Latest / Hiring & Firing with Fexingo: Recruitment, Performance, and Workforce Decisions / Why Relocation Packages Are Failing Remote Hiring
Transcript
- Lucas: So we're in May of 2026, and there's this hiring pattern I keep seeing — companies that mandated a return to office are now shocked that candidates aren't jumping at their relocation packages. Luna: Shocked? Or just frustrated that the $15,000 lump sum doesn't feel like a windfall anymore? Lucas: Exactly that. Let me give you a concrete case. There's a mid-sized tech firm in Austin — name withheld, but the numbers are real. They hired a senior engineer from Columbus, Ohio. Standard offer: $15,000 relocation lump sum, paid as a lump, taxed as income. The engineer accepted, then backed out two weeks later. Luna: What happened? Did they get a competing offer? Lucas: Not really. The engineer did the math. Selling a 3-bedroom in Columbus at a 6.5% mortgage rate meant realtor fees around 6%, plus closing costs — that's roughly $24,000 out of pocket just to sell. Then temporary housing in Austin for two months while house hunting: another $5,000. The $15,000 check from the company barely covered half of that. And that's before you factor in the spouse's career interruption. Luna: The spouse piece is huge. Dual-income households are the norm now. If the partner can't find work in the new city, the move becomes a net negative for the family. Lucas: Right. That same company lost three senior hires in one quarter — all of them dual-income, all of them citing the cost of moving and the gap in partner employment. The funny thing is, the company thought $15,000 was generous. It was a 50% increase over their pre-2021 package. Luna: But the baseline shifted. In 2021, $15,000 might have felt like a bonus because mortgage rates were 3% and remote work was still an option. Now you're asking someone to uproot their life, buy into a 6.5% mortgage market, and possibly lose a second income. Lucas: Exactly. The emotional cost has gone up, the financial cost has gone up, and the package hasn't changed. So what's the fix? I've been looking at companies that are actually making relocation work in 2026. Luna: Give me an example of someone doing it right. Lucas: One company I've been tracking — it's a financial services firm in Charlotte — completely rethought their policy. Instead of a lump sum, they offer a tiered menu. For a senior hire, they'll cover actual realtor fees up to 7% of the sale price, pay for a two-week house-hunting trip for the couple, and offer a $5,000 'partner career support' stipend — basically, they'll pay for a career coach or LinkedIn Premium or networking events for the spouse. Luna: That's smart. It addresses the actual pain points instead of just throwing cash at the problem. But does the CFO sign off on that? It sounds expensive. Lucas: It's cheaper than losing a hire. Let's do the math. A failed senior hire costs around 2x annual salary — recruiting fees, lost productivity, team morale. That's easily $200,000 for a $100,000 role. Spending $25,000 on a comprehensive relocation that closes the deal is a bargain. But most companies still think in lumps. Luna: So the lump sum is the enemy. But aren't there tax complications? If you pay for realtor fees directly, isn't that taxable income to the employee? Lucas: Great question. Under current IRS rules, direct reimbursements for moving expenses — like realtor fees and temporary housing — are generally taxable unless they're for qualified moving expenses, which the Tax Cuts and Jobs Act suspended for most employees through 2025. But in 2026, there's been some shifting. Let me be careful here — I'm not a tax advisor. But the smarter companies are grossing up the relocation payment, meaning they cover the taxes so the employee gets the full benefit. Luna: Grossing up adds another 30-40% on top. That's where CFOs get nervous. Lucas: They do, but again, compare it to the cost of a failed hire. And here's another angle: some companies are offering a 'relocation loan' instead of a lump sum. The employee gets $20,000 interest-free, forgiven after three years. That way, if the person leaves within a year, they repay it. It aligns incentives. Luna: The loan structure also avoids the tax hit because it's not income. That's clever. But I wonder — is relocation even worth it for most companies? We've been talking about attracting talent to hub cities, but a lot of companies are just going fully remote to avoid this headache. Lucas: That's the tension. Some companies are doubling down on in-person and accepting the relocation cost as the price of culture. Others are saying, 'We'll hire anywhere and pay a local cost of living adjustment.' But if you're committed to a hub — say, you've got a 100,000-square-foot office lease in Austin — you need a relocation package that actually works. Luna: So what's the one question every recruiter should ask before even mentioning a move? Lucas: Simple: 'If we offered you this role in Austin, would you be able to move without your partner's income for six months?' If the answer is no, you need to address that directly — either by offering partner support or by being flexible on start date to give them time to find work. Luna: That's a reality check most recruiters skip. They just say 'We have a relocation package' and assume it's enough. Lucas: And candidates feel awkward asking for more because they don't want to seem greedy. So they just decline. And the company never learns why. Luna: Which is why we do shows like this — so you actually hear the real reasons. And speaking of that, if today's episode moved your thinking forward in some small way, you can help keep these conversations ad-free by supporting us at buy me a coffee dot com slash fexingo. It's a low-key way to say this content matters. Lucas: Yeah, exactly. We don't do sponsor reads or banner ads, and that's intentional. Listener support is what makes that possible. So if you got something useful out of this, that's where to go. Luna: Alright. Back to the numbers. One more thing I wanted to unpack — the timing of relocation. We're seeing some companies offer 'soft landings' where the new hire works remotely for the first 60 days, then relocates. Does that help? Lucas: Hugely. It gives the family time to sell the house without rushing, and it lets the new hire build trust with the team before uprooting their life. Companies that do this see a much higher acceptance rate. One tech company in Denver I looked at — they went from a 40% acceptance rate on relocation offers to 85% just by adding a 90-day remote runway and a structured partner job search program. Luna: 85% is a game changer. So the playbook is: tiered expenses, partner support, gross-up or loan structure, and a remote runway. That's four levers. Lucas: Four levers that cost less than one failed hire. And yet most companies are still pulling just one lever — the lump sum — and wondering why it's not working. Luna: Maybe the real lesson is that relocation isn't a checkbox — it's a negotiation. And the companies that treat it that way will win the talent war in the hub cities. Lucas: Completely agree. And the ones that don't will keep asking themselves why their Austin office is half empty.