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The Hidden Cost of Relocation: When Employees Leave After the Move
Everyone measures the cost of relocating an employee. Far fewer measure the cost when that investment walks out the door.
For many organizations, relocation accounting ends when the employee arrives, begins work, and the last relocation expense is recorded. But if that employee resigns a year later, the true cost of the move is rarely attributed to the original relocation investment.
Where Money Disappears
Ask any HR, Global Mobility, or Talent Management leader what makes relocation generally expensive, and they'll point to the obvious costs: moving the household goods, home sale, temporary housing, flights, hotels, and tax assistance or equalization for assignees abroad.
All true, yet that's not where the real money disappears.
Whether you're transferring someone across the country or sending them across the world, the big cost shows up later, after the boxes are unpacked, and the employee is on the job.
It’s when the employee you just spent months relocating decides to quit, and few companies count it against the original relocation spend.
The International Case
When a company relocates an employee and their family across borders or across the globe, the company’s costs and investment exposure are significant.
Long-term international assignments typically run $250,000 to $1 million or even more, with costs varying based on company goals, job role, country of repatriation, and assignment period. That's the investment.1
SHRM reports that a quarter of repatriates leave their employers within one year of returning, and roughly half are gone within two years. Findings point to a lack of promotional opportunities and the inability to capitalize on the skills gained abroad, according to SHRM's "Retaining Repatriates."2
The U.S. Domestic Case
On paper, domestic relocation may appear low- risk compared with international relocation——no visas, no cultural or language adjustments, and no repatriation necessary—but the trend is still visible.
On average, 11% of employees who transfer domestically leave the company within two years of relocating, according to SHRM.3 Those are employees walking away from a company that paid to support and develop them professionally.
A Structural Gap and the Cost of Losing Them
A few questions can help reveal whether the program has a structural gap:
- Does a formal career-management process exist for those who are relocating or on assignment?
- Is there a formal international assignee repatriation program tied to retention?
- Does the organization have an identified pipeline of candidates ready for U.S. domestic or global roles?
The company's investment in the employee and in their relocation or international assignment package is usually unrecoverable. When those individuals leaves, the company is not just facing a normal replacement cost. The company loses the relocation investment once, then pays again to replace the employee.
Analysis from the Center for American Progress, reviewing more than two dozen case studies of general employee turnover, found the typical cost of replacing an employee runs 16% to 21% of salary for most roles. It climbs as high as 213% for highly specialized or executive positions. To be clear, that figure is not specific to relocated or repatriated employees, but it is a baseline cost of replacing talent. Layer that onto a sunk relocation investment and the real, higher number is one most companies do not get around to calculating.4
Which is exactly why most companies may never see the full investment picture.
Action Steps
The place to start is before the move happens. Employers should know why the move is being made, what the employee is expected to contribute after arrival, and what would make staying worthwhile once the relocation is complete.
Practically speaking, employers need to:
- Look beyond the move itself
- Track what happens to relocated employees after they arrive, especially during the first twelve to eighteen months
- Compare that information against the purpose of the move, the cost of the relocation, and the role the employee was expected to fill.
If a relocation program has a clear plan for the move but no plan for what comes next, the retention risk is already built in.
That information becomes useful when it is shared across Mobility, Talent Management, HR, and business leadership. If relocated employees are leaving soon after a move, the question should not stop at what those relocations cost. It should be whether those employees had clear reasons to stay, defined next steps, and roles that made good use of the investments the organization had already made.
If you would like to discuss global relocation, mobility, or talent management strategy trends, please contact your NEI representative at any time.
The above article is provided for informational purposes only. Please consult your tax, legal, or accounting advisors before making any decisions or transactions.
Sources
The Hidden Cost of Relocation: When Employees Leave After the Move
Everyone measures the cost of relocating an employee. Far fewer measure the cost when that investment walks out the door.
For many organizations, relocation accounting ends when the employee arrives, begins work, and the last relocation expense is recorded. But if that employee resigns a year later, the true cost of the move is rarely attributed to the original relocation investment.
Where Money Disappears
Ask any HR, Global Mobility, or Talent Management leader what makes relocation generally expensive, and they'll point to the obvious costs: moving the household goods, home sale, temporary housing, flights, hotels, and tax assistance or equalization for assignees abroad.
All true, yet that's not where the real money disappears.
Whether you're transferring someone across the country or sending them across the world, the big cost shows up later, after the boxes are unpacked, and the employee is on the job.
It’s when the employee you just spent months relocating decides to quit, and few companies count it against the original relocation spend.
The International Case
When a company relocates an employee and their family across borders or across the globe, the company’s costs and investment exposure are significant.
Long-term international assignments typically run $250,000 to $1 million or even more, with costs varying based on company goals, job role, country of repatriation, and assignment period. That's the investment.1
SHRM reports that a quarter of repatriates leave their employers within one year of returning, and roughly half are gone within two years. Findings point to a lack of promotional opportunities and the inability to capitalize on the skills gained abroad, according to SHRM's "Retaining Repatriates."2
The U.S. Domestic Case
On paper, domestic relocation may appear low- risk compared with international relocation——no visas, no cultural or language adjustments, and no repatriation necessary—but the trend is still visible.
On average, 11% of employees who transfer domestically leave the company within two years of relocating, according to SHRM.3 Those are employees walking away from a company that paid to support and develop them professionally.
A Structural Gap and the Cost of Losing Them
A few questions can help reveal whether the program has a structural gap:
- Does a formal career-management process exist for those who are relocating or on assignment?
