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Lump Sum Policy Best Practices: Pros & Cons of Supplemental Lump Sums

| January 14, 2018

supplemental lump sumsAs the name suggests, companies offer supplemental lump sums to cover part of an employee’s relocation costs, not all of them. About one-third of TRC’s clients utilize the supplemental lump sum to cover benefits such as the home finding trip, temporary living and the final move. Companies usually tailor supplemental lump sums to each employee’s move, often by pricing accommodations through preferred providers and including pre-determined amounts for mileage and meals.

According to the Atlas World Group 2017 Corporate Relocation Survey, 50% of companies are using a supplemental lump sum to cover temporary accommodation costs, up from 38% – 43% in years 2011 through 2014. In its 2017 Workforce Mobility Benchmark Report, Runzheimer noted that nearly 50% of the organizations they surveyed manage home finding expenses via a supplemental lump sum.

Pros of Supplemental Lump Sums

The advantages of using a supplemental lump sum within a relocation policy are cost control and ease of administration.

Cons of Supplemental Lump Sums

With data readily available, supplemental lump sums work well for home finding, temporary living and final move expenses. However, it can be more difficult to determine a reasonable cap or lump sum on a benefit such as the household goods move or home sale.

Next Steps

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With increased focus on talent acquisition and retention, along with the ever-present need to control costs and streamline administration, many companies are taking a closer look at their lump sum policy and its effectiveness. For companies that used lump sums as a one-size-fits-all approach, many are now finding that this might not be the best methodology.

To help you understand the complexities of  a lump sum policy, download the white paper, “Lump Sum Policies Best Practices” to learn about the advantages and disadvantages of each type of lump sum policy; how each type of lump sum program works; and which type of policy is the best fit for your employee relocation program.