Turning to relocation candidates to fill challenging roles can be either a daunting task for employers or a successful hiring and retention strategy. An employer’s location may be remote, have a limited local workforce, or lack certain amenities that potential employees find appealing.  

No matter the reasons, sometimes it’s necessary to turn to recruiting relocation candidates. There are important considerations and different approaches to this hiring strategy for both the employer and potential employee. 

For example, when companies recruit employees to their locations, there is always the risk of high turnover rates. This is costly in terms of both time and resources invested in training new hires and the upfront reimbursement of relocation costs. 

How can employers avoid pitfalls in using this hiring method, and what are the alternatives? In this post, we will discuss the challenges of retaining relocated employees and offer two viable solutions that employers can use to increase retention rates. These include signing bonuses and retention or loyalty bonuses. 

The challenges of retaining relocation employees   

Retaining relocated employees presents unique challenges for employers. One of the most significant challenges is that the upfront investment in relocation costs can be substantial. Depending on the distance and cost of living, companies may be on the hook for transportation costs, temporary housing, and moving expenses. All these costs quickly add up, making it tempting to find reasons to avoid offering relocation packages. 

Even when companies offer relocation packages, there is no guarantee the employees will stay with the company for the long term. According to a survey by Atlas Van Lines, 43% of relocated employees leave their new jobs within two years of relocating. This high turnover rate can be attributed to several factors over a short period of time, including difficulty in adjusting to a new location, feeling disconnected from family and friends, and struggling to build a new social network.  

The costs of high turnover rates for relocated employees should not be underestimated. Beyond the costs of recruiting, training, and relocating new employees, high turnover can also affect morale, team dynamics, and ultimately, a company’s bottom line.  

With this in mind, let’s consider two solutions that can help companies in the retention of relocated employees. 

1. Offer a signing bonus in lieu of a relocation stipend  

One way to incentivize employees to stay with the company for the long term is to offer a signing bonus or relocation bonus instead of a relocation stipend or reimbursing all of part of relocation expenses. A signing bonus is a one-time payment to a candidate once they accept a new job offer. This is suggested as an alternative to offering a lump sum to cover the cost of movers and other moving expenses, house hunting, and many other associated relocation costs. Employers can offer a signing bonus to incentivize new employees to stay with the company for a set period of time, such as two years.  

This approach has several advantages above and beyond being easier for the employer to administer. As mentioned, a signing bonus can be a more cost-effective way of incentivizing employees to stay with the company, and the cost of a signing bonus is typically lower than the cost of a full relocation package. Second, a signing bonus can be an attractive incentive for employees who are considering relocating to a challenging hiring location. The upfront payment can help offset the costs associated with relocating, making the move more financially feasible.  

2. Offer a retention or loyalty bonus  

Another approach to incentivizing employees to stay with the company is to offer a retention or loyalty bonus, payable after six months or one year or longer on the job. This retention bonus can come from the budgeted base salary, making it a more sustainable solution in the long run.  

A retention bonus can be an effective way to keep employees motivated and engaged in their work, even in challenging locations. It can also help build loyalty and a sense of commitment to the company. Also, a retention bonus can incentivize employees to work hard and perform well, knowing their efforts will be financially rewarded in the long run.  

A retention bonus can also be structured in a way that incentivizes employees to stay longer with the company. For example, an employer can offer a tiered bonus structure with a higher bonus payable after two years or three years of service, or the structure could be tied in with salary increases. Depending on how the agreement is arranged, this approach can help increase retention rates and build a more committed and engaged workforce.  

Involve candidates in the decision process  

It’s essential for employers to recognize that there is no one-size-fits-all solution. When developing a relocation package, it’s important to consider the specific needs and circumstances of each potential team member. Share options with the candidate to learn what they find most appealing, then make a decision and ensure details are outlined in the job offer letter.  

This personalized relocation policy and approach to the relocation process builds a sense of trust and commitment between the company and team member, further cementing the likelihood of a long-term, mutually beneficial, and attractive hiring experience.  

For assistance in developing relocation packages or help in filling your most challenging roles, an experienced recruiter is a great partner. Reach out to me today to learn more about how I can help your company recruit and retain top talent, even in the most challenging hiring locations.