Lump Sum: A Dangerous Trend
Lump Sum: !A Dangerous Trend
Before we get started,
you should know…
Lump sums are
fantastic
When used properly, they are an extremely
effective form of reimbursement.
In August 2013, 69% of organizations agreed that the advantages of
lump-sum-only policies outweigh the disadvantages.*
*ERC Study of 142 organizations
That being said, while lump sum has its advantages… …offering it as a stand alone benefit isn’t enough. There is so much that goes into a move that people don’t consider.
Lump sum without guidance means that your transferee has…
No professional expertise
A lack of communication
No education on tax ramifications
A risk of working with unqualified vendors
A lack of robust solutions for renters
This is especially a problem for your Millennials, who are the
largest lump sum recipients.
Millennials
• Born after 1980 • Grew up with the internet • Desire instant gratification and structure • Gravitate towards text/email – NOT phone • Less concerned with privacy • Want clear visibility
What does this mean?
It means you need to give your transferees
options
Options that will appeal to all of your
relocating generations
There are a few different routes you can take in terms of the lump sum policies
your company chooses to offer
Flexible Allowance Plan
This plan, while it requires a lot of monitoring and receipt keeping,
is the most cost effective.
The amount available in each category is (as the name suggests)
flexible. If a transferee under-spends in one category, the remainder can be shifted around wherever necessary.
Capped Allowance Plan
These plans are great for the employer, but they come attached with restriction.
If you underestimate a cost and it ends up
exceeding the allotted budget, your transferee can be left feeling
overwhelmed and abandoned.
On the contrary, sometimes employers give more than they have to.
Not all moves are equal, so giving a flat lump sum rate isn’t always the best route to take.
(Even though it might be the easiest)
Relocation Technology
Relocation technology provides information that typically you as the employer would be responsible for, such as:
• Transferring utilities • Housing information • Lists of vetted vendors • Public transportation • Educational information • City and neighborhood guides
Relocation technology is able to…
Lift the burden off your company in having
to be available for constant guidance
Give the employee the support they need from you 24 hours a day, 7 days a week
Offer options for tiered relocation policies
(Not everyone needs a full service relocation package, i.e. interns)
3 major components
1 - Education
Relocation technology provides destination information curated for
employee, teaching the transferee about the relocation process and creating
excitement.
2 - Managing the Relocation
Relocation technology allows the employee to move at their own pace by providing online support 24/7 in a centralized location, as well as giving
access to vetted vendors.
3 – Policy and Budget Management
Relocation technology allows you to distribute lump sum in a way that manages personal
relocation budget, handles employer-covered categories, reports and tracks progress, and
monitors tax implications.
Employers are able to monitor their employees and
see how they are moving along in their relocation
Any kind of assistance that you can offer your transferees will not only be appreciated, but it will help make the
relocation cost effective for both employer and employee.
As you can see, with the right support…
lump sum policies are
highly effective
Just make sure to offer them
wisely!