Typical Relocation Compensation 1

[Noway2]

This morning I turned down an offer from a company that would have involved relocation. There are several reasons for turning down the offer, some of them financial, some not, but one of the sticking points was amount that they were offering to relocate.

In this instance it would have been a move of about 500 miles. From experience, the total costs of relocation by the time you pay for movers, sell a house (paying a realtor commission), buy a new house (closing costs), get vehicles registered, etc would have been around $40K-$50K, which is no where near what the company was offering. Quite frankly, I do not believe that I should have been expected to take a $25K-$30K out of pocket hit for the company's benefit. While it isn't really relevant to the relocation, I was not being hired through a recruiter which saved the company a lot more than the relocation costs.

While I don't regret turning down the offer, I am wondering if my expectations were out of line. My question is, what is typically offered in a relocation package. This would have been for a senior engineering / project manager level in the USA.

Anybody have any thoughts or ideas?

 

[mechengdude]

My experience:
Many companies offer two options:
1. Here’s a lump sum of money for your move
2. The hiring company offers a package where they pay to move you put you up in a hotel for some time etc.

I have always opted for option 2. I would think a reasonable package would include all cost to move your household goods to your new home and or storage paid for 3 - 6 months. Cost should be covered for you and your family to be in a hotel for 3 months including meal cost. That should be a minimum. Some extra perks might me a longer duration for the hotel stay or the payment of closing cost on the home or some sort of sign on bonus. I think gone are the days of the company offering to buy your home.

Short story, your expectations are in line with mine. As a point of ref, I am mid career, east coast, and have seen 5 companies.

 

[KENAT]

Related thread thread784-198942

KENAT, probably the least qualified checker you'll ever meet...

 

[Noway2]

Kenet,

Thank you for locating that thread. Before posting I tried searching for similar threads but was coming up empty handed. I am not sure if it was my choice in keywords or the search engine itself...

Anyway, the theme of that thread seems to be that the company offered to pony up (upto) $10K and when the guy got close they felt taken advantage of. Shame on them for not being clearer.

In my case, a company offered $20K which without clarification I have to assume would have been taxable, reducing my cut to about $14K. This would not cover the expenses by the time real estate fees would have been paid on both ends. Based on the salary level that they were offering, I felt that this was insufficient and turned them down.

When I moved for the company I am with now, they paid all of these expenses (movers, real estate, etc). The company I was interviewing with told me that no company would ever offer that - I don't believe them. Hence, I am curious as to what other people are seeing.

Per Mechengdude's statement about being mid career, east coast, that is an apt description for my position.

 

[Senselessticker]

I really do not believe there is a way to objectively measure how companies compensate for relocation. It's been my experience that companies are often willing to negotiate with each individual employee.

The point being… it “cost” someone with a family/house/boat/kids/pets/toys/etc… a great deal more to relocate than someone who is single that can pick up and move easily.

I relocated roughly a year ago. Company offered me two options: (1) Company pays lump sum of money for me to move + raise. (2) I pay relocation cost but receive an additional 4% on top of raise. Option 1 and 2 both gave me 3 months paid food, lodging, and travel (rental car and plane tickets) during my transition.

I went with Option 2. I was offered the job, accepted, and working in new location within all within one week time frame. BUT I’m single, not a home-owner, no kids, relatively young, no pets, no boats, no extra vehicles, etc… etc…

I’ve since relocated back to original position in original town. Although I did have to bear the cost of relocating (twice), I was able to bump my salary by roughly 20% and then return to an area where cost of living is relatively low.

It all worked out great for me and for the company. But theres no way I could have pulled it all off with a family, house, etc…

 

[IRstuff]

Seems to be about typical. If you do a websearch, you'll find numbers like $5000, or "one month's salary," etc. Note that most reimbursement policies do NOT cover cost of selling/buying homes:

http://www.utulsa.edu/personnel/Policies/index.pl?section=2&policy=2

This is similar to smoe private companies' policies. Only those that were considered "essential" employees would get anything resembling reimbursement of home-related expenses. In one extreme case, the company zeroed a negative amortization for a highly valued employee. The rest got lump-sums no the order of $10K-$15K, but that was 10 yrs ago.

