Love them or hate them: Lump Sums for Domestic Mobility

Flexibility for New Talent

Lump sums are being increasingly used when hiring or relocating talent who have simple relocation needs, such as new graduates and early-career professionals. They typically haven’t established a large household or started a family, so they don’t always need the support that a full relocation package offers. A straightforward lump sum can be appealing as it gives them cash to spend how they need: to cover moving costs, find temporary housing, or buy some furniture. It's simple, straightforward, and lets them make the choices that work best for them.

Perhaps the biggest benefit is the flexibility it gives talent acquisition teams. Instead of explaining detailed relocation benefits, they can say, "Welcome to the company. Here’s some money to help you get settled." It's an easy pitch for new recruits who might not appreciate the offerings of a traditional relocation package. Plus, lump sums make it easier for everyone involved to get on the same page and keep things moving.

Cost Transparency

For companies, lump sums are appealing because they make budgeting easier. You know exactly how much you're committing from the start, which helps with financial planning. This predictability is especially handy when you're hiring multiple new people or working with a tight budget.

The business and talent acquisition teams love the cost transparency, too. With a simple chart that shows predefined amounts that can be offered to candidates, they can make decisions quickly without waiting to consult with Global Mobility.

Speeding Up the Hiring Process

Lump sums can speed up the recruitment process. With a set amount already decided, talent acquisition can make offers without waiting for approval from Global Mobility experts. This speed is especially important when you are competing for the best candidates. The simple approach of lump sums also cuts down on back-and-forth conversations, making the whole process faster for everyone.

Lump Sums for Everyone?

Of course, lump sums aren't perfect. They may not be ideal for senior executives with big families or complex personal situations. In those cases, a full relocation package with more services and support might be a better fit.  

However, some companies are giving their employees, at all levels, the choice of a lump sum or full relocation services. This allows employees to choose what works best for them. The key here is to still offer a choice of services for those that need it, and lump sums for those who prefer to manage themselves.

Leverage Data

Those with effective lump sum programs leverage data to determine their lump sum values. They also update the lump sums each year to make sure they keep pace with inflation or changes in preferences for relocation benefits. When offering a lump sum, there often isn’t the need to match a benefit dollar-for-dollar. For example, a policy might allow for 60 days of temporary living, but employees might not use the full benefit. When constructing the lump sum, it is recommended to think about how the lump sum will be calculated to ensure the values are appropriate but not too generous.

Given the wide spectrum of mobility needs, lump sums can be a useful tool in domestic mobility in the right circumstances. They offer flexibility for new talent, cost transparency for companies, and a streamlined hiring process. But they're not the answer to every relocation scenario. Knowing when they work and when they don't is the key to making the most of them.