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!