- Is there a formal international assignee repatriation program tied to retention?
- Does the organization have an identified pipeline of candidates ready for U.S. domestic or global roles?
The company's investment in the employee and in their relocation or international assignment package is usually unrecoverable. When those individuals leaves, the company is not just facing a normal replacement cost. The company loses the relocation investment once, then pays again to replace the employee.
Analysis from the Center for American Progress, reviewing more than two dozen case studies of general employee turnover, found the typical cost of replacing an employee runs 16% to 21% of salary for most roles. It climbs as high as 213% for highly specialized or executive positions. To be clear, that figure is not specific to relocated or repatriated employees, but it is a baseline cost of replacing talent. Layer that onto a sunk relocation investment and the real, higher number is one most companies do not get around to calculating.4
Which is exactly why most companies may never see the full investment picture.
Action Steps
The place to start is before the move happens. Employers should know why the move is being made, what the employee is expected to contribute after arrival, and what would make staying worthwhile once the relocation is complete.
Practically speaking, employers need to:
- Look beyond the move itself
- Track what happens to relocated employees after they arrive, especially during the first twelve to eighteen months
- Compare that information against the purpose of the move, the cost of the relocation, and the role the employee was expected to fill.
If a relocation program has a clear plan for the move but no plan for what comes next, the retention risk is already built in.
That information becomes useful when it is shared across Mobility, Talent Management, HR, and business leadership. If relocated employees are leaving soon after a move, the question should not stop at what those relocations cost. It should be whether those employees had clear reasons to stay, defined next steps, and roles that made good use of the investments the organization had already made.
If you would like to discuss global relocation, mobility, or talent management strategy trends, please contact your NEI representative at any time.
The above article is provided for informational purposes only. Please consult your tax, legal, or accounting advisors before making any decisions or transactions.
Sources
The Hidden Cost of Relocation: When Employees Leave After the Move
Everyone measures the cost of relocating an employee. Far fewer measure the cost when that investment walks out the door.
For many organizations, relocation accounting ends when the employee arrives, begins work, and the last relocation expense is recorded. But if that employee resigns a year later, the true cost of the move is rarely attributed to the original relocation investment.
Where Money Disappears
Ask any HR, Global Mobility, or Talent Management leader what makes relocation generally expensive, and they'll point to the obvious costs: moving the household goods, home sale, temporary housing, flights, hotels, and tax assistance or equalization for assignees abroad.
All true, yet that's not where the real money disappears.
Whether you're transferring someone across the country or sending them across the world, the big cost shows up later, after the boxes are unpacked, and the employee is on the job.
It’s when the employee you just spent months relocating decides to quit, and few companies count it against the original relocation spend.
The International Case
When a company relocates an employee and their family across borders or across the globe, the company’s costs and investment exposure are significant.
Long-term international assignments typically run $250,000 to $1 million or even more, with costs varying based on company goals, job role, country of repatriation, and assignment period. That's the investment.1
SHRM reports that a quarter of repatriates leave their employers within one year of returning, and roughly half are gone within two years. Findings point to a lack of promotional opportunities and the inability to capitalize on the skills gained abroad, according to SHRM's "Retaining Repatriates."2
The U.S. Domestic Case
On paper, domestic relocation may appear low- risk compared with international relocation——no visas, no cultural or language adjustments, and no repatriation necessary—but the trend is still visible.
On average, 11% of employees who transfer domestically leave the company within two years of relocating, according to SHRM.3 Those are employees walking away from a company that paid to support and develop them professionally.
A Structural Gap and the Cost of Losing Them
A few questions can help reveal whether the program has a structural gap:
- Does a formal career-management process exist for those who are relocating or on assignment?
- Is there a formal international assignee repatriation program tied to retention?
- Does the organization have an identified pipeline of candidates ready for U.S. domestic or global roles?
The company's investment in the employee and in their relocation or international assignment package is usually unrecoverable. When those individuals leaves, the company is not just facing a normal replacement cost. The company loses the relocation investment once, then pays again to replace the employee.
Analysis from the Center for American Progress, reviewing more than two dozen case studies of general employee turnover, found the typical cost of replacing an employee runs 16% to 21% of salary for most roles. It climbs as high as 213% for highly specialized or executive positions. To be clear, that figure is not specific to relocated or repatriated employees, but it is a baseline cost of replacing talent. Layer that onto a sunk relocation investment and the real, higher number is one most companies do not get around to calculating.4
Which is exactly why most companies may never see the full investment picture.
Action Steps
The place to start is before the move happens. Employers should know why the move is being made, what the employee is expected to contribute after arrival, and what would make staying worthwhile once the relocation is complete.
Practically speaking, employers need to:
- Look beyond the move itself
- Track what happens to relocated employees after they arrive, especially during the first twelve to eighteen months
- Compare that information against the purpose of the move, the cost of the relocation, and the role the employee was expected to fill.
If a relocation program has a clear plan for the move but no plan for what comes next, the retention risk is already built in.
That information becomes useful when it is shared across Mobility, Talent Management, HR, and business leadership. If relocated employees are leaving soon after a move, the question should not stop at what those relocations cost. It should be whether those employees had clear reasons to stay, defined next steps, and roles that made good use of the investments the organization had already made.
If you would like to discuss global relocation, mobility, or talent management strategy trends, please contact your NEI representative at any time.
The above article is provided for informational purposes only. Please consult your tax, legal, or accounting advisors before making any decisions or transactions.
Sources
