Lump Sum Use

Used as Supplemental and Full Program Options

Lump sums continue their solidified presence 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 also used to supplement other relocation benefit programs and provide flexibility for specific costs. Our survey continues to investigate which costs fall under lump-sum payments, and to whom and for what types of relocations they are applied.

Nearly identical to the last two years, essentially half of firms use lump sums to manage temporary housing costs (47% vs. 50% in 2016-2017), remaining higher compared to previous years (38%-43%). For the fourth year in a row, nearly twice as many firms used lump sums to cover real estate assistance/transactions (28% vs. 11%+). While slightly lower than the last 3 years, far more continue to use them for rental assistance/transactions (28% vs. 32%-33%) than did on average from 2011-2014 (16%+). However, usage to cover household goods shipping/storage sees a dramatic shift downward. After progressively increasing from 2011 (28%) to a historical high in 2016-2017 (44%), it is now used by around a third of firms. Usage for miscellaneous expense allowances also dropped markedly (47% vs. 57%). 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 46% of firms use them for the entire relocation cost, supplemental use occurs among these firms as well.

Overall, small and mid-size firms are less likely than large firms to use lump sums for miscellaneous expense allowances (37% and 42% vs. 63%). This usage has fallen notably compared to last year across firm size (52%, 50% & 71%, respectively).
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 35a-1

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

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Question 35a-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 continue to most often apply lump sums for domestic relocations. Around a third of firms overall use them for international long-term assignments. Over a fourth use them for short-term/temporary assignments; about one seventh use them for alternative assignments. Mid-size and large firms are more likely than small firms to use lump sums for international long-term assignments (37% and 34% vs. 23%) or short-term/temporary assignments (30% vs. 20%). However, use across company size for domestic relocations and alternative assignments is more 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 were transferees, and employee level was less a factor than new-hire status. Then the landscape began changing. From 2015 to 2017, far more firms used lump sums for executives (54%-59% vs. 32%+ in prior years), and this remains elevated in 2018 (52%). However, during that same period, far fewer firms used lump sums for new hires (43%-49% vs. 59%+), but for 2018 it trends higher and closer to previous levels (55%).

Underlying use by company size is shifting as well. For executives, small firms see usage fall but it remains elevated compared to historical highs (57% vs. 66%). It remains near historical highs (57%) at mid-size firms. Large firms report levels similar to 2017 (43% vs. 44%), down notably from 2016 (63%). Usage for new hires jumps markedly compared to last year among mid-size firms (52% vs. 39%), continues increasing for small firms (55% vs. 50% in 2017 & 39% in 2016), and remains similar to last year’s historically normative levels for large firms (58% vs. 60%). Use of lump sums for experienced professionals drops 10 percentage points compared to the historically normative level of 2017 (48% vs. 58%) overall. However, underlying shifts by company size emerge here, too, with usage across firm size for experienced professionals falling notably compared to last year (55% vs. 65% small, 43% vs. 54% mid-size, 45% vs. 53%, large), even as small firms remain the most likely to use lump sums for this employee type. Overall, usage of lump sums for entry-level employees, renters, and homeowners dips slightly but remains near recent historical norms, excluding 2015.

Among large firms, close to half or more use lump sums across employee levels and employee types; far fewer (27%) base lump-sum offerings on homeowner status.
Entry-level employees are more likely to receive lump sums from mid-size or large firms than from small firms (49% and 53% vs. 31%); transferees are also more likely to see lump sums at these firms as well (46% mid-size & large vs. 35% small).
Small and mid-size firms are more likely than large firms to provide lump sums to executives (57% vs. 43%), while small firms are more likely than mid-size and large firms to offer them to experienced professionals (55% vs. 43% & 45%).
Relocating renters are more likely to receive lump sums from mid-size and large firms compared to small firms (34% and 41% vs. 24%).

As lump-sum usage has grown, the survey has incorporated additional questions about monetary ranges for the categories of reimbursement. Compared to the past five 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: household goods shipping/storage, entire relocation cost, temporary housing, and miscellaneous expense allowance. However, offerings for real estate assistance/transactions, rental assistance/transactions and travel expenses fall one range lower.

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

Question 35b-1-1

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