Tag: lump sum

Categories
Corporate Relocation Corporate relocation tips Domestic Relocation Domestic Relocation Challenges Domestic Relocation Tips

Employees Not Taking Advantage of Lump Sum Relocation Packages

pretty aftican american female shaking hands with her new boss
Business woman, b2b or handshake for collaboration, networking or success partnership deal for company support growth. Business people or HR shaking hands for welcome or thank you for job interview

Learn why it is essential for employees to utilize every penny possible in a lump sum relocation policy

What is a Lump Sum Relocation Policy?

A lump sum relocation package is a fixed sum of money employers provide to employees being transferred or newly hired. This money is given in place of relocation benefits like assistance with moving household goods, training in culture and language, or help finding a new home. Employers anticipate employees will use the lump sum payment to handle their relocation process.

Employers with employees who have recently graduated from college, individuals who contribute to the company, or those who are new to their careers may be the most suitable recipients for relocation packages that involve a lump sum payment. These workers typically rent their homes and have only a few belongings to relocate. Furthermore, they only sometimes demand substantial investments in talent acquisition since they are vying for positions at a lower level.

When it comes to companies hiring new employees or transferring them to higher positions, it is considered the best practice to offer a variety of advantages. Individuals at more elevated levels often necessitate a substantial investment in recruiting skilled individuals. Providing benefits that aid in successful relocations also leads to increased employee contentment.

Avoiding Risks with Lump Sum Packages

By offering lump sum packages versus a comprehensive relocation package, you may be putting your employees and your business at risk, cutting costs at the expense of employee satisfaction, loyalty, and productivity.

Firstly, it is common for employers to need more money in their lump sum compensation packages to fully cover the costs of relocating their employees. Even if employees can negotiate a higher lump sum amount, they still have to personally pay for relocation expenses, such as storage and labor, to unload their belongings. This is a frequently encountered situation for employees relocating with lump sum packages. 

In most cases, employees relocating with a lump sum package see the financial amount as a bonus and money to move with. The most straightforward example is employees might try to use a local moving company to save some of that cash instead of using a vetted van line company provided by their relocation management company. 

While it seems incredible that the employee can pocket the saved cash, much can go wrong in the relocation process. Using an unorganized household goods shipping provider that cannot handle a rushed family move can cause many more issues than solutions.

What Advantages Do Lump Sum Mobility Policies Offer?

Lump sum relocation packages offer benefits in streamlining the process for employers. The primary advantage is employers and their mobility managers face fewer complexities when providing relocation assistance. Supporting employees during their relocation is simplified to merely addressing inquiries regarding the availability of the lump sum funds.

Employers can also make things easier by simplifying their budgeting and forecasting processes. Instead of spending time and effort trying to figure out the exact costs of hiring or transferring employees, they can use a standard number that applies to all tiers of their relocation program.

GMS Is Here to Help

The corporate relocation specialists at Global Mobility Solutions (GMS) have assisted numerous clients in developing relocation policies that effectively attract and retain skilled individuals. With our expertise, we can help your company by offering exceptional relocation packages, ensuring a positive experience for transferees and new employees.

GMS became the initial relocation corporation to register as a .com officially. Additionally, they developed the inaugural online interactive instruments and calculators, which brought about a complete transformation in the relocation sector. GMS continues leading the industry by being the forerunner in innovative and technological solutions through their exclusive MyRelocation™ technology platform.

Contact our specialists to explore how your organization can utilize one-time relocation packages for new employees and transferees.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

Categories
Domestic Relocation Domestic Relocation Tips Domestic Relocation Trends Household Goods Relocation Best Practices Relocation Policy Review Relocation Programs

Lump Sum Relocation Packages: What are the Advantages? What are the Disadvantages?

Calm healthy businessman meditate at desk feeling zen no stress
Calm healthy businessman meditate at work desk feeling zen no stress free relief, mindful young man taking break doing yoga exercise relax breath fresh air for peace of mind sit in office cafe

Global Mobility Solutions recently surveyed its clients to determine the impact of lump sum relocation packages on their organizations. Industry trends arising this year are having a direct impact on transferees. Often these trends become visible through the use of business intelligence and data analytics. 

What are Lump Sum Relocation Packages?

Lump sum relocation packages are a specific amount of money that employers offer to transferees or new hires. This money replaces a number of relocation benefits such as household goods moves, culture and language training, or home-finding assistance. Essentially, employers expect employees receiving a lump sum payment to manage their own relocation process.

Advantages of Lump Sum Relocation Packages

Simplification

The advantages of lump sum relocation packages are related to helping employers simplify the process. The main advantage is that employers and their mobility managers have less complications around relocation support. Providing support during an employee’s relocation is reduced to answering questions about when the lump sum funds will be available.

