Assist Employees Moving Household Goods with Lump Sum Reimbursement Program (reprint)

Don’t let your relocating employees go it alone

In recent years many corporate transferees have been asked to take on a more active role in managing their own relocations. This trend developed with many new emerging companies that had not relocated people in the past and with larger more established companies whose relocation costs were steadily climbing; looking for ways to reduce this trend. At Consumers Relocation we see a tremendous number of people coming to us for assistance in their moves since their companies are asking them to manage many of the pieces of this process themselves.

Lump Sum Allowances Emerge
One of the largest trends has been the emergence of lump sum allowances for many of the typical relocation costs. Lump sum programs group a number of expense categories typical to relocation into on dollar allowance which the company will provide to the transferee. Househunting trips, temporary living expenses, miscellaneous expenses, final move expenses and shipment of household goods are the most typical expenses reimbursed under Lump sum programs. The most expensive of these categories is the actual shipment of household goods, and is probably the category where a transferee can save a considerable amount of money if done properly.

The attractiveness of lump sum programs to companies is the reduced administrative work in processing expense reports and audits. This reduced time allows human resource administrators more time to work with the relocating family in assisting them with school selection and other special needs. The HR administrator has more time to counsel transferees on current policy issues and to do other projects unrelated to relocation as well. Particularly for small and mid sized companies with understaffed HR departments, this program can provide that extra person that is needed.

Lump sum programs also provide more fiscal responsibility for relocation expenses on the part of the transferee. Transferees will take more time to spend their money wisely understanding that there is not an unlimited amount of dollars for their relocation. It allows them to spend more money on the activities that are the most important to them.

Lump sum programs reduce the costs of relocation in many cases; placing an absolute ceiling on relocation dollars. Lump sums will eliminate or drastically reduce the number of exceptions since the transferee has the latitude to spend dollars in activities that they formerly would have asked for as an exception.

Streamlined budgeting is a product of lump sum allowances. Programs eliminate the need for administrators to budget for each activity involved in the relocation process and make judgments on the overall program and apply factors to overall costs of relocation.

Many companies report improved employee satisfaction when lump sum programs are implemented. When companies disclose the details of the lump sum calculation, employees are less likely to challenge the costs of relocation. Generally the small percentage of employees that are not satisfied are thought to have been dissatisfied with the relocation process in general anyway.

Portions of Lump Sum Programs Need Active Management

Just as the corporate travel department arranging for airfares and hotels for the house hunting trip saves the transferee money and potential headaches, the shipment of their household goods can create pitfalls that are preventable through active management by experts. The transportation business in general, whether it be travel or shipping of household goods has its mysteries and obstacles that only knowledgeable experts can effectively navigate through. Pricing, timing, seasonality, delays, and a host of other variables are controllable and manageable by companies that specialize in these areas and the transferee should be offered their assistance in order to save money, time and improved satisfaction. Volume pricing may also be taken advantage in these areas as well; freeing up lump sum dollars to be spent in other categories.

When dealing with the shipment of household goods for interstate (state to state) moves, a variety of factors must be controlled because of the makeup of the business. In general the household goods industry can be considered regulated to a certain extent, however subject to market conditions in pricing, and also subject to local organizations for pricing and performance.

The household goods shipping industry is made up of large van lines that are essentially banking and dispatch organizations. Within each van line, are local agents that are for the most part independently owned and operated, and adhere to the guidelines of the overall van line for interstate shipments only. They operate under their own name and guidelines for local and intrastate (within the state) moves.

For interstate shipments, the local agent and their employees are responsible for the estimating of the cost of the move as well as the origin services such as packing, crating and other services that might be provided at origin. If a transferee is managing the move themselves, they must be careful in choosing this local agent and the van lines involved since the performance of local agents within the same van line may vary dramatically both in pricing accuracy and local services provided.

Most van lines have a variety of pricing plans available to their local agents. The type of pricing plan whether it be actual weight and services, guaranteed to not exceed, or fixed guarantee have applications in differing circumstances related to the move. The choice of plan must be done with much forethought in order to avoid a pricing plan that is counterproductive to the individual transferee’s move.

Van lines have several types of valuation coverage available to transferees and its important for them to understand these fully if they are managing their own move. Replacement valuation coverage may be purchased by an individual transferee with a variety of deductibles and can be expensive, but is necessary. Other valuation plans are available that look more attractive due to price, such a depreciated value plans, but will not adequately cover the damage of household goods in many cases. The industry standard, of sixty cents a pound, is offered at no charge to an individual transferee moving, but again is not adequate to cover significant damage. Move management companies like Consumers Relocation will offer the premium coverage, replacement valuation with no deductible, at no charge to either the transferee, or the client corporation.

Individual transferees managing their own move may become confused in the event of problems in the move or in the claims process if damage is experienced or if the shipment is delayed. Often times the person they dealt with at origin, the sales person, is not the person they will work with in the event of problems or claims. This confusion can cost the transferee many dollars in productivity and lost opportunity to recoup their loss. Experienced Move Managers are dealing with high volumes of moves with the van lines and have set up their own protocol of contacts to take care of the problems. Often times “gray area” problems can arise that an individual moving will not be able to sway in their direction. Move Managers, due to their volume of business, can equitably resolve ”gray area’” issues.

Companies that only work with a handful of transfers a year, may not be entirely familiar with the tariffs and pricing used in moving. These tariffs change periodically and some van lines file their own versions; complicating audits even further. Move Managers offer audit assistance with it be directly for your transferees or for the company. Mistakes can be made and sometimes the translation of promises made by the origin agent are not clearly communicated to the van line billing department. A Move Manager, involved in both the origin pricing and the final billing will quickly clear these kinds of issues up.

Companies offering lump sum reimbursements should encourage their transferees to obtain two to three estimates for their moves. Physical estimates are a must and phone estimates should be discouraged. Physical estimates create more accountability regarding pricing and the physical location of the home. When a mover actually sees what is being moved they can make a more accurate judgment as far as the weight of the shipment, packing services needed, crating needed, as well as the ability of the moving van to park close to the home; negating the need for the extra charge for a shuttle truck. An “apples to apples” comparison of the estimates can then be performed. A Move Manager can effectively order three estimates from reliable movers, and provide the comparisons, and resolving any unusual variances in weight, or services. The end result is the transferee can make an educated selection of mover with all the facts. Three estimates will also enable the transferee to have a better choice of load and delivery dates during busy time periods. One mover may not be able to accommodate the transferee’s dates, where one out of three will most likely be able accommodate the transferee.

Clearly, in certain relocation activities it is better for the transferee and the company to offer some managed benefits for relocation. Shipping household goods, real estate related activities and travel are the ones where the company and transferee benefit from working with reliable experts in these fields. Managing these activities will avoid the many dollar and service pitfalls a transferee may fall into.

Consumers Relocation Services manages household goods shipments for thousands of families each year. Volume discounts, special valuation coverage and personalized expert counseling one on one with each transferee is standard in the program. Consumers Relocation can save the company and transferee time and money on every move. Companies, large associations and real estate companies have been relying on Consumers Relocation since 1993 to deliver household goods move management services through out the United States and internationally as well.