Relocation policy bandings: What are they?

Relocation policy bandings: What are they?

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Relocation can be complicated - and not just for the one moving! For HR teams, there are a lot of employee relocation expenses to consider, from home-finding to shipping, and everyone’s needs are different. One way to simplify things is to use bandings in your relocation policy.

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It's standard practice to offer more substantial relocation policies to your more senior staff. They’re often more likely to be uprooting a more settled life - they might have higher value homes, children in school, partners with their own jobs - and therefore require more support.

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Here we’ll walk through how relocation policy bandings work, and what to weigh up when it comes to deciding if this approach is the right one for your company.

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What are bandings?

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A banded policy is when a company defines a small number (roughly 3-8) of fixed employee relocation cost packages with increasing levels of predefined support, then allocates a specific package to a relocating employee depending on their seniority.

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For example, you’d offer a basic package to an intern or entry-level employee, while the CEO or others at executive level would get a more extensive package.

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Of course, this approach to corporate relocation costs has its advantages and disadvantages. It’s important to weigh them up to see whether it’ll work for your business and your employees.

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Pros of relocation policy bandings:

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●     Streamlining - A clearly defined banded system makes things plain and simple. For all employees, from an intern to the CEO, you’ll know exactly what their package includes.

●     Cost clarity - Bandings remove all ambiguity and guesswork around costs. This makes your budgeting process far more straightforward and means avoiding unexpected bills.

●     Cost control - Budgeting for team members is often in the wheelhouse of team managers, and bandings ensure they can plan their people spend more easily.

●     Transparency and fairness - Standardising a scale of packages across the board will reduce instances of employees negotiating for extra benefits, which can be unfair.

●     Employee motivation - A relocation package is an awesome perk! And the prospect of a more extensive package is a great motivator for junior employees to progress further.

●     Talent attraction - Offering a comprehensive, tangible relocation package as a benefit of a high level position at your company will be very attractive to executives.

●     Employee ownership - A defined policy with clear band delineation means managers can confidently walk employees through their benefits, for more visibility and ownership.

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Cons of relocation policy bandings:

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●     Inequality - It’s important to tread carefully here. While there are many justifications for a higher allowance for senior staff, there’s a risk that junior employees feel less valued.

●     Individual needs - Bandings based on seniority level only don’t account for other needs, like extra family support. Policies should have an element of flex for employee situations.

●     Costs vary by location - Having flat worldwide package costs is problematic as living costs vary hugely by destination, but this can be overcome with regional package costs.

●     No bespoke packages - Rigid bandings don’t allow for the freedom to create a unique package for an individual. However, this can be solved by ensuring that your bandings still have an element of core-flex - check out our cost savings article[1]  for more details!

●     Vendor network - Employees will require strong vendors to help them use their budget effectively. There’s no risk however if you use a reputable relocation company.

●     Cost review - It’s more advice than a ‘con’, but you’ll need to review the bands regularly to make sure they stay competitive and in line with inflation and other changing factors.

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Bandings case study

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PerchPeek recently worked with a major sports apparel designer in Birmingham, UK. They wanted to provide core relocation support to all employees, but offer more extensive packages to more senior members of staff, where the stakes of their relocation going well are highest.

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Here’s an outline of the policy bandings we devised with them, to suit the requirements and expectations of their employees at all levels.

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●     Band A - Self-Directed: Complete home search guidance with consultancy support on all additional services and budget management, plus basic travel support and basic shipping

●     Band B - Early Career: Complete home search guidance with consultancy support on all additional services and budget management, plus contribution to initial rent and deposit, travel including transfers, basic shipping and basic temporary accommodation

●     Band C - Mid Career: Full support package on all services including complete consultant-led home search, plus full family travel, small home shipping, school support, temporary home for 30 days and initial rent and deposit payments on a two-bed property

●     Band D - Business Critical: Full support package on all services including complete consultant-led home search, plus full family travel and return travel, large home shipping, school support, temporary accommodation, spousal support and three months’ car rental

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Setting these policy bandings allowed this client to offer relocation support to all staff, regardless of their level, while satisfying the additional needs and expectations of more senior employees. What’s more, all bandings still have the flexibility to cater a move to individual priorities.

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It also allowed the company to reduce costs on their relocation policy, and use spend figures to make data-driven decisions on package adjustments and save further costs down the line.

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Key takeaways

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Having considered all the pros and cons, this should put you in a good position to decide which way to go. Either way, there are a couple of points to note on staff relocation costs:

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Firstly, it’s really important that all employees, regardless of seniority, receive a base level of support. Relocating is the third most stressful life event (!) and up to 50% of relocations fail - meaning employees give up and return home, or leave their company altogether. It’s of course in your interests to invest in your employees’ moves and support them through this journey.

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Secondly, to make a truly cost-efficient relocation policy - banded or not - it needs some flexibility. The main cause of wasted relocation expenses for employees is handing out money for services they don’t need, like a shipping container when they only plan to fill up a backpack!

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It’s a great idea to have a chat with your employees to gain understanding of their individual situation. As well as helping you pinpoint what their needs are, they’ll feel valued as a result.

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If you’re feeling unsure about how best to go about setting bandings and flexing your policy, feel free to reach out for a chat! We’ll be happy to help and offer our advice for your specific needs.

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How much does the average package cost?

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If you’re looking to set up a new relocation policy, or tighten up your existing one to make it more cost-efficient, we can help! Our easy cost estimator tool will do the sums on your job relocation expenses to help set a policy that works for you, your employees, and your bottom line.