A Guide to Negotiating a Relocation Package
You’ve been offered your dream job – it’s just not in your city. While it’s a big step, sometimes relocating for work is your best bet for long-term career opportunities and a higher salary. Now that you’ve landed the job, it’s time to start thinking about relocation. With relocation costs reaching into the tens of thousands of dollars, you’ll need to know how to negotiate to get the best deal and ensure your move is as smooth and stress-free as possible.
A lot of variables go into negotiating and surviving a corporate relocation, and Moveline is here to be your guide with tips and advice from experts and movers who’ve been there and packed that. Let’s go!
The art of relocation negotiation
According to the Worldwide ERC®, a workforce mobility association, companies spent $9.3 billion on relocations in 2011. As the economy slowly climbs out of recession, the number of companies offering relocation (or "relo” in HR speak) assistance continues to increase. According to the 2013 Atlas Van Lines Corporate Relocation Survey, 73% of companies offered relocation incentives in 2011, a 13% increase compared to the previous three years. So just because you landed a job out of town doesn’t mean you’re on your own when it comes to relocation. But if a relocation package isn’t discussed with your offer, then it’s up to you to start the conversation. Next, we’ll cover steps in the negotiation process, from starting the conversation with your employer to figuring out how much the services you’ll need should cost so you can negotiate the right package for your needs.
Ask for help
Since corporate relocation is on the rise, you should just assume your company has a nice big package all planned and ready to go for you upon accepting your job offer, right? Nope. Don’t assume your company will offer enough relocation assistance – or any, for that matter. Just like in your career, you have to ask for what you want, and that includes all of the services and compensation you’ll need for your move.
Know that moving can be very expensive. Whatever you think it’ll cost, it’ll probably cost more. According to the Worldwide ERC®, in 2012 companies spent an average of $19,303 to move a new hire renter and $70,000 to move a new hire homeowner. This isn’t a time to be shy about asking for help. Besides, you’ll never know what you can get until you ask. And as long as it’s within reason, you’ll stand a good shot of getting it as long as you make your needs clear.
The most important thing to remember is that in the end, you and your company want the same thing: to relocate you in a way that will make you (and your family) happy so that you’ll be free to focus completely on your job without a lot of hassle. Everything about negotiating a relo deal, whether you’re moving on your own or with your spouse and two kids, is about making the move as financially viable and stress-free as possible.
Know what to ask for
Before you start negotiating, get an idea of what you’ll need, including special assistance or services. A new graduate moving from a one-bedroom rental probably won’t have the same needs as a homeowner with two children, a boat, two vehicles and a home to sell. Your employer won’t know or assume what you services you need, so take time to assess your situation and then suggest what services you think should be covered in your relo package. It doesn’t mean you’ll get it, but again, it never hurts to ask. You’ll also want to research how much everything should cost so you know at what dollar amount to start negotiations. As a general rule, everyone underestimates how much stuff they have, and therefore, how much it'll cost to move it. We recommended starting there.
More Money: Understanding corporate psychology
The ultimate goal for most companies is to pay as little as possible to relocate an employee while ensuring they feel comfortable, cared for and ready to hit the ground running in the new job. Another concern (that's less openly discussed) is how the relocation policy reflects on the reputation of the company. Most companies see relocation as a valuable recruiting tool, so a bad or nonexistent policy could hurt their chances of attracting top talent in a competitive job market.
So, what does knowing the company’s psychology around relocation mean for your negotiation strategy? If you've got another offer on the table that includes relocation, but the job you really want doesn't, mention it. Be specific about the nature of the relocation support the competing offer includes, and ask the company you want to work for to match it. The worst they can say is no.
Another handy tip? If the base salary offer is lower than you want, you’re more likely to make up the difference in the relocation package than by asking for a higher salary. Relocation is an area in which companies are more willing and able to negotiate because salary is a recurring expense (and thus a bigger commitment) while relocation is a one-time expense that, in some companies, comes from a different budget. No matter what, remember that companies care about their reputations in recruiting, and want to make the offer attractive so you’ll work for them and not a competitor.
Make your case
Whether it’s moving an employee or leasing office space, companies choose to spend money based on the expected return on investment. The best way to get what you want when negotiating relocation is to explain how the money spent on your move will ultimately benefit the company. Make a case for your request by first explaining why it would be advantageous to the organization and how it’s a win-win for you both.
For example, let’s say the company wants you to report to work in three weeks, but you first need to sell your home. You know it would be almost impossible to sell, move and report to the new job in less than a month. You make a request for home sale assistance and temp housing, explaining these services would free you to focus on the move and ensure an on-time start date. When making the request, word it so that the benefit to the company comes first: “I can guarantee I’ll report to the office by June 15 and be ready for the next product development cycle if you provide home sale assistance and temp housing until my home sells.” Chances are, the company has been understaffed and searching for the perfect candidate for the job, and now that they've found you, speed is of the essence.
