VERSA Productivity

How A Well-Executed Relocation Program Minimizes Employee Downtime and Improves Productivity

What makes for a well-executed relocation program?  That is a question that global mobility professionals ask themselves every day.  It’s how they create the best relocation solutions for their clients, and how they stay abreast of emerging industry trends.  And although relocation involves a set of very complex integrated processes, a well-executed program often comes down to one simple thing: minimizing employee downtime, while improving productivity.

While that might sound easy enough, it takes a great deal of experience, knowledge and expertise to make it happen.


It all starts with a solid relocation program 

To best minimize employee downtime when relocating, you have to make sure that you have a solid relocation program that is built around the key factors that are most important to your transferring employees.  For most domestic relocations, those typically include:

  • Packing and shipment of household goods
  • Home sale and home purchase assistance
  • Mortgage assistance
  • Temporary accommodations
  • Vehicle transportation
  • Home-finding and rental assistance
  • Miscellaneous out-of-pocket expenditures

For international relocations, that list might be expanded to include:

  • Cross-cultural training
  • Destination services
  • Language training
  • Tax, legal and immigration services

Having a robust relocation program removes a lot of the burden associated with the move (in both time and money) away from the employee.  That means that they will be able to focus on their job, and remain productive before, during and after the move.

Ideally, your relocation program should be one that makes relocation easier for your employees.  This goes a long way in helping the employee and their family quickly settle into life in their new location, because it takes a lot of the self-planning and guess-work out of the process.  So, make sure that you have a solid relocation program that is based on industry best practices, and that is in keeping with your organization’s overall business goals.


The value of trusted partners

A solid relocation program is also one in which you have trusted, vetted partners working in symphony with one another, to achieve the mutual goal of providing the highest level of service to each transferee and family.  When done successfully, this will best ensure a smooth transition.

By developing a solid relocation program, you are investing in your valued employees, which is a critical component for employee retention.  Statistics show that employees who do not feel like they are well supported by their employers throughout their relocation, are at a much higher risk of leaving the organization altogether.  And, it can be quite costly to relocate an employee across the country only to have him or her leave the company.


Minimizing employee downtime when relocating

Time is money, so the last thing you want is for a relocation to cause an employee unnecessary or excessive downtime.  When employees are relocating, it’s easy for them to become distracted by the physical and emotional aspects of the move. A certain degree of this is to be expected, but you want to make sure that each part of the process is running as efficiently as possible.

That’s why having trusted partners working towards the same goal is essential.  For most companies, the typical scenario involves an RMC (Relocation Management Company) that oversees all of the service providers, and manages the relocation every step of the way.  This establishes a structure of accountability, and keeps the process moving forward.  When each service provider is successfully executing their specific part of the relocation, the result is a win-win for both the employee and employer.


Less stress means improved productivity

A well-executed relocation program also means less stress on the employee and family.  And when you reduce stress, productivity levels tend to remain higher.

Oftentimes, one of the most stressful aspects of a relocation is property ownership.  The idea of selling a home in one location to purchase a home in a new location can seem like a cumbersome undertaking for a relocating employee.  But, if the employer’s relocation program includes home sale and home purchase assistance, the move will be much more attractive for the employee.  Thus, it alleviates a lot of the stress associated with selling and buying a home, which in turn, reduces employee downtime.


Setting and managing expectations

Another important ingredient for minimizing downtime and improving productivity during a relocation, is by setting and managing the expectations of the employee and family.  That means planning for the unexpected and being nimble in response to questions and concerns that might arise along the way.

Likewise, you need to be aware of the employee’s expectations about his or her move.  As with most things, good communication is the key.  So, don’t assume that everyone is on the same page.  Make sure that you are answering every question and explaining everything that will take place.  Also, make sure that all parties are copied on all applicable communication, and that you share all relevant information from start to finish.

Good communication is the best way to stay proactive and help your employees avoid any pitfalls during their relocation.  And, when there is an issue or a challenge, be ready to provide the most practical solution.  Based on the situation, this might call for a standardized action, or a more customized solution. Either way, you need to be ready for anything that might come your way.


A positive relocation experience goes a long way

At the end of the day, a positive relocation experience goes a long way.  This is why it is vital that you have a solid relocation program, that is founded on minimizing employee downtime, while improving productivity.

Relocation programs also need to evolve over time.  So, be sure to review your relocation policies on a regular basis, and evaluate how well they align with your talent management/talent mobility strategies, and adjust them when necessary.


