• “Out of the Box” Series – Part 2: Embracing Lump Sum Mobility Programs


    While most of our business processes and every day work procedures seem to be getting more sophisticated, we are seeing a trend toward simpler relocation policy design.  Comprehensive full service relocation programs are still the norm, however, the use of a lump sum approach seems to have taken hold. Though more common for new hires and junior roles, these policies are also starting to appear at managerial and even executive levels.  The times they are a-changing!

    Lump sum policies satisfy the requirements of the most basic relocations, but they do not always meet the greater needs of multi-faceted cases. Throw in the disruption of a spouse’s career and the need to find schools for the children, get the house sold, etc., and employees and their family can easily become overwhelmed, increasing the risk of a miserable relocation and, very possibly, an unsuccessful assignment.

    The lump sum approach addresses corporate fiscal requirements, provides employees with flexibility and is simple to manage. However, it is not tax effective for employees, leaves much of the relocation and integration to chance and, as such, is no guarantee of a consistently good relocation experience. In order to be effective, a lump sum relocation program must balance these pros and cons, and still reflect the corporation’s philosophy and objective of providing responsible employee support.

    The following are our “Out of the Box” thoughts on designing and managing a lump sum relocation program:

    “Lump sum” should not mean little or no corporate support; it is easily what the employee might perceive. Offer guidance with a list of vetted relocation industry suppliers who can provide a number of services at reasonable or possibly no additional cost. As an example of the latter, real estate brokers often include a number of destination services as part of the housing search.

    If you currently have a relationship with a relocation management company, ask what options they offer in the context of a lump sum program. If they aren’t helpful, there is a new generation of relocation companies that focus on self-managed moves and offer less costly web-based support.

    To complement and enhance the customizing nature of the lump sum program, offer some flexibility in the work schedule (e.g. flex time) during the relocation period to allow for settling activities such as arranging licences and registrations, opening new bank accounts, finding doctors and dentists.

    Promote the cost effectiveness of self-pack/unpack and self-load options, and combine them with the added benefit of work schedule flexibility as suggested above.

    As corporations can spend relocation dollars more tax effectively than employees can, you may want to create a managed lump sum program or capped approach whereby expenses are reimbursed through your organization up to a certain amount, to allow employees to benefit from a more tax effective process.

    Ask a staff member at the destination to “sponsor” the relocating employee. These sponsors can provide tips and assistance with many aspects of the relocation such as housing search and introductions for a variety of services as well as lend much needed moral support to an area newcomer.

    Lump sum policies are one of many approaches to managing employee relocation and, depending an organisation’s needs and objectives, can be very effective. Keeping an eye on the employee/family experience and tweaking the program when required will help keep the relocation return on investment positive.