Here, there and everywhere

A Roundtable with Association of Relocation Professionals, Primacy Relocation, and Sterling Commerce

Business Management brought together three experts with extensive experience in the relocation industry to discuss how firms can not only minimise the stress and costs of relocation assignments, but get real long-term value in the process.

And, having packed and unpacked my own belongings three times in the past six months, I’m not about to refute it... in fact, I’d place it high up in the rankings. And, while for me it was a simple case of moving across the city, relocating to a different city or to another country and to work in new offices presents a whole new set of challenges.

The Panel:
Tad Zurlinden, CEO, Association of Relocation Professionals
Steve Marshall, President EMEA, Primacy Relocation
Jeremy Beglin, Chief Operating Officer, Sterling Relocation

BM. What are the main reasons that organisations look to relocate personnel or offices today?
TZ. There are two primary reasons why organisations want to relocate personnel – the first being in the interest of those staff members, to encourage their career development. Secondly, a firm may want to move a particular employee because it will be in the best interest of the company to do so.

Companies tend to relocate primarily for economic reasons; because they want to reach new markets or are looking to grab the opportunity of carrying out their business in a different place, but with lower costs – thereby resulting in higher profits.

SM. There are various reasons a company might move an employee or employees to another city or country, for example, because their technical expertise is required elsewhere or due to changes within an organisation as a result of mergers and acquisitions.

A move such as this might also be in order to develop the company’s culture, and sometimes also to groom the employee in question for upper management.

A senior manager might be dispatched from the company’s head office to another location to emphasise best practices. Some employees are sent to transfer or ‘cross-pollinate’ their company’s organisational culture, while others go to set up or strengthen the informal communication networks that are so important in connecting far-flung branches, subsidiaries and strategic partners.

Within the European region, Primacy has also worked recently with a number of companies who have relocated entire teams and offices from one country to another in order to achieve more favourable tax treatment or to reduce manufacturing or operating costs.

JB. Expansion is a major driver of relocation activity, with companies looking to exploit new markets and opportunities, redirecting resources to different geographic regions.

Consolidation through mergers and acquisitions is also very hot right now; over the past five years, we’ve seen a number of our clients restructure and realign their resources, often resulting in group moves between sites. This can also mean redundancies, where individual or teams of employees are repatriated under the terms of their expatriate agreements. In all cases, effective relocation management is seen as part of a long-term strategy for controlling costs.

The general trend appears to be growth, however, with investment in R&D, especially in the pharmaceuticals and technology sectors, meaning many staff are being relocated on long-term assignments.

Short-term assignments have also been used to great effect, particularly in IT and construction, and have opened up many more opportunities for middle management. Businesses have therefore recognised the training and development opportunities associated with overseas assignments; oversees experience significantly improve an individual’s employment opportunities.

BM. So it is a trend that you see increasing? Why do you think that is?
TZ. It isn’t particularly common at the moment for companies to move to save money. However, it is ultimately going to benefit a company then certainly they will move people around. Everyone is obsessed by profit these days, so if by relocating a staff member they improve an office or a part of a business in some way, then obviously it will eventually have some effect on the company’s profitability.

SM. When it comes to global assignments, we’re certainly seeing the numbers increase. I think this is primarily the result of two factors; the first being the expansion of ‘established’ global companies growing their existing operations, particularly into the emerging markets. Second is that many more companies are needing to extend their business internationally in response to demand and new market opportunities.

Within Europe, we are experiencing a significant increase in intra-European activity as companies move their own staff between existing office locations or to new territories.

The typical assignment duration is now much shorter, often resembling an extended business trip more than a traditional relocation. This again is leading to an increase in the number of people on the move, as indeed is the increase in permanent moves and localisations.

Another important trend that we see is an increase in consolidated or holistic outsourcing. Employers are now more likely to work with only one relocation provider, who will act as an extension of the client’s mobility department, instead of outsourcing different relocation services from different providers. An employer is more likely to take this approach if the services they want to outsource include expense tracking and other finance-intensive disciplines.

JB. Over the past three years, Sterling has seen an overall growth in the number of assignments, both short and long term. While China and India are the obvious destinations for new business opportunities, we also see many relocations to South America, Brazil for example.

An increasingly global economy means most businesses have access to international markets and are using a combination of improved technology and flexible workforces to reach these. Advancements in technology over the past five years have created an environment ideal for reducing costs associated with establishing international trade channels and improving communication. International business is now within the grasp of almost any organisation and has helped to create a greater need for staff mobility rather than replace it. Businesses are also realising the motivational value of having influential staff with key skills, available on-site.

Whilst we expect the number of relocations to increase, we also expect to see a change in the type of relocation support being provided. As businesses realise the long-term cost savings of relocation, we expect to see improvements in the measurement of the effectiveness of assignments and those factors affecting success. We therefore predict more investment by clients in services that reduce the impact on the family unit and relocation packages designed for unmarried employees.

BM. What are some of the problems or challenges that deter organisations from relocating, and how can they be overcome?
TZ. Cost is one of the biggest problems; relocating employees overseas can be extremely expensive if you get it wrong. However, if you get a relocation right, the company can be very successful.

