If you provide relocation support to junior employees yourself, you may be saving money in the short run. But it is a false economy. Here's why.
The pale shadows of apricots
When I was little, my grandmother used to spend a lot of time and effort making apricot jam from scratch.
If now you think "aww... memories!", beware: The puny, shrivelled apricots she used came from a set of trees in her garden that were probably cursed. Or it was the altitude, I don't know. In any case, the jam ended up being pretty lousy - sour, lifeless, mediocre.
But as it was homemade (“with much love”, as we were frequently reminded), it was the family’s duty to consume a whole palette of pale yellow sugary paste, and not all of it was used in its intended way, if you catch my drift. Usually around Easter time, we finally ran out and could start buying tasty supermarket jams.
I see many parallels with my grandmother when looking at companies’ attempts of providing in-house support for their relocating employees. They are made with a lot of love, but often aren't very good and end up costing a lot more money and effort than buying from the professionals.
Some cost are obvious - paying for short term or emergency accommodation, assisting with administrative errands, answering repeated questions. Other cost are hidden and can be opportunity cost - how many more and better candidates could you attract if you advertised professional relocation support in the job advert?
Whether obvious or not, these cost pile up. We wanted to answer the question: How much? How much does a company who does junior employee relocation in-house spend on it? We managed to put a number on it and learned a few surprising things.
Doing non-core-competency tasks in-house is expensive and/or of poor quality
Large companies regularly hire junior employees from abroad and relocate them to another city. In this process, they have different tasks to do:
- Provide information and assistance - From recommendations of areas to live in, to instructions for registering with local authorities and healthcare providers.
- Process requests for advance salary payments to help the employee with their flat deposit.
- Pay for temporary accommodation
- And lots more
Many of these tasks are repetitive, but few companies implement systems to make things more efficient. This area is usually not considered important enough to deserve extra attention. In larger companies, individual HR staff then take the initiative and create ad hoc shortcuts and workarounds to ease the workload.
Not only is relocation support for junior employees not the core competency of a company, it’s not even the core competency of an HR team - who rightly focus on big issues like training, incentives and career progression. So it’s only natural that companies don’t invest strongly to create efficient systems.
However, this (justifiable) neglect comes with a price tag.
Areas of waste
We spoke to different companies who, before working with Benivo, did their relocation support in-house. We uncovered four main cost areas:
Cost comparison - Relocation support done in-house vs. using Benivo
1) Providing temporary accommodation
Before working with Benivo, some of our customers used to provide short term accommodation for their new junior staff. One used to pay between 7 and 10 hotel nights for their UK-bound junior team members. This amounted to an average cost of £850 per new employee.
Of course, there is no requirement for a company to pay for an employee’s accommodation, but the company in question was doing it due to a lack of alternatives. They wanted to be helpful but couldn’t find a more efficient way of easing the burden for new arrivals in their city. Often, they also picked up the bill when an employee had an emergency (e.g. water damage) in their chosen flat and didn’t have friends to stay with, given that they had just arrived in the new city.
Using Benivo, this customer now can eliminate paying for temporary accommodation. The new employees are able to find long term accommodation via Benivo before their move, and are paying their own rent.
2) Demands on the HR team’s time
Questions from new starters have to be taken care of, even if the HR team has heard them many times before.
Before working with Benivo, our clients’ HR teams used to spend around three hours of their work time on each new starter, only on matters of relocation and settling in.
Working with Benivo doesn’t completely eliminate this time requirement. After all, Benivo need a one-off briefing, and there might be ad hoc tricky questions that Benivo needs an answer to. But questions from the employees to the company’s HR team usually stop completely and get redirected to the Benivo moving specialist. On average, we manage to reduce the HR team’s time spent by a net 90%.
On top comes the need to keep the information provided to job starters up to date. Addresses, administrative requirements and errands change - this has to be tracked and maintained. A cost that increases almost linearly with every new company location.
At an average salary cost of £40,000 per HR employee, reducing a three hour outlay to less than twenty minutes one hour represents a “cost saving” of £65 per relocating employee.
We write “cost saving” in quotation marks because, of course, this is not money instantly saved - we don’t want to lose this HR worker. Rather, it represents an inefficiency and the potential to free up an employee’s time for work on higher value tasks.
3) Employee productivity
Company employees using Benivo have two big advantages that reduce their time spent on errands:
- They find long-term accommodation before they start work. Via the Benivo platform, they can research neighbourhoods, browse flats on offer, and put down a deposit on one they like.
- They find a neatly organized to-do list with all relevant information on what administrative tasks await them after their move - what services they have to register and how to do it.
Companies offering relocation support in-house most often do not have a database of accommodation options, and their to-do lists are usually centered on work-related topics (e.g. what to bring on the first day of work) and less on the new employee’s life circumstances.
Their employees therefore spend much of their first work weeks on flat-hunting and administrative errands and are less productive as a result.
