Professional tips for calculating realistic relocation allowance

Global economy is uneven, and in some countries, basic costs of living are much higher. This is a factor that must be accounted for when pondering how much to increase salaries of employees sent on international assignments. Even the most experienced managers can make mistake while estimating costs in a remote and unfamiliar market, which is why proven tips can be more valuable than gold when it comes to relocation allowance size.

In modern business, employee relocation is a standard tool that multinational firms frequently use to meet their staffing needs. When the employees are sent to a market with a higher living standard, they need to be reimbursed for the expenses they will be forced to endure by relocating, or otherwise few quality workers would accept the job. Deciding how much reimbursement would be fair can be difficult to assess from afar – too low figure might leave the employee disgruntled, but too high allowance could become a burden for the company budget. This dilemma can’t be answered with a one-size-fits-all solution, but there are some guiding principles that might be of assistance. This list of professional tips contains good business practices for employee relocation that are valid regardless of the country where you intend to send your workers.

Tip #1 - Learn the local landscape from online sources

The size of relocation allowance should be based on two objective factors – average level of pay for similar service at the intended destination, and the difference in living expenses between the two countries. In practice, companies need to gather accurate information about the conditions in the target market, which can be done conveniently and affordably through the internet. One possible difficulty is the language barrier – local sites are likely to be in a foreign language and online translation tools just can’t be trusted. That’s why it’s best to cross-reference all data from multiple sources.

Tip#2 - Account for long distance travel and communications

The reality of international assignment is that it involves a lot of trips back and forth, and even more long-distance calls and Skype conversations. At least a portion of those expenses comes from the employee’s pocket, which can become an issue if the assignment lasts for several months or longer. Adding a little extra on top of the salary to cover those expenses sends a clear message that the company understands the sacrifices that employees are making.

Tip #3 - Avoid paying ‘foreigner fees’ on apartment rent and services

In some countries, landlords and service providers are prone to overcharging foreigners. Since the expenses are typically covered by the headquarters, the employee that uses the apartment or services has no reason to question the numbers, simply passing the bill to his superiors. As this type of abuse frequently goes undetected, those charges continue to undermine the viability of international presence. That’s why it’s very important to ensure that all contracts are signed only with reputable providers who don’t engage in price inflating activities.

Tip #4 - Hire professionals to negotiate better deals

The easiest way to navigate employee relocations is to enlist top professionals to advise you through the process, and there is no better partner for this role than Brunel. Based on our direct presence in key global markets and intimate understanding of local economies, we can help you calculate the most appropriate relocation allowance on every occasion and negotiate better deals on a number of necessities, allowing you to operate prudently while still being fair towards your workers.