Atlas Amplifier — Summer 2004
You've heard the saying, "If you don't like the weather, just wait, it's going to change."
Most people would agree the same holds true for business. Sales volumes move up, sales volumes dip. Earnings inch higher, then retreat. Prognosticators are bullish one day and bearish the next. Since the fateful fourth quarter of 2001, the economic climate has been puzzling, if not disappointing. But through it all, relocation professionals are staying focused on objectives that translate to the well-being of their transferees.
The Amplifier was fortunate to get a little time in conversation with a few of the guest presenters at this year's Atlas Forum on Moving. We asked a variety of questions related to relocation policy and vendor management. We wanted to know how they are making things work in their organizations. Their comments offer a firsthand glimpse at some of the important issues currently facing American corporations that rely on relocation services.
During twenty years in the relocation industry, Larry Gersch, Residential Real Estate Manager with Kraft Foods Inc., says he has noticed that relocation policy has become more concerned with cost-effectiveness. "Unfortunately," says Larry, "such changes often cause issues with service, but there have been enough 'workarounds' to keep employees satisfied."
Larry says that his firm's approach to controlling costs does not typically involve paring benefits. "Our belief has been not to massage the policy, but to reduce the number of relocations to reduce costs." This is challenging because the price of homes, a significant benefit cost, continues to escalate. But he also sees countervailing good news.
"Service levels have risen," says Larry. "The bar has been raised each year. The industry overall is doing a better job in empathizing with the relocating employee and providing exceptional customer service."
Perhaps such heightened service delivery is contributing to the perception among transferees that relocation is not something to be dreaded; rather, it is a natural accompaniment to personal advancement.
"Physical relocation is not as unexpected as it used to be," says Kristen Salmon, Director, HR Global Services with America Online. "We used to feel like we had to hand-hold employees throughout the relocation process; now it is much more accepted as part of a career and employees are much more relocation-savvy. This not only heightens benefit expectations but also service expectations."
As does Larry, Kristen voices concern with the cost of relocation. "The economy has changed, and companies are much more conscious today of how much is spent on moves," she says. She agrees that service levels have improved, mainly because providers have adopted systems that improve their ability to communicate and respond to customers. "Technology has influenced and streamlined the ability to deliver higher quality service and proactively support the customer in relocation overall."
Costs are not the only factor driving changes in the administration of relocation benefits. For Pam Reynolds, Category Manager in Enterprise Purchasing for ConAgra Foods, Inc., information that enables prudent decision-making is of prime importance.
"I'm responsible for managing our company's relationship with an outside relocation company," says Pam. "Until last year, we had relied on the services of three such providers. After we identified a need to gain better control over the relocation process, we made the decision to consolidate business with one relocation company."
"The dynamic that affects relocation decisions among our companies has changed, and so have our policies," says Pam. "A lot more thought now goes into who gets moved, and whether the relocation is worth the expense. This turned out to be another benefit from consolidation. Now we get more consistent pricing, which has produced cost savings for us."
If provider consolidation can enable better management of the relocation function, what about "policy consolidation"?
During 2003, May Caffi, Senior Director, Relocation Services with Marriott International, served as a subject matter expert on a policy task force.
"We developed one standard domestic policy for all of our 13 business units," says May. "We had been working with three different policies; by arriving at one policy we were able to simplify the assignment of benefits and standardize the policy benefits."
"Because relocation budgets have not been keeping pace with the cost of moving and our future growth plans, the task force recommended policy changes that would have produced savings. However, in a reaffirmation of the company's commitment to employees, Marriott's senior management passed on those recommendations. They reasoned that moving is difficult enough on the families," says May. "So it is better for us to move fewer families but still 'do it right'."
Flat relocation budgets and escalating relocation costs do create a challenge. May has seen Marriott continue to refine its human resource strategy to meet this challenge and the ultimate goal of getting the right person in the right job at the right time. Since relocating employees plays a vital role in accomplishing this goal, relocation will continue to be an integral part of Marriott's human resource strategy.
If a policy is the blueprint for building employee satisfaction, service providers can be thought of as the skilled hands who do the construction work.
Pam recognizes that employee satisfaction hinges largely on providers. She believes the audit process is increasingly important for determining how well vendors live up to policy, so that employees get the benefits to which they are entitled.