We estimate that a new starter, staying in a hotel or AirBnB for a few days, on average spends 20 of their working hours on finding long term accommodation. Researching neighbourhoods, scheduling and travelling to and from viewings, doing paperwork. Another 10 hours usually gets eaten up by administrative tasks like researching mobile phone contracts, utilities, running errands with local authorities and sorting out healthcare. In confidence, most employees admit that they do not attempt to recuperate these hours by working evenings and weekends. It’s tacitly considered to be par for the course when starting work in a new city that some of their work time will be spent on personal errands.
30 hours for someone making £22k per year (average UK starting salary for graduates) is worth around £400.
→ Employee productivity goes down by £400 when junior employees have to sort out their accommodation and admin tasks during working hours.
Like in the example before, this cost can’t be instantly saved when using Benivo, but it represents an inefficiency.
4) Recruitment downsides
This area is difficult to quantify, but it’s clear that the number is big enough to deserve a discussion. Succinctly put:
By offering (and advertising!) professional relocation support, you attract more and better workers and improve your staff retention.
Let's look at the why:
More candidates, better hires
Once the job offer is out, the company needs to sell itself to the candidate. The best students and graduates will usually have multiple offers and evaluate companies based on a lot of different factors - money, people, location, growth opportunities.
Professional relocation support will not be the main reason a candidate chooses one employer over another. But providing and advertising it has far more value than its low three-digit cost per employee (with Benivo) would suggest: Relocation support is traditionally reserved for senior employees, so by providing it to junior staff, the company is sending a powerful message to the desired candidate: You matter to us. You’re not just a cog in a machine. We care and want to support you in this difficult undertaking.
A thoughtful gift that cost £20 can have bigger subjective value than receiving £100 in cash. Similarly, when a candidate has the right resources and technology to turn to in a time of great personal and professional change, it can be priceless.
“Benivo was one of the best things that happened to me when I relocated to London. Finding a flat to rent from abroad, where you don’t exactly know who you’re dealing with, is scary. Benivo made it a much better experience."
Maya Izraeli, software engineer, Tel Aviv
And being able to count on an employer who goes above and beyond their expected obligations can create more loyalty and gratitude than the promise of a bonus.
This way, a company driving home the message that they will support junior employees in their relocation has a competitive advantage - not only will it have more applicants, but tip some of the better ones who are on the fence, choosing between employers.
Bringing in marginally better candidates can have an extraordinary impact in revenue generating roles (a 10% better salesperson improves the bottom line by 10%). In some areas like programming, differences between good and great can be orders of magnitude (“A great writer of software code is worth 10,000 times the price of an average software writer” - Bill Gates)
In all these cases, the same principle applies: Better candidates bring better results and attract more good candidates.
No-shows are a frustrating part of a recruiter’s life. After hours of interviewing, reference checking, negotiating and paperwork, the new employee drops out a few days before their start date or, even worse, simply doesn’t show up on their first day. It happens to the best companies.
Having your new starters use Benivo gives you much better visibility on their pre-work activity level on the platform, which can be vital to anticipate problems. You can approach employees who barely log into their Benivo dashboard and don’t interact with the system (e.g. by looking for accommodation). You can ask them where they are in the relocation process.
This way, you can identify the inevitable drop-outs earlier and be better prepared for the headcount gap. And you can bring a few doubters back from the brink, by merely listening and inquiring if their concerns are something that you can fix.
An unexpected benefit of using Benivo is that more interns become permanent employees and fewer employees quit in their first months on the job. The conclusion is not scientific as we don’t have a control group to test against. Companies either fully use Benivo for all their interns and employees or they don’t - there’s no A/B tests being conducted. However, some of our customers were positive on this particular effect when we spoke to them.
This effect might stem from two interrelated factors:
- By offering Benivo, the company reduces a lot of stress for the new employee, which contributes to a more positive attitude towards the employer. Gratitude drives reciprocity which improves work morale.
- By having the logistics of the move sorted out early on, the employee has more time and headspace to make friends and build relationships inside and outside the company. Social connections are paramount to succeeding in a new location.
Benivo doesn’t only help with the logistics of the move. We also send the new employee a physical welcome pack and offer suggestions and coupons on leisure activities in their new hometown or region. We don’t only take care of the boring bits, but also guide them towards the fun.
Providing relocation support to junior employees by yourself can cost you three to four times more money than using a professional service like Benivo. And that doesn’t even take into account the opportunity cost from not optimising your recruiting and retention.
It wasn’t my grandmother’s core competency to make apricot jams. She didn’t have good raw materials nor good infrastructure (e.g. her kitchen didn't have running water). She would have done a better job at grandmother-dom by spending more time with her grandkids without falling asleep from exhaustion as soon as she sat down to play board games.
Some things can be left to the experts - especially when the alternative is so easy to come by.
If you would like to find out how Benivo can help you with relocating junior employees, drop us a line at firstname.lastname@example.org.