Budgeting and Forecasting

Another simplification for employers revolves around budgeting and forecasting. Instead of working to understand the true costs of hiring new employees or transferring employees from one location to another, the budget process is tied to a number that is applied across the board based on tiers in the relocation program. An executive homeowner with a family relocating from Duluth, MN, to New York, NY is given the same lump sum payment as another single executive renter who is relocating from Las Vegas, NV, to Fort Wayne, IN. The renter will pocket a significant amount of money. However, the homeowner will not have enough funds to cover the costs of moving their family.

Disadvantages of Lump Sum Relocation Packages

Inadequate Coverage

Lump sum relocation packages make things easier for employers when it comes to administration and budgeting. However, there are several disadvantages employers are beginning to see in their organizations. First among these disadvantages are that many lump sum payments do not adequately cover all of an employee’s relocation costs. GMS’ 2019 Lump Sum Survey shows that employees are spending more, and sometimes significantly more, on their relocation than their lump sum payment. This includes:

  • 61 % of homeowners reporting spending more
  • 50% of renters reporting spending more

Employee Dissatisfaction

Ultimately, more than half of relocating employees do not receive enough lump sum cash to cover their expenses. Naturally, this results in a higher level of dissatisfaction with the organization’s lump sum relocation packages. Overall, dissatisfaction with lump sum payments follows these patterns:

  • 58% of homeowners reporting dissatisfaction
  • 53% of renters reporting dissatisfaction

Loss of Control

A significant disadvantage is the employer’s loss of control over how budget dollars are spent. Lump sum relocation packages disbursed directly to employees may result in company funds being spent on non-relocation expenses including cars, televisions, vacations, or any number of items. Funds spent on non-relocation expenses do not support the successful relocation of the employee. As a result, the relocation may be at higher risk of failure.

Inefficiencies

Many GMS clients achieve significant spending reductions with relocation programs that follow industry best practices. A major GMS client recently conducted an in-depth study of their relocation program expenses. This client learned that if their organization moved to a lump sum program, they might increase their relocation program expenses by 40%. In other words, by following industry best practices, this client keeps relocation budget dollars that otherwise would have been spent on inefficient lump sum relocation packages. Any GMS client can achieve the same reduction in relocation costs through:

  1. Benchmarking their relocation policy to industry best practices
  2. Efficient relocation program operation
  3. Providing support to transferees that they actually need
  4. Using business intelligence and data analytics to understand the true costs of their relocation program
  5. Utilizing a competitive vendor network of relocation service providers

What Does This Mean?

Companies that offer lump sum relocation packages could potentially save a significant amount of budget dollars by following industry best practices. Lump sum payments let employers simplify their internal processes related to support, budgeting, and forecasting. However, this simplification may be costing employers up to 40% or more of their relocation budget dollars. It also results in over half of transferees reporting dissatisfaction with their relocation packages.

What Should Employers do About Lump Sum Relocation Packages?

Employers with transferees or new hires that are recent college graduates, individual contributors, or new to their professional career may be the best candidates for lump sum relocation packages. These employees are often renters and may not have a significant amount of household goods to move to a new location. Also, they tend to not require a significant investment in talent acquisition, as they compete for lower tier positions.

For employers who have new hires and transferees at higher tiers, industry best practice is to provide a range of benefits. Employees at higher tiers often require a significant investment in talent acquisition. Benefits that help ensure successful relocations also result in higher employee satisfaction.

Industry Benchmarking Studies Help Employers Compare Their Relocation Program

GMS has recently published several Industry Benchmarking Studies to help employers learn whether their company’s relocation program is designed following industry-specific best practices. There are many benefits to a corporate relocation policy benchmarking. For example, employers can learn how lump sum relocation packages in their relocation program compare to those offered by competitors in their specific industry.

Industry best practice is to schedule a relocation program and policy review every 12 to 18 months to ensure your company maintains its competitive position. This review will also help your company learn about how the relocation industry is evolving to meet increased employee demands, including recently evolving trends for lump sum relocation packages.

Conclusion

GMS’ team of corporate relocation experts has helped thousands of our clients understand how to create relocation policies that attract and retain talent. Our team can help your company provide the best experience for transferees and new hires who have lump sum relocation packages.

GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation™ technology platform.

Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.

Contact our experts online to discuss how your company can leverage lump sum relocation packages for new hires and transferees, or give us a call at 800.617.1904 or 480.922.0700 today.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

Categories
Relocation Management Relocation Policy Review Relocation Programs

What are the Top 5 Benefits of Managed Cap Relocation Programs?

