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How to Make Your Lump Sum Programs More Efficient

How to Make Lump Sum Programd More EfficientAt the end of 2012, we issued an EBook on the Top 10 Ways Relocation Programs Lost Money in 2012. It was well received. HR managers and relocation experts should consider ways to save money now that 2013 has started and there is still time before busy season starts in April. As a partner to HR, we want to help cut costs and will continue to work on new ways to streamline the relocation process, reduce redundancies and tighten overall program management. 

One of the first challenges we want to tackle is combined benefit allowances, also known as the dreaded lump sum. I say dreaded lightly. Lump sum programs were designed to simplify relocation programs, with some companies are taking benefits including home finding, temporary living, final move and miscellaneous allowances and lumping them into one large sum, based on estimated costs. We do administer lump sums, and we work hard to educate transferees on how to best use their lump sum payment, but with a little creativity we believe that lump sums can be more efficient.

As it stands now, combined benefit allowances (lump sums) are not geared towards the specific needs of any transferee. Thus, if your transferee needs more or less included in their benefit plan, there is no flexibility to find a viable solution. Further, with a strict combined benefit allowance plan, relocation managers do not have the ability to save money on transferees who do not need certain benefits, while redirecting funds to those that who need more. One-size-fits-all programs might be predictable, but they almost always lose money in the end.

So, what’s the solution? The key to better lump sum management is flexibility. A defined benefit program coupled with real-world cost estimation and accruals based on specific transferee needs will give HR and relocation managers the opportunity to allocate funds more accurately so that monies don’t go to waste. This will allow relocation managers to generate cost savings in real time, while giving them the flexibility to direct additional funds to transferees that really need more support.

As we head into busy season, it’s worth looking at your transferee pool to see if there are any adjustments that can be made to better administer such a program. We expect new tax regulations will add additional expense to lump sum programs (stay tuned for a blog post on this issue!) so now is the time to save money.

Have you considered tweaking your lump sum program? Please share your thoughts below.

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VP, Client Services

VP of Business Development Northeast Region


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