The Pitfalls of Lump Sum Payments

Lump sum programs for relocating employees have continued to gain in popularity over the last few years. On the surface, lump sums seem like a simple solution because they are easy to administer, provide a known budget for the company, and offer flexibility to the employee. However, these programs also have issues that can negatively impact both the company and the employee.

Traditional Lump Sum Payment Model

Under the traditional lump sum payment model, the corporation provides transferring employees with a fixed dollar amount towards their relocation expenses. While it is a convenient solution for companies, it leaves the employee to navigate the intricacies of relocation on their own, which often leads to challenges that can hinder the success of the relocation.

Common Pitfalls

1. Distribution of Funds: Obviously, the most important part of a lump sum program is the distribution of funds. Since the employee isn’t on payroll yet, companies administering their own lump sum programs typically must wait until the employee’s start date or first payroll period to provide the payment. Corporations also need to be able to track and report on relocation payments, tax withholding, and gross-up. If the payment process is too slow or confusing, it can result in financial stress and frustrated employees.
2. Moving on their Own: Most employees don’t have a lot of moving experience, especially early in their career. While a lump sum provides flexibility and choice, the employee may not know where to start or how to find qualified suppliers for the services they need to get to their new destination. With no guidance, employees have to figure everything out on their own, making them susceptible to scams, moving delays, and stress, which can lead to dissatisfaction with their new company before even starting the new job.
3. Planning Confusion: While the whole point of a lump sum is simplicity, employees do have to find suppliers for services they need, keep track of quotes received, search for general moving information, find information about their new destination, search for a new place to live, move their belongings, set up new utilities, change home or auto insurance, and a host of other components for a smooth relocation. Researching and keeping track of all this information takes time and effort and can be a  distraction from their new role with the company.

A New Approach

As the challenges of the traditional lump sum payment model became increasingly apparent, it was clear that a new approach was necessary. This is where NuCompass steps in as a powerful ally. Our new solution, CoPilot Express™, offers employees a more comprehensive and supportive lump sum experience, while still maintaining an easy, cost-effective program for the employer.

CoPilot Express offers fast lump sum payments in real-time, direct connections to the same trusted suppliers that NuCompass uses for full-service relocation, cash back offers, live chat support with relocation experts, destination information, personalized plan summary, and an educational library ‒ all combined to guide your employee through their entire journey.

You can eliminate many of the issues associated with the lump sum payment model with this simple innovative platform that provides your employees with a more rewarding relocation experience. Click here to learn more and get early access!