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Mobility Article, April 2007
Client and supplier perspectives
By Jocelyn Rockstrom and Christine Short
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Think Locally - Area Involvement through Regional Councils
By Marc Galvagno, CRP, CMC, RIM
As printed in the January 2007 issue of Mobility magazine
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How to Avoid the Five Hidden Pitfalls of Lump-sum Relocation Programs
By Marc Galvagno, CRP, CMC, RIM
As printed in the October 2005 issue of Mobility magazine
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Mobility Article, April 2007
Client and supplier perspectives
By Jocelyn Rockstrom and Christine Short
Trust one who has gone through it.
Virgil, The Aeneid, circa 2nd century BC
Virgil's wise advice is still relevant today, suggesting as it does the value of stepping into another's shoes. Until or unless you have been on the other side of the working divide, you cannot fully appreciate the other's situation. As it happens we have spent years on the customer side of the relocation industry as administrators for large corporations and now have "jumped" to the supplier side. As service providers and former corporate customers, we view this dynamic industry from a unique vantage point. We share our insight and some advice with corporate administrators and suppliers with the hope that understanding the others perspective will benefit both.
Wearing the supplier's hat: Our best advice to clients
Emphasize ease over choice
Often companies believe that they must offer their transferees many choices about their move, and that the company benefits from the good will and high morale that empowerment engenders. In reality, what employees want most is a smooth transition. Corporations want the relocation to go easily too, with no unanticipated bumps in the road so that employees can get their minds back to productive work. Too often, employees who are offered the option to move on their own and do so end up with unanticipated hassles and delays. The looming question for corporate administrators is - what are my best choices for attaining a smooth transition? For most companies, this will involve developing a program that utilizes pre-approved vendors who guarantee their services, schedules and budgets. Utilizing experts and taking the unknown out of the equation allows employees to feel secure in their move and focus on their job.
Consider cost savings in aggregate
There are numerous tax implications in the choices corporations make when funding an employee move. The following three examples show the tax impact on a typical $2,000 relocation bonus/allowance provided for moving expenses:
1. Employee receives a $2,000 relocation bonus; company cuts a check, less taxes, netting the employee approximately $1,600. The company must include this gross dollar amount in the employee's taxable wages which provides the employee with only $1,600 cash-in-hand at time of move.
2. Company contracts directly with a van line to direct-pay employees move expenses. In this case, the money spent is considered non-taxable income to the employee, does not need to be included in W2 taxable wages, and the employee is able to utilize all $2,000 at the time of their move.
3. Company wants employee to have $2,000 cash-in-hand at time of move. The $2,000 would be considered taxable income to the employee, and the company would need to "gross-up" the wages. This option ends up costing the company approximately $2,600 because an additional $600 is needed to cover the taxes in order to net the employee $2,000 at time of move. Understanding the implications of how and when money is spent can help your company and your employee utilize dollars more wisely.
Weigh all risks
Rarely are all of the costs of a relocation taken into consideration, such as underinsured goods, transferee's downtime, or unexpected liability such as accidents in the course of the move. So consider all of the potential issues if an employee decides to move themselves without the benefit of an outside service. If an employee chooses a mover that in the end is unreliable, late in delivery, or delivers household goods damaged, or if an employee gets hurt in the course of their move, your company may incur exponential costs for unplanned events, sometimes in the form of lengthy temporary housing, medical expenses, or legal fees.
Expect personalized programs
Service providers thrive on long-term relationships with their corporate customers and are conditioned to provide the very best advice and service - if you let them. So explain your company's unique situation and make clear your needs - in exchange suppliers will offer their expertise and make recommendations that will fulfill your requirements and at the same time protect your company from undue risk and liability. Additionally, if your company does decide to outsource part or its entire relocation program, remember that the suppliers your company partners with represent many corporations and numerous employee transfers each year, giving them a lot of clout with individual vendors -- which they can and will leverage for your benefit.
Wearing the client's hat: Our best advice to suppliers
Communicate processes and protocols
Service providers are conditioned to make sure their customers are satisfied, but not necessarily informed about the supplier's own processes. Keeping corporate administrators in the dark about the details can be confusing and, ultimately, damaging. The supplier needs to educate the client about their own internal process, as well as that of their vendors and partners, and manage their customer's expectations. Customers value being kept in the information loop and doing so can help smooth problems later and help set expectations for transferring employees utilizing your services.
Track performance
Corporate administrators need help validating their choices in how their program is run and the suppliers they choose by providing concrete evidence of savings in time, money, and resources. Suppliers, who track their performance against a base line of service, help internal resource departments to justify outsourcing part or all of their employee relocation. Help show your value and when you receive "kudos" from their employees for the job you do, share that with the company.