Need more information?

VERSA is always here to answer any questions you might have, or to provide you with any information that might help you make more informed decisions about your global mobility program.  Please contact us anytime!

4 things to consider when choosing an RMC

4 Things to Consider When Choosing a Relocation Management Company

Regardless of industry, choosing the right service provider is critical for business success. These days, a provider must go beyond providing a service or commodity and show the true value in their partnership. Therefore, it is worth spending adequate time choosing the right company to do business with.

You may be searching for a Relocation Management Company (RMC) to provide relocation services for your employees. Perhaps this is your first time evaluating an RMC, or maybe you are unhappy with your current provider and looking to make a change. No matter your situation, consider these four points to help guide your decision making:


  1. Cultural fit – Perhaps one of the most important aspects to consider when evaluating an RMC is cultural fit. How the prospective company conducts business is important when picturing the viability of the partnership. The values of your company should be congruent with those of the company you do business with. This is especially important in relocation management, when your employees are undergoing a stressful time in their life and will rely heavily on relocation consultants for support and empathy.


  1. Service level and quality – Quality should always be a central component of supplier evaluations. Typically, RMCs gather quality scores from relocating employees to assess the performance of their internal employees, as well as external vendors, such as temporary housing facilities and real estate agents. Ask to review those quality scores to get great insight into the experience other clients are receiving. In addition to quality, ask about the level of service your transferees will receive. Prospective RMCs should outline a standard operating procedure for a relocation and what the experience will be like for the employee. For example, is there 24/7 support for the transferee? What level of consulting will be provided?


  1. Client testimonials and case studies – Most RMCs will have client testimonials readily available on their website. It is important to read through those carefully and take note of anything (good or bad) that stands out. In fact, we encourage you to take a step further by reaching out to people posting testimonials to gain more insight into what is like working with that RMC. Ask for case studies to clarify how the RMC specifically helped other clients address issues. Ask the prospective RMC if they can provide a case study for a company with pain points similar to yours. This information will help you get an in-depth look at what results you might expect working with that service provider.


  1. Flexibility of program offerings – It is important for your RMC partner to understand that one size does not fit all. Each company is unique, so their relocation program should be, too. Ideally, you should have the ability to craft a program based on the depth of your relocation offerings and which services are necessary for your company. However, not all relocation service providers offer this type of program flexibility. Be sure to ask whether you are buying a one size fits all package, or if the program will be tailored to your unique business needs.


Evaluating a service provider is critical for your business success. Taking cultural fit, quality, client testimonials and flexibility into consideration will help you make the best decision when choosing which RMC partner is right for your company.


Have more questions about this topic? We can help! CONTACT US today. We’re here to listen.


Career and Family Considerations for International Assignment

It’s a pretty typical scenario. You are in the throes of a thriving career, when all of a sudden, your spouse or partner is offered an international assignment. You know that it’s a great opportunity for his or her career, and your friends and family reinforce this by saying that it’s a chance of a lifetime, and one that you just can’t afford to pass up.

While all of this might be true, the idea of leaving everything behind, even temporarily, can be a scary one, underscored by your personal feelings of anguish about your own career.

At the same time, if you have children, you have to think about how the move will impact them as well. So, rather than approaching this opportunity from a mere career perspective, you have to examine how it will impact your entire family. There is obviously much to consider for you to be able to make the best decision for your family.

Let’s take a closer look at some of those considerations.


Career Considerations

First of all, it’s okay to ask, “What about me and my career?” Dual-career families are extremely common today, and one career isn’t necessarily more important than the other. However, according to a recent Harvard Business Review article entitled, “Talent Management and the Dual-Career Couple,” dual-career couples are often faced with having to decide which career will lead and which one will follow.

If you and your spouse or partner determine that yours is the one that will follow, it’s important that you are prepared for the potential impact the international assignment could have on your career.

So, you have to ask yourself some critical questions, such as, will I be able to continue working while on assignment, or will I have to put my career on hold?  And, if I do have to put it on hold, will it be waiting for me when I return?  What challenges could I face as a result of interrupting my career?

Ultimately, you have to be confident in your decision, and know the challenges and implications before you go. That will make it that much easier for you to resume your career when you return.

And the good news is, you can still network and stay up-to-date with your profession or industry while you’re away. This is important, because staying professionally connected can go a long way in easing your repatriation and re-entry back into the workforce upon your return. Not only that, but your international experience can give you a unique, professional advantage.

