Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of WERC.
Are the days of lump sums numbered? My esteemed colleague Christopher Chalk believes so and, anecdotally, I’ve heard from others who take this stance, too.
But in the spirit of healthy debate, I’m here to offer a different point of view, one that Christopher alludes to in the opening of his article and requires further exploration. Lump-sum packages are not the be-all-end-all of talent mobility, but they can certainly serve a useful purpose in specific scenarios.
In its simplest form, a lump-sum relocation package offers the employee a fixed amount of money to cover moving expenses. This approach can be particularly appealing in situations where the relocation needs are straightforward and do not require extensive support services, such as short-term, commuter, or permanent moves.
In these scenarios, employees can use a lump sum to cover specific expenses most relevant to their situation, such as travel costs, temporary accommodation, or new furniture. This flexibility ensures that the relocation package is tailored to the unique needs of the employee.
Consider someone moving from one part of a state to another. Will they require extensive housing support, moving and household goods services, or transportation? It’s possible, but in this scenario, the employee may be satisfied with a lump sum, feeling comfortable enough to make the move on their own terms.
From my perspective, these types of moves are becoming more prevalent, as global mobility teams are being asked to help manage costs and give employees options beyond traditional assignments. Additionally, if your company culture supports and encourages employee self-service, then a lump-sum option aligns with your corporate values and further demonstrates the strategic value of global mobility.
Productivity vs. Human Nature
While research has cited an estimated loss of productivity when employees are more involved in their move, there’s also a factor of human nature to consider. When making a big life change, individuals often want to be hands-on in the decision-making process. Lump sum or not, chances are an employee will spend some time reviewing new homes, researching different neighborhoods, or exploring local services. While a more high-touch relocation package may free up an employee’s time to a degree, the process of relocation inherently requires some extracurricular involvement from those impacted by the move.
Offering employees a lump sum can also enhance their satisfaction and engagement, giving a sense of empowerment. When employees have the freedom to make their own decisions, they are more likely to feel a sense of ownership and responsibility for their move. This can lead to a more positive relocation experience overall if it’s determined that a lump-sum package is indeed the right fit for the employee.
Keeping the Bottom Line in Mind (Within Reason)
From an employer's perspective, lump-sum packages offer reasonable cost savings and consistency. By providing a fixed amount, companies can predict and manage their relocation budgets effectively, simplifying financial planning and reducing the administrative work of managing multiple vendors and services.
These types of packages also provide financial predictability. Companies can allocate a specific budget for each relocation, ensuring costs don’t spiral out of control. This is particularly valuable in times of economic uncertainty or when companies need to implement cost-saving measures. This is a situation where both parties can meet in the middle; employers can maintain expenses while still supporting employees.
In his article, Christopher fairly points out that this mindset overall can be a slippery slope, with some leaders seeing lump sums as a surefire way to maintain the bottom line. To this point I agree and see the need for greater discretion. This is where the mobility manager can play a role in educating leadership when a lump sum is beneficial and when it will cause more harm than good. We are the experts in this space; we know when an employee will manage well independently and when the situation will call for a more hands-on approach from the company.
Employee Support Remains a Priority
While lump-sum packages offer flexibility, they don’t equate to a lack of support. Companies can (and should) still provide guidance and resources to help employees manage their relocation. Employers can offer recommendations for reliable moving companies and provide a framework that outlines what the lump sum is intended to cover.
As a mobility manager, you won’t cut the employee a check and send them on their way. Their success is your success, and your job is to ensure they’re informed enough to complete the move with reasonable guidance. This balance ensures the employee feels supported without the company incurring excessive costs.
Relocation is not a one-and-done process. By having open conversations with the employee about specific needs and meeting them where they are, the mobility manager can tailor the lump sum to cover what’s most important. Taking this proactive approach helps mitigate potential stress down the road, ensures a smoother transition, and ideally avoids any surprises or hidden costs.
Mobility managers can also provide additional resources, such as checklists, access to relocation consultants, tips on budgeting, recommendations for cost-effective services, and advice on avoiding common pitfalls.
The Right Tool for the Right Job
Lump-sum relocation packages are not a universal solution, but they can be highly effective in the right circumstances. Consider them as one more tool in your relocation toolkit.
As Christopher says in his piece, mobility professionals have an obligation to do their job with care and critical analysis, balancing the needs of the employee with the needs of the business. Will a lump-sum package be the right fit for a family of five moving halfway across the world? Maybe not—but as the mobility manager, it’s well within your wheelhouse to sit down with the employee, identify their needs, and determine which solution is the right fit.
Lump-sum packages can play a valuable role in today’s employee mobility strategies, especially for short-term, commuter, and permanent moves. When implemented thoughtfully, they can be the right solution for the company and the employee, offering a successful relocation experience.