Estimating the Hidden Costs of Relocation Stress

Relocation stress is by its nature a “soft” concept that can be very difficult for business decision-makers to recognize at all, let alone grasp just how much it may be costing them. It is an example of a large hidden cost to business that can be addressed and mitigated if recognized.  When we conduct free relocation stress cost analyses, there is one general pattern we see in the reaction—no matter how many times that we say up front that relocation stress costs are large, people are consistently surprised with the level and magnitude this soft and normally hidden cost is having on their organization.  The table below offers a generic cost estimate that does not consider cross-company variation.  In general, however, we keep the numbers on the conservative side—for many companies these costs will be substantially higher.

 

Total Impact of Relocation Stress as a % of Salary for Newly Relocated Employees
Turnover 5.0%
Reduced Productivity 10.0%
Indirect Transition Costs 6.2%
Health Care 3.6%
Paid Time Off 1.6%
Productivity Spillover 1.0%
TOTAL 21.2%

 

Using this percentage on a hypothetical (but realistic) company relocation stress can cost 4.2 percent of all of the wages paid by the company!  To put this in perspective, this is close to the same amount that companies pay on average for Retirement and Savings plans.

To learn more about the financial and economic factors surrounding relocation stress of new hires and transfers, including other hidden costs to businesses, and effective strategies and techniques businesses can utilize to counteract these costs, get our new book here.