Remember, the person you’re working with at the company, whether it’s your boss or someone in HR, will need to make a case for your requests to whomever is writing the checks. Make it easier for them to negotiate on your behalf by providing all the benefits for them up front, increasing the odds that you’ll get what you want. Keep your talking points clean, rational, and concise to win the day.
The anatomy of a relo
Most companies go beyond just moving an employee’s household items. Depending on the company, the package may also include loading, unloading, insurance and full packing. In some instances, the moving company your employer hires will require a full pack in order to provide insurance in the event anything is lost, destroyed or damaged during the move.
According to the Atlas survey, half or more of companies reimburse or pay directly to:
- Pack all items (82%)
- Move a car (80%)
- Move exercise equipment (52%)
- Move a second car (52%)
- Unpack all items (49%)
Moving specialty items
If you happen to have a grand piano, glass top dining table, vehicle, boat or any other expensive, fragile and/or bulky items, chances are you’re going to need special moving services. Standard moving companies may not offer specialty moving and packing in-house, and you may need to contract with a third party mover that specializes in moving and/or building specially-designed crates for fragile items.
Other services and perks
In addition to moving standard household items, roughly 75% of companies, regardless of size, offered temporary housing according to the Atlas survey. Nearly half offered relocation bonuses and 43% included loss-on-sale protection for homeowners selling their home. Even if you're not a homeowner, there are other services you may benefit from, including:
- Moving coordination
- Pre-move visit (to check out housing and schools)
- Rental assistance (breaking a lease, security deposit)
- Spousal employment assistance
- Travel allowance
The Money: Relo package types
Relocation packages and included services can vary greatly depending on several factors: whether you’re an owner or renter, moving as a single person or with your family, as well as the amount of stuff you have to move. What they all have in common is that services cost money. How companies go about providing funds matters to you: some methods only require that you work with a moving coordinator that locates, hires and pays all needed services on your behalf, while with other methods you’ll be responsible for locating, pricing, hiring and coordinating the entire move yourself. Get familiar with the different types of relocation assistance and be sure to plan your move accordingly so you don’t actually end up paying out of pocket (yes, it can happen).
A relo package can take the form of a lump sum, reimbursement, direct bill or third party relocation. As the name implies, a lump sum is when the company gives you a set amount of money to spend however you want in order to get you, and all your stuff, to the new city. A reimbursement is when the company agrees to pay you back for some or all moving-related expenses. Like the lump sum, there’s usually a cap on how much the company will reimburse.
Relo Terms to Know:
Lump sum: a pre-negotiated, fixed one-time payment provided by the company for moving-related expenses. You decide how to spend it, but once the money's gone, it's gone.
Reimbursement: a maximum amount that the company will reimburse for moving-related expenses. Get ready to save your receipts.
Direct billing: when the company pays all or some expenses directly, often used when the company coordinates moving services. This may also be combined with lump sum or reimbursements for miscellaneous travel or rental expenses.
Third party relocation: when the hiring company outsources employee relocation to a relocation services broker that provides management and coordination for all needed services.
In a direct billing arrangement, the company pays directly for moving services and often selects and hires the moving company for you. Finally, with third party relocation, the company outsources all moving logistics and coordination to a moving broker that provides comprehensive coordination for all services. This may include move guidance and counseling, home sale marketing assistance, arranging for storage in the destination city, arranging temporary housing or rental assistance, and spouse employment assistance.
Companies that choose not to outsource to a broker generally use a mix of methods depending on company size and relocation budget. For example, a large company with a sizable budget may directly pay for the entire cost of a full-service move, including moving a vehicle and storage in the destination city. It might also offer a lump sum or reimbursement for all other related expenses, such as a rental deposit, travel expenses and home sale marketing if needed. According to the Atlas survey, small and mid-size firms are much more likely to use lump sums for shipping and storage expenses while large firms are more likely to use lump sums for miscellaneous allowances and bill directly for the move and related services.
To get a feel for why companies choose to go the Direct Billing route, we caught up with HR consultant Marisa Keegan. She says companies that contract with national movers may opt to coordinate and bill directly for the entire move.
“The nice thing from the employee’s perspective is that they don’t have to deal with the moving company at all – their company just pays for it,” says Keegan. Other experts we spoke too said the same: Direct Billing keeps the details out of the way for the incoming hire, with the added benefit of cost-control and oversight.