TTFN

FAQ731-376

 

[KENAT]

I couldnt' remember how related that thread was, thought it may have had some info of use.

The amount seems to vary a lot by area, employer, industry, individual etc. I'm not sure that there is a typeical number. I've heard of the '1-3 month rent/hotel' a few times.



KENAT, probably the least qualified checker you'll ever meet...

 

[VisiGoth]

Wow, this is a real eye opener. I thought $2k was top dollar. And if you were a real sharp shooter you could get a $10k bonus without any pretense about using it for moving. I must be in the minor leagues.

 

[Noway2]

I agree that this thread is a real eye opener. I am hearing that my expectations that they should pick up the real estate fees may be a bit uncommon but not unreasonable either.

I guess a lot of it comes down to how much does the company want you. In this case, I felt that the salary increase was relatively flat, along with some other negative points, which ultimately made my decision a no-go. Had the salary offer been higher, I might have been willing to take the offer as it stood because I would recoup the real estate losses over a few years.

As Senslessticker put it above, it 'costs' more to relocate someone with a family/house/boat/kids/pets/toys/etc than someone who is single. At the same time, someone with 10-15 years of experience under their belt is more likely to have those things, but would presumably contribute more 'value'.

 

[civilperson]

Bechtel paid 6k, (movers receipt amount), for relocation and 30 days motel expense after arrival in Las Vegas.

 

[KENAT]

"I guess a lot of it comes down to how much does the company want you."

I'd say in private industry it all comes down to how much the company wants you.

In governement work/union places they sometimes have to give packages to existing employess if they move sites etc but for new employees (especially private industry) I'd expect it to be pretty much discretionary, even if they have some guidelines.

KENAT, probably the least qualified checker you'll ever meet...

 

[dcasto]

I've had two types of packages. 1) pay all expenses per IRS deductable rules, movers, temp housng, realators, and a few more. Licence plates, no way, you have to buy them anyway.

2) was 10% of the sales price of the house (realtor gets about 6% so ahead alittle there) plus 20% of annual salary so a little more than the cost of moving van stuff. PLUS gross up for taxes.

 

[mshimko]

When I was active duty military, I had no choice but to accept transfers about every three years. The government paid actual packing and moving expenses (I'd guess about $5K plus or minus 1 or 2K), provided a few days of leave, and one months "DLA" which amounted to around $250.

I know civilian government personnel (several neighbors) who move aften also (say every 6 years), and in addition to the expenses above, the gov't pays closing costs on a home (or will agree to BUY yu old home if the market is soft), and a few more expenses.

In my current company, everything is negotiable, but generally not many people will get paid much to assist with moving expenses. HOWEVER, moving expenses comes out of one tightly controlled pot of money, whereas salary is typically paid out of contract expenses. It's not uncommon in the negotiation to up the offered salary by $5K to cover moving expenses that we just can't afford out of our overhead budget (something to keep in mind during future salary negotiations).

 

[Noway2]

You have a very good point there: that it may be easier to negotiate up on the salary as opposed to the moving package. I would even go as far as to say that it could be the preferable approach in that you will ultimately be farther ahead after only a few years. As future increases are often times a percentage of your base salary, making getting a higher base salary even more beneficial.

In this particular case, I believed that the salary being offered was insufficient. Combining that with a loss on relocation, made the decision clear. Had the salary been higher, to where I would have recouped the moving costs, specifically the real estate portions, in about 3 - 4 years I would have likely accepted.

 

[tripleZ]

Wow! I'm in the wrong field! Many manufacturing companies in the Midwest, for outside hires at least, offer to pay moving expenses (moving company only). Anything above and beyond the cost of the moving company has been out of the question for all of our new hires. We've lost one engineer in the last year due to his inability to sell the family's previous home in southern Indiana. Our recent new hires have all been local (with a preference given to local candidates), and they have been very wary of hiring people who are unwilling or unable to shoulder a good portion of the expense.

