Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Decoding the Language of Lump Sum

14,543 views

Published on

With just a sum of money and no other guidance, your employees have no benchmark or timeline for how their relocation should be moving along. This leads to overwhelmed HR and Mobility departments, stressed out transferees, and a lot of money lost on both ends of the spectrum. Learn how to fix this problem by providing lump sum in a more guided way. [Dive even deeper into this topic with our eBook: http://resources.urbanbound.com/decode-the-language-of-lump-sum-ebook]

Published in: Career, Lifestyle, Recruiting & HR
  • Sex in your area is here: www.bit.ly/sexinarea
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • If you want a girl to "chase" you, then you have to use the right "bait". We discovered 4 specific things that FORCE a girl to chase after you and try to win YOU over. copy and visiting... ●●● http://scamcb.com/unlockher/pdf
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Dating for everyone is here: www.bit.ly/2AJerkH
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Simple Mindset Hack Gives You A Limitless "Millionaire Brain"  https://tinyurl.com/y44vwbuh
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Earn a 6-Figure Side-Income Online... Signup for the free training HERE ■■■ http://dwz1.cc/G9GauKYg
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Decoding the Language of Lump Sum

  1. Lump sum has been gaining a lot of Tractionin the relocation space
  2. FLEXIBLE ALLOWANCE PLAN CAPPED ALLOWANCE PLAN Lump SUM WITH RMS CORE/FLEX
  3. FLEXIBLE ALLOWANCE PLAN CAPPED ALLOWANCE PLAN Lump SUM WITH RMS CORE/FLEX There are clearly of options to choose from  
  4. Out of the $75 billion dollars spent in the U.S. on corporate relocation… 70% of companies use a lump sum distribution policy…
  5.  
  6.  
  7. It’s becoming a much more g u i d e d relocation option
  8.      
  9. Lump sum amounts didn’t always accurately account for needs:   Car shipment Pet assistance School-finding trips Language training Spousal support
  10. Lump sum amounts didn’t always accurately account for needs:   Car shipment Pet assistance School-finding trips Language training Spousal support Employers had into what their employees needed
  11. Where one person might only only $7,000 for their relocation… …another might need $15,000.
  12. And there was no light being shed on the reasons why.
  13. Story time.
  14. Let us tell you about Relocating Rachel.
  15. Rachel was being relocated from St. Louis to San Francisco.
  16. Her company gave her $15,000 and said: “See you in a month!”
  17. Here’s the thing about Rachel. She was strapped with student debt, so cash was tight.
  18. She decided to take that $15,000 and get to San Francisco the cheapest way possible, and then pocket the leftover money.
  19. Bad move, Rachel.
  20. Rachel forewent a homefinding trip, found the cheapest moving company possible, didn’t ship her car, and chose not to pay for any storage.
  21. Turns out the moving company showed up late and moved really slowly and inefficiently. They even broke a few of her items.
  22. Then she got in her car, drove through the night, got to her new apartment, and found out it wasn’t quite what she was expecting.
  23. It was really small and off the beaten path. She couldn’t fit all of her things in her space, either. But she didn’t have any storage.
  24. Rachel wasn’t happy. She had to go to her first day work the next morning, and she hadn’t unpacked a single box.
  25. Now, Rachel is stressed, unhappy, and uncertain if she made the right decision by moving across the country.
  26. All our Relocating Rachel needed was…
  27. It’s situations like this where lump sum’s lack of structure can really your transferees
  28. When a transferee plans poorly for a relocation… …they often have to dip into their own funds. This isn’t always feasible, especially since:
  29. 2/3 of graduates walk away from college with an average of $26,600 in debt
  30. Don’t let this happen to your transferees. We’ll show you how with 4 types of guided lump sum options.
  31. FLEXIBLE ALLOWANCE PLAN
  32. what it is: Employers separate the relocation into different categories and assign a maximum amount of spending per category. For example, if a company decides the expenses they are willing to provide reimbursement for include: shipping household goods, short-term housing, traveling expenses, and 2 homefinding trips, they will assign an amount that the employee can spend per category, and the employee can go from there. If they don’t spend all of the allocated money in one specific area, they can transfer the remainder to a different area and spend it there.
  33. Let’s take a look at an example:
  34. FLEXIBLE Allowance Plan Household Goods -----------$8,000 Short-term Housing-----------$900 Traveling Expenses------------$500 2 Homefinding Trips-----------$2,000 (Actualspending) Household Goods -----------$10,000 Short-term Housing-----------$700 Traveling Expenses------------$100 2 Homefinding Trips-----------$2,400
  35. FLEXIBLE Allowance Plan Household Goods -----------$8,000 Short-term Housing-----------$900 Traveling Expenses------------$500 2 Homefinding Trips-----------$2,000 (Actualspending) Household Goods -----------$10,000 Short-term Housing-----------$700 Traveling Expenses------------$100 2 Homefinding Trips-----------$2,400 Employees can around as needed
  36. It provides the transferee with some kind of structure… …without limiting them too much in terms of how much money can be spent per category.
  37.  
  38. Remember tax implications, too. Some areas of a relocation are tax deductible, so if a transferee takes money away from one of those areas, and instead puts it towards a taxable area, you might end up spending more than you bargained for.
  39. FLEXIBLE Allowance Plan Household Goods -----------$8,000 Short-term Housing-----------$500 Traveling Expenses------------$500 2 Homefinding Trips-----------$2,000 (Actualspending) Household Goods -----------$6,000 Short-term Housing-----------$500 Traveling Expenses------------$100 2 Homefinding Trips-----------$4,000 exempt from taxes   not exempt from taxes   this combination is actually more expensive  