Provide broad expertise
Corporate administrators depend on suppliers to help them keep pace with our very dynamic relocation industry. When suppliers keep customers current and informed about industry trends, companies can make more informed decisions and plan better for the future. In addition, by being a source of important industry information, the supplier reaps the goodwill of their customer engendering both their trust and loyalty.
Be our partner
Customers need suppliers who own the problem. Quality suppliers act as your partner when they are engaged in pro-active thinking, propose solutions before their customers even know they have a problem, and provide expertise so that customer's questions can be immediately answered, problems effortlessly solved, and future issues anticipated. Give us a "heads-up" if you anticipate an issue. No one likes to be blindsided and your customers will know you have their back. It's the age old adage, "don't come to me with a problem, come to me with a solution."
About the authors
Jocelyn Rockstrom and Christine Short head up relocation divisions for American Pacific Relocation Services, a division of Air Van. They are responsible for delivering comprehensive employee relocation service packages to client companies. Together they have over 20 years of experience relocating thousands of employees for large, multi-national companies.
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Think Locally - Area Involvement through Regional Councils
By Marc Galvagno, CRP, CMC, RIM
As printed in the January 2007 issue of Mobility magazine
Regional councils give relocation professionals the opportunity to interact with colleagues and further their education on a local level. Through examination of the Pacific Northwest Regional Council (PNWRC) and conversations with its members, Galvagno explains the value of regional relocation groups.
Regional councils give relocation professionals the opportunity to interact with colleagues and further their education on a local level. Through examination of the Pacific Northwest Regional Council (PNWRC) and conversations with its members, Galvagno explains the value of regional relocation groups.
When you consider it, regional councils are a way for relocation industry professionals to act locally. Regional councils focus on subjects and issues of interest to their own local membership and that, say members, is invaluable.
Taking Cues from the Worldwide ERCŪ
Regional councils in many ways model Worldwide ERC in structure and services. Setting the industry standard, Worldwide ERC provides the kind of industry clout and visibility that comes with 13,000 members worldwide. In addition to the organization's remarkable educational and informational resources, membership in the Worldwide ERC provides valuable networking and industry development opportunities on a global scale.
Similarly, regional councils provide members not only the opportunity to develop close-knit relationships with their peers, but also numerous resources and educational events at a local level. Many regional members who may not have the time or resources to travel to distant Worldwide ERC meetings and events welcome the close proximity of events and meetings that focus on area issues, education and exposure to new ideas and business practices.
Regional councils have popped up all over the country, formed by relocation professionals to serve their own geographical areas. Many begin "organically" as offshoots of informal get-togethers that morph into full-fledged organizations. Most, if not all, have as their mission to create forums in which social and professional interaction, education, and professional growth are possible.
"Membership in the Pacific Northwest Relocation Council is one of the key ways for me to stay 'plugged in' to the issues and concerns of both corporations and relocation service providers in the Pacific Northwest," said Rick Willard, CRP, marketing director, Wells Fargo Home Mortgage, Irvine, CA.
While they reflect the needs of their own members, in many ways regional councils are similar. Typical is the Pacific Northwest Relocation Council (PNWRC) The PNWRC has a membership base of relocation industry professionals largely based in the Seattle-Portland area. Like other regional councils, it is focused on education and programs that support the success of its members.
The PNWRC has about 100 members that come from many different areas of the industry - from corporations to service providers (relocation management, household goods moving and storage companies, and home finding and temporary housing services). Founded in 1991 by relocation managers from many of the corporations associated with the Pacific Northwest -- Microsoft, Boeing, Airborne Express, Frank Russell, Nordstrom, Seimens, Simpson Paper, Westin Hotels, and Weyerhaeuser - members still include corporate location professionals from some of the areas most prestigious companies, including Washington Mutual, Amazon, Starbucks, PACCAR.
According to Dave Caple, PNWRC board president and CEO of ABODA, Redmond, WA, to successfully open up membership to all professionals, the organization must discourage soliciting of buyers (corporations) by suppliers. This is especially important for attracting and retaining a healthy corporate base. The PNWRC strives to make the organization's membership representative of the entire industry by creating a forum that focuses on education and discourages networking simply for business development.
Successful regional councils rely on the commitment and involvement of their members-the regional groups must become places where mentorship thrives. The most frequent comment heard from new members of PNWRC, and especially those professionals just entering the field, is that our council creates an atmosphere of sharing.
But it's not all give and no take. Many members with years of experience feel they receive ample benefit by sharing their expertise and experience. That is why the PNWRC provides members numerous ways to contribute to others' knowledge through leading groups, speaking publicly and working with peers and clients. And the group encourages a drop-the-title-at-the-door environment to level the playing field and make everyone feel comfortable to ask questions and share ideas.
