Relocation is not a commodity that can be purchased with a simple price comparison. It is a sophisticated service designed to effectively manage a costly and disruptive event. A well‐conceived and executed relocation program will minimize the costs borne by the corporate client and the disruptions endured by their employees. We suggest clients evaluate the total costs of doing business with a service provider and try to calculate the efficiency of the service delivery and how it will impact their total relocation costs.
In order to prepare a comprehensive proposal, Altair would request complete data regarding global relocation or assignment programs. We would need to know:
- Key locations for transfers and assignments
- Emerging markets if applicable
- Specific benefits offered to transferee or assignee to determine full scope of work
- Levels or tiers of benefits
- By level or tier, cost and number of employees who received and utilized benefits two years previously and forecast for the following year
- Average number of days of the relocation cycle for all assignment and relocation types
- Average values of the homes in home sale and home purchase programs
- Average marketing times of the homes in home sale program
- Number of homes taken into inventory and costs
- Rates of referral fee capture at origin and destination in home sale program
- Reporting of costs for transportation and storage of household goods and invoice samples
- Direct costs of home sale program expressed as a percentage of the value of homes in home sale program, if applicable
- Any other historical costs to share by service, i.e., temporary living, global compensation, destination service providers, etc.
- Quality and satisfaction reports
ASKING THE RIGHT QUESTIONS
Armed with this information, we can begin to design a program that creates the maximum value for the client. Altair recommends considering the following criteria for a Relocation RFP:
Who owns the relocation management company? What is the core business of the parent company? How does this core business relate to the relocation subsidiary?
An understanding of the motives of the parent company can help evaluate the service provided by the relocation subsidiary. A mortgage company that owns a relocation company will be most interested in securing mortgages; a real estate company that owns a relocation management company (RMC) will be most interested in securing listings; a company with a marketing subsidiary will be most interested in collecting consumer information during the relocation process; a moving company will be most interested in the household goods move portion.
Is the Relocation Management Company involved in any merger activity?
Sales can be disruptive to both employers and employees and key personnel often leave during the transition process.
Is the Relocation Management Company currently changing its method of service delivery? When was the last time they changed their method?
Many relocation management companies include less expensive ʺcall centerʺ type counseling. They may not disclose planned service changes unless asked.
How is the relocation process organized?
Is there a dedicated consultant (with back up) who is responsible for the process from start to finish, or are there ʺspecialists,ʺ i.e., one person handles counseling/appraisal, another handles destination services, another handles closings, another household goods, etc.? In other words, how many people does the employee have to deal with day‐to‐day and is anyone accountable for the overall management of that relocation?
What is their technological capability? What is their operating system? Do they have web‐based applications? Do they allow real time interaction with their database?
Some relocation management firms claim to have a web capability, but actually are simply patching information from their bank of mainframes. This is very different than having an entirely HTML‐based operating environment running on the latest technology.
What is their error rate for US tax gross up calculation? How many W‐2s were generated with erroneous information?
Is there a timely and accurate method for reporting global expenses to your tax partner for global compensation accumulation purposes?
This is often a key indicator of audit/reporting capability and technological prowess
Are there incentives in the pricing structure that work counter to maximizing amended value offers?
Often companies charge more for inventory properties than for an amended value sale, citing the need for more intensive workloads. This pricing structure, in effect, rewards the relocation company for creating exactly what the client corporation does not want ‐ inventory.
How transparent is their pricing structure?
Clients have the right to ask the RMC how they make money. Do they pass through all direct costs or are they adding a mark‐up fee? Which suppliers pay them a commission for their services? Do they have the flexibility to let the client use their suppliers or do they have to use the RMC’s network? Do they have a network and do they charge suppliers a fee to be a part of it?
What hours of access will transferees have to their consultants?
Many transferees are wrapped up in their new jobs and do a lot of their relocation calling before and after work, so hours and access should be flexible. If it is 9:00 PM and the transferee has an offer, can that employee or his/her broker reach someone who has the authority to negotiate that contract? Over 75% of all real estate transactions occur on weekends. An answering machine or call center attendant with no knowledge of the individualʹs circumstances will not suffice.
Is there a separate implementation team with a dedicated project manager? What are the options for taking over files in process? Is there ongoing project management support as part of the account management and service delivery?
Having a dedicated project manager ensures all of the many tasks are managed and the implementation remains on schedule.
Does the company have the capability to support multi‐currency invoicing and/or local billing for entities which require it?
Some countries have restricted currencies therefore invoicing in local currency or having a local entity may be advantageous for tax reasons.
The more information a client can give to a service provider will allow the RMC to design a better overall program for them. Without all of the pieces, a vital component might not be included. This also applies to what the client asks their service provider or what they provide to them. Communication must be a two‐way street when both parties have the same intent: to design a world‐class mobility program for that particular client.
Altair Global Relocation (‘Altair’) has provided this information as a service and convenience for your information only. It is not intended to replace your own legal or financial guidance and/or assistance and you are encouraged to seek the advice of your own tax and legal advisor. Further, the information contained herein is to our knowledge accurate to the extent of the data available to Altair as of the date identified. Altair does not assume responsibility for the accuracy of the contents hereof and is under no obligation to update the material contained herein.
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