The (frightening) true cost of Lump Sum Payments.

Updated: Apr 27, 2019

Providing your relocating employee with a Lump Sum payment rather than offering them assistance through Radstones can be surprisingly expensive — both financially and in terms of lost productivity.

Lump Sums are used for many reasons, taking pressure off Human Resources personnel and also allowing the employee a degree of control over how their relocation is managed.

But, if you treat this as an investment opportunity it is easy to determine that outsourcing to Radstones will actually enhance everyone’s experience and most importantly, have a positive not negative effect on the transferee’s productivity.

Working on accepted principles, we find that:

Job Value - the real cost of an employee, the benefits they bring to the company, their support network etc., is about three times the employment cost (salary, taxes, benefits)

Hourly Cost - every hour the employee spends dealing with their relocation will cost the company at least three times the Job Value

Efficiency - factoring in the time spent waiting on the phone for an automated switchboard to put you through (usually to a voice mail), travel, web searches, dealing with new and different tasks such as visa applications, rental agreements, bank accounts, drivers licenses, vehicle insurance, health services etc increases time spent (for ‘spent’ assume ‘wasted’) by a minimum of 50% for simple tasks and as much as 200% for ones that are complex or involved.

Many tasks that are normally categorized as simple become complex as lack of knowledge complicates and slows down processes. Think about driving in a new city in a new country:

  • Can you use your current drivers licence?

  • Do you need to take a new test?

  • Is your driving record valid?

  • What paperwork do you need?

  • How do you arrange vehicle insurance?

  • Can you apply beforehand?

  • Do you need a medical/sight test?

  • Do you need to have a local Social Security number?

Without Radstones local knowledge it is easy to see how long it would take to find out and organise any aspect of relocating.

Assuming a relocating employee earns $120,000 (£90,000) per year and it takes them just three hours to deal with establishing the driving criteria, the real cost based on Job Value is probably close to $1,700 (£1,300).

If we expand that into two full weeks (spread over a couple of months) to deal with a relocation, the true cost escalates — probably to $41,000 (£31,500) or more plus the lump sum payment!

This escalates beyond belief when a Board Member or senior employee is moving.

. . . . . . . . and then there are the tax issues.

You will be pleased to know that Radstones fees including 'end to end' expense & tax management, are considerable less that the above figures - and your employee remains productive throughout.

#relocating # lump sum #payment

15 views0 comments

Recent Posts

See All