The core flex model is one of the most popular and highly debated topics amongst relocation programs. Core flex combines elements of a set relocation benefit as well as supplemental offerings that employees can choose from.
One of the reasons why this method is so popular is because it allows employees more flexibility and also puts less weight on the employer having to provide the same benefits to every employee.
HR and recruiting managers have begun implementing this type of business relocation due to a need in the marketplace. When done properly and thoughtfully, the core flex model can be a great option for both employees, managers, and stakeholders.
What is the Core Flex Model?
Let’s break it down. The core flex model consists of two parts. Part one is the lump relocation package that is available to everyone. This aspect exists to cover transportation, moving costs, travel costs, and whatever else is deemed necessary by the person in charge.
The second aspect is a range of optional items that can be cherry picked to create the perfect relocation package that works for each employee. These can include home purchase assistance, payment for transporting pets, tax support, immigration, culture training, and spousal support.
Advantages of Core Flex Models
There are significant advantages of this method no matter what industry you’re in and regardless of the size of your business.
Money Savings
Think about it this way. You’re relocating two employees in the same position but one has a family with three kids and the other is a single male. Why would you provide them both with the same amount of money for their relocation when one is clearly going to cost more?
By offering a lump-sum relocation, you’re doing that. With a core flex model, you can offer the same lump sum benefits but have the married man with children elect to take some of the extra benefits because he will need them.
More Flexibility
From a business owner standpoint, a flex policy reduces the chances of outstanding circumstances. Since each employee has the choice to elect for whatever benefit they deem is necessary, no one will feel that they’re taking the brunt of the responsibility and won’t have the need to reach out to make a change or request something else.
Great for Recruiting
With the younger workforce demanding a mobile lifestyle, the core flex model is a great recruiting tool for bringing in younger talent. If you implement this style of corporate relocation, it could make your business more appealing to qualified talentinternational-relocation-services/.
Disadvantages of Core Flex Models
While this model may seem like a no brainer, it’s not always as simple as it looks. There are issues and concerns as well.
More Red Tape
Naturally, when you’re designing a package unique to everyone’s needs, it creates more paperwork. Every transferring employee will receive their own package including finances, administration, and supervision. Working on a case to case basis like this will take a lot more time than a typical relocation bonus or reimbursement.
Higher Risk
From an employee morale standpoint, there is a higher risk of upsetting certain employees. When they find out that someone received benefits they didn’t, they could become resentful of the company and try to negotiate something into their package that wasn’t there before.
Just because someone doesn’t have children, doesn’t mean they may not be interested in finding a house for example. This can also increase the overall time it takes to execute the relocation as you find yourself negotiating with every employee about the flex options.
How to Establish a Core Flex Policy
There are a few ways to simplify the model and make it easy to understand for employees and managers. Here are some of the most popular employee driven models:
Menu Approach
- Employees receive a list of optional benefits
- Employees are allowed to choose a specific number based on factors such as dependents, marital status, and position
This method works best when the cost for all the menu items are similar and all the benefits are a means of sweetening the deal for employees. None of the optional benefits should be something that an employee actually needs to complete the relocation. (ex. Moving truck and packing costs)
Monetary Cap Approach
- Also called “dollar value cap”
- No exact benefits are provided, instead, a monetary number is provided on top of the lump sum for optional benefits
- The cap can be set based on employee position, dependents, marital status, etc
This approach works well when it’s properly thought out and a correct number is used to determine how much the average employee will need to spend to cover the cost of their relocation.
A capped strategy isn’t always ideal because it puts a lot of pressure on the employee to spend wisely and the stress of managing their budget can only make the relocation more difficult for them. Also, if they don’t have any experience in relocating whether it’s across the country or the world, this can have a negative impact that will trickle up to the business as well.
Points-Based Approach
- Each flexible benefit has a certain number of points
- Employees receive a set number of points based on various factors
In reality, this method is the same as the cap approach but it’s simplified when dollar signs aren’t the main factor in play. This strategy requires a lot of due diligence and experience on behalf of the employer so many businesses are not able to execute it without the help of a trained relocation consultant.
Lump Sum Approach
- A complete sum of money is provided to employees to use on flex benefits
- Amount of money is calculated based on historical cost of various relocation factors
- Employees can spend their money however they want without employer intervention
Lump sum relocation is one of the more popular methods but there are risks. This method increases the chances of mismanagement by the employee who may not have experience with the costs and timelines associated with relocation.
It can work best in cases of executive relocation where the person relocating has experience and has done it many times before. In this example, it can actually improve their relocation by putting them in the driver’s seat.
Wrapping Up
At ARC Relocation, we’ve helped many companies design and implement a successful core flex model. It starts with clear communication, careful planning, and follow up with individual business units to make sure everything is running smoothly.
If you’re planning a business relocation and think that the core flex model is an option that may work, consider setting up a free consultation to learn more today!