CapRelo Blog

November Relocation Survey

Posted by Amy Mergler on Fri, Nov 18, 2016

Thinking about changing your relocation program or just curious about what other organizations are doing? Each month, we'll feature a short survey and share our findings along with the next survey the following month.

First up, Lump-Sum Relocation packages!  

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Topics: relocation packages, lump sum package, global relocation

What You May Not Know About Lump-Sum Employee Relocation Packages

Posted by Amy Mergler on Wed, Sep 16, 2015

productivity.jpgThere's a lot to think about if your company is considering changing to a lump-sum employee relocation package rather than reimbursing moving expenses for relocating employees. Here are a few factors you may not have considered.

Employee satisfaction may be lower when employees are left to manage their own funds, as with a lump-sum relocation package. Employees hoping to save money (and pocket the difference) when they receive a lump-sum relocation package to pay for their moving expenses may end up unhappy with the service they receive if they shop by price for relocation service providers. This could result in a slower return to productivity as well as a lower employee retention rate following the move.

Learn more about lump-sum relocation packages by downloading our free guide.

Employees who are busy organizing and managing their move will not be fully focused on their job. Moving can be a stressful time. When employees are left to fend for themselves when selling their home, lining up household goods movers, and even finding a new place to live, their minds are not on their job. This could result in lost productivity.

A lump-sum employee relocation package may not save your company money in the long run. Letting employees manage their own move can result in relocation delays if a house won't sell, and can lead to lost productivity. While lump-sum packages save your company money in administrative costs and time, they may not represent the significant cost savings you believe, especially if employee relocation packages that reimburse expenses lead to all-around greater employee satisfaction and low-stress relocations.

We're not specifically advocating one type of program over another, but it's a good idea to evaluate your situation – or call on a relocation management company to help – if you are thinking of changing your employee relocation policy.

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Topics: employee retention, Home Selling and Purchase Assistance, Relocation Services, relocating employees, relocation management company, executive relocation package, lump sum package

4 Types of Lump Sum Packages

Posted by Shirien Elamawy on Tue, Dec 16, 2014

Understanding_Lump_Sum_Pkgs.jpg

Lump sum relocation packages offer benefits to employees and employers alike. For employers, it is not only easier to control costs with lump sum packages, but administration of these packages is also much simpler. For employees, it places more control over the relocation in their hands and allows them to shop around for the most cost-effective relocation options. These are four primary types of lump sum relocation packages you may want to consider.

To gain a better understanding of lump sum relocation packages, download our free article.

1)   Flat (Fixed) Lump Sum 

These packages acknowledge that the moving expenses are the same for employees at all levels of experience within the organization. As such, the relocation package involves the same lump sum payment for entry-level employees as it does for executive-level employees.

2)   Variable Lump Sum 

These packages are unique to different employees and/or transferees according to standards the company establishes. These standards may include any of the following.

  • Relocation distance
  • Renting vs. buying
  • Size of families
  • Level of responsibility within the organization
  • Salary level
  • Typical relocating costs

With variable lump sum relocation programs, there isn’t a one-size-fits-all employees plan and the employer sets the parameters.

3)   Alternative (Partial) Lump Sum

Employers can offer a lump sum payment for some of the relocation expenses and then reimburse the remaining expenses upon submission of receipts and supporting documentation the employer decides which expenses are covered under the lump sum portion and which will require receipts for reimbursement. Typically it is recommended to reimburse the employee for non-taxable relocation expenses such as final move and household goods shipments.

4)   Managed Lump Sum  

These programs allocate a capped lump sum amount to the employee. The policy will delineate the provisions covered and any individual provision limits and may require the employee to submit receipts for expenses. Additionally, the policy may be enhanced by authorizing the services of a relocation management company to assist them in spending their funds wisely.

How Do Lump Sum Relocation Programs Benefit Businesses?