Just reading about some of the options that others have seen in the field is a real eye opener for me. Maybe I need to beef up on my negotiating skills the next time around.

 

[GregLocock]

I've typically been paid

1) Legal and real estate costs on buying/selling house

2) all direct costs associated with the move

3) accomodation for up to 3 months in the new area

4) relocation consultant (aka local dogsbody - actually very useful)



Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[TStaples]

I've been relocated 3 times in the last 10 years. The first time was all inclusive from Southeastern US, to Detroit area. The company bought my house and paid all fees, paid directly for movers and storage(keeping it off my taxes), real estate fees on the new house, temp living expenses, travel to-fro until everything was settled, and a 1 month's salary sign-on bonus to cover the miscellaneous stuff not explicity covered. All of the expensed items were grossed up to cover the tax burgen. This was in 1999, for a mid-level engineering/project management position, when there was a severe shortage of qualified automotive engineering talent in the Detroit area (unlike today.)

In 2004, I was transferred to Southern CA, and my relocation was also all-inclusive, except that they would not buy my house. They did pay all of the real estate fees. I just recently relocated about 100 miles away, still in Southern CA, this year, and my relo was similar, with the new employer again not buying the house, but covering fees.

I have also been down the path with prospective employers that just dead ended when the subject turned to relocation. Last year I had one offer for a low six figures salary position back on the east coast that had a $5k cap on relocation expenses. The prospective employer was "shocked" when I turned the offer down in about 2 seconds, citing the lack of relo coverage.

I see no need to consider a relocation that wasn't predominantly/entirely paid for by the employer, unless your situation was very unusual. Relocation is such a major expense, you would have to be pretty highly motivated to shoulder it personally, for a new position or transfer. In all three of my relos, home sales/purchase costs, moving/storage expenses, temp. living costs, etc . . . have been in the $35k-$50k range. Assuming the new position comes with a salary increase, you would likely have to work a long time just to break even after paying relo expenses.

-Tony Staples

http://www.tscombustion.com

 

[jpankask]

In my humble opinion, EXPECTING $40k-$50k moving expenses to be paid is a little out of line. Some companies may pay that for the exceptional candidate who they want very badly but I believe for the most part, you should expect much less. I think if you are looking for a job in another area, you should expect to shoulder some burden of cost in either selling your home or buying a new one. If they seek you out, then by all means ask for whatever you need to make it worth your while to move. Your best bet is to negotiate a high enough salary that these one-time costs seem very small.

I think my current company pays a lump sum of one month salary for moving expenses, at least to us small-time folk. My previous company would pay out of state new employees a moving expense plus would pay for motel/living expenses for a certain time period while settling in.

 

[IRstuff]

Again, it really depends on your worth to the company. Headhunters usually take a big chunk of first year salary. If you're really in the 6 figure regime, then $30K isn't necessarily out of bed.

But, if there are a dozen other qualified applicants that aren't asking for a big premium for moving, guess what?

TTFN

FAQ731-376

 

[ivymike]

last time I got...
signing bonus (a few $10k)
professional movers to pack and ship stuff
storage for stuff for 60days while house shopping
realtors costs at both ends
4%-of-price bonus for quick home sale
a 180day buyout guarantee
guaranteed closing after signed contract (or co. buys it)
about $10k for unreceipted expenses (percentage of salary)
a relocation consultant to facilitate everything
career placement assistance for my spouse
2 months of spouse's salary paid while she looked for work
paid temporary housing while shopping
paid personal transportation expenses including meals and board during homeshopping excursions and move

In all it was about $40k-$70k worth of benefits. The cash parts were all "grossed up" to cover taxes. It was a standard package for mid-career hires, except the bonus which was negotiated (took a few months to get that settled, but I had time on my side).