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A New Lump Sum for a New Generation

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Dive into this topic by reading our eBook all about lump sum: http://resources.urbanbound.com/ebook-new-lump-sum-new-generation

Lump sum is a popular method for businesses to use to supplement various aspects of their transferees' relocations.

The problem is—it can get pretty complicated.

Learn about why moving this process online is so critical, as it will not only make your jobs easier, it will make the process quick and seamless for your transferees as well.

Published in: Recruiting & HR
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A New Lump Sum for a New Generation

  1. 1. Think about the last time you paid someone back.
  2. 2. How did you do it?
  3. 3. QuickPay?
  4. 4. Venmo?
  5. 5. PayPal?
  6. 6. Square Cash?
  7. 7. Regardless of what medium you used, you probably used some type of technology.
  8. 8. That being said, here’s a question:
  9. 9. Why should relocation be any different?
  10. 10. The truth is, the way many companies administer lump sum, is a bit...
  11. 11. ...behind the times.
  12. 12. People prefer technology.
  13. 13. ESPECIALLY Millennials.
  14. 14. And the numbers speak for themselves:
  15. 15. 73%of Millennials would rather handle financial needs with Google, Amazon, Apple, PayPal or Square than from their own nationwide bank Source: Millennial Disruption Index
  16. 16. 33%believe they won't even need a bank in the next 5 years. Source: Millennial Disruption Index
  17. 17. See what we mean?
  18. 18. Technology is important.
  19. 19. It makes things easier.
  20. 20. We’re going to teach you how this applies to lump sum.
  21. 21. Let’s talk about the way lump sum used to be (and in some cases still is) distributed.
  22. 22. step 1:New hire accepts the offer and agrees to relocate
  23. 23. step 2:New hire signs repayment agreement (which, if this is offline, they have to fax, scan, or mail it back)
  24. 24. step 3:New hire finds a time to talk to their employer to gather bank account information or an address to send the lump sum amount
  25. 25. step 4:Employer hands off the information to their third party or in-house team that handles the transfer of funds
  26. 26. step 5:Everyone hopes that as the information passes through all of these people, nothing is lost in translation or entered incorrectly
  27. 27. step 6:Employee waits. Employer waits. No one has insight into where the money is.
  28. 28. While all of this is happening, here is what your transferee is thinking:
  29. 29. I just deposited a check into my bank account by taking a picture, but these are all the steps required for me to get my lump sum?
  30. 30. It just doesn’t make sense to them.
  31. 31. We know what you might be thinking.
  32. 32. “We just give our transferees their lump sum in their first paycheck! No need to fuss with this nonsense!”
  33. 33. PROBLEM.
  34. 34. This leaves transferees in financial stress, especially those who are younger, entry and middle level employees. Waiting until the first or second paycheck to pay your employees causes a reluctance to spend money on relocation expenses, ultimately leading a haphazard and unorganized move. AND, to add icing on top of the cake, you have to pay $10,000 for your transferee to have a bad experience and begin their journey with you on the wrong foot.
  35. 35. THE SOLUTION?
  36. 36. Give your transferees the lump sum ahead of time, and in a way that they are used to receiving it: Quickly. Easily. Online.
  37. 37. HOW?
  38. 38. Through a technology-driven lump sum disbursement solution.
  39. 39. Taking this traditionally offline process online allows employers and employees to benefit from a more streamlined process.
  40. 40. Employers can manage the distribution process from a single platform, and employees can easily (and securely) claim their lump sum.
  41. 41. Here’s the new breakdown of steps:
  42. 42. step 1:Employee confirms the lump sum amount their employer sent over
  43. 43. step 2:Employee signs the repayment agreement electronically, right in the same place
  44. 44. step 3:Employee enters their bank account information
  45. 45. ...and that’s it.
  46. 46. The money is deposited into the employee’s account, and both parties have transparency into this process the entire time.
  47. 47. Let’s take a look into how this process helps each person involved in the lump sum distribution process.
  48. 48. 94%of Millennials are active users of online banking Source: Forbes