Happy couple sitting by the boxes in their new apartment and talking to each other on a coffee break.

Managed cap relocation programs provide several benefits for companies and transferees. These programs provide services and allowances up to a specific capped dollar amount. This amount is set by the employer and noted in the company’s relocation policy.

Companies seeking to develop a relocation program often inquire about traditional lump sum programs. However, once they learn about the top 5 benefits of managed cap programs, most companies prefer them over lump sum programs.

What is a Traditional Lump Sum Relocation Program?

A traditional lump sum relocation program is simple in its approach. Basically, an employer provides a relocating employee a specific amount of funds. The relocating employee works with a Relocation Management Company (RMC) to choose services within the parameters of their employer’s relocation policy. As a result, the employer has little involvement in the relocation beyond arranging the funds.

In a traditional lump sum relocation program, a relocating employee must:

  1. Review and choose van lines to move their household goods
  2. Pack their goods, or arrange for packing services
  3. Arrange travel to their new destination
  4. Find and arrange for new housing options
  5. Set up destination services including utilities and internet

What are the Disadvantages of a Traditional Lump Sum Relocation Program?

There are some disadvantages of a traditional lump sum relocation program. First and foremost is the relocating employee’s lack of expertise in making all of the arrangements to facilitate their move. Many people remember times they have moved to a new location, experiencing various challenges along the way. If these experiences are not all favorable, the memory of that experience may alter their perception of their new location, employer, or assignment. Also, any issues that arise may result in delays for the relocating employee to start their new position. If the lump sum amount is paid as a bonus on an employee’s paycheck, the amount will be taxed as income. As a result, this greatly reduces the amount of the relocation benefit to the employee.

Top 5 Benefits of Managed Cap Relocation Programs

Managed cap relocation programs offer several direct benefits for companies and relocating employees. The top 5 benefits of managed cap relocation programs are:

  1. Assists employers with talent acquisition
  2. Enables a strong focus on cost containment and savings
  3. Program administration requires minimal management resources
  4. Quick and easy implementation
  5. Requires limited quality assurance management

What Does This Mean?

Managed cap relocation programs include support services from the RMC. Relocating employees receive policy counseling from experts to help them allocate their relocation funds. The RMC answers employee questions and acts as a guide through their relocation process. Relocating employees in managed cap relocation programs experience fewer budget overages. Also, these employees consistently report higher satisfaction levels than those employees who use traditional lump sum relocation programs.

What Should Employers do Regarding Managed Cap Relocation Programs?

Companies currently looking to implement a lump sum relocation programs should consider implementing managed cap relocation programs. Companies will gain 5 distinct benefits by choosing this type of relocation program instead of a lump sum relocation program. Also, they will experience higher relocating employee satisfaction levels.

Conclusion

GMS’ team of global relocation experts has helped thousands of our clients determine the relocation program that is the best fit for their organization and employees. As a result, our team can help your company understand how to gain the 5 benefits of managed cap relocation programs.

GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation™ technology platform.

Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.

Learn best practices from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online to discuss your company’s interest in managed cap relocation programs, or give us a call at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

Categories
Relocation Management Relocation Policy Review

Lump Sum Self-Service with Payment Options for Relocating Employees

Men carrying carpet from moving van

What does a traditional Lump Sum relocation program entail as opposed to Lump Sum Self-Service? In traditional Lump Sum relocation programs, employees receive a specific amount of funds for relocation. They also work with a Relocation Management Company to select services within the parameters of their employer’s relocation policy. Global Mobility Solutions (GMS) can also arrange for relocating employees to receive a GMS MoveMoney™ debit card. With this card, funds are electronically transferred to the employee after their expense report is audited.

Lump Sum Self-Service

GMS is developing a new online Lump Sum Self-Service with Payment Options to provide relocating employees direct access to our network of suppliers through our proprietary MyRelocation™ website portal. Using the lump sum provided by their employer, the relocating employee will be able to choose any of the services and options within our network of providers. They will also be able to arrange payments directly to the providers. Furthermore, the employer does not have to track relocation expenses or be involved in the process. As a result, the relocating employee will have complete freedom of choice for their relocation process. They can utilize helpful packing and moving guides and other information as they manage their relocation.

