lump sum: a dangerous trend
DESCRIPTION
Lump sums are a great way to reimburse employee relocations, but they need to be managed with support.TRANSCRIPT
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Lump Sum: !A Dangerous Trend
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Before we get started,
you should know…
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Lump sums are
fantastic
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When used properly, they are an extremely
effective form of reimbursement.
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In August 2013, 69% of organizations agreed that the advantages of
lump-sum-only policies outweigh the disadvantages.*
*ERC Study of 142 organizations
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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.
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Lump sum without guidance means that your transferee has…
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No professional expertise
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A lack of communication
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No education on tax ramifications
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A risk of working with unqualified vendors
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A lack of robust solutions for renters
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This is especially a problem for your Millennials, who are the
largest lump sum recipients.
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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
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What does this mean?
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It means you need to give your transferees
options
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Options that will appeal to all of your
relocating generations
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There are a few different routes you can take in terms of the lump sum policies
your company chooses to offer
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Flexible Allowance Plan
This plan, while it requires a lot of monitoring and receipt keeping,
is the most cost effective.
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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.
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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.
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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)
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Relocation Technology
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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
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Relocation technology is able to…
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Lift the burden off your company in having
to be available for constant guidance
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Give the employee the support they need from you 24 hours a day, 7 days a week
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Offer options for tiered relocation policies
(Not everyone needs a full service relocation package, i.e. interns)
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3 major components
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1 - Education
Relocation technology provides destination information curated for
employee, teaching the transferee about the relocation process and creating
excitement.
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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.
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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.
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Employers are able to monitor their employees and
see how they are moving along in their relocation
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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.
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As you can see, with the right support…
lump sum policies are
highly effective
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Just make sure to offer them
wisely!