Lump Sum Use

Continued Use as Supplemental and Full Program Options

Initially used sparingly, lump sums appear to have solidified over the past decade as a permanent piece of relocation policy and practice. Similar to the last few years, firms report around a fourth of relocations were lump sum payment only. However, lump sums are applied in myriad ways; some cover specific costs in a supplemental manner. Our survey continues to investigate which costs fall under lump-sum payments, and to whom and to what types of relocations they are applied. Some notable trends have emerged. Identical to last year, half of firms use lump sums to manage temporary housing costs (50%), up notably from previous years (38%-43%). For the third year in a row, nearly twice as many firms used lump sums to cover real estate assistance/transactions (28% vs. 11%+) or rental assistance/transactions (33% vs. 16%+) than did on average from 2011-2014. The percentage using lump sums to cover household goods shipping/storage increased progressively from 2011 (28%) to a historical high (44%) in 2016 and again this year. Roughly half of firms use lump sums for four out of the seven cost types listed, indicating diversity in how lump sums answer different situations in relocation management. While 41% of firms use them for the entire relocation cost, supplemental use occurs among these firms as well.

Overall, small and mid-size firms are more likely than large firms to use lump sums for household goods/shipping costs (53% and 46% vs. 32%), while large firms are more likely to use lump sums for miscellaneous allowances compared to small or mid-size companies (71% vs 52% and 50%).
In the past, far more differences existed among companies in how lump sums were applied; in recent years, the frequencies of use are mostly similar across company size.

Question 32a-1

For what types of relocation costs are lump sum payments typically offered?

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Question 32a-2

For what types of relocation costs are lump sum payments typically offered?

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Employee and Relocation Types Receiving Lump Sums

The vast majority of firms across company size indicate that lump sums are most often applied for domestic relocations (87%). Around a third of firms overall use them for short-term/temporary assignments or international long-term assignments; about one sixth use them for alternative assignments. Mid-size firms are slightly more likely than small or large firms to use lump sums for international long-term assignments (41% vs. 29% and 33%), but use across company size and assignment type is similar overall.

The use of lump sums across employee types continues to shift in response to the changing environment of relocation. When first measured in 2011, around half or more firms said most employee types, except for homeowners, commonly received lump-sum payments. Gaps widened in 2012. In 2013 and 2014, new hires were more likely to receive lump sums than transferees, and employee level was less a factor than new-hire status. However, the landscape began changing in 2015. Far more firms from 2015 to 2017 than in prior years now use lump sums for executives (54%-59% vs. 32%+), and far fewer firms use lump sums for new hires (43%-49% vs. 59%+). Despite these trends, underlying use by company size is shifting. For executives, it has jumped to the highest levels historically for small firms (66%) and to near-historical highs for mid-size firms (59%), while dropping from last year’s increase among large firms (44% vs. 63%). Usage for new hires remains lower among mid-size firms (39%), rebounds markedly for small firms (50% vs. 39% last year), and remains similar to last year’s historical normative levels for large firms (60% vs. 56%). Use of lump sums for experienced professionals remains similar to historical norms (58%) overall. However, underlying shifts by company size emerge here, too, with more small firms than mid-size or large firms exercising lump sums for these employee types (65% vs. 54% and 53%). Overall, usage of lump sums for entry level employees, renters, and homeowners remains within historical norms over the last two years after dipping in 2015.

Among large firms, roughly half or more use lump sums across employee levels and employee types; far fewer base lump-sum offerings on homeowner (36%) status.
New hires are more likely to receive lump sums from large and small firms than from mid-size firms (60% and 50% vs. 39%).
Small and mid-size firms are more likely than large firms to provide lump sums to executives (66% and 59% vs. 44%), while large firms are more likely than small or mid-size firms to offer these to entry-level employees (67% vs. 37% and 44%).
Relocating homeowners or renters are the most likely to receive lump sums from large firms compared to small or mid-size firms (36% vs. 22% and 25%, 48% vs. 41% and 34%).

As lump-sum usage has grown, the survey has incorporated additional questions about monetary ranges for the categories of reimbursement. Compared to the past four years, most offerings are more frequent and generous than in 2013 and on par with 2014, despite some dips below ranges reached in 2015. The overall median ranges are the highest in five years for: real estate assistance/transactions, household goods shipping/storage, entire relocation cost, temporary housing, and miscellaneous expense allowance. However, ranges offered for rental assistance/transactions and travel expenses remain one range lower.

The median amount offered by large and small firms were the same for rental assistance/transactions ($1,000-$2,499); mid-size firms were slightly more generous.
Median amounts offered by mid-size and large firms were the same for real estate assistance/transactions ($5,000-$9,999) and miscellaneous expense allowances ($2,500-$4,999). Small firms were slightly less generous.
The median amount offered for household goods shipping/storage was the same for small and mid-size firms ($5,000-$9,999); large firms were slightly less generous.
Median amounts across company size were the same for the following categories: entire relocation cost ($10,000-$14,999), temporary housing ($2,500-$4,999), and travel expenses ($1,000-$2,499).

Question 32b-1-1

What types of relocating employees most commonly receive lump sum payments?