When these buyers encountered difficulties with transferring employees, they looked to outsourced vendors to come up with innovative solutions.
Given current market conditions, few HR domains are more challenging to manage these days than corporate relocation. In this climate of depressed real estate values, transferees are finding that their purchasing dollars can go further when it comes to buying, but the struggle is disposing their existing homes without incurring a tremendous loss. Further complicating the picture is that millions of homeowners have entered negative equity territory, meaning they owe more money on their mortgages than the home is worth.
For employers, the real estate market has been the biggest headache in their relocation programs. With many transferees reluctant to take a loss on sale, it’s led to employees rejecting assignments as well as companies looking to use more local talent. However, while companies are turning to alternative assignments to meet their talent needs, many simply don’t have the domain expertise to effectively manage their programs in this climate. Outsourcing relocation services is one solution, but with many companies putting a freeze on hiring and sharply cutting back on relocating workers, is this the time to consider such a move?
According to industry observers, including providers and buyers, even in lean times an outsourced relocation program can offer employers benefits they can’t achieve on their own. While an outsourcer’s expertise in real estate issues may be the most compelling reason to turn to an external solution, it also brings a host of other best practices to the table. Regardless of whether the need is to manage the relocation of a group of employees, handle international moves, or help manage policy and exceptions, outsourced providers are seen as a critical resource for many employers suddenly caught in the downturn.
To understand exactly how outsourced vendors are helping employers resolve their unique problems, HRO Today asked relocation specialists at three buyer organizations about their experience. In each one, the buyer cited the ability of the vendor to deliver innovative solutions that significantly improved their processes and minimized disruption to the transferee. But beyond troubleshooting a specific case, providers are also implementing continuous improvement initiatives, revisiting policy as market conditions change, and offering cutting-edge technology that deliver critical, up-to-date data to keep workers, managers, and relocation managers in the know.
Most everyone in corporate America today recognizes the Dunn & Bradstreet (D&B) brand; almost anyone doing business has come across this provider of commercial information. With a database containing more than 130 million business records, the firm supplies detailed reports on and to companies of all sizes, from global enterprises to small shops.
In the past, the company relocated a considerable number of employees domestically and abroad, according to Cathy Turner, a relocation specialist at the Short Hills, NJ-based firm. Today, with the economy flailing, that figure has declined to about 20 to 25 a year. Nevertheless, the decreased volume hasn’t made the moves any easier; in fact, the depressed real estate market has made it more challenging for Turner, who said that home values have become the biggest stumbling blocks in the relocation program.
“Most of our cases in the past six months have been difficult because of the housing crisis,” said Turner, who praised her provider The MIGroup for its integrated services. In a previous relationship with another provider, D&B transferees had to manage various vendors that partnered with the primary relocation company, which required more of their attention. Under its new relationship, The MIGroup handles all the transactions.
“The individual (transferee) had to manage all these relationships [before]. We now we have a single point of contact,” she said. “I think the biggest value add is it (The MI Group) takes the company out of the middle-man position.”
Of particular value, she said, was the consultative support D&B receives. Because the housing market is so weak, she said she looks to The MIGroup for expertise in a number of areas, including working with realtors to help transferees better prepare their properties for sale, market analysis, and even employee incentives to encourage quicker sales.
In a memorable case, Turner recalled, one of D&B’s transferees was being moved from Ohio to Austin, TX. This was an especially difficult home sale because the markets were vastly different. Although home values are also dropping in Texas, the Austin area has held up comparably well. On the other hand, Ohio has one of the worst housing markets in the nation, with a high percentage of foreclosures and homeowners with negative equity. Because the employee would have faced a loss on sale, Turner said she consulted with her outsourced provider and came to the conclusion that D&B did not want to start offering a loss-on-sale program just to resolve this particular case. “It was a pit of issues we didn’t want to get into,” she recalled.
Instead, the company decided to offer a cash incentive, which helped to keep the transferee happy and prevented the company from having to make a significant policy change that would have a profound impact on all future relocations.
While Turner said she was pleased with the consultative support from her provider, this kind of value-added service is not unique. The current climate may be the first time that many relocation specialists have encountered a downturn in the real estate market. As a result, they are turning to the seasoned veterans of providers for advice.
Customizing the Solution
Expert advice is one way in which outsourced relocation providers are helping employers to cope with the times. Another is to customize solutions to particular needs, especially if it’s an esoteric one. That was the case for one very large financial services company. A relocation specialist who asked not to be named because of corporate policy, told HRO Today that his service provider was able to develop a unique tool that facilitated “group” moves of employees—which occurs when a particular line of business or department is relocated along with its staff members.