  49. 49. “For this hyper-connected and tech- savvy crowd, finance is more synonymous with crowdfunding, virtual currencies, and online payment platforms than it is with the brick building with a drive-thru ATM on the corner.” Source: Forbes
  50. 50. They simply respond better to technology. They’ve grown up with it. They’re used to it.
  51. 51. For these reasons alone, moving to an online solution will be beneficial for transferees.
  52. 52. But there’s more.
  53. 53. It’s no secret that lump sum isn’t enough to supplement an entire relocation.
  54. 54. By giving them an easy and seamless experience with smooth user interface, they’ll be able to overcome one of lump sum’s biggest hurdles: THE COMPLICATED NATURE OF DISBURSEMENT.
  55. 55. Transferees will be able to easily access their money not only because the process is relatively straight forward, but because it is similar to what they are used to. Your younger transferees are used to seeing money process at the blink of an eye.
  56. 56. Receiving instant gratification is second-nature to most of your employees. They want choices, and they want their choice to have an instantaneous effect.
  57. 57. Making them go through a complicated and drawn-out process, one that only leads to them being left in a waiting game until their money comes through, probably won’t be something your transferees are used to.
  58. 58. By moving this process online, the steps will be much more intuitive to transferees, removing a layer of confusion in an already complicated situation.
  59. 59. Think about all the things that can go wrong in your day.
  60. 60. From the minute you get to work until the minute you leave, your day is probably filled with various tasks that have you running in multiple different directions. The room for error is pretty substantial— with any job, really.
  61. 61. And while some mistakes are small and fixable, some are a little more... complex.
  62. 62. This is one of the huge benefits of an online lump sum disbursement tool.
  63. 63. It removes a series of tasks that have a pretty large margin of error.
  64. 64. Whether it’s making sure your transferees are connected with the right people, making sure you have the right address (physical or email), making sure you’ve securely received and processed their information, making sure the money was successfully sent—there are a plethora of ways that human error can get in the way of the lump sum disbursement
  65. 65. Now let’s add taxes to the mix.
  66. 66. FLAT RATE.
  67. 67. SUPPLEMENTAL.
  68. 68. MARGINAL.
  69. 69. Calculating taxes is a time consuming process that has no “official owner” in most companies. Compiling the tax reporting doesn’t necessarily fall on the shoulders of Accounting, but adding that to the plate of HR/Recruiting isn’t always the best solution either, since they have a lot on their plate to begin with. At the end of the day, it falls on payroll to report this information, but it falls on HR to gather all of the information from each subsidiary.
  70. 70. An online solution will help educate both the employer and the employee on tax rates, gross-ups, withholdings, and anything else that typically falls in between a variety of departments.
  71. 71. In addition, the insight that real-time reporting gives employers is extremely beneficial.
  72. 72. Not only do employers gain transparency and insight into the status of their employee’s lump sum, they can also identify issues with bank accounts immediately, run reports on how much has been dispersed, how much is in transit, and unveil some of the data behind their disbursements.
  73. 73. Everyone wins!
  74. 74. At the end of the day, you can have the most streamlined of systems and the most advanced technologies, but none of it matters if you aren’t communicating effectively with your employees.
  75. 75. Technology can be an extraordinary tool to guide your employees through their relocation, but without your communication on what is available (and how to use it), your solutions may not end up living up to their full potential.
  76. 76. Don’t lose sight of the fact that while lump sum is a very viable solution to supplement a relocation, it should be used as a complement to other tools that help employees navigate their relocation.
  77. 77. The nature of lump sum is complicated.
  78. 78. The process from start to finish is granular and fragile.
  79. 79. And there’s a lot to understand for both employer and the employee.
  80. 80. Arm transferees with the resources they need to be successful, and their successes will span more than just their relocation!

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