Relocation Reimbursement

Multiple Methods Still Favored, More Transferee & New Hire Differentiation

The continued use of multiple reimbursement methods shows how companies tailor assistance to answer the needs of employees and businesses. For the third year, full reimbursement for new hires (42%) remains near the lowest level historically (36%-38%, 2015-2016), out of favor in comparison to lump-sum payments (53%). Full reimbursement for transferees rebounds (65% vs. 55% last year) and is now similar to highs of the past twelve years (63%-66%). A notable change is the reemergence of partial reimbursement for new hires or transferees among nearly half (48%) of firms. This number was closer to a third the previous five years, now returning to levels seen for new hires from 2009-2011 (46%-51%) and surpassing the 2011 peak for transferees (47%). Lump-sum usage for transferees also jumps (55% vs. 42% last year) to the highest level historically, even above the highs reported from 2011-2015 (47%-49%). It also moves upward for new hires (53% vs. 45% last year) falling in line with historical usage by about half of firms since 2008.

For transferees, reimbursement methods this year are similar across company size; around two-thirds use full reimbursement, over half use lump sums, and roughly half use partial reimbursement. For new hires, however, differences emerge by company size. Large firms are more likely than small firms to offer full reimbursement (48% vs. 37%), while both small and large firms are more likely than mid-size firms to offer lump sums (56% and 60% vs. 43%). Use of partial reimbursement for new hires is similar at firms of all sizes, with around half offering it.
The percentage of large firms using full reimbursement is near historical lows for both transferees and new hires. However, among small firms, full reimbursement for transferees jumps to the highest level on record (65%), far more than last year (47%). Full reimbursement for new hires also increases (37% vs. 25%) but remains near the lower ranges historically. Mid-size firms also report an increase in full reimbursement (67% vs. 55% last year) returning to a historically normative range after last year’s low, while it remains near historical lows for new hires.
After dipping slightly last year, use of lump sums for transferees is now at the highest level historically, driven primarily by vast increases in use among large firms (61% vs. 45% last year) and small firms (54% vs. 38% last year). For mid-size firms, usage returns to historic norms of the past nine years (51%). A similar trend emerges in lump sum benefits for new hires: usage is at the highest levels historically for large (60%) and small (56%) firms, but it trends closer to the lower range of the past decade (43%) for mid-size firms.

Companies estimate that roughly half of their relocations were either partially reimbursed or paid by lump sum only. Before the turn of the century, full reimbursement was by far the method used most frequently to cover costs for both transferees and new hires. As in recent years, firms continue to differentiate for full reimbursement (65% for transferees vs. 42% for new hires). While use of lump sums and partial reimbursement remain similar for transferees and new hires, current employees appear to receive greater benefit in the area of full coverage. Last year, large firms estimated over half of relocations were fully reimbursed, while mid-size and small firms estimated only four out of ten were.

Question 31-1

Extent company reimburses relocation expenses of transferees/new hires