October 6, 2010 by MSI
With the present economic
environment, budgeted relocations are a re-emerging trend. Not that they ever disappeared;
this type of relocation program is popular with many corporations. But, with
more companies hopping on the budgeted move bandwagon, it’s important to
examine the good, the bad, and the ugly of this program alternative.
So let’s start with the
good: budgeted moves enable predictable costs at each tier level. From an
accrual perspective, the budget is static and cost-efficient. A properly
structured budgeted program supports the relocating employee’s needs while predicting
and containing costs. And budgeted moves, as well as hybrid programs that
incorporate a lump sum for particular benefits, enable flexibility and employee
empowerment on how the relocation dollars are utilized.
Theoretically, budgeted or
lump sum programs should and can be easy to manage with a properly structured
program. However, there is also a harsh reality to these types of programs, which
leads me to the bad and the ugly.
Experience shows that one
size does not fit all. When a family of four moves from the East Coast to the
West with the same budget as a family of two, the inequity is obvious. In order
to stretch those dollars, the employee may decide to move himself and then he
or she is faced with managing and arranging that supplier. Others will struggle
to use all of the budget dollars even if they are not necessarily needed; what
was intended to be a benefit morphs into an entitlement.
Overall, a poorly designed
program can lead to employee resentment both toward their employer and the
relocation management company. If a budgeted program is not structured
properly, transferring employees sense frustration and elevated stress levels. What
was meant to be an effective, easy to manage, straight forward benefit program
can twist into a frustrating, time consuming, and resented experience in the
eyes of the employee.
To avoid the “ugly” of
budgeted moves, we recommend that you ensure that the program is well thought
out and properly structured. Examine the budget caps to assure equitable
treatment and create a strong policy guideline that clearly and concisely
outlines the intent of the benefit package. Also, consider creative alternatives
to an overall budgeted move that can still generate desired cost control. And
lastly, conduct a yearly case study review to identify trends where
improvements may be implemented.
One size definitely does not
fit all. A successful program for both the corporation and the relocating
employee, whether budgeted or not, is only possible with a well thought out