Learn how to maximize cost-savings and employee happiness by paying careful attention to market information.
It should come as no surprise to anyone that not all cities are created equal – equally priced that is. Notoriously high are the price tags for a basket of goods in London, New York and Hong Kong, whereas that same basket will cost far less in Chicago, Prague and Bangalore.
Companies invest time and money to understand market rates and determine salaries to ensure they offer appropriate compensation for the location and position. A shared goal is to be competitive without being overpriced, tempting new hires while managing costs. So why do we see this logic sometimes go out the window when it comes to relocating employees?
MOVE Guides understands (and likes!) that companies use lump sum policies to provide their employees with a better relocation experience, autonomy throughout the process, and to help themselves manage costs and streamline the administrative process. We've noticed that sometimes companies are tempted into giving every employee the same lump sum no matter where they are moving.
As the data shows us, $15 for breakfast in Austin may buy you an elaborate spread but in Hong Kong it'll get you a little more than a good cup of coffee. While giving employees the same lump sum benefits in the same city makes a lot of sense, giving employees the same benefits in radically different cities does not.
Here's why: Some employees could do with less and some could really do with more. You may be overpaying for some lump sums – injuring the goal of cost savings – and leavings others a bit bare – injuring the employee experience.
What's the solution? With MOVE Guides' help, you are able to sculpt policies appropriate for every market you are sending your transferees and business travelers. We understand that just as you pay attention to the market rates for salary in order to balance talent acquisition with cost, you want the edge in your lump sum policy too. Market data is a critical tool for designing an appropriate policy whether you're wishing your employees “bon voyage” or “auf wiedersehen”.
Research shows that when lump sum policies are out of sync with market data, companies often find themselves with unhappy employees and higher than expected costs. They ultimately switch to a managed-move offering, doing exactly what they'd tried to avoid in the first place -- spending more and fragmenting their relocation offering.
Lump sums are a fantastic way to manage costs, minimize admin, empower employees and align your relocation program with this workforce's demographic preferences. The secret to success is not to let yourself think that simplifying the policy means one sizes fits all. Customizing your program to reflect the market is critical to ensuring an engaged and motivated workforce.
Interested in having a great lump sum program? Get in touch today for a demo.