Talent shortages plaguing nearly every industry are making many companies reconsider their slimmed-down lump sum relocation programs in favor of something more…magnetic. Meanwhile, inflation and rising costs have these same organizations questioning how they can afford a more generous benefit offering. In short, companies struggle to find balance amid so many competing forces; the need to curate a positive employee experience that attracts and retains talent, and the need to contain costs during a period of financial volatility.
What if it were possible to find some neutral territory between these polar opposites? Spoiler alert – it most definitely is.
Modern lump sum mobility programs can help companies deliver an admin-light option that offers employees access to the support and resources they need to thrive (rather than floundering in the stress of navigating the many complexities of relocation on their own). Investing the time into giving your traditional lump sum model the “glow up” it deserves demonstrates your commitment to the employee experience. This is proven to help you attract and hold onto your talent. And just like that, the lump sum and the war for talent have gone from stalemate to Sunday brunch!
Here are our top three tips for bringing your lump sum model into the modern mobility age.
Most importantly, it’s essential to know that lump sum programs best suit employees with fewer relocation needs. Think interns, Gen Z talent and new hire graduates — three groups that make up a sizable demographic in today’s mobile workforce. Beyond that, knowing if a lump sum program is suitable for your organization’s unique goals and budget is also important.
Ask for candid feedback from employees who’ve received lump sums regarding their experiences with your current model. Solicit input from managers, too. Were the initial estimates accurate? Is your method of calculating the lump sum meeting employee expectations? Are there instances of misuse or double dipping?
If you deal with frequent exceptions among your lump sum population, dropping retention rates following completion of the move, or a high number of candidates turning down the move, it may be an indication that your lump sum amount needs some adjusting.
Because companies define lump sums so differently and the components offered vary significantly, there is limited data on exact amounts and the benefits the allowance is intended to cover. And since there is no “magic number” when determining appropriate lump sum amounts, you should be thoughtful about how you calculate the final payment and be as specific as possible in defining any covered provisions.
A good start: calculate the average cost of each benefit for your traditional move corridors (i.e., Boston to Chicago). If necessary, calculate different amounts based on employee level or tier and by homeowner or renter. Add up the amounts to determine the estimated cost per employee. This is going to reflect the top of the range for the lump sum. And don’t forget the gross-up provision!
And right before you press “play” on your company’s magic lump sum figure, take some time to gauge whether it meets the critical balance between being conservative enough to encourage the employee to be resourceful but not so low that it prevents mobility or spurs negative feelings among your mobile workforce.
Why do Lump Sums get such a bad rep? Because relocation can be incredibly complex, especially in the current global environment, and managing the many moving parts on their own can weigh heavily on transferees, even if they have the funds to pay for it. The burden of coordinating their relocation can impact the employee experience and, ultimately, their productivity.
Thankfully there are some great tech options worth exploring that can empower lump sum transferees with the choice, tools, resources, and support they need to be successful. For example, Weichert’s Sumplicity tool – available through the Weichert Go platform – offers a robust selection of features to help employees manage their moves confidently and allows them to request assistance from personal hosts who provide destination counseling, answer questions, and expedite moves. The result is a win-win: a truly customized and far more rewarding lump sum experience for your employees and a fixed, predictable cost for your company.
The resurgence of lump sums in the industry reflects that they’re easy to implement and provide the highest level of flexibility. But it’s important to be vigilant; without guidance, planning, or knowledge of the process, your lump sum program can swing from blessing to curse in the blink of an eye.
Want to learn more about how to reinvent your lump sum approach, or are you ready to explore other options that can offer the same cost-containment and admin-light features? Talk to us!