15 Oct Why Offering Assignees Lump Sum Relocation Packages is a Smart, Strategic Move
For U.S. companies, corporate staff relocation is fast becoming a norm, and no longer an exception. The stakes are going high, though. Now there are even lump sum relocation packages which doesn’t sound so crazy. It’s considered a smart, strategic move for organizations. In one survey, 50 percent of organization heads said that they expect to increase budget expenses related to this process of employee location transference by 50 percent.
Do not be surprised that when, given an option, your employees and assignees might choose a lump sum relocation package rather than the traditional full package plan. Many are young professionals, from their early twenties to their mid-thirties, who prefer the flexibility and savings potential that the first preference provides. Meanwhile, although it is more convenient, the second choice can appear more limiting and rigid.
The lump sum relocation package makes your assignees or employees an active participant in the types of home they choose. They are made aware of the expenses from the start. Instead of being given an entire program that covers the process from preparation to final settlement, they receive an amount of money they can use to facilitate the relocation. This also gives them a voice in the other aspects of the move, such as furniture, neighborhood location, and methods of packing, repacking, and transfer.
Startups and small businesses triggered the emergence of this kind of relocation package. With few resources at their disposal, these firms could not afford the expenses that a full relocation package would entail. They could not shoulder all the relocation requirements like plane tickets and transport services, storage fees, and property dues. Asking their new employees to “help” in the actual transfer and giving them a specific budget to do so was an innovative and practical strategy. Many of their millennial employees actually preferred the lump sum relocation package because they became part of the decision-making process. Wisely using the monies given them by the company can also lead to extra savings.
Advantage of flexibility
The lump sum relocation package offers the same flexibility and several advantages to employers. The first is cost management. Employers can hold the relocating assignees to adhere to the specified budget, reducing chances of incurring supposed unanticipated or hidden expenses.In contrast, full relocation packages can be more malleable. The supervising global mobility specialist would find his crafted budget fluctuating depending on the changes that he can encounter during the relocation process. He might be more open to accommodating these changes if it means making his prized assignee or new employee happy.
Second, back-office expenses related to relocation can also be reduced. The process of transferring an assignee from another country is not simple. As soon as preparation starts, relocation-related training would have to equip him into coping with his new environment. The company might have to pay for additional staff to document the expenditures and other cost-incurring lifestyle choices that the assignee makes. The lump sum relocation package makes this training and documentation unnecessary, reducing further expenses.
Finally, allowing an assignee to map out his relocation process can further increase his investment in his career and his new home. In reaching out to the various parties that can make his move convenient and cost-effective, he would be building a network of VIP’ who can be useful in the future. Some of them include school administrators, local government heads, language-school teachers, corporate housing executives, and accountants.