As the new year approaches, employers find themselves stuck between a rock and a hard place. The rock: the raging war for talent, which is shaping up to be the #1 challenge.
The hard place: the need to cut budgets in light of a possible downturn.
How can employers balance these conflicting goals? How can HR attract—and retain—talented people, while operating on a leaner budget?
It won’t be by cutting compensation. Studies show that employers will increase salaries by more than 4% in 2023—higher than previous years—to support recruiting and retention efforts.
However, there is one recruiting-related expense where you can most likely make substantial cost savings: your relocation program. Chances are, there’s plenty of waste in there, if you know where to look.
The best part: make the right cost-cutting moves, and you’ll actually strengthen your relocation program, rather than water it down.
Specifically, if you’re one of the many employers that currently offer lump sum disbursements, converting to a managed budget plan will save you big money and improve your employees’ relocation experiences.
Yes, this could be the gamechanger you’re looking for. Here’s why.
The Hidden Waste in Lump Sum Plans
If your company offers lump sums, you know how they work: you give relocating employees a chunk of cash, then turn them loose to arrange their move. It’s up to them to get movers’ quotes, choose real-estate agents and deal with the myriad details that accompany relocation.
You may think it’s a sweet deal, because there’s little administration on your end. Plus, your costs are easy to budget.
Except, here’s where you’re bleeding money:
When Relocations Cost Less, You Still Pay More
With lump sum plans, employees keep all unspent funds. Regardless of their relocations’ costs, you pay the full flat amount, forfeiting your opportunity to save.
The Risk of Failure Is High
Some employees do a great job of organizing their relocation, but others drop the ball, resulting in stressful and sometimes delayed relocations. When employees miss their start date or show up distracted and unhappy, that costs you, too.
You Can’t Make Informed Plan Improvements
Because you don’t oversee your employees’ relocations, you won’t collect valuable data that can help you trim costs going forward.
Why would any employer sign up for this, when a sound managed budget plan eliminates these drawbacks, without creating more work for you?
Why Managed Budget Plans Are Cost-Effective
In some ways, managed budget plans are like lump sums. Benefits are flexible, so employees can use them as needed, up to the maximum amount.
However, rather than hand those funds over upfront, expenses are paid as they’re incurred. But you don’t need to do that, because most managed budgets are handled by relocation providers—and cost-conscious providers build all kinds of saving vehicles into their programs, including:
Discounted Vendor Agreements
Savvy relocation providers maintain networks of quality, pre-screened vendors that work at discounted rates in return for repeat business. Not only do services cost less, but vendors must perform to stay in the network—minimizing the chance of moving mishaps.
Expert Support to Smooth Relocations
Instead of letting employees sink or swim, providers match employees with relocation specialists who offer guidance and troubleshooting services. As a result, employees relocate with minimal drama—and show up for work grateful and ready to roll.
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Actionable Data
Because providers track your employees’ expenses—captured in reports and analytics—you see how your money is spent. This transparency allows you to keep tweaking your program to be more cost-effective.
Unspent Funds Stay with YOU!
We saved the best for last. Unlike with lump sum, unspent managed benefit dollars never leave your account. And thanks to all the above cost-cutting measures, the potential for savings is great—as is the likelihood that employees will have a consistently-awesome relocation experience.
3 Questions to Ask Potential Relocation Providers
If you manage your lump sum plan inhouse, you may pause at the thought of contracting with a relocation provider. Don’t worry: a great provider will deliver such great savings, it should offset their fees and then some.
But not all relocation providers are the same. When choosing one, be sure to ask these three questions:
Is your solution software-based?
Software-based relocation providers cost a fraction of what traditional providers charge, while leveraging the real-time service and data-collection benefits of technology. If you want to save money, this is a must.
How much do employers save by switching to you?
If they look at you blankly, move on. A good provider has a proven track record of saving clients money and can’t wait to share it with you.
Have they negotiated discounts with preferred vendors?
Careful here. Some providers discount fees, but others actually add commissions to them. Why would you want to deal with a provider that benefits when you pay more?
In short, if you’d like to cut costs in 2023, while supporting your recruiting and retention objectives, start exploring managed benefit plans. The sooner you do, the sooner you start saving.