  40. Be open to hearing this plan called of different things, too.
  41. CAPPED ALLOWANCE PLAN
  42. what it is: Unlike flexible allowance plans, employees cannot transfer funds from one area to another. The employer will often have a policy stating what kinds of things the employee can use the lump sum for, similar to a flexible allowance plan, and if provided, they can use the support of a relocation management software or a relocation consultant to guide them through the process.
  43. One downfall of this plan is that a lot of people don’t know where they are going to need to spend money and how much of it, so they might reach one cap much quicker than anticipated and one much slower, and this can be stressful.
  44. Additionally, transferees have to be with keeping and tracking their receipts for reimbursement
  45. This plan is a little more cost effective when comparing it to a flexible allowance plan. You don’t run into the same sort of issues, specifically related to unforeseen tax expenses.
  46. The main differences?
  47. Watch out for the possible troublesome areas though:
  48. If the employee doesn’t spend all of what they are given, leading to unnecessary spending just to reach the amount given
  49. Let’s check out an example of what this policy might look like.
  50. CAPPED Allowance Plan Household Goods -----------$10,000 Homefinding Trip-------------$300 Car Shipment-----------------$1,000 Short-term Housing----------$500 (Actualspending) Household Goods -----------$10,000 Homefinding Trip-------------$300 Car Shipment-----------------$1,000 Short-term Housing----------$500
  51. CAPPED Allowance Plan Household Goods -----------$10,000 Homefinding Trip-------------$300 Car Shipment-----------------$1,000 Short-term Housing----------$500 (Actualspending) Household Goods -----------$10,000 Homefinding Trip-------------$300 Car Shipment-----------------$1,000 Short-term Housing----------$500 Funds stay and actual spending is the same as what is allotted
  52. If you choose to reimburse transferees (instead of giving them the money up front) remember to try and be as quick as possible with turn around time.
  53. LUMP SUM WITH RMS
  54. A good RMS (relocation management software) can change lump sum from a dangerous trend… into an overwhelmingly positive one.
  55. what it is: An RMS is an important tool for a few reasons. For one, it provides transferees with an overview of the costs they’ll run into, along with a timeline on when they should be expecting them—ensuring employees don’t end up overspending in one area too soon. It also educates users on tax implications by outlining all potential tax breaks and explaining terms that might new (such as the 50 mile rule, in-transit storage , etc). By housing guides and important documents in an RMS for transferees, it makes this information accessible at all times and allows transferees to take things at their own pace.
  56. don’t forget the power of pairing RMS with human contact
  57. Relocation specialists deal with lump sum policies on a daily basis, so they know how to , saving you a lot of money.
  58. CORE/FLEX
  59.    
  60. When you ask an employee: “What are your top 3 concerns for this relocation?”
  61. 1.) Finding a house 2.) Shipping my stuff They almost always rank their top concerns as:  
  62. Enter: core/flex
  63. what it is: With a core/flex approach, employers offer a “core” set of benefits which is covered in full (usually household goods and housing assistance) through direct billing, along with a list of “flex” benefits to use based on needs and seniority (the higher your level, the most flex benefit options you’ll receive). Employers then offer a smaller lump sum which functions similarly to the flexible allowance plan discussed earlier. Transferees get to basically craft their own relocation policy. Having multiple policies for your different transferees is much more realistic and less time consuming with this approach.
  64. It takes time to get the process up and running, but once you have a system in place… the benefits will far exceed the initial time spent.
  65. What it looks like:
  66. Core/flex Household Goods: Covered in Full •  Moving Company X •  Moving Company Y Short-term Housing: Covered in Full •  Housing provider X •  Housing Provider Y Choose 3 additional benefits: •  Homefinding trip - up to $300 •  30 days of storage - up to $500 •  Spousal assistance – up to $800 •  Language training – up to $2,000 •  Pet assistance – up to $600 •  Lifestyle transition assistance – up to $1,500 •  Car shipment – up to $2,500
  67. Core/flex Household Goods: Covered in Full •  Moving Company X •  Moving Company Y Short-term Housing: Covered in Full •  Housing provider X •  Housing Provider Y Choose 3 additional benefits: •  Homefinding trip - up to $300 •  30 days of storage - up to $500 •  Spousal assistance – up to $800 •  Language training – up to $2,000 •  Pet assistance – up to $600 •  Lifestyle transition assistance – up to $1,500 •  Car shipment – up to $2,500 This is the plan of the four.
  68. Where lump sum was once a check and a “good luck!”, it’s moving more towards a structured plan that encourages transactions to be handled between employer and supplier, instead of the employee. This takes a lot of stress off of your employee’s plate and allows them to focus on their new career and settling into their new city.
  69. Core/flex will continue to gain traction, just like we’ve seen with lump sum.
  70. Core/flex will continue to gain traction, just like we’ve seen with lump sum. So stay tuned.
  71. There are a lot of different routes you can take when choosing a lump sum policy that’s right for your employees.
  72. As long as you dive in and really understand the drawbacks and benefits of each lump sum plan…
  73. …you’ll have no problem choosing the right one for your company!
  74. Want to learn more?

×