LUMP SUM USE
Supplemental Use Remains Higher
The use of fully reimbursed/cost-covered relocations has declined progressively and remains near its historical low. For the past nine years, firms estimate one in four relocations are lump-sum payment only (for the entire relocation). For the past eight years, roughly one in five were partially reimbursed; for 2020, this trends upward to one in four.
Even as companies continue their reliance on lump sums, they are using them not just to replace relocation benefits but as a flexible supplement 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.
Among firms using lump sums, roughly 4 out of 10 apply them for the entire cost of relocation, essentially consistent with findings since measurement began. However, the percentage of companies using lump sums for travel expenses drops from half or more over the past five years to 38%, and those using them for household goods shipping/storage or temporary housing also falls from roughly half to around a third. After progressively increasing across these categories for most of the past decade, these are notable shifts. Those using lump sums for miscellaneous expenses trends lower as well. Of note is that firms using lump sums for rental assistance/transactions and real estate assistance/transactions remain at levels similar to the past six years and do not see declines.
- Roughly a third or more firms use lump sums for each of the expense categories on this list, indicating there is still wide diversity in application of lump sums for relocation management.
- Usage of lump sums has increased and remains elevated for the following categories:
- Since 2015, around one-third of firms used lump sums for rental assistance/transactions, compared to 16%-21% from 2011-2014.
- For the seventh year running, nearly twice as many firms used lump sums for real estate assistance/transactions (28% vs. 11%-15% for 2011-2014).
- After rebounding from a low in 2015 (40%), firms applying lump sums to miscellaneous expense allowances has decreased to its lowest level historically (57% vs. 34%) in 2021.
- In the past, far more differences existed among companies in how lump sums were applied. In recent years, frequencies of lump sum use are mostly similar across company size. Notable differences this year include: midsize and large firms are more likely to use them for temporary housing (43% & 40% vs. 26% of small firms), and midsize firms are much more likely to use them for rental assistance/transactions than large firms (38% vs. 24%).
As lump sum usage has grown, the survey has incorporated questions about monetary ranges for categories of reimbursement. Over the past eight years, most offerings are more frequent and generous than in 2013 and 2014, despite some being lower than 2015. The overall median ranges match the highest levels in eight years for every category except rental assistance/transactions, which is one tier lower. However, there remain differences in offerings by company size.
- Small and midsize firms offered the same median amounts for rental assistance/transactions ($1,000-$2,499); large firms were slightly more generous.
- Midsize and large firms offered the same median amounts for real estate assistance/transactions ($5,000-$9,999), household goods shipping/storage ($5,000-$9,999), the entire relocation cost ($10,000-$14,999), temporary housing ($2,500-$4,999), and miscellaneous expense allowances ($2,500-$4,999). Small firms were slightly less generous for each category.
- Median amounts across company size were the same for travel expenses ($2,500-$4,999).
EMPLOYEE AND RELOCATION TYPES RECEIVING LUMP SUMS
While the majority continue to apply lump sums for domestic relocations, more than half of firms across company size now indicate they use them for short-term/temporary assignments. The percentage using them for traditional/permanent domestic relocations has progressively declined over the past four years to the lowest level historically, while those using them for short-term/temporary assignments has increased to the highest level over the last three years. This is likely tied to the dramatic decrease in the percentage of domestic relocations falling under traditional/permanent status in 2020 compared to the previous five years (59% vs. 69%-75%). Nearly 40% of relocations were categorized as either short-term/temporary or alternative (rotational/commuter/etc.) last year, compared to around a fourth the previous five years.
Use of lump sums for international long-term assignments remains on par with the roughly one-third that have done so historically. More than a sixth use lump sums for alternative assignments; this is also similar to the past five years overall. Use of lump sums for short-term/temporary assignments is essentially the same for firms across size for a second straight year. Midsize firms are the most likely to use lump sums for international assignments compared to both small and large firms (43% vs. 28% & 32%).
Among firms using lumps sums, usage rates across executives and experienced professionals had been increasing progressively. However, this year, use of lump sums for executives falls markedly lower (44% vs. 52%-59%) than the previous six years and dips among experienced professionals to match 2015 (52%), although it remains above 2018 (48%).
Use among entry-level employees remains in the mid-level range historically. A progressive overall decline remains the trend for new hires, and usage of lump sums ticks up slightly for transferees for a second straight year, returning near historical norms. Usage of lump sums for homeowners falls after being dramatically higher in 2019-2020 (26% vs. 36%+) to within historical norms; for renters, it falls to the lowest level historically after spending the past five years in the historical midrange.
- Midsize firms are the most likely to offer lump sums to experienced professionals compared to both smaller and larger firms (59% vs. 49% and 47%).
- Midsize firms are the most likely to use them for executives (57%), but small firms are also more likely to use them than large firms (43% vs. 31%).
- Large firms are the most likely to offer lump sums to renters compared to smaller firms (32% vs. 22%+), and both midsize and large firms are more likely to offer them to homeowners than small firms (30% & 28% vs. 21%).
- Around one out of three firms across size use lump sums for new hires, and close to half use them for entry-level employees or transferees.
