Top 5 Best Practices for a Successful Lump Sum Program

As a mobility professional with a lump sum program, one of the biggest challenges is creating a lump sum program that fits all sizes. The top five practices described here will help you create a lump sum program that is suitable for your company and still offers some level of customization preferred by relocating employees.

5 best practices for lump sums

In the world of relocation, there is no shortage of decisions to be made. One of the biggest decisions is how to create a practical and appealing relocation benefits program and which methodologies to use. Lump sum programs offer companies a way to deliver varying degrees of support to a transferee while also minimizing administrative needs. A lump sum is a cash payment given to the employee to cover all or a portion of relocation services that would otherwise be delivered directly to the employee. Often, lump sum programs are viewed as an alternative to full-service relocation programs offered through providers. However, it is important to note that within the world of lump sum there are many variations and options that can aid companies in creating a more suitable, customizable lump sum program. This includes combining relocation programs via a provider with a lump sum to cover different aspects of a move. So, with all the options available, how do you create a lump sum program that works for your company and your transferees?

Here are our top 5 best practices for a successful lump sum program.


  1. Ask the Right Questions

    When beginning to build out a lump sum benefits program, it is crucial to make sure you answer key questions. Doing this will ensure you have covered your bases and will lead you to make the best policy decisions for all stakeholders involved in a given relocation.

    Here are some questions to consider:

    1. When will we deliver the funds to the transferee-before, during, or after the move?
    2. Is the lump sum amount enough to cover all of the expenses? If not, what expenses will the company cover? What expenses will be the responsibility of the employee?
    3. What is the employee's compensation plan or salary level?
    4. How long has the employee been with the company?
    5. How many family members will also be moving?
    6. Is the employee a homeowner or a renter? Will they need to sell their home?
    7. Will the employee need temporary housing or storage? If so, for how long?
    8. What is the distance of the move?
    9. Are they moving to a costly area?


  2. Make it a Culture Fit

    Company culture is a major focus for today’s companies. Top talent is focused on finding a company they can both identify with and feel proud to work for. Even after talent is acquired, retaining talent can be impacted by how consistent and dedicated a company is to its culture and values. When it comes to lump sum benefits and its line items, we encourage those in charge of their company’s relocation program to not only evaluate it through a financial lens but also through a cultural one.

    When it comes to lump sum benefits and company culture, be sure that your policies match up with your culture. If your firm promotes equality across seniority levels, do you cover all employee moves the same across all levels of the company? Does your organization want to place an emphasis on advancement and offer more covered items for more senior talent as a result? Additionally, the location and demographics of your employees are important as it may influence what types of items need to be moved, such as boats for coastal locations.  If many of your employees have large families and your company is family-centric, you may need to include funds to cover the needs of the children during the relocation. These are the types of discussions and considerations that should be had to ensure the benefits offered are in line with the company’s culture.

    For more on how corporate relocation programs influence culture, please visit our blog post, Hidden Messages: What Does Your Relocation Program Say About Your Company Culture?

  3. Choose the Right Type of Benefit

    As mentioned above, lump sum benefits come with a variety of options and methodologies. One of the biggest differentiators amongst lump sum packages is which type of benefit a company chooses to offer. Below are the four main types of lump sum benefits:


    1. Self Service: The lump sum is provided to the employee in lieu of all benefits and services. The transferee coordinates their own move and services.


    2. Limited Support or Managed Lump Sum: The transferee is provided with a lump sum amount along with support and guidance on how to maximize the lump sum through a Relocation Provider. Support can be provided through a relocation counselor or through a technology portal.


    3. Core Benefits: The employer designates certain core relocation benefits to be covered by a lump sum and may offer additional support via a relocation provider. The lump sum is then provided to assist with these designated core relocation benefits that would have typically been provided through reimbursement.


    4. Flex Benefits: A lump sum can also be used to provide for additional services that may fall outside of a company’s typical core benefits. These benefits are known as, “Flex Benefits” as they provide flexibility to a given relocation program. Flex Benefits might include:

      • Family Support

      • Spousal Support

      • Additional Home Finding Trip

      • Return Trip Back to Origin

      • Pet Shipment

      • Additional Temporary Living


  4. What’s it all for?

    Since lump sum benefits are cash payments given directly to the employee, it is crucial to determine and clearly delineate what the payment is intended to cover and how your firm will ensure the employee applies the funds correctly. Most commonly, lump sum benefits are used to cover things like temporary housing, household goods shipments, house hunting trips, visa and immigration costs, taxes, and cultural training. Be sure to outline clearly what the lump sum is intended to cover and whether your company will require receipts to verify where the employee spent their lump sum funds.


  5. Make it add up

As with choosing benefit type, choosing the right calculation method for your lump sum program is key to its success. Which calculation method is right for your company depends on many factors such as the number of relocations, the number of possible cities involved, company culture factors, and how important cost predictability is to your firm. 


  1. Company Determined: This is where the company sets an amount based on the expected costs for the services they are willing to cover.


  2. Location: Based either on the employee's origin location or destination, it is a flat amount set by the company for each location.


  3. Flat Amount Globally: Regardless of distance or location, employees receive the same lump sum amount to cover their moves.


  4. Distance: The lump sum benefit is calculated based on a set amount for the distance of the employee’s move, most commonly by applying a fixed dollar amount per mile.


  5. Software Program: Some firms opt to use software programs to determine the lump sum amount for some or all of the total benefits provided. Data for the employee’s move such as distance in miles and the number of family members being moved is entered into a program that then computes the lump sum amount.


Whether your organization uses lump sum exclusively or in combination with a full-service relocation program, be sure that you are following these 5 best practices. By asking the right questions, ensuring cultural alignment, choosing the right type of lump sum benefit, being clear about the amount’s allocation, and selecting your calculation methodology, your lump sum benefits program will work for all your firm’s stakeholders while being functional and practical. To learn more about lump sum alongside the latest research on how today’s companies are utilizing lump sum benefits, visit the  resources page on our website to check out our Ultimate Guide to Lump Sum Mobility Benefits.

Categories: Corporate Mobility Planning Policy Development