Lump Sum Relocation Policy is Not a Good Solution for Federal Agencies

May 2, 2018Latest, News, Policy

Many agencies opt to use a lump sum relocation policy for employee location.

A possible benefit of this approach is reducing administrative expenses, but on a federal scale, it is not cost-effective and reduces employee productivity during the transfer. Fortunately, there is a better solution for employee relocation at a federal agency. Read on to learn more.

Lump Sum Policies Don’t Make Sense on a Government-Sized Scale

Lump sum policies are detrimental both to minimizing relocation expenditure and to supporting transferee welfare in the federal government.

Unlike a small commercial company that may utilize lump sum because it only relocates a limited number of employees, the federal government relocates 20,000+ civilian employees and 400,000+ military uniformed members every year. With such a large volume and the added responsibility to account for and spend taxpayer money efficiently, the Federal Travel Regulations (FTR) should (and does!) have detailed relocation rules and information system(s) should be leveraged to automate those rules in a cost-effective manner.

Lump Sum Relocation Policies Harm Both Agency and Employee

In a lump sum transaction, one thing is certain: either the government will overpay or the employee will be underpaid; neither of these outcomes is a characteristic of a good and responsible relocation policy. Furthermore, under lump sum, the transferee, who is not a relocation expert, is left on their own and will generally overpay for services and undue hardship often ensues. The transferee’s productivity will often also take a big hit at both the old and new duty station.

Lump Sum vs Reimbursement

The only stated benefit of a lump sum approach is to reduce administrative expense; however, if the government utilizes an information system (like mLINQS! that automates the process, the administrative expense is minimized equally, if not more, than under lump sum rules. At the same time, the information system (mLINQS!) will be collecting and fully accounting for expenses in accordance with generally accepted accounting practices for fully auditable processes.

Contact Us

Are you interested in using an automated information system for employee relocation at your agency?

Contact mLINQS today!

We will help maximize efficiency during relocations, increasing both agency and transferee satisfaction.