Membership Advantages
For each person, the benefits of membership will be different. It may be gaining an understanding of the future of relocation so he or she can modify programs, policies, and services to ensure value. It may be the fulfillment of sharing his or her wisdom and years of experience with new area relocation professionals. It may be connecting with suppliers or clients on non-business terms.
"Regional groups are becoming more and more important to 2006 Worldwide ERC as a way to stay connected to and carry educational items deeper into our relocation industry," said 2006 Worldwide ERC Board Chairman Beth Archibald, SCRP, GMS, director relocation and business development, Prudential Northwest Properties, Portland, OR.
Regional councils focus on regional issues and subjects interesting to their own members. The PNWRC, which holds quarterly programs, events, and workshops, regularly features a wide range of interesting subjects from motivational speakers and futurists to experts on tax law and real estate. The group also provides Certified Relocation Professional (CRP) accreditation sites and continuing education credits under the guidance and using the tools of the Worldwide ERC.
"I can say that for me, being a member of the PNWRC has enriched my professional growth by sharing, listening and connecting with those that make learning and knowledge transfer a priority," said Kimberly Hughes, vendor relations manager, Starbucks, Seattle, WA. A regional councils is a venue in which professionals can learn about relocation from their counterparts' perspectives. Within this format, suppliers are offered the opportunity to take off their sales hats and really learn what clients want and how to supply it, which ultimately, contributes to mutual understanding.
"[PNWRC gives me] an opportunity to give back through sponsorship of respective charities and organizations," said David Cox, general manager, Grabel Quality Movers, Kent, WA. Regional councils are a venue for involvement in community programs. The PNWRC has several regional charities and organizations in which members and their companies can participate.
"Exciting events and informative speakers keep me at the forefront of relocating networking," said 2007 Worldwide ERC President, Peggy Smith, SCRP, GMS, relocation program manager, Microsoft Corporation, Redmond, WA.
Regional councils provide networking events. For example, the PNWRC event committee goes the extra mile to think of creative ways to engage members in social events. In the last year, the PNWRC hosted a charity golf event that raised $10,000 for local area charities, participated in the American Cancer Society's Relay for Life, hosted a boat cruise on Puget Sound, and held a membership meeting at Starbuck's headquarters in Seattle, which also featured coffee tasting with company executives.
Dual Membership
As with other regional councils, a majority of PNWRC members also are members of and attend Worldwide ERC events, participate in training, and take advantage of its expansive resources. The benefits for belonging to both are many. For example: with its resources and global presence, the Worldwide ERC can conduct the kind of periodic surveys that provide data useful for the business planning in the industry.
But it is the interaction with other local relocations professionals and the caliber of the participants that is most attractive, says members The greatest benefit of being a part of your area's regional council is the exchange of ideas, expertise, and experiences from the members hailing from the various relocations.
Today's regional council membership seeks to keep on top of a dynamic industry. One of PNWRC's greatest missions is to be of value to members in keeping pace with our rapidly changing industry. We seek a wide range of experts that can regionalize global trends and globalize regional ones. PNWRC queries its members on topics not only of interest to them, but critical to the success of their companies. Navigating the changing and often turbulent waters of today's workforce mobility industry requires smart thinking, shifting strategies, and innovation. Regional councils can support their members in this and by doing so raise the bar for the entire industry.
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How to Avoid the Five Hidden Pitfalls of Lump-sum Relocation Programs
By Marc Galvagno, CRP, CMC, RIM
As printed in the October 2005 issue of Mobility magazine
Being a service provider in the relocation industry is always a unique challenge. Corporations continually strive to find the best quality programs to support the needs of their relocating employees while at the same time balancing their need to control costs.
Relocation service providers often are confronted with the challenge of helping their corporate customers meet these needs. In the last few years, suppliers have had to become increasingly nimble as customers have become more flexible and dynamic in the relocation programs they offer.
As a result, lump-sum relocation packages are particularly popular and for good reason. At first glance, such programs appear to be the easiest and most cost-efficient way for businesses to manage employee transfers. After all, what could be more hassle-free than simply writing a check or allocating a sum of money to give a transferee the maximum amount of control over their household relocation?
In fact, almost half of administrators now report using lump-sum allowances to cover expenses for at least some portion of their relocation benefits, according to Runzheimer's recent survey and analysis of employee relocation policies and costs according to the Runzheimer International Spring 2005 Mobilty Report. As a service provider, we have an interesting vantage point. We support many different corporations as they implement, manage and direct new types of relocation programs. We have the front row seat to watch lump-sum programs fly with great success, as well as to watch others stumble and never recover. Quality service providers will use their snapshot understanding of their client programs to better assist you in building a successful program for your employees. Like any program, lump-sum relocation often can be plagued with unforeseen challenges and unwelcome hassles. I want to share with you the following five pitfalls our company has witnessed as a moving services supplier and the strategies we suggest to help avoid them.