It is a distinguishing factor that you should leverage and emphasize on your resumé.



Educational Considerations

The number one consideration when moving to a foreign country with children typically revolves around their education.  As such, you will want to find out what educational options are available while on assignment.

The last thing you want to do is to disrupt your children’s school curriculum without knowing how they will best reintegrate into the school system upon your return. You want to ensure that they will not fall behind.

Sometimes it is best to engage the services of an educational consultant who can advise you and answer the many questions you might have.


Making It Work

For an assignment to be successful, it’s important that you have a buy-in from the whole family.  Yes, there will be disruptions and different ways of doing things, but remember, you will be doing it all together. And, at times, it will be stressful. But, there are ways to proactively combat some of that stress. Here are a few suggestions:

  • Research before you go. This will help to manage expectations, and give you and your family specific things to look forward to in the new location. Be sure to include your children in the research.  This helps them to feel a part of the process before you even move.
  • Keep it fun. Look for family activities and sites to visit shortly after your arrival. Encourage your children to take photos and keep travel journals about their experience. Remind them that they are having an adventure.
  • Stay in touch. Technology makes it possible to stay in touch with family and friends no matter where in the world your travels might take you. Take advantage of that, and encourage your children to do the same. It can make a big difference.


We Are Listening

International assignments are a complex undertaking, and require the careful planning of all parties involved.  At VERSA, we have the experience and know-how to provide the best solutions to our corporate clients and their employees based on their unique needs.  How do we do this?  By truly listening to what they have to say.

To learn more, please contact us anytime!


Tax Cuts Law

How the Tax Cuts and Jobs Act of 2017 Impacts Your Company Sponsored Relocation

The Tax Cuts and Jobs Act of 2017, which went into effect January 1, 2018, includes a major change for the relocation industry, more specifically, household goods moving. This new act only affects individuals relocating on behalf of their employer, when the employer is funding the relocation. Prior to this newly enforced act, household goods moving, household goods storage, and the final trip for the employee, and their family to the new destination were not treated as income to the employee and, therefore were not taxable. The Tax Cuts and Jobs Act of 2017 states the amount of money paid for the household goods portion of the relocation, related storage and the final trip to destination is now treated as income and, therefore is taxable to the employee. If the relocation is personal, and not paid for by an employer, these new rules do not apply.

The employee is responsible for paying federal taxes on all aspects of the relocation, including; house-hunting trips, temporary housing, household goods moving and household goods storage. This change has prompted companies to “gross-up” taxable dollars on behalf of the employee, but this is costly and adds to the overall expense of the relocation. A tax gross-up is when a company increases an employee’s salary, bonus or any other taxable income so the employee does not pay his or her estimated tax. If a company does not “gross-up” the tax dollars for the employee, those tax dollars are due from the employee immediately following the relocation event. This applies to all forms of support to the employee; lump sum, reimbursements, direct paid expenses, etc. All are considered taxable income to the employee.

It is very important for relocating employees to know how their relocation tax dollars are being handled. Is the company “grossing-up” relocation expenses or is the employee responsible for them?

Employees need to understand if the entire expense of the relocation will be added to their taxable income on their federal Form W2 at the end of each year. If an employee’s income is $75,000 annually and the expenses for their move total $20,000, their annual taxable income is now $95,000 for the tax year in which they relocated.

This is a big change in relocation for both the employee and the employer. It is important for each to understand how this will financially impact the relocation. If you have questions, our team is happy to help answer them. Contact us today!

It's on your plate now what

It’s on your plate, now what?

Let’s face it, we all wear many hats on a daily basis when it comes to our job responsibilities.  And, during the busiest times of the year, we tend to have so much on our plates at any given time, that those plates start to feel more like platters.

So, there comes a time when we must closely evaluate our core responsibilities and see if there are certain aspects that might be better served by doing things in a different way.  If global mobility is one of your core responsibilities, but you find yourself unable to give it the focus that it requires, perhaps it’s time to look at alternative options.

Depending on the size of your organization’s global mobility program, or the changing needs of that program, you might need to take a closer look at whether your organization is best served by an in-house program, or one that is outsourced (in part or in whole) to a third-party Relocation Management Company (RMC).


How to Lighten Your Load?

One thing is for sure: the best way to lighten your load is by taking a few things off of your plate.  This can be easier said than done, because once something has landed on your plate, it is far more difficult to give it back.  That’s why you have to look at efficiency and cost-saving measures that might be more equitable for your organization, while paving the way for a global mobility program that is more successful.

