Executive Relocation Package: Risks, Terms, and Strategies
With an executive relocation package, C-suite employees have an opportunity to protect themselves from certain risks. As the world continues to globalize, the possibility of relocation continues to rise. Executive experience and skillsets develop everywhere, across different industries.
That means employers have to be creative as they search for and acquire talent. In turn, executive-level employees receive offers from companies in an array of locations. However, relocation is no small matter.
Often, it means you have to uproot and disrupt your family’s lives, education, and careers. Additionally, there are many factors to consider as you negotiate an executive relocation package.
Moreover, you have to ensure that your employment agreement covers the risks you take as you accept the offer. Below, we look at important strategies to help mitigate the risks and secure important opportunities.
Why Relocate for an Executive Career?
There are plenty of reasons to relocate for work.
- An employee reaches the top of the ladder at their current company.
- Your field has better opportunities in a different location.
- The best offer that arises in your job search is simply in another city.
- A talent scout found you and made an enticing offer.
When a company requires someone to relocate, they often offer a relocation package. This helps to cover the cost of the move in order to make the transition easier on the employee and their family.
If the company seeks you out or you are a strong candidate, it puts you in a good position to negotiate your relocation package as well as your employment agreement. Next, we look at some of the risks that come with relocation.
The Risks of Relocation
Even when you relocate for an incredible position, major moves require a bit of caution. When an executive relocates for a new position, they take on important risks.
Oftentimes, employees who relocate find themselves in a tough position. Occasionally, the company or position doesn’t meet their expectations. Alternatively, the company may misrepresent itself or its situation prior to hiring.
For example, a CFO might join a company that severely misrepresented its financial situation. That makes the job vastly more difficult and far less attractive.
In other cases, circumstances simply change, such as a new CEO being hired after someone joins a company. The new CEO might not honor the promises made by their predecessor, which can make relocation not worth the trouble.
All of a sudden, the key benefits behind your decision to accept a job evaporate. In order to recoup your losses, you might have to search for a new position and move yet again. However, you have an opportunity to protect yourself with a binding executive relocation package.
Risk Management with an Executive Relocation Package
With the various risks of relocation, it’s important to exercise caution before you accept a position. In some cases, it’s possible to work a clause into your executive relocation package that gives you time to test the waters before you relocate permanently. Ideally, this provides you with an opportunity to ensure the company fulfills its promises.
Additionally, temporary relocation places pressure on the company to continue to woo an employee to make the move. It also allows you to demonstrate your potential to work remotely. Over the course of the period, the company begins to develop a dependence on you, allowing you to renegotiate your terms before you commit.
Terms to Consider for a Temporary Executive Relocation Package
There are six key components to consider in temporary relocation packages.
- Transportation: Local car rental, air travel, and more.
- Remote Service: Allowance for you to work remotely in a home office or from an office in your current location.
- Temporary Residence: A furnished apartment or another residence for you to occupy throughout the period or compensation appropriate to cover these costs.
- Commuting: Reasonable allowance for visits home if the temporary relocation requires you to be on-site.
- Terms of Temporary Relocation: The general period agreed upon for a temporary relocation as well as any benefits.
- Tax Structure: Structures the temporary residence as a company asset to prevent you from having to pay taxes on it.
Terms for a Permanent Relocation
As you negotiate an executive relocation package for a permanent move, consider these terms.
- Costs of Securing a New Home: Any costs associated with the search and closing of a new home, including trips to the new location to visit houses.
- Moving Expenses: Packing and shipping household items, vehicles, moving companies, moving insurance, and other relevant costs.
- Costs of Leaving the Old House: Any costs related to breaking a lease or selling a home.
- Residual Expenses: Dual mortgages, compensation for selling a property at a loss, etc.
Other Factors to Consider
Before you sign an executive relocation package, there are many things to consider. Be sure you never overlook the impact on your family, though. Ask yourself and your loved ones these questions.
- Is everyone on board with the move?
- What is the change in the cost of living, and does it align with your finances?
- How does the move impact your spouse’s career?
- Is the new location an area you picture your family long-term?
- How does the move impact the lives and education of your children?
- Is the new location beneficial to your career? Are there additional prospects in the area?
Ready to Negotiate Your Executive Relocation Package?
As you negotiate your executive employment agreement, be sure you understand the terms across the board. Often, employers allow executives to include different terms in their agreements. However, it’s important that you understand the long-term impact of the verbiage.
That’s why it is crucial to work with an employment lawyer with the experience and expertise to negotiate an executive relocation package that benefits you. Moreover, it provides you with an advocate dedicated to pursuing and protecting your best interests.