Benefits of Lump Sum Self-Service

There will be several benefits to the Lump Sum Self-Service for relocating employees:

  • Immediate access to suppliers of proven quality and experience
  • Payment options with suppliers that are easy to set up
  • Information about services that they otherwise might not have found doing their own research
  • Anytime, anywhere access to the employee’s relocation information
  • Cost savings for the relocating employee with multiple suppliers bidding to provide services
  • Reduced administration costs and efforts for employers

Conclusion

Relocating employees provided with Lump Sum funds will soon be able to have access to a network of qualified suppliers through Lump Sum Self-Service. Asking providers to bid for services and choosing the lower cost options will help relocating employees save money for other relocation services. Employers choosing to provide Lump Sum funds to relocating employees should encourage the use of Lump Sum Self-Service with Payment Options.

The global relocation experts at GMS have the knowledge and expertise to help your company understand how to communicate the benefits of Lump Sum Self-Service with Payment Options to your relocating employees. Contact our team of experts to discuss your relocation policy needs, or call us at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

Categories
Corporate Relocation Corporate relocation tips Domestic Relocation Domestic Relocation Tips Global Mobility Global Relocation Global Relocation Tips Relocation Best Practices Relocation Management

The Real Truth: Managed Cap vs. Lump Sum

Managed Cap vs Lump Sum – Key Things You Need to Consider

As a mobility manager, lump sum payments might seem like the fastest and easiest method of providing your employees with the funds they need to move. However, when looking at managed cap vs lump sum, lump sum payments come with their own unique set of problems. Some of the challenges include:

  • Transferees often left alone in the relocation process
  • No cost controls and often budgetary overages
  • Limited process or service structure
  • Non-taxable benefits are lost
  • Frustrated transferees mean elevated HR involvement and escalations

Fortunately, a managed cap program alleviates many of the problems associated with a lump sum. It also provides:

  • The desired simplicity and predictability of a lump sum program
  • Enhanced employee tax benefits, resulting in more dollars for relocation.

Let’s see the difference between a $15,000 lump sum payment and the same $15,000 from a managed cap program:

GMS-Managed-Cap-vs-Lump-Sum-Chart

A Winning Scenario

The Managed Cap Program provides the transferee with $4,351 more for relocation services!

 

Modern Mobility Made Easy™

What this means for you and your relocating employees

A Managed Cap program will ensure that your transferees get the most out of their relocation dollars and that you will reduce the amount of administrative burden dealing with exceptions. Global Mobility Solutions – a leader in mobility management since 1987 – has expert relocation consultants who understand how a Managed Cap program can benefit you and your company. Contact Global Mobility Solutions and learn how we can quickly implement a managed cap program custom-tailored for your needs. Request your complimentary managed cap program demo to see how much you can be saving.

Request-a-Demo

Categories
Corporate Relocation Domestic Relocation

Managed Cap Programs – A Better Alternative to Lump Sum Programs

Business meeting at table
Group of young modern people in smart casual wear discussing business while working in the creative office

Managed Cap Programs – Lump Sum payments might seem like the fastest and easiest method of providing employees with the funds they need to move. However, Lump Sum payments come with their own unique set of problems. Some of the challenges include:

  • Transferees often left alone in the relocation process
  • No cost controls and often budgetary overages
  • Limited process or service structure
  • Non-taxable benefits are lost
  • Frustrated transferees means elevated HR involvement and escalations

In many cases, when transferees are presented with a lump sum, they try to retain as much of the lump sum for themselves. Not being experts in the relocation industry, the transferees seek out the least expensive providers and usually get the proverbial service for which they paid. In their attempt to cut corners – combined with an unfamiliarity with all that is involved with a corporate relocation move, their frustration with the service providers equates to more calls to their HR departments.

Fortunately, a Managed Cap Program can not only alleviate many of the problems associated with a Lump Sum, but it provides more useable funds for the transferee by addressing each line item of the relocation processes and taxing only the applicable services. Let’s see the difference between a $15,000 lump sum payment and the same $15,000 from a Managed Cap Program:

 

Managed Cap Programs provides 50% more relocation funds than standard lump sum programs

 

The amount of tax withholding from the Managed Cap Program is only $1,949 versus the $6,300 deducted from the standard Lump Sum scenario. The Managed Cap Program provides the transferee with $4,351 more for relocation services.

On top of wanting the obvious tax savings and happier transferees, there are five characteristics common with companies that elect to move away from standard Lump Sum programs and into Managed Cap Programs:

  • High focus on cost containment and savings
  • Limited resources for mobility management
  • Lack of structured programs and/or policies
  • Limited quality-assurance management
  • Need to attract and develop talent

If this sounds like your company, it would benefit you and your employees to contact Global Mobility Solutions and learn how we can quickly implement a mobility program custom-tailored for your needs.

 

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

About

About Us

Careers

GMS Client Login

Privacy Policy

 

Contact

Contact Us

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904 

Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

Accessibility by WAH

Looking for something?