So, it might be time to call in the experts.  That is not to say that you are not an expert at what you do, but relocation management is at the heart of all services provided by RMCs.  It’s what they do; it’s their specialty.


Should You Outsource Your Global Mobility Program?

 Whether or not you should keep your global mobility program inhouse or outsource it in whole or in part to an RMC, might seem like the million-dollar question.  As such, it is not one that can be quickly and easily answered.  You have to carefully evaluate your organization’s current program, it’s potential for change and growth, and what that looks like for the near future.

For example, the scope of relocation benefits associated with your global mobility program might need to be reassessed.  Perhaps your company has had fewer and infrequent instances in which you have needed to move your employees.  When your global mobility workload is small, it certainly seems much more manageable.

Likewise, and as needs change, you might now find that your company has implemented a much more aggressive global mobility strategy, that will require the movement of many more employees on a much more frequent basis.

So, you might find yourself wondering whether your organization might be better off by partnering with an RMC, in the hopes that your program will more streamlined, efficient, and set up for long-term, sustainable success.

The decision requires not that you try to determine whether your company is the right fit for an RMC, but more importantly, whether that RMC is the right fit for you and your organization.


Are You the Right Fit for an RMC?

 Here are some of the key questions that you should be asking to determine whether you are the right fit for an RMC:

  • What is the volume of your global mobility program? If it’s less than 10 moves a year, chances are you will be fine to handle it in-house.
  • How complex is your program? For example, are there various tiers for different levels of employees? Do you need assistance developing a more robust program?
  • Are the responsibilities of your program putting undue stress on you or your department? Global mobility is a very complex business, so it is not uncommon to feel overwhelmed and that you are operating outside of your area of expertise.
  • Are you having difficulty managing and tracking relocation costs? RMCs can streamline those costs by instituting cost-saving measures, while provide you with trackable, analytical data.
  • Has it become too cumbersome to vet and manage the array of service providers needed to assist your mobile workforce? Supply chain management can be a very difficult and time-consuming undertaking for an HR or Procurement Department.
  • Are you sure that your program is following industry-established best practices? This can be tough to determine, but with the help of an RMC, developing a program that utilizes best practices is far more likely.


Benefits of Having a Trusted RMC and Partner

Over the years, more and more companies have moved away from in-house global mobility programs, in favor of outsourcing the various functions to RMCs.

Assuming that your organization is the right fit for an RMC, there are many advantages of placing your global mobility program in the very capable hands of an RMC.

One of the most important advantages of outsourcing to an RMC is the ability to have a trusted partner that is always looking out for your best interests and those of your organization.

Like all successful relationships, this one too must be founded on the fundamental principle of trust.  As such, the relationship between your company and the RMC needs to be one that is revered as a true partnership.  To do this effectively, it’s important to ensure that the services provided by the RMC are not only the right fit for your company, but that their culture also closely aligns with yours.

At the same time, if your strategic business objectives remain at the forefront of your global mobility program and subsequent policy development, then you can rest assured that your RMC “partner” will carry out the process based on your company’s goals and high level of standards.


Still Not Sure What is Best for Your Organization?

Sorting through all of the intricacies and variables involved in global mobility is not an easy task. There are obviously innumerable aspects that must be intimately understood and processes that must be expertly carried out.

But, don’t worry, because you don’t have to go it alone.

VERSA is always here to answer any questions you might have, or to provide you with any information that might help you make more informed decisions about your global mobility program.  Please don’t hesitate to contact us anytime!

12 Signs you need to outsource

12 Signs You Need to Outsource Your Relocation Program

Companies of various sizes, across all industries, relocate employees domestically and internationally. For some, this can prove difficult as individuals within human resources or procurement departments assume the role of managing the company’s relocation program, sometimes in addition to other responsibilities. Depending on the frequency and complexity of relocation needs, managing this program can easily become overwhelming. If this sounds familiar, here are 12 signs you need to outsource your relocation program to a Relocation Management Company (RMC), and how outsourcing may benefit you.


1.Your new hire is managing their own move. This is probably contradictory to your company’s culture, and does not provide the new hire with a positive first impression of your company. A lack of support during the moving process can result in lost productivity and low morale for the new hire and their entire team. A RMC partner will manage the relocation process for your new hire and ensure your employee is properly taken care of during the household goods move portion of their relocation.


