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Are your assignees responsible for selecting their own international moving company? Are you questioning if a lump sum policy is still right for your scaling relocation programme? If so, read on...
In recent years we’ve had many conversations with companies who offer a lump sum Global Mobility programme and are growing concerned as their programme and number of employee relocations grow. Their biggest areas of concern include:
- Assignee experience
- Duty of care
- Compliance
- Cost control
One of the biggest frustrations we’ve heard is the lack of support that Global Mobility teams can offer a lump sum has been given. Some employees fail to understand that the employer cannot typically intervene if issues arise with the employee’s chosen supplier as there is no relationship and no agreement (and often no internal resource allocated) that would help find a solution. This often puts the employer and the employee in a difficult and upsetting position, with the employer feeling helpless and the employee feeling let down and stressed at a key time.
If your employee relocation programme is growing then it may be time to consider centralised management which can provide a better solution to improve employee satisfaction, manage duty of care and compliance and improve cost control.
In this article, we help you evaluate your current situation and explain some of the potential solutions that help you bring your programme under control as your number of employee relocations grows.
Empowering Assignees vs. Maintaining control
Lump sum programmes can offer assignees flexibility; however, they may pose challenges in ensuring compliance and quality control. On the flip side, fully managed vendors or curated vendor lists maintain higher standards but might limit assignee choice. Balancing these options involves considering the company's risk tolerance, assignee preferences, and programme objectives.
Achieving the right balance between flexibility and control requires thoughtful programme design. Lump sum programmes offer flexibility but might lack oversight, making it crucial to establish clear guidelines and expectations for assignees. In contrast, fully managed vendors provide control through pre-approved vendors or a dedicated provider, ensuring compliance, consistency, and adherence to company policies.
As your relocation programme scales and the number of relocations increases, this balance becomes key in ensuring a consistently positive experience for assignees that meets global mobility objectives.
Challenges of managing lump sum relocation programmes
Clients that we have transitioned from programmes where assignees are responsible for selecting their own vendors to managed vendors have frequently fed back that quality and compliance are the main causes of dissatisfaction.
Below we have outlined some of the potential risks of poor selection:
Negative Assignee Experience
Challenging relocation encounters can trigger immense strain for the assignee and their family, hampering their ability to settle in and be productive during their assignment. Some of the challenges that may arise from a lack of consistent service quality include:
- Poor communication that relies on employees to chase for updates.
- Damages that result in an employee having to spend time making an insurance claim and sourcing replacement items.
- Delays that mean additional time in serviced accommodation or finding alternative furniture solutions while they wait.
- Unforeseen extra expenses not advised in advance, for example, customs inspection fees or quarantine/cleaning fees for items they were not adequately advised on how to prepare for shipping.
Duty of care and compliance in relocation
When addressing duty of care and compliance, it's crucial to acknowledge that the average assignee, especially those new to relocation, may have limited understanding and experience in this area. It's essential to consider the extent of responsibility you hold in ensuring their decisions align with international laws and your company's policies.
Employers have a duty of care to their relocating employees which means it is their legal duty to ensure their health, safety and wellbeing. In the case of Lump Sum relocation allowances assessing risk, planning and developing guidelines can go a long way to providing effective duty of care. Education and training are key.
There are several areas in which our clients have previously expressed concerns about duty of care and compliance when it comes to a lump sum or reimbursement policy:
- Exposure to scams/fraud/unlicenced or uninsured movers: Lump sum programmes, while offering flexibility, can unwittingly expose assignees to risks associated with selecting ‘rogue’ movers. You may have seen the horror stories in the newspapers when things go wrong (if you haven’t check out "Moving Company Scammers face 20 years in prison" and “Crooked removal firm owners jailed”). Although luckily not every case of bad service is so extreme, choosing an inexperienced, uninsured or unqualified mover can cause more than just a headache for the assignee.