Mover Beware: Reading the relocation policy fine print
There’s a lot on the line for both you and the company that’s footing the cost. If done correctly, the move should be a win-win for both of you, but there are a few possible scenarios that spell trouble for relocation, so many companies (or their lawyers) build protections into their policies that you should be aware of before the move:
Your new company is making a sizable investment in hiring and moving you, so it’s understandable that they’re going to want some reassurance that after the move you’re not just going quit and go work for a competitor. According to the Worldwide ERC®, 86% of companies require new hires to sign a payback agreement wherein if the employee leaves the company within a predetermined amount of time, say, within a year or 18 months of their start date, they’re responsible for paying back all or part of the cost of their relocation.
A big question to answer if you’re getting a lump sum payment is when the company will actually give you the money. Now? After the move? In six months? In the best case scenario companies will cut a check immediately upon you accepting the offer. Most will put it in your first paycheck while others might pay out at the end of a probationary period. The downside of a delayed payment is that you could lose a big chunk of your savings for a period of time or be in debt to the tune of thousands of dollars until the company pays you back. Make sure you manage your cash flow wisely.
Before you start contracting services and spending money you hope will be later reimbursed by the company, be sure you know exactly what’s considered an approved expense and what’s not. While you may think that specialty packing and moving for your vintage pinball machine collection should be included, that might not be the case. There may be certain things that the company will not cover – even if it falls within the budget. It’s always best to review the approved expenditures policy and attempt to negotiate any extra services in order to avoid getting stuck with unexpected expenses.
Taxes: The IRS wants your relo money
When negotiating your relocation package, remember that lump sum payments are fully taxable as earned income, which means you’ll be on the hook to pay income taxes for that amount at your full salary rate at the end of the year. Most companies will offer the lump sum pre-tax but may be willing give it to you post-tax -- but only if you ask for it. Some will “gross up” – i.e., pay a larger gross amount so that the net benefit, after taxes, will approximate the moving expenses. You can avoid this situation altogether by asking the company to bill directly for moving services. You don’t need to pay taxes on or report payments made directly by the company to the IRS. If the company won’t go for direct billing, you’ll want to deduct moving expenses in your tax return, so be sure to track what you’re spending and keep those receipts. Tax rules can vary and not all expenses are deductible. Contact a tax professional to learn how the move may affect your tax situation. In the mean time, here's a quick link to Moveline's quick-and-dirty tips for deducting moving expenses after you move for a job.
Coordinating your own move
Smaller companies often don’t have the time or staff to make arrangements with a mover on your behalf, so you may end up coordinating the move yourself with your lump sum. The upside is that whatever you don’t spend, you can keep. The downside is that costs can add up quickly and before you know it, that fat check is going to start looking pretty small. It’s important to shop around to get the best price and also find a reputable mover.
Also keep in mind that once you accept the job offer, the clock’s a tickin.’ Most companies will want you to report to the job within four weeks. That doesn’t leave a lot of time to plan your move. The faster you can find a good mover and get it scheduled, the better.
Manik, 24, had been working as a web designer and developer for the 2012 Obama presidential campaign when he accepted a job offer with Fluence, an early-stage tech start-up in San Francisco, that was to begin one month after the election. The company offered a lump sum for him and his fiancé to move from New Jersey to San Francisco. It was up to Manik to figure out a reasonable estimate for the move and coordinate it while keeping the budget in check.
“They offered to give what I needed and only requested that I spend the money as if it were my own,” he says. “I was no stranger to the process of finding local movers, but it got to be trickier with the timeline and getting storage and being able to trust movers with our stuff for days, weeks, or months at a time. I set some strict restrictions for movers because I did a ton of research and knew what was fair and set the budget based on that.”
When Mark, 48, an advertising executive, accepted a job offer from a start-up in his hometown of New York City, he too was given a lump sum and asked to keep costs down by “finding the most efficient way to move up there.”
The lesson here is that even though some companies will pay for the move, that doesn’t always mean they’ll coordinate it or know how much it should cost. When you’re given a set amount of money in a lump sum, you’ll need to know how much the services you need cost and keep tabs on the budget as well as manage coordination and associated risks. Next, we’ll cover how to manage your move and what to avoid.
Avoiding scams and stress
When moving yourself with a lump sum or reimbursement, spend some time researching your options given your budget and moving timeline. When shopping around for moving services, be on the lookout for scams. Call moving companies directly to ask for their rates and availability and make sure those you call are reputable, licensed and insured. For any move, but especially those that cross state lines, be wary of prices you're quoted over the phone. For movers to know how much to charge, they really need to see your stuff; phone surveys are notoriously inaccurate, and while the low-balled quote sounds appealing now, these prices are almost never guaranteed. You pay for how much you move, not how much it sounds like you might have to move.