A second challenge is relocating the employee’s family. Often the welfare of any families involved tends to be ignored in the costs. They must, however, be considered before any move. It is essential, for example, to ensure that any children are integrated into their new schools, whether it be an international or national school. An employee’s partner must also be considered. They should be provided with help in getting a new job if they had worked previously in their home country. Unfortunately, however, that past experience isn’t always a guarantee that they will successfully find employment in the new country. For instance, obtaining a work permit might be problematic.

SM. From a company’s point of view, the most obvious deterrent may well be the cost, or rather misconceptions about the cost, of relocation. In order for the true value of an assignment to be accurately assessed, the full costs incurred must be balanced against the goals achieved during the assignment.

Overcoming this deterrent requires clear goals and objectives to be established before the assignment is undertaken and then for these goals to be measured during and at the end of the assignment. To support this, pristine and up-to-date programme data and cost information must be gathered and available that management staff know how to assess.

In practical terms, this means that HR and finance have to track and recognise costs at macro- and microeconomic levels with customised reporting and budgeting tools. This will enable ‘educated decisions’ about both corporate-wide policies and the possible role of a relocation specialist.

JB. The perceived risk is probably the main deterrent. While the financial cost of a relocation can appear prohibitive, those companies that look at the short-term cost of assignments without considering the longer-term value are likely to lose out to their competitors.

Implementing methods of effectively budgeting and controlling costs throughout each assignment is key to reducing the financial risk and lesson the risk of any nasty surprises later down the line. Relocation planning and management will further ensure there are no additional costs later on. For example, selecting candidates based on their personal circumstances and ability to adapt to change, rather than job skills alone, will increase the likelihood that they’ll see the assignment through to completion.

Retaining an employee should not be left until the end either; a career plan should be defined for any assignee right from the start. The majority of companies that have fairly complex relocation programmes still don’t track the progress of their returning personnel; as a result, it is estimated that almost one third of returning employees take the skills they have acquired and move jobs.

BM. What role can a relocation specialist play in addressing some of the challenges?
TZ. As an association we can only direct employers and individuals to members of our organisation, but there are many ways a specialist can help. They can, for example, often resolve situations that seem irresolvable. Unless the employer is very enlightened, they normally have very little to do with the relocating family, and it is here that a relocation consultant can help. They will sort out any issues regarding schools and extra curricula activities such as sports and other hobbies, which are actually very important in making a family feel settled. They can also work out the best place for the family to live, perhaps equidistant from school and work. Pointing partners in the right direction to enable them to find jobs or voluntary work is another role they can play. So, in many respects, there is an element of social work in the work of relocation specialists, as it involves caring, looking after people and making sure they are happy.

There are specialists out there who will carry out feasibility studies and advise companies on the best place to relocate to. In the good old bad days, if a company decided to move, the chairman might, for instance, decide that the perfect location is near to his or her country estate. These days, however, a company would never base a move on such factors, instead opting to conduct a feasibility study to find the ideal location. Sometimes the study’s results will question the company’s motives for moving in the first place; often a company does not need to move and would be better off staying put.

SM. Relocation management firms are unique within the consulting world in that we tend to perform the actual work once the consulting part is completed. It is very often during this initial consulting/implementation phase of the relationship between an organisation and a relocation management company that many of these potential challenges can be identified and overcome. Understanding when, why and where a company is sending its people then enables the appropriate processes, policies and services and approach to successfully move individuals and families on behalf of our clients.

JB. Relocation companies should provide both a supportive and advisory role in helping clients fulfil their business objectives. Providing clear and transparent costing structures will obviously help to improve client budgeting and reduce administration of reconciling assignment costs. Expense reporting tools that accurately tally these costs throughout the relocation process provide ongoing cost controls.

Involving your relocation company from the early stages of an assignment will help considerably in the assessment stage. We often find that we are able to pick up on information, especially from the family, that will directly affect the success of an assignment. For example, the attitude of the employee’s partner and concerns about a move often become very apparent during the home search stage. We are able to provide feedback to the company based on this and adapt the relocation programme accordingly. By involving the relocation company at the point of assessment, these same skills can be used to identify key obstacles. From this, a relocation company can assist in defining the suitability of an individual for an assignment, as well as devise a policy and relocation package to overcome these issues.

Relocation companies should also work with their clients to define performance indicators that are relevant to the specific goals of their clients, and provide the relevant feedback to make measurement of these possible. Ultimately, the relocation company is responsible for the quality of relocation services provided.

BM. What are the key considerations for an HR Director when selecting a relocation firm? How important is it to seek out experience, attention to individual needs, technical capability, etc?
TZ. The decision often depends on whether the company is selecting a relocation team for a specific project or whether they want to act on it globally. I would suggest that is it is important that HR itself feels comfortable with the people they are dealing with. Hiring a relocation firm because they are the cheapest is foolish. The HR department must know exactly what they want from the specialists from the start. Selecting the largest firm may also be unnecessary; if they are planning on relocating two or three people each year to a particular part of the country, a smaller company may be perfectly capable of dealing with this.