- Health and Safety: There are still many countries that do not have as developed rules and regulations concerning health and safety as others, is there a risk to your assignees of working with suppliers that have not passed stringent checks? Although privately arranged the services procured are still job-related in terms of their relocation, therefore do you still need to ensure compliance with your company's rules? In 2014 six people were injured and two killed when a balcony collapsed when two men were moving a sofa over it (read the news article here). Imagine having to deal with these devastating consequences as an employer.
- Adherence to Regulations: Anti-bribery and corruption is a crucial aspect to consider. In certain locations, it is not uncommon for assignees to be pressured into making 'facilitation payments' - essentially small bribes to speed up standard government procedures. Are your employees receiving proper guidance from their providers and being directed to adhere to the ethical standards your company upholds?
- Data protection: Compliance with data protection laws is vital to keeping your employees information safe when relocating internationally and any data breach by non-compliant vendors could have serious consequences.
Relocation cost control
There is also a potential impact on cost control as assignees do not benefit from volume discounts that may be available through a single vendor as well as lack of control over expenses and exceptions, or guidelines for vendors regarding costs.
It's also important to be aware that in some locations Relocation Lump Sums may be taxable either entirely or over a certain value.
managed relocation services for scaling global mobility programmes
As a company's relocation programme scales, managing multiple assignee-selected moving companies can become increasingly complex and administratively burdensome.
Centralised management is often the recommended solution for companies with growing relocation programmes.
Photo by Antoni Shkraba via Pexels
Benefits of centralised relocation management:
By appointing a dedicated relocation service provider (or panel of vendors) you can:
- Improve assignee experience and wellbeing
- Standardise services
- Reduce liability and risk through compliance checks
- Enhance cost control
- Improve access to global expertise
- Reduce administrative burden
- Provide a seamless relocation process globally
The ultimate goal is to deliver a seamless relocation experience for your assignees, while mitigating any risks and maintaining efficiency.
There are several options to consider if a lump sum or reimbursement programme no longer suits your organisations needs. The main alternatives our customers typically consider are:
Guided lump sum
Whilst the day-to-day management and choice of engaging an International Mover and managing a move is in the hands of the assignee, Global Mobility continues to take responsibility for the selection of service providers, applying strict criteria for a pre-vetted approved list of movers.
Fully managed relocation service providers
Going one step further and appointing a single relocation service provider or small panel of movers adds further benefits in improving assignee experience in relocation. From reduced administrative burden through a single contract and invoicing process to the ability to leverage the larger volume of shipments to secure favourable pricing and contract terms.
Contracting to a dedicated Employee Shipping Company also improves accountability as providers are measured on key performance indicators, and allows your global mobility team to build close relationships with trusted advisors to allow them to guide you in continuously optimising your relocation services and programme.
If you’re considering an RFP process to appoint a centrally managed provider check out our Guidelines for a Successful Move Management Tender and Sample Questions for Relocation RFPs.
Reducing risk in Lump Sum programmes
If you do decide to continue to offer a lump sum / self selected service rather than providing managed relocation services there are still a few things you can do to reduce risk.
- Provide a list of recommended movers on your intranet or website that you have completed some level of due diligence on (for example members of FIDI - the professional association for international movers - as a minimum).
- Work closely with your chosen providers to design and implement your programme to get their guidance and support to avoid some of the challenges typically faced.
- Provide educational resources to help assignees make informed decisions. For example, Bournes provide Lump Sum accounts with The Employee Guide to Choosing an International Removal Company to help them get the most out of their relocation budget whilst ensuring they secure a quality service and the right services for a smooth move.
Measuring success
In both lump sum and fully managed vendor scenarios success metrics such as assignee satisfaction, cost per relocation, on-time delivery and compliance can be meaningful benchmarks. These metrics help evaluate the effectiveness of your chosen approach, allowing you to continuously improve and optimise your global mobility programmes.
Further reading and support
If you'd like to discuss your lump sum programme or employee relocation challenges further we'd love to help. You can request a consultation or call us on 01797 228000.
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