Part 2: Cafeteria Relocation Benefits – Cost Savings
The Potential for Relocation Cost Savings
As we mentioned in the prior blog, a desire for flexibility is the most common reason for companies to embrace a cafeteria approach. However, the potential for cost containment can be another powerful motivator.
In a typical relocation program, companies might be providing “one-size-fits-all” benefits that employees neither want nor use. In a cafeteria program or a hybrid tiered/cafeteria program, benefits tend to be better aligned with actual needs, frequently with a cap on the total benefit amount. According to the Worldwide ERC® survey, Relocation Assistance: Transferred Employees, 45 percent of companies using a cafeteria approach place a ceiling on the value of the selections made. That figure has increased from 39 percent in 2004; the ceiling typically depends on the job level of the employee.
For companies more focused on cost containment, cafeteria menu items often are tied to the core home selling and home finding processes, with limited “soft service” options. An example would be a self-move package for a new hire.
Who Selects the Benefits?
A cafeteria approach does not necessarily mean that the transferee has the deciding vote. In fact, the Worldwide ERC survey, Relocation Assistance: Transferred Employees reports that in 84 percent of organizations with cafeteria plans, the business unit or division selects the specific benefits. This helps balance the employee’s wishes with the competitive environment and allows the company to tailor benefits to attract the best candidates for the position.