Worldwide ERC conducted a survey in 2013 on lump sum policies. The survey results provide important insight as to why businesses choose to offer lump sum payments for relocation expenses. According to the survey, 46 percent of companies offer lump sums to pay for specific components of a relocation policy. 28 percent offer a lump-sum-only policy to some of their relocating employees, while 9 percent offer a lump-sum-only policy to all relocating employees.

The primary reason for offering a lump sum was stated as concerns for employee flexibility. The second most commonly stated reason was cost control.

The record-keeping aspect of relocation packages should be considered. Traditional packages do offer some tax benefits for the business, but the complexity of record keeping involved for expenses at all levels is unwieldy and difficult to manage. Examples of these expenses could include:

  • Temporary living
  • Return trips while living in temporary quarters
  • House hunting trip
  • Final move
  • Home Sale and Home Purchase Closing Costs
  • Lease breaking assistance

Lump sum relocation packages allow employees to prioritize needs and expenses according to the money available to them in the package. This can make it easier for businesses to control the costs and reduce the record-keeping and expense tracking burden on the employer.

Relocating employees is a large expense for many businesses. Any of these lump sum relocation packages could help businesses keep these expenses in check, while allowing transferees the opportunity to take more control over their relocations and related relocation expenses.

Download our article: Understanding Lump Sum  Relocation Packages

 

Topics: relocation packages, lump sum package

A Lump-Sum Executive Relocation Package Offers Options

Posted by Jim Retzer on Mon, Nov 17, 2014

 
If you're revamping your executive relocation policy to include lump-sums, you may have more flexibility than you imagined.
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Topics: lump sum package

Lump-Sum Executive Relocation Package

Posted by Brian D'Orazio on Tue, May 06, 2014

Thinking about revamping your executive relocation policy? Watch our short video to get ideas on how to customize your relocation package. 

 

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Topics: Home Selling and Purchase Assistance, corporate relocation program, executive relocation package, lump sum package

The Trade-Offs of Using Lump-Sum Relocation Packages

Posted by Rick Bruce on Wed, Jan 16, 2013

v--crs-kristins-blog_posts-blog_photos-falling_money_around_person-resized-600.jpgMore and more businesses have been favoring lump-sum relocation packages for employees in recent years. After all, they are cheaper than just doing a regular relocation - right? Unfortunately, the truth of the matter is not always so cut-and-dry.

One thing about lump-sum packages that is easy to overlook is the fact that, like many other "discount" programs, they can cost more than they save in the long run. While this isn't necessarily true in every case, it happens more often than anyone would like; how do you know if it's true of what you offer your employees? Let's take a look at some of the trade-offs and explore how it all adds up (or doesn't).

Our free guide will help you understand lump-sum relocation packages.

How a Lump-Sum Relocation Policy Saves Money in the Short Run

Lump-sum relocation packages obviously have their advantages. Otherwise, none of us would ever use them! When employers favor them, they do so because:

    • They have a lower front-end cost.
    • They seem to be an easy, "hands-off" way to manage employee relocation.
    • In some cases, lump-sum relocation packages provide greater flexibility to employees.
    • They eliminate the chance that you'll buy an employee's home, only to be stuck unable to sell it in the current housing market.
    • Lump-sum packages put less strain on Human Resources.

It's true that a lump package will help any business with front-end costs. But what about the longer term costs? They are often easy - and dangerous - to overlook.

The Hidden Costs of Lump-Sum Relocation Packages

The biggest trade-off with lump-sum packages is what you get back in employee satisfaction and loyalty. Making a move is always a stressful procedure, even when it involves a better position at the end of the tunnel. Even the smallest thing you do (and don't do) for your relocating employee during this time will have more impact than it would under less stressful, more routine circumstances.

Probably the biggest drawback in today's economy is that each employee is left to take care of home sales on his or her own. Unless you live in a select few markets, this is likely to double or triple the stress your employee feels about their move.

This often translates to increased frustration or even bitterness towards you as an employer--especially if your relocating employees know anyone whose employers provided them with AVOs, BVOs, or other buy-out options.

Another prospect looms even larger for most employers: the difficulty of working with an employee who is trying to sell his or her old home. At the very least, this takes time and energy away from your employee's vital functions.

