Casualties of a slow economy

It’s been more than a decade since most countries enjoyed robust economic growth. Since then, companies worldwide have laid off millions of employees; many continue to rein in spending wherever they can. In some instances, businesses and consumers have sought cheaper substitutes for their preferred products and services; in other cases, they have simply gone without.

Relocation services reflected this trend as HR departments were downsized and many supporters of a balanced cost/service approach were lost to attrition, layoffs and retirement. Given the significant amount spent on a service for a relatively small employee population, relocation spending — whether in-house or through relocation management companies (RMCs) — presented a tempting target for the corporate budget axe. Relocation services began to be treated like any other company purchase: a commodity that could be delivered by the lowest bidder.

Finding the balance between service and price

Like so many processes in nature, business and politics, a pronounced swing in one direction unleashed a countervailing force, ultimately restoring equilibrium. In many cases, what we’re seeing now is a renewed focus on quality, service and value. For example, a recent survey from CarMax, the used-car superstore company, showed that quality is the most influential factor for used-car buyers.

In the relocation services industry, companies are again seeking a balance of service and price. HR professionals gained the attention of senior management by underlining the consequences of a poor selection. Employers came to realize that the low-bidder they chose turned out to be a poor match, especially in terms of service, fit and culture. Many companies realized that they had fallen into a cycle of revolving-door relationships with different RMCs: No sooner would the implementation be accomplished and the service team acquainted with the client than HR management, the procurement group or both would be looking for the door.

The importance of successful RMC strategy

While any company that contracts for relocation services continues to pay close attention to cost, there is much more attention being given to whether the selected RMC can accomplish the task at hand — and its strategy for doing so. Savvy employers have come to realize that relocations have become more difficult to complete. Mediocre service produces longer cycles, swelling home inventories, disgruntled employees, ballooning costs, and potentially, failed relocations and assignments.

As a result, resourceful, empathetic counselors and seasoned, creative program managers have earned new respect and appreciation. The RMC has a highly visible role, most likely interacting with the client’s business leaders and with many employees under stress, who often see its counselors as de facto parts of the company. As such, they need to mirror the client’s culture and to be able to speak knowledgeably and authoritatively as a virtual part of the client’s organization. They need expert problem-solving skills, great creativity and tact and the ability to keep today’s fragile relocation and real estate transactions on time, on track and on budget.

A smarter RMC sourcing process

It’s worthwhile to conduct careful internal due diligence to ensure that the service ultimately purchased is aligned with the company’s quantitative and qualitative objectives. Pricing, historical performance and other quantitative measures are critical, of course, but qualitative assessments of the RMC’s organization, philosophy, people and even its charitable and “green” presence, if these are important to the company, can be just as important.

Some companies apply weighted scores to concrete, technical factors as well as to less tangible, service-based considerations. For example, a company might apply a weighting of 65 percent to technical factors and 35 percent to qualitative factors such as mission and values, customer service approach and community involvement. This approach can be even more granular to suit a company’s requirements, with smaller weightings attributed to many specific line items.

Regardless of how the process is structured, in the end there is no need for a tradeoff between service and cost. Balanced consideration of cost and service elements and careful weighting of qualitative service elements can help ensure the success of the program.