A major trend in relocation policy development is tiering, which sets different levels of benefits for specified groups of employees. Companies have turned to tiering to cut costs and provide flexibility for hiring managers.
A tiered relocation plan places each transferee in a category. The relocation benefit options are different for each category of employee. A typical structure provides four tiers. A tier one complete relocation package for executives. A tier two package for middle managers, a tier three package for all other exempt employees and a tier four package for newly hired college recruits. Most companies have a special category for expatriates.
Generally, the benefits allotment and options granted to each category corresponds with the employee’s level within the company. This approach allows the company to control costs, while responding to the needs of different groups of employees.
Companies sometimes tier policies based solely on whether an employee is a new hire or existing employee. Payment of household goods and reimbursement of final move expenses to the work site are the most typical for non home owning transferees. Typically new hire homeowner transferees would also be granted home sale closing costs assistance (BVO or direct reimbursement) and reimbursement of new home purchase costs. New college graduates require minimal programs, while a new executive would probably need substantially more relocation assistance. An increasing number of companies are turning to the use of a lump sum payment for new hires with very minimal needs.
As recruitment has become progressively more complex, companies have chosen to include more programs to attract the talent they require. Deciding whether or not to tier your relocation policy is important to the overall success of your relocation program. Both approaches have their merit and will prove effective in certain circumstances provided administration is fair and accomplishes the goals the company has set for itself.
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