When an employer negotiates hiring terms with a job candidate from outside the organization’s city or market, a question that often arises is whether to offer candidate relocation assistance or a signing bonus, which can also serve as a relocation stipend. 

While all methods don’t work the same way, each is common and quite successful in attracting, incentivizing, and onboarding top talent. Relocation support as part of the hiring strategy shows commitment from the company and makes the transition easier (and often, possible) for the new hire. 

In this blog, we dive into the details, pros, and cons of each model to help hiring managers and executive decision makers determine what is best for the business and a particular candidate. 

A high-level look at how relocation options and expenses differ 

A relocation package (full or partial) can include reimbursements, packing and moving services, assistance in finding local housing, travel costs, and in some instances, an allowance on top of these services. Alternatively, a signing bonus or relocation stipend is usually a one-time, up-front cash payment that makes the job offer more attractive or helps to offset a candidate’s moving costs. 

For all options, including a hybrid option and other creative methods discussed below, monetary value widely varies based on the role the candidate will assume, the distance involved in the relocation, whether the candidate has a family, whether the candidate has a home to sell or if temporary local housing will be needed, differences in the cost of living, and many other factors. 

Relocation packages can be full or partial 

The average relocation package costs employers between $19,309 and $24,216 for new hires who are renters and between $72,627 and $97,116 for homeowners. Some employers prefer to manage the entire relocation process by direct billing service providers, while others use a relocation management company, and still others through reimbursements to the new employee. 

Employee relocation packages typically cover expenses for common items, including a moving company to pack and move household goods, transportation and travel expenses for food, lodging, and gas, storage expenses for belongings, and at times, temporary housing and an apartment or realtor fee. Costs involved in selling an existing home or purchasing a new one can also be included, along with employment assistance for a spouse or partner and school enrollment fees for children. 

Senior- and executive-level job candidates usually receive the most comprehensive relocation packages, although sought-after candidates are also in a position to negotiate greater cost assistance. Small to mid-size organizations may take an alternative approach, such as those described below. 

Signing bonuses or relocation stipends offer greater flexibility and resources 

A signing bonus, or sign-on bonus, is a simple solution that helps organizations quickly attract top talent, especially in a competitive industry or hiring market. It is essentially an up-front incentive to join and stay with the company long-term, and it can be used by the new employee to cover relocation costs. Similarly, a flat relocation stipend, or allowance, is also paid up front to the new hire. 

These options are simple for both the employer and candidate, with far less administration required of the employer and in which the candidate manages the logistics of the move on their own terms. 

With these hiring and relocation incentives for candidates, there are no restrictions and receipts are not required by the employer. The new employee spends the money however they choose. However, it’s important to stipulate the official start date of employment in the hiring terms to ensure the employee is on board at the company in the mutually agreed upon timeframe (a particular date or week). 

Many employers are choosing to offer hybrid relocation assistance models 

Increasingly, organizations are blending the above approaches by offering full or partial support in the form of a relocation package, alongside the more flexible, upfront signing bonus or relocation stipend. This balances efficiency and provides a better overall experience for the candidate in moving, settling in, and onboarding with the company. 

Give potential employees a say in your decision process 

Circumstances, needs, and preferences are different for every candidate, so it’s smart to include your potential new hire in the conversation around relocation support. For example, since relocation packages, bonuses, and stipends are taxable income for most taxpayers, a candidate may have budget considerations that impact their preference. 

Once you determine an option or options that are best for your company, share them with the candidate, get their input, and then make a final decision. Be sure to outline the specifics and terms in your written job offer letter to be signed by both parties. 

This personalized approach builds trust, a positive hiring experience, and the likelihood that the new employee will stay long-term. 

Establish a clear policy and retention terms, and consider the benefits of creative incentives 

Retaining relocated employees can be challenging, so it’s important to consider the return on your relocation support investment during the hiring process. Given the substantial cost of any relocation assistance model, employers want assurance that the candidate will stay – and to know what measures they can take to protect their investment. 

To this end, and as mentioned above, policies and terms around moving support must be negotiated before a job offer is finalized. The terms should cover specifics for any of the options described above. To further protect your investment, you might choose to offer a split sign-on bonus or relocation stipend – one up front and one after a year – or a commitment to stay for a designated period of time.  

There are many ways to structure your model: For example, you might consider offering tiered retention or loyalty bonuses, paid annually over two to three years, with the amounts increasing each year. Increasing financial rewards over time are a great way to incentivize relocated team members to stay. 

The costs of relocating people and providing bonuses or stipends add up fast, so the bottom line is to be clear with the candidate in the job offer letter, so they’re fully aware that the investment goes both ways. 

Key takeaways to support your decision process 

• Choices: When employers determine the need to support a job candidate’s move, they typically choose between a structured relocation package, a signing bonus, a relocation stipend, or a tailored (hybrid) combination of these to offset the costs of relocation. 

• Relocation packages: These provide targeted, employer-managed support for actual moving expenses, housing, and logistics. This approach reduces risk and improves the transition experience for the candidate; however, it comes with higher administrative complexity and cost. 

• Signing bonuses and relocation stipends: These offer candidates a simple, flexible lump sum to accelerate job acceptance and reduce the burden on the employer; however, they shift the responsibility of relocating to the candidate and don’t address the full gamut of practical challenges involved in relocating. 

Let us help you design a perfect package or incentive to relocate your new hire 

If you would like to discuss an ideal approach to relocating an upcoming hire in greater detail, or if you need top-tier candidates for a key role, reach out to Goodwin Recruiting. We have great intel to share with you on the creative solutions companies are using to attract and relocate the best talent.  

Contact one of our expert recruiters today.