If you’re currently in the process of drafting out the potential plans for employee relocation packages, there’s definitely going to be a lot of factors you’ll need to consider right away.
Is this package going to cover it all? How much is it going to cost the business each year? What if the budget exceeds your spending plan? What if people take advantage of the package if you’re too generous with it? We get it, because just like you, there are hundreds of employers who struggle with all these decisions every year.
And that’s exactly why we’ve put together this list that talks about the 3 advantages that come with going with a lump sum relocation package. If you have no idea what this is, keep reading because we’ll explain it with context along the way. Now let’s dive right into it!
1. It Saves Money for the Company
Needless to say that one of the primary reasons this package is popular is because it’s effective while also being reasonable when compared to other packages. The reason for this is because it is formulated by keeping the overall cost of relocating to a new area, while also involving enough research to know just how much the employee is going to be needing.
The reason this works is because sometimes, there are some who will try to take advantage of the benefits given by the company and misuse certain allowances when there is no need for it to begin with. By using the specific data of the individual who is going to be relocating, however, the company will be able to come up with a lump sum that will be issued to the employee.
2. It Covers Almost Everything
Companies usually prefer having a package that covers it all, because it simplifies the process and also makes documentation easier for the HR team. For this reason, having a lump sum relocation package will help employers cover the entire sum at one go, under one package. This package is comprehensive and usually involves everything that’s needed for relocation, though it may slightly vary between each company.
In general, a lump sum package includes the following:
- Transportation services
- Packers and movers
- Rental home payment
- Temporary hotel services
- Temporary food expenses
- Expense of breaking a lease
- Temporary childcare
- Language learning classes (if necessary)
- Closing costs
- Security deposits
Guiding employees through every step of their relocation process can become a long and tedious process. For this reason, it’s easier to draft an amount based on the factors applying to their move (how far they need to travel, how many children they have, if they’ve already found a place to stay, etc.), and giving them the lump sum to spend along the way.
This way, employees also have a certain amount of freedom in deciding where they would need to spend how much, and where they can try to cut down on costs, depending on the amount they’ve been given in hand. This way, the package becomes an advantage to both parties.
While companies do their research and give employees an adequate amount of money for their move, some people can take advantage of the fact that they have the flexibility to do what they please with the money.
Which won’t prevent them from spending it as they please and then reporting that it was insufficient, or barely spending any of it because most of the factors included in it may not have been applicable for them (for instance, they may already have a place to stay at in the new location and won’t have to rent).
In such cases, companies can still have an eye on how much is being spent by implementing the use of digital lump sum tools that calculate how much of the money is being used on an average – based on this, they can either increase or decrease the amount once they get enough statistics.