Relocating employees can be quite a troublesome activity, and it usually creates a lot of extra effort for the company. From helping the employees find a good home and neighborhood to offering them free transportation and other similar features, the people in charge of this task will have their hands full.
Still, it is something that needs to be done in order to find valuable new employees or to place trustworthy collaborators in new branches. However, there is another way to go about this, and that is to offer a lump sum relocation package and call it a day.
In short, a lump sum relocation package is a single (and usually fixed) amount provided by the company to the employee that is about to move in order to make things easier for them. The purpose of this package is to speed up the relocation process and to reduce (or control) the costs within the company.
Therefore, today we'll discuss the main reason why the lump sum relocation package is getting more popular and if there are any cons to consider before accepting this as the standard way of doing things.
What Does This Package Cover?
Depending on the company, this type of relocation package can cover anything from transportation costs to costs related to finding a new home at the new location. In general, the package is negotiated during the final interview and is included in the final contractual offer, with a list of acceptable expenses.
The main purpose is, as we already specified, a speedier relocation process that allows the company to avoid getting other resources involved. In short, once the future employee accepts the lump sum relocation package, they will be the ones to worry about finding movers, taking care of the real estate related hassles (and costs), and everything else.
On the upside, even if the person relocating is left with a lot of decisions to take in a short period of time, it also allows them to get full control of the process and decide where the money should go.
On the downside, it's important to remember that these are taxable money, which will also fall onto the shoulders of the employee. So, if companies don't include this aspect in the package, the employee may end up having to pay the relocation tax from their own pocket (check out this guide to learn more).
While there are a few different types of a Lump Sum Relocation package (fixed, variable, and partial) the best way to keep people motivated and interested in your offer is to negotiate the amount according to each person's needs.
For this, it may be useful to hire a relocation specialist who can provide useful advice and tips. In fact, if you plan on using relocation as a way to dip your toe into a more diverse talent pool, a relocation specialist is one of the professionals every busy entrepreneur needs to hire for things to go on as smoothly as possible.