2. You are answering questions about commute times, neighborhoods and schools. Sometimes, you leave the office to give new employees a tour of the town. Outsourcing relocation management relieves administrative burden and allows human resources or procurement teams to focus on their core responsibilities.


3. You spend any amount of time reviewing estimates and setting up vendors for payment. Vendor management can be distracting and time consuming. A RMC partner handles all vendor management for you.


4. You are involved in resolving claims or service issues, or find yourself managing disputes between service providers and your employees. A RMC partner will handle service issue escalation and resolution for you.


5. You spend time sourcing household goods movers, temporary housing facilities or apartment complexes. RMCs have established relationships with service providers and will find the best fit for your relocating employee.


6. You code expenses, pay invoices and report to payroll. A RMC partner will take care of these tasks with a high degree of accuracy and compliance.


7. You do not believe you are getting competitive pricing from service partners. RMCs can leverage their volume to procure better pricing for their clients.


8. Your policy is outdated, or your competitor’s relocation program offers better benefits, and you are losing potential candidates. A RMC partner will benchmark and review your policy, help you update to current industry best practices, and find the right policy type and benefit offerings to match your budget, talent acquisition needs and company culture.


9. Your CFO wants to know how much you spent on relocation last year, what the most common exception requests were and what your projected costs are for next year, but you don’t have relocation financial data readily available. A RMC partner will provide customized reporting with a high degree of accuracy, and give recommendations for budget and policy changes.


10. Your employees are asking about the tax liability of relocation costs and you are not sure how to answer them. RMCs can provide accurate, up-to-date tax law education to stakeholders and employees.


11. You are challenged to find information about best practices, policy models and other relocation topics. A RMC partner acts as a trusted resource for industry information and will guide your program to success.


12. Your company recruiters are trying to figure out which equally qualified candidate will be the least expensive to relocate. A RMC partner can provide accurate cost estimations to help talent acquisition professionals and hiring managers make informed decisions.


Any one of these signs could indicate that outsourcing your relocation program would be beneficial for your company. If you would like to explore what outsourcing relocation may look like for your organization, let’s talk!

RMC Right Fit

Choosing an RMC: It’s All About Fit

Relocation is a tricky, complex and costly process for an organization.  That is why so many companies outsource their relocation needs to Relocation Management Companies (RMCs), as opposed to managing the process in-house.

Choosing an RMC that is the best one for your organization can be an equally cumbersome and complex process.  In most cases, it all comes down to fit.  But, choosing an RMC that is the right fit for your organization can be difficult when trying to compare apples to apples.  That it because there are no two RMCs that are alike.


All RMCs Are Not Created Equal

There are many choices when it comes to RMCs, and one size definitely does not necessarily fit all.  So, while most RMCs offer core services that might look the same on paper, the way that they carry them out can differ considerably.  Each RMC has specific strengths as well as certain limitations, so it is essential to choose an RMC that best aligns with your organization’s business goals.


Finding the Right Fit

How do you determine which RMC will be the right fit for your organization?  You need to be able to see and experience the company culture of the RMCs under consideration.  So, don’t utilize an RFP (Request For Proposal) process; conduct site visits to the RMCs instead.  This is a far more effective way of gaining valuable insight into how an RMC really operates.  You will also have access to the people who will be interacting with your relocating employees, and you can witness first-hand how they conduct themselves.  Spending time onsite will give you the best idea as to whether or not an RMC is the right fit for your organization.

The problem with RFPs, is that they force you to rely on the accuracy of the information provided by the participant, instead of allowing you to see the company through your own eyes.  Additionally, RFPs are very impersonal, overly complicated, and quite costly and time-consuming to both parties.


What to look for in an RMC

Obviously, you don’t want to overpay for services, or pay for services that you don’t really need.  You also don’t want to sacrifice personal attention.  So, when choosing an RMC, you should choose one with a service model approach that resembles your own.  That means that the RMC needs to be a true partner to your organization and needs to fully understand your objectives.  That will help to ensure the success of your company’s global mobility program.

Here are some key considerations when choosing an RMC:

  • What are the core competencies of the RMC?
  • Does the RMC have domestic and international capabilities?
  • What is the reputation of the RMC within the industry?
  • What is the RMCs company culture?
  • Does the RMC offer the flexibility you need?
  • How does the RMC choose their suppliers and service partners?


Is it time to make a change?