Keep in mind that finding reputable movers that fit your budget and schedule will take a lot of legwork. Manik spent a month aggressively searching for movers with countless phone calls and a few in-person walkthroughs of his apartment to get estimates and still couldn’t find a company he trusted enough to hire.
“Ultimately they all fell through because they were either faking reviews online or, if they came highly recommended, they charged an exorbitant amount of money – almost four times what I was expecting it to cost,” he says. “It was a really rough situation.”
One way to avoid scams and the hassle of coordinating a long distance move yourself is to hire Moveline, a company that provides multiple guaranteed prices from insured, reputable movers and a “Move Captain” to oversee every step of the process. All services are free to customers since Moveline’s profits come from the moving companies they hire on customers’ behalf.
After his month-long search for movers, Manik’s friend recommended he try Moveline, and in less than two weeks he was contracted with movers and had arranged for storage in San Francisco.
“It worked remarkably well. I recorded a video of my apartment [with my cell phone] and within a day they had my entire inventory. The next day they sent me three movers. I saw all the reviews right in Moveline[‘s app]. I picked one and it was exactly where I wanted it to be, budget-wise.
“They did exactly what I needed in terms of getting my stuff and handling storage and keeping me updated all the way. Moveline rescued my entire move out here. They did an incredible job.”
Finding temp or rental housing
Finding temporary or rental housing from hundreds – or thousands – of miles away can be a huge challenge. If you’re planning to buy a home in the new city or just want time to search locally for a rental, temporary housing may be the way to go. If your package includes temp or rental property location assistance – use it. Some assistance covers the cost of temp housing until you find and purchase a new home or can cover rental expenses like deposits and utility fees, saving you a wad of cash when you get to town. Several resources have come online in the last few years that can make the search for temporary housing easier. Airbnb.com, Sublet.com, and Homeaway.com all list rental properties available by the day, week or month.
If you’re moving to a popular city with a booming job market, chances are lots of other people are too, and you’ll be fighting for a dwindling number of rental properties. Nowhere is that more true than in New York City, which hit a record population of 8.3 million according to recent U.S. Census Data. Luckily, Moveline's put together a handful of on-the-ground reports from locals in a few hot cities to share insights into the real estate market.
Moveline's guides to finding Temporary Housing:
- Learn to speak broker in New York, NY
- Find a sublet in Austin, TX
- Find a sublet in Washington, D.C.
- Find a sublet in San Francisco, CA
When moving to cities like this, online resources (even great ones like ours) can only get you so far. The rest will depend on vigilance, creativity and, according to Mark, a little luck.
Mark first looked for apartments on his own and “hated every second of it.” When he commented about the experience on Facebook, a friend saw it and connected him with an available rental.
So, don’t forget to tap your network – especially when competition is stiff. You might just snag a place before it even hits the market and be the first (and only) one in line to snatch it up.
Setting in and making new friends
Just because you moved for work doesn’t mean you’ll be spending your entire life at work. Eventually you’ll want to get out, explore and make new friends. But if you’re new in town with no connections, meeting people you enjoy spending time with can be a challenge. Luckily, there are a few tried-and-true ways to help you build a new social network.
Start at work
The best place to start building your friend base is the place you go every day – the office. At the very least, you’ll make a few pals to joke with in the lunchroom and at best you might meet people you actually would like to spend time with outside of work. No matter what, developing friendly relations with your fellow coworkers right off the bat is a great way to learn the company culture and make work more pleasant (if not actually fun). Lunchtime tip: Even if you prefer to sit at your desk playing solitaire during lunch, as the new kid you should accept offers to get lunch away from the office or to join your colleagues for happy hour. These are good opportunities to show you’re interested in making new friends and get to know people better outside the office.
Go meet up
Meetup.com has expanded to 196 countries around the world, hosting more than 13 million members at no fewer than 125,000 meet-up events over the last decade. Whatever your interest, there’s a meetup group for it. Manik says attending technology meetups and company open houses has been a good way for him to get to know other professionals in his industry.
Want to do more than just socialize? Be a force for good in your new community and make friends doing it by volunteering. Websites like VolunteerMatch.org are excellent for pairing you with the kind of work you’d like to do, the kind of cause you’d like to support, and the place where you can easily do it.
Moving for work is more than just about work – it’s a move that changes your life: where you call home, what you do for a living, who’s in your social network, and what your opportunities for the future might be. It’s a huge step that requires careful planning and consideration to make it a success. So before you make the jump to a new city, let Moveline simplify the process for you. We’re here to take the stress out of moving so you can spend your time, money and energy on more important things in your new home. Life is short, so enjoy it… and don’t go it alone.
Moveline is a technology company that makes life easier for people who are moving. We build software people use to get organized, compare prices, and make decisions about an upcoming move. To learn more, visit www.moveline.com.