The Great Recession affected most every corner of the business world and corporate relocation was not immune. Whereas in past decades when companies would offer hearty relocation packages to new hires and transferees, businesses have taken a shrewd look at relocation budgets as a way to cut costs. And although some companies still do offer full relocation packages, lump sum programs are increasingly more common across all job levels.
Why? Lump sums are simpler, which is a tremendous benefit for HR departments who’ve seen their staff size shrink from a large team to just one or two individuals trying to handle the entire workload.
Lump sums do grant employees more flexibility to spend the money however they see fit. But if your company has decided to take the lump sum approach, you need to have a strategy in place to make sure you’re doing so effectively and efficiently.
We will be regularly covering the different aspects of lump sum management and strategy on our blog, first of which is why it’s so critical to educate your employees on how to manage their lump sum. Yes, they require less work for the business, but there are many pitfalls employees can find themselves in if they don’t have any guidance.
Budgeting a move is complex
There’s a wide range of expenses associated with even a seemingly straight forward move, and a lot of people simply don’t know how to properly budget for a move on their own. What often happens is people try to spend as little as possible in the early part of the move, where there might be things that merit a significant portion of their lump sum. At the very least, you should provide your employees with a cost breakdown of common moving expenses (which you should update annually to reflect current market costs) so they know how they should allocate their lump sum.
Helps ensure the success of the employee
Any HR manager knows that just because an employee has accepted a position, problems can still arise that might make him or her rescind the acceptance. It’s not even out of the question that he or she could resign in the first couple months of starting, so it’s important to make sure the transition goes as smoothly as possible. In future posts, we’ll cover some of the specific things to warn employees of such as rogue movers, but you need to make sure your transferees and new hires feel valued and cared for even before their first day on the job.
If it feels like this is too much to handle, remember, replacing an employee costs approximately 20 percent of their annual salary so the more you can do, the more likely you’ll have a successful assignment.