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Budgeted Moves: The Good, The Bad and The Ugly

October 6, 2010 by MSI

With the present economic environment, budgeted relocations are a re-emerging trend. Not that they ever disappeared; this type of relocation program is popular with many corporations. But, with more companies hopping on the budgeted move bandwagon, it’s important to examine the good, the bad, and the ugly of this program alternative.

So let’s start with the good: budgeted moves enable predictable costs at each tier level. From an accrual perspective, the budget is static and cost-efficient. A properly structured budgeted program supports the relocating employee’s needs while predicting and containing costs. And budgeted moves, as well as hybrid programs that incorporate a lump sum for particular benefits, enable flexibility and employee empowerment on how the relocation dollars are utilized. 

Theoretically, budgeted or lump sum programs should and can be easy to manage with a properly structured program. However, there is also a harsh reality to these types of programs, which leads me to the bad and the ugly.

Experience shows that one size does not fit all. When a family of four moves from the East Coast to the West with the same budget as a family of two, the inequity is obvious. In order to stretch those dollars, the employee may decide to move himself and then he or she is faced with managing and arranging that supplier. Others will struggle to use all of the budget dollars even if they are not necessarily needed; what was intended to be a benefit morphs into an entitlement.

Overall, a poorly designed program can lead to employee resentment both toward their employer and the relocation management company. If a budgeted program is not structured properly, transferring employees sense frustration and elevated stress levels. What was meant to be an effective, easy to manage, straight forward benefit program can twist into a frustrating, time consuming, and resented experience in the eyes of the employee.

To avoid the “ugly” of budgeted moves, we recommend that you ensure that the program is well thought out and properly structured. Examine the budget caps to assure equitable treatment and create a strong policy guideline that clearly and concisely outlines the intent of the benefit package. Also, consider creative alternatives to an overall budgeted move that can still generate desired cost control. And lastly, conduct a yearly case study review to identify trends where improvements may be implemented. 

One size definitely does not fit all. A successful program for both the corporation and the relocating employee, whether budgeted or not, is only possible with a well thought out policy.