On each occasion, HR should go out and choose a company that is based in the location of choice. Specialists may be able to recommend others in different locations. These days, many large companies appoint experts to act for them globally, but often these will sub-contract to others working more locally. However, dealing directly with local companies is often far more economical. You don’t need a huge department working for you if you have the right suppliers.

SM. It is important to look for a relocation provider that can wear two hats and balance demonstrable capabilities – consulting skills, service range, extended geographical presence, IT and reporting – with the ability to keep the process personal and to provide tailored services that meet the individual requirements of the employees we are supporting. Strategically, the employer’s financial and competitive needs are paramount, but tactically, we are serving and protecting unique individuals as they undergo a stressful process.

In all of these situations it pays for a company to dig deep into the organisations it is considering. Test the claims they are making, visit their premises, look directly at their technology and meet their staff face to face to ensure they do have the skills necessary to meet the organisation’s requirements and that they will be a good cultural fit.

This investment of time will also establish the way in which revenue and fees are being charged and what relationships, if any, relocation companies have with third party networks. This is important, as it helps to establish independence and to know that advice is impartial and independent.

JB. Selecting a relocation company is about finding the best fit for your business objectives. The first thing to consider is what type of relocation assistance you require – how much you want to outsource and retain in-house. Relocation companies come in many forms: relocation management companies, providing only a coordination and reporting service; relocation service companies that deliver individual or a collection of relocation services; and relocation management and service companies that deliver both the complete range of services as well as manage other third party relocation providers, offering full reporting capabilities.

Staff experience and expertise is an important consideration, as a high personal level of service is required throughout a relocation. In addition, there should be a balance between the level of staff experience and robust systems. While a company may have experienced staff, if they can’t share their knowledge about assignments it could be lost if they leave. Likewise, if a company is totally reliant on their systems, it could lead to bureaucracies and increase decision times.

Check the service capability of the relocation company. No relocation company has bricks and mortar representation everywhere around the world, so their ability to manage service providers and third parties in your locations is vital. Check they have SLAs in place and ways of measuring performance. Also, select a relocation company that has similar core values to your own business, to achieve consistency to your brand internally and externally.

Cost is of course a key factor, but reducing costs shouldn’t mean settling for a poor service. Relocation and assignment costs should be seen as an investment and always compared to the value and savings you expect in return – through efficient relocation management processes, increased productivity in the workplace and better housing deals, – and justified by the competitive advantages your business receives by having the right people in the right place at the right time.

BM. What extent of support and services should be offered – in terms of pre-relocation planning, removals, and after-move support, for example?
TZ. If you are going to relocate people somewhere really radical, it is very important to send them on a preview so they can get a sense of the place. When it comes to pre-location planning, the partner of the person being relocated must be kept informed of developments. If they are not properly informed, the partner, and potentially the rest of the family, can become alienated. Looking carefully at people before considering them for relocation is also important, simply to make sure you get the right kind of people. The relocation specialist can also handle the disposal or acquisition of property, for you, finding or introducing you to a suitable company.

How much after-move support they provide depends on each situation. Moving within a country is relatively easy, provided the person is familiarised with schools, shopping facilities, etc. A more radical move to a new country, on the other hand, will require support services. For example, there is an organisation called FOCUS that can help people moving from the US to London, providing support and a meeting place. There are many other similar organisations out there to provide the necessary support, to reassure people and help them learn to deal with any cultural differences.

SM. Primacy Relocation has available an extensive range of services to support companies relocating their employees all around the world. What is most important, though, is that the services offered and delivered meet the specific requirements of each company and each employee they relocate.

Identifying these needs and how they will fit within a corporate relocation policy is essentially the first type of support or service we offer. This involves a lot of careful listening and learning in order to arrive at the right solution for each relationship. This is not a one-off exercise. A company’s requirements can and do change and our job must be to be able to respond as this happens.

This carefully, consultative and flexible approach must also be applied to each individual relocation that we undertake.

JB. The level of support for each assignment will depend on the individual. However, we recommend that a relocation policy should provide certain allowances. Every assignment, for example, should include candidate assessment, and the intensity of the programme will be determined by the level of risk. Budget planning should be based on the needs of the assignment and referenced to overall assignment budgets and quotations provided. Tax and expense allowances should also be taken into consideration. This will depend entirely upon the destination.

Pre-relocation planning should include support for any immigration, work permit or legal issues and, where necessary, cultural training and area introduction. If family is to be relocated, school search assistance is normally necessary and will have a direct knock-on effect to how efficiently a home can be found. It is always advisable to provide a suitable level of housing assistance, the exact level of financial assistance depending on the destination. Household moving assistance should be for full door-to-door service.

Settling-in assistance can make sure that an assignee is up and working almost immediately and can save weeks of problems for the assignee. Finally, while ongoing support is not essential, it is highly recommended, as is repatriation planning in order to ensure that valuable returning staff are monitored and stay with your company.