At worst, a slow home sale could result in a disappointed employee who moves back to their original location, leaves at a critical moment, or stirs large amounts of discontent with your other employees.

When it comes down to it, a lump-sum employee relocation package often represents moderate initial savings. But a more well-handled employee relocation policy is actually an investment: an investment in your employee's loyalty and productivity, as well as an investment your business's future.

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Topics: Home Selling and Purchase Assistance, employee relocation expenses, lump sum package

What To Expect When Relocating Employees with Families

Posted by Rick Bruce on Tue, Jun 19, 2012

family_discussion.jpgMoving employees to the best positions in the company where they can offer the most productivity may sometimes require you to have that employee relocated to a different office. Based on the complexity of the move, a job relocation means more than just having the employee pack up his things on Friday and expect him to be in the office come Monday morning.

Find out more about policy considerations when relocating employees with families in our free article.

Employee relocation involves having the employee follow the company's standard relocation policy. Why do you need a relocation policy? Because this policy has to state what the company shall do to compensate the employee on his moving expenses, since the expenses for an employee to move may be more than what the employee can handle financially on his own. There are also other considerations.

Sometimes your company will not only be relocating the employee, but also his family. Employees will take this into consideration when deciding whether to accept the job at all. Job relocation requires the employee to enroll their children into a new school, requires the spouse to locate a new job, and may require the employee to sell his old home and buy a new residence. All these tasks take time, money, and cause stress to the employee.

Having a thorough relocation policy and accompanying paperwork can assist in accounting for the expenses the company will handle on the employee's behalf for the move, and gives the employee a checklist of all the things that he needs to do to make the job relocation the easiest of transitions for himself and for his family. The expenses that the company and employee has to consider.

  • Packing expenses -- including storage of items, hiring a moving company or renting a moving truck
  • Listing and selling the employee's old home.
  • Travel expenses for house-hunting trips.
  • Temporary lodging and meals for the employee and his family while they locate a new home.

A relocation policy will state whether the employee will be paid a lump sum amount to cover moving expenses, or be reimbursed for the expenses that the employee pays out of his own pocket. It may also require working with a real estate agency concerning the sale of the employee's old home. If the house is listed for too long, a company must decide whether to purchase the home on the employee's behalf, since the employee is carrying mortgage payments for every month that the house goes unsold.

Understanding all the details of employee relocation while drafting job relocation policies, paperwork, and allocating reimbursed expenses can be tedious. If you are a growing company who is now moving employees to the best job positions, you need to have all the appropriate paperwork for your employee, take time to work with a real estate agency, and ensure the employee's expenses do not exceed what the company is willing to pay.

This is why it's important to consult with a corporate relocation firm. The firm can assess the employee's relocation, address the proper resources that need allocated, and meet with the real estate company. By having the corporate relocation firm handling these important steps, it can make employee relocation easier on the company, the employee and the employee's family.

The Low-Stress  Relocation Guide

 

Topics: Home Selling and Purchase Assistance, relocation process, Family Relocation, lump sum package

Partial Lump Sum Relocation Package: Not as Simple as It Seems

Posted by Nicole Overholt on Tue, Dec 20, 2011

While the term “lump sum” implies a company relocation policy that is standard and fixed for all employees across the board, that's not always the case. A number of options and variations exist within the classification of “lump sum.” Let's look at a few of the options.

Learn more about lump sum packages with our free guide

Fixed lump sum:

A fixed lump sum company relocation package works under the premise that all employee moving costs are about the same, regardless of the employee's salary, time with the company or a number of other factors, including whether they rent or own their own home.

Variable lump sum:

A variable lump sum is different for each employee and may be negotiated individually or determined based on a number of factors. Some factors used to determine the amount of a variable lump sum company relocation package include:

  • Historical costs
  • Renter or homeowner
  • Distance to destination
  • Size and needs of family
  • Position within company
  • Employee salary

Partial lump sum:

A partial lump sum company relocation policy pays (as the term states) for part of moving expenses in a lump sum, while reimbursing the rest. The partial lump sum, according to this article in Mobility magazine, typically pays for expenses incurred during the move and temporary living costs while the employee is “between homes.” All other expenses, including costs related to home sale and purchase, may be reimbursed.

