funds, sometimes
in two or three installments. They can be used for a portion or
for all related expenses. The figures committed to should be in
"net" terms as the government considers this taxable income. |
When all
else fails remember to put yourself in the other person's shoes. As the
employer, think about the emotional stress of moving and, as the candidate,
spend your employer's "money" as if it were your own.
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