"We developed an evaluation process as a way to measure our suppliers," says Pam.
"There's always a danger that you can over-survey people. That said, we rely on information about customer service and vendor performance from three different sources: the mover's post-move survey, the relocation company's survey, and our own survey conducted by our Human Resources Department."
Pam says she does not discourage vendors from taking their own surveys, but she recognizes that how questions are asked can affect findings. "We feel it's important to ask questions from the ConAgra perspective. From our standpoint, we want to find out: Did ConAgra treat you right? Sometimes the survey is a learning experience. And we can use it to quickly remedy almost any instance of negative feedback."
No service provider is perfect; that's why there are programs for continuous improvement, even among the best vendors. But if a passion for perfection drives the best companies, it is likely a quality of those they work with as well.
For Kristen, the perfect vendor is an ideal that rarely, if ever, exists. "We have a pretty tough quarterly evaluation, based in internal feedback from my core team of domestic relocation consultants."
At AOL, the relocation process is managed entirely in house; staff work directly with providers of van line services, corporate housing and destination services. Evaluations are formal, using the same criteria the company employs for its own internal performance management.
"We use a scale of one to five, with five being distinguished," says Kristen. "Three is a high performer, which means you are doing well in your core expertise. A four indicates a vendor consistently exceeds expectations, rarely receives a complaint or has to be challenged on an issue."
Kristen describes the ideal vendor as one who clearly understands what is to be delivered to the customer. "Having a familiarity with our policy is critical to the vendor's success and to our success," says Kristen. "At the same time, the ideal vendor relationship is a partnership, built on trust and respect. That is what we strive for in all our vendor relationships."
Appreciation and recognition can help keep partnerships strong. AOL hosts a luncheon each year to thank its vendor partners for a year of exceptional service. "Out of the approximately 50 companies in attendance, we may recognize three to five as high-performing," says Kristen. "We look not only at the metrics, but at other qualities, such as innovation, that may set their service apart."
At the end of each year, vendors are asked to present a scorecard that shows how they supply value, and any proposed price increase must correspond to a value increase. What's even better, says Kristen, is when a vendor partner offers unsolicited advice on how to enhance service cost-effectively.
"Vendors can play a huge role in helping make policy better by finding opportunities to improve value," says Kristen. "I have many issues to deal with; if a vendor approaches me with a value opportunity, especially when I have not pushed that button, that's being a great vendor," says Kristen. She adds that finding ways to make improvements in policy can "move a vendor from a three rating to a four rating, or even from a four rating to a five."
Pam likewise sees the value of vendor input to policy. "Vendors should play an active role in policy development," says Pam. "There is potentially much to be learned from the vendor's experience with other customers. The vendor needs to take a proactive role. Customers need to hear more than, for example, 'we can move it for a price.' We need to know, does it make sense to move it for a price, and what the benefits are."
The technology wave that has brought new efficiencies to communication still brings challenges. Pam says that electronic bidding is in place and working well at ConAgra, but sees some reluctance outside her company to embrace the process. "People either love it or hate it," says Pam. "There is a perception among some that technology takes away the personal element in a relationship that suppliers had previously enjoyed with a handshake."
Regardless of how bidding is conducted, it remains essential to the process of vendor selection and the awarding of contracts. Pam offers the following advice to suppliers:
"Don't say you can if you can't. Don't commit to something you can't deliver, no matter how tempting. There are so many options out there and so much competition, it's not worth the risk of losing the business altogether."
Kristen also warns against making promises that can't be kept. She believes it's important for a vendor to focus on the ability to think creatively. "Try to show your innovation; what sets you apart from your competitors," says Kristen. "And don't give up before you even try." And, Kristen cautions that incumbent vendors should never take a bid process for granted. "Don't assume you already have the business won, or communicate like the customer has no other choice. Customers do not want to feel 'boxed in'."
Although the experts we spoke with work in different capacities, industries, and corporate cultures, they share a resolve to provide service that both satisfies their transferees and serves the greater interest of their organizations. Perhaps the greatest common denominator among them is an ongoing quest for value. Toward this end, each is looking for the right fit, in both their policies and their providers. In this sense, they share the concerns of people throughout the relocation industry who often must rely on their own ingenuity to make things work.