According to the specialist, prior to engaging its current provider, Graebel, the group moves—involving hundreds of workers in the past few years—required a lot of attention and coordination by his department. Many associated chores were highly manual, and because the company had no technology tools that centralized administration, the process was highly inefficient. When it switched to Graebel, the financial services giant worked hand-in-hand with the vendor to build technology that provided tracking and communications tools. As a result, many of the processes that required manual intervention are now automated.
“A lot of it had been paper-based, and the vendor created an automated solution. We gave them the requirements, and they built it. It works very well,” he said, adding that components of this customized solution as being used by other Graebel clients as well.
According to the relocation manager, the key to developing the solution was the provider’s understanding of his company’s business requirements. He said until his organization began working with the current vendor, coordinating some aspects of moves such as changing a move date sometimes took half a day’s work rather than the minutes staffers might spend on it now. A previous vendor had tried to develop a similar tool but failed to hone in on critical functionality the user required. He advised buyers to insist providers put a team leader who understands the business requirements in charge of such projects.
“If someone is talking about code for the sake of code or development for sake of development, you don’t want that person to drive the bus. He should understand relocation. He should understand how a business has a unique need,” the relocation specialist said, adding that while there were some minor technical glitches initially, those problems have since been resolved by Graebel.
More importantly, the technology facilitated communication and tracking so HR, transferees, and the provider all can view moves in progress online. Because the toll offers detailed reporting, users can easily track spending and other metrics. The tool also provides pre-move decision-making functionality so employees understand the costs of taking on a new assignment beforehand.
The buyer added that since implementing the technology, his department has been able to reduce headcount by one FTE. Moreover, the company has standardized benefits as well during that time.
He urged other buyers to work closely with their providers to come up with innovative solutions. He advised that employers should carefully map out their needs so they can clearly communicate them to the outsourcer. At the same time, the vendor must spend time learning the business needs of clients so an optimal solution can be developed.
“We had been doing group moves for a while, and we thought we knew everything. But when we started working with them (Graebel), they started to ask questions we never thought about,” he pointed out.
Understanding the Culture
Indeed, relationships cross over from vendor-buyer status to business partners when they collaborate closely to solve a common problem. To do that, a mutual understanding of each other’s culture is necessary, and that’s the lesson one employer learned when it switched its service provider two years ago.
Jennifer McGill, a recruiter at Healthways, a disease management services provider based in Franklin, TN, said although her company has drastically cut down the number of moves during the past year, it still looks to provider Lexicon for help on a number of issues, from policy changes and exceptions to technology support.
She said that until about eight months ago, her company relocated 75 to 100 employees each year, but since then, that figure has dropped to fewer than 25. Like many businesses these days, Healthways is avoiding all unnecessary costs. To that end, Healthways still relies on Lexicon to help tweak policies to minimize spend while retaining and engaging talent. Some of the areas it advises on include offering cash allowances to transferees to make minor improvements to their homes so they can sell more quickly. She said Lexicon has actively worked with local realtors to identify problems that prevent properties from selling; at times, it may be aesthetic in nature, other times, it may be more complicated. In any case, the vendor provides useful feedback on how a particular move can be accelerated.
In one instance, the company decided to cover a loss on sale because the employee was one that Healthways aggressively wanted to retain. After consulting its provider, the employer decided to extend the loss benefit to entice the employee to relocate. She said Lexicon provided best-practice guidance in this instance.
She credited her provider for having strong insight into her company’s culture and operational processes. Providers that demonstrate their willingness to understand the nuances of a client’s business are more likely to deliver attentive service, she added.
“We wanted to feel very important as a customer of theirs,” she said of its current vendor. “Some of the other [providers contacted by Healthways] were larger and made us feel like another fish in the pond. They (Lexicon) are very responsive to our calls.”
For McGill and a number of other buyers, a cultural fit and responsive service are the most important criteria in the selection of a provider. For others, it may be the ability to innovate customized solutions. Still others find that a provider with domain expertise and a willingness to offer some hand-holding during difficult times is just what they want. Whatever the need, today’s outsourced relocation marketplace offers a gamut of solutions and services. The challenge for buyers is finding one with the right set of expertise, technical competencies, and service quality that can help them navigate through today’s troubled waters.