Having the right RMC can make or break an organization’s global mobility program.  For that reason, we recommend reviewing your company’s program needs on a regular basis, along with the quality and level of service you are receiving from your RMC.  Are your needs still being met?  If not, it might be time to make a change.

Don’t try to put a square peg in a round hole, because your global mobility program could suffer as a result.  And if your program suffers, it could negatively impact employee recruitment and retention.  Ultimately, as your global mobility needs change, you need to have an RMC that has the flexibility to change and grow with you.


VERSA’s Client Service Model

Ideally, you should work with an RMC that is looking out for the best interests of your organization and your relocating employees.  At VERSA Relocation, we pride ourselves in providing a very flexible, hands-on approach that is based on the unique needs of each of our clients.

We know that having the right fit is everything.  So, let us work with you to design a program that is the right fit for the needs of your organization.

For more information please contact us anytime!

UTSW Case Study

CASE STUDY: Relocation Management for Higher Education

Client Profile: Medical Institution | Dallas, TX


Client Overview: The client was utilizing their purchasing department for the procurement of household goods relocations through a three-bid system. Pricing was dictated by the E&I Cooperative Services contract. Purchasing was being utilized as a subject matter expert and problem solver for relocation issues and needs. Incoming faculty members were receiving minimal relocation support and unsatisfactory service on household goods moves, which resulted in a poor first impression of the university and an underwhelming relocation experience.


Client Need: The lack of a formal relocation policy or internal processes to standardize what services could be formally provided to relocating employees in a tiered system created a challenge for employees and providers alike. Relocation amounts were arbitrary and negotiated with the employee as one-off transactions during the hiring process. This resulted in the client potentially overcompensating employees for relocation expenses and, at times, not providing services necessary for the faculty member to relocate successfully. The client had multiple suppliers in the relocation process, which made it difficult to track and budget relocation expenses. The client also needed assistance transferring the relocation function from their purchasing department to the university human resources department.


How VERSA Helped: We assisted the client with the development of a formal relocation policy that was consistent throughout the organization, competitive in their industry and fair to the employee and the client. The policy was developed to provide a relocation allowance to better fit the budgetary and procedural needs of the client, and deliver adequate funds for the individual employee’s specific relocation needs. We helped to administer the relocation reimbursement allowance, drive accurate relocation reporting and played an integral role in ensuring that each faculty member received an excellent relocation experience. VERSA Relocation, as an E&I supplier, was able to provide a full-service relocation experience and ensure consistent quality of service through our network of trusted providers, eliminating the need for the employee to “shop around” for multiple service options.


Results: Formalizing a relocation policy resulted in an overall reduction in relocation spend by an estimated 15%, due the adoption of a need-based relocation allowance, which contained costs while delivering a relocation experience to the employee that provided a positive first impression of the university and its staff. Responsibility for relocation was shifted to the human resources department, which allowed for closer oversight of the relocation process and on boarding of new faculty members. VERSA’s relocation management program and the involvement of our team members reduced the overall administrative burden and the tedious process of each department administering relocation services.

The cost saving results achieved in the relocation allowance program were allocated to relocation administrative assistance, tracking of all relocation expenses, and detailed reporting based on the individual employee and the overall program. The single-source relocation solution increased employee satisfaction, provided consistent service and delivered an overall level of accountability that previously did not exist within the university.


Key Services Requested:

  • Relocation Consultation
  • Expense Management
  • Household Goods Mgmt.
  • Temporary Housing
  • Travel Management
  • Area Orientation
  • Rental Assistance
  • Lump Sum Assistance



Home Sale Programs

Understanding Relocation Home Sale Programs

There are obviously tremendous expenses involved when moving an employee to a new location. The largest of those expenses typically involves the sale of the employee’s current home.  In most cases, the company will want the employee to be moved and settled into their new location within a fairly short period of time.

Depending on the real estate market, the employee’s home could sell right away for the optimal price, or it could have difficulty selling and result in a loss for the employee.  Either way, the home sale process can be the cause of much stress and worry for the employee.  Such stress can negatively impact the employee’s relocation, as well as his or her work productivity before, during and after the move.

That is why many companies have implemented relocation home sale programs as one of the most important benefits that they provide to their relocating employees who are homeowners.

And although there are a few different home sale programs available, some can be costlier to both the company and employee, while others offer more favorable tax implications.

So, if you are evaluating the different home sale programs for your company, you need to be able to effectively compare and contrast the available options.  Here is an overview of the most common relocation home sale programs.


