Relocation Services Sourcing — Best Practices for 2011 and Beyond (Part 3)

Spend Matters would like to welcome a guest post from Pete Kolp, CEO of AIS (Advanced Integrated Solutions). See Part 1 and Part 2 of this post as well.

Throughout the strategic sourcing process you need to look for opportunities to generate savings, including how the program is administered, what policy provisions are provided, and how the supply chain is managed on your behalf. The following proven techniques have reduced relocation spend by 10-30% -- or more:

  1. Implement a Competitive Policy
    Surveys indicate that forty percent of workers plan to leave their current jobs within the next five years, meaning that your prized talent may already have one eye on the competition. Therefore, your relocation program has to stack up competitively. To ensure you have the right people in the right locations, it is essential to shave costs from how you administer your relocation program, not what benefits the employee gets.
  2. Consolidate and Control Maverick Spend
    Controlling maverick spend is a challenge, particularly for decentralized organizations, but consolidating volume can generate significant savings. For example, we worked with a company that recently decided to outsource their entire program. By redesigning the process, introducing technology improvements and centralizing authorizations, we eliminated seven full time employees and saved the client $2M in the first year. By process mapping your program and how it is administered, you will identify inefficient process flow and implement improvements that reduce your spend.
  3. Minimize Exceptions
    There are two types of exceptions; one makes sense to approve because it will ultimately avoid costs, the other sets a dangerous precedent that increases costs. The process we recommend tracks all exceptions. We help clients analyze the difference and reduce costs. We can determine if the same managers are granting the same exceptions, and can provide ongoing training to expose the costs associated with exceptions and help repeat offenders understand why its important to be consistent.

    Temporary living is one of the most frequently occurring exceptions to policy, often the result of poor planning that stems from employees trying to sell their homes without expert advice and appropriate services. Utilizing a home sale program can help you avoid this exception and save thousands in tax gross-up, while permitting the employee to move to the new location without worrying about the sale of his or her home.

    Cost avoidance, better planning and effective home sale programs can save more than 5% on the average move.

  4. Expedite the Relocation Process
    Too often, managers insist that employees arrive in the new location immediately, causing extended temporary living and frequent return trips, among a host of other cost-producing activities. The only dependable method of preventing these expenses is to establish, and stick to, a reasonable relocation timetable. AIS provides "to dos" that help ensure employees deal with the task at hand and expedite the relocation in an orderly process that ultimately avoids costs and minimizes productivity.
  5. Provide the Right Services
    If an employee is expected to find a new home in one home finding trip, they'll need all the right information beforehand, from counseling to advance research on their new location and a pre-approved mortgage. Online tips and calculators make sure they have access to meaningful data instead of floundering on unqualified/commercial sites.
  6. Ensure Financial Integrity In an era where corporate accounting practices are held to the highest scrutiny, financial integrity has never been more important. Accurate accounting and data integrity can only be achieved from a fully integrated technology platform. With more comprehensive data, you can track overall savings and keep the auditors happy.

It is possible to reduce your relocation spend by millions and still provide exceptional service and meet your company's long-term mobility objectives. But it requires a delicate balance of the right policy, administered effectively and supported by the right services and suppliers. Because your relocation policy drives employee satisfaction and your company's overall costs, you need a competitive policy that is implemented with the highest quality of service. This will be the only way to control maverick spend and ensure enterprise-wide consistency. In addition, only when you are armed with solid cost tracking will you be able to more effectively evaluate the performance of the service partner, your policy and the total cost of the program.

The techniques presented throughout these posts will help control total costs through more flexibility, greater employee empowerment and holistic management of your program. Our fact-based recommendations are built on industry trends, benchmarking, surveys and extensive consulting experience -- the kind of experience that allows us to anticipate and avoid costly problems while building a brighter way to manage your relocation program that will significantly reduce your overall relocation spend.

Spend Matters would like to thank Pete for his contribution.

-- Pete Kolp, CEO of AIS (Advanced Integrated Solutions)

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