The Five Pitfalls
1. The transferee is treated as a small fish in a big pond. All too often, a company is hired based on price or convenience. Unfortunately, that company may regard the transferee as only a single move Should a situation arise-a truck runs late, or furniture is damaged in transport a "one and done" vendor is far less motivated to meet and exceed performance expectations than one that has many additional employee moves to manage with the same company. As a result, transferees are often left with additional costs, inconveniences and time away from work that they did not plan on. A better situation would be to provide the transferee with a prescreened list of service providers that have committed to the corporate client to provide quality services in exchange for an "approved supplier" status. By doing so, the transferee becomes a part of a bigger fish that the service provider is more accountable to.
2. Show me the money. Additionally, when a corporate client negotiates rates and services with a handful of "approved" service providers, they also can bring to bear their buying power; negotiating better rates, terms and overall service packages. If an individual goes out on their own to price services, they often do not realize that what is standard for one company is an add-on for another. There are many additional variables to consider beyond price that factor into the success, satisfaction, and efficiency of each move.
To help ensure that each transferee is getting the most out of a move, select service providers that have experience in corporate relocation and understand the ins and outs of quality service programs. These companies offer your employees competitive pricing structures to get them moved and situated as quickly and efficiently as possible.
3. Risk, risk, and major loss of money. A far worse scenario can develop if a transferee decides to do the moving themselves. If an employee decides to pocket the relocation money and move without the help of an outside service, the risks are enormous. Should the transferee get hurt, there is the potential for them to turn around and sue the company that asked them to move for their job. The medical expenses, lost time, lost productivity and potential legal fees could easily cost hundreds of thousands of dollars.
4. Provider/supplier does not recognize the nuances. The relocation business has its own set of unique issues, challenges and concerns. Organizations committed to serving this market have invested time, talent and resources to acquire specialization and deliver the quality service demanding customers expect. It is crucial to choose service providers that have demonstrated over time their capabilities to earn stellar satisfaction ratings. Companies earn reputations-good or bad-based on a pattern of performance over time.
Develop an "approved" supplier list with service providers that measure performance, track customer satisfaction and make continuous service improvements to enhance their customer ratings and overall satisfaction. Quality service providers should be able to manage each move as that family's advocate, taking into consideration circumstances such as a trailing spouse, time allotments and other special circumstances. By leveraging their knowledge, resources, prior company experiences and services, they can provide maximum value for each transferee. In addition, as times change, quality service providers will come to you with better solutions and pricing structures to fit your relocation department needs.
5. Tax implications pack a punch. There are two ways to structure lump-sum programs. The first is to give a check to the employee that is to be used for moving expenses. The other is to allocate a certain dollar amount they can spend and have the accounting flow through the corporate client directly to the service provider.
For the employee, there are big differences. If a company uses the first method and writes the employee a check, it will be treated as income in the eyes of the Internal Revenue Service and taxed fully. As such, receiving a $10,000 check may mean that the transferee can only spend $6,000 in (depending on the person's individual tax rate) if they do not spend wisely and itemize the deductions.
Unless educated in such matters, a transferee does not typically realize that certain relocation costs, such as household goods moving services, are not taxed, while others, such as temporary housing, are.
Clarify for each transferee the tax implications of relocation costs to cut down on surprises. Do so by offering educational resources provided by qualified tax advisors.
In addition, help transferees invest their lump-sum payments in quality services that expedite the process, resulting in more value and services for the dollar. Making the Most of Your Lump-sum Relocation Program Relocating is stressful enough without having to deal with all the possible headaches and additional costs that can be associated with an unqualified relocation services provider.
Before writing a check or allocating a sum for relocating employees, consider these suggestions:
- Strongly discourage transferees from going it alone.
- Explain the impact that purchasing power can play in a successful relocation.
- Bias vendor selection in favor of quality service providers that have earned a stellar reputation for customer service, advocacy and satisfaction over time.
- Provide qualified resources to educate the transferee about the tax implications associated with a lump-sum payment.
- Negotiate with a handful of reputable, experienced vendors in order to provide transferees with a pre-selected vendor list to facilitate a winning outcome for all.
In theory, lump-sum relocation packages are easier for corporate clients to manage. In practice, the employee is often left to manage the vendors on their own. Awareness of the five hidden pitfalls of lump-sum relocation programs will help ensure that your company and its relocating employees will be able to avoid a host of distractions, frustrations, and hassles that result in the loss of time, productivity and money for all.
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