Direct Reimbursement

This is perhaps the easiest home sale program to explain, because it simply means that the employee is responsible for the sale of his or her home, and is then reimbursed for the costs associated with that sale.  The benefit of this program is that the company stays completely out of the transaction, and has no risk of owning the property in the event that a sale doesn’t occur. The issue with this program, is that the reimbursed expenses are viewed as taxable income by the IRS.  So, there is an added tax burden that can become quite expensive for the company and/or the employee.


 Buyer-Value Option (BVO)

This program mitigates the tax liability of the direct reimbursement program.  It allows the employee to list and market the home until an offer is received on the property.  Then, the Relocation Management Company (RMC) purchases the property from the employee based on the sales contract amount, and in turn sells it to the ultimate buyer.  So, with the BVO program there are actually two distinct sales that take place for the property.  This removes the tax liability for the costs covered to pay for the real estate broker’s commission and the closing costs of the property.  However, if the sale falls through for any reason, there is the risk of the home being taken into inventory, which can be costly.


 Amended Value Option (AVO) / Guaranteed Buy-out

With the AVO program, the employee normally has a set timeframe in which to find a buyer for the property.  This could be anywhere from about 60 to 120 days.  If the employee is unsuccessful in selling the home, they have the option of taking a guaranteed buy-out offer, which is based on an appraised value of the property.  Once the buyout happens, the property is taken into inventory, which again, can be costly.  But, like the BVO program, the AVO program also removes the added income tax burden.


Which Relocation Home Sale Program is Best?

As you can see, relocation home sale programs can be very complex and complicated until you understand them.  In short, the goal for any relocation home sale program should always be to reduce the financial risk and tax implications for both the employee and the company.  While all programs have certain advantages and disadvantages, the BVO program has become the program of choice for many of the companies.


For more information about relocation home sale programs, please contact VERSA anytime! We are always here to help you make the best choices for your organization!

MSH Blog Covers (7)

Resist the Temptation to Manage Relocation by Way of Lump Sum

This is a guest post by David Bradstreet, CRP, Director of International Sales for VERSA Relocation. See more from David on LinkedIn!

The recent tax reform law is having a significant impact on companies who offer relocation benefits to employees. Certain relocation expenses such as moving household belongings, moving automobiles, household goods storage and relocation travel costs were previously excludable, but are now treated as income to the employee.


According to Worldwide ERC, this will add an estimated combined $2 Billion in relocation costs to companies in the United States.


This additional tax liability expense may create the temptation for some companies to revert to managing relocation by way of a cash bonus or lump sum. There are several reasons companies should resist this temptation and continue to partner with trusted relocation providers.


Service Excellence: Employees are not seasoned consumers of relocation services. They want an employer to vet out top suppliers that will provide them with the best possible relocation services and experience.


Optimal pricing: Employees cannot obtain the same pricing on their own that an employer can negotiate on their behalf. In fact, during peak moving season, the employee may pay as much as 40% more for the same services, if purchased on their own.


Funding challenges: Employees often do not have enough disposable income on hand to cover relocation expenses, especially during a move, when they are facing numerous other personal expenses. It is easiest for employees when invoices are paid directly by the employer or the relocation management company and they do not have to be heavily involved in the funding of relocation services.


Employee productivity: When employees are left to manage their relocation themselves, sourcing, negotiating and managing service providers can become a large distraction from the work they were hired to do. If you have trusted providers who deliver quality service and are easy to do business with, your employee can focus more on their work and less on the details of moving.


Data: Relevant data drives a great relocation program. When expenses are tracked and trends are analyzed, companies can make effective decisions about how to spend funds in the future.


Accountability and partnership: Moving is inherently stressful and challenges often arise that could negatively affect the new hire experience. Relocation partners who understand your culture and are loyal to the partnership are tremendously valuable in avoiding problems and mitigating the challenges that can arise. Ultimately, they help reduce stress and provide a great experience.


Talent acquisition considerations: Providing a professionally managed relocation is still important for attracting top talent. Lump sum offerings could create stress and candidates may worry whether they can complete the relocation within the budget offered.


The new tax laws have an unfortunate impact on employee relocation. We must accept that moving employees has become more expensive. Together, we should carefully consider how to manage the added costs and avoid shifting the burden to new hires and transferring employees.


Is this a topic you need guidance navigating? If so, let’s schedule a meeting!