One option is to take advantage of Household Goods, Final Move and relevant home sale benefits as tax-excluded reimbursements, while other benefits can be put in a lump sum and grossed-up to minimize tax liabilities for the relocating employee. As you can see, knowledge of relocation tax law is necessary to create an effective partial lump sum company relocation policy.

A lump sum company relocation package may reduce administrative costs and time, but if your company relocation policy includes variable or partial lump sums, it may not be as simple as it seems. That's where a company relocation management company can help. Give CapRelo a call if you need a hand evaluating your company relocation policy.

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Topics: executive relocation package, lump sum package

How Does Your Corporate Relocation Package Compare?

Posted by Joseph Torres on Mon, Aug 29, 2011

savings resized 600Lump-sum packages are growing in popularity due to three major benefits over reimbursing employee's relocation expenses.

Gain a better understanding of lump-sum packages with our free guide.

Benefits of a Lump-Sum Corporate Relocation Package

  • Ability for the company to better control relocation costs
  • Ease of administration
  • Flexibility for relocating employee to choose their own relocation service providers

However, within the parameters of a lump-sum corporate relocation policy, several variables exist:

  • Partial or full lump-sum payments
  • Fixed or variable payments
  • How lump-sum payments are calculated

A Mobility Magazine survey uncovered some interesting facts about how companies are managing their lump-sum corporate relocation packages.

  • Most partial lump sums are a fixed amount for every employee.
  • Most lump-sum-only payments vary based on a number of factors, including individual needs or the employee's level within the company.
  • Fixed payments are more common with entry-level employees
  • An executive relocation package usually varies based on a number of factors.
  • In a complete, variable lump-sum corporate relocation package, whether the employee is a renter or homeowner was a big factor in calculating the lump-sum amount. In a partial lump-sum payment, homeowner or renter status was rarely taken into account.

If you're structuring (or re-structuring) your corporate relocation policy with lump-sum packages, benchmarking can help you set payment amounts. A full-service corporate relocation firm can help. 

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Topics: Corporate Relocation Costs, employee relocation expenses, corporate relocation program, relocating employees, corporate relocation company, executive relocation package, lump sum package

What You May Not Know About a Lump-Sum Employee Relocation Package

Posted by George Herriage on Wed, Aug 10, 2011

Should we use a lump-sum package?There's a lot to think about if your company is considering going to a lump-sum employee relocation package rather than reimbursing moving expenses for relocating employees. Here are a few factors you may not have considered.

Employee satisfaction may be lower when employees are left to manage their own funds, as with a lump-sum relocation package. Employees looking to save a few bucks (and pocket the difference) when they receive a lump-sum relocation package to pay for their moving expenses may end up unhappy with the service they receive if they shop by price for relocation service providers. This could result in a slower return to productivity as well as a lower employee retention rate following the move.

Learn more about lump-sum relocation packages in our free guide.

Employees who are busy organizing and managing their move will not be fully focused on their job. Moving can be a stressful time. When employees are left to fend for themselves when selling their home, lining up household goods movers, and even finding a new place to live, their minds are not on their job. This could result in lost productivity. 

A lump-sum employee relocation package may not save your company money in the long run. Letting employees manage their own move can result in relocation delays if a house won't sell, and can lead to lost productivity. While lump-sum packages save your company money in administrative costs and time, they may not represent the significant cost savings you believe, especially if employee relocation packages that reimburse expenses lead to all-around greater employee satisfaction and low-stress relocations.

We're not specifically advocating one type of program over another, but it's a good idea to evaluate your situation -- or call on a relocation management company to help -- if you are thinking of changing your employee relocation policy.

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Topics: employee retention, Home Selling and Purchase Assistance, Relocation Services, relocating employees, relocation management company, executive relocation package, lump sum package

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