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“Goblin Mode” got us thinking about what word might reflect the mobility industry in 2023, and “flexibility” is certainly one that stands out. As employee expectations change, talent remains scarce, and companies yearn to stay competitive, a degree of flexibility in programs and policies is necessary (now, more than ever). But as mobility professionals, we’re also acutely aware that too much flexibility – like that of a lump sum program – can sometimes be a problem. It can put the employee experience at risk (and consequently the ROI of the assignment) and makes it challenging to analyze and contain costs – an issue that is amplified as recession fears loom large.

Could a Managed Cap program be a possible solution for offering the flexibility of a lump sum but in a more supportive and economically sustainable way? Perhaps.

The Basics

Many organizations now consider a managed cap program a viable alternative to the traditional lump sum program. This approach balances the employee’s needs with the organization’s goals by providing cost control while supporting the employee experience with qualified relocation guidance and managed suppliers.

Companies often lean towards lump sums because employees can use the funds as they see fit. But with this freedom, employers lose complete visibility into how the funds are used and the quality of the employee experience. A managed cap program addresses these concerns, providing mobility managers with confidence that the funds are going towards the move, and ensuring that employees are getting quality service, support and guidance. The cap can be overall or on select individual benefits. The employee is free to utilize whichever benefits are most important to them, with coverage up to the stated limit(s).

“Cost-contained flexibility with customized support? I’m sold!”

Pump the breaks, Buster. There are a few significant trade-offs to a managed cap program that need consideration before you go off capping all those policies.  Things like:

“What do you mean, the tax advantaged status of some homesale programs are invalidated by a cap?”

Yup. Don’t do it unless it’s on a direct reimbursement to the transferee for homesale costs.

“My latest hire with 8 kids says she can’t move her whole family from Alaska to Delaware for even half the amount we’re providing for final move and household goods”.

Unfortunately, capped amounts can create constraints for employees with large families and long-distance moves.

“I’m spending half my time talking with employees who are trying to negotiate higher caps on one benefit, because they won’t be using two others.”

While this may be OK with your organization, it doesn’t exactly ease your administrative burden or enhance the employee experience and may even lead to errors in service delivery.

Want an even closer look at how Managed Cap Programs work and the most common “watch-outs” to be aware of before you take the plunge? We’re here to talk!