After your company has completed the preliminary steps of the RFP process and reviewed the final presentations from prospective corporate relocation management services providers, you will be ready to evaluate pricing proposals and proceed to contract negotiations. Once the contract is signed, your new provider will work closely with you to implement your new program. A successful partnership will strengthen the competitiveness and success of your employee mobility program.
Following are some tips on working through pricing and contract negotiations with a corporate relocation management services partner.
Demystifying RMC Pricing
Pricing is sure to be an important aspect of your decision. Unlike many outsourced service providers, relocation management companies (RMC) do not charge monthly or annual retainers or fees. Once you sign a contract with an RMC, you pay for services only as you use them. In fact, the cost of a relocation program depends almost entirely upon the number of employees you relocate and the level of benefits you choose to provide. Your culture, budget and competitive environment will influence these benefits. An RMC can equip you with the information you need to make informed choices.
Surprisingly, outsourcing relocation services can allow you to offer your employees a more comprehensive benefit at a lower cost than buying individual services as you go. You benefit from the RMC’s negotiated, volume pricing with suppliers and its knowledge of current best practices.
Any RMC you are considering should offer a transparent view of its pricing. A pricing proposal from an RMC might include any or all of these fees:
◆ Service fees are administrative fees charged for providing specific benefits. A common example is renter assistance. One service fee might cover a bundle of specific benefits provided to the relocating employee.
◆ Referral fees are a share of commissions earned by real estate companies that participate in your employee’s move. These fees come from third parties, not your company. Most relocation companies today earn a substantial part of their revenue from real estate referral fees. RMCs, acting as brokers, are entitled to these fees for referring business to local agents. Collected referral fees reduce or even eliminate client service fees for homeowner employees.
◆ Non-compliance fees can apply if contract terms are not met, for example, if the RMC did not have the opportunity to earn a referral fee on an employee’s home sale.
◆ Cancellation fees might apply if the RMC has completed substantial work on an employee’s relocation at the time of cancellation.
◆ Administrative fees can include wire, overnight delivery and other administrative costs.
◆ Direct costs are not fees but charges for services delivered by third parties, such as cultural or language training. The RMC passes through these charges, with or without a markup.
RMCs often bundle core services for homeowners and renters in packages of benefits. This bundled price is less than the cost of choosing the same services a la carte. The RMC should clearly spell out which services are included in the bundled price.
RMCs typically send clients a consolidated invoice, usually monthly but sometimes on a different agreed upon schedule. The RMC can customize billing to meet your needs; for example, separating expenses by division or location.
Making the Final Decision
Your relocation partner should be able to meet all of your company’s needs—now and as you grow. Look for a demonstrated record of success and favorable references. Comprehensive, web-based technology and apps are essential for mobile employees and they allow you to keep track of costs and service performance. Aside from these core qualifications, you will want to get a sense of the RMC’s culture and whether it is compatible with yours. The selected provider, after all, will be serving as an extension of your company and working directly with your employees.
Here are several points to consider in selecting a relocation service partner:
◆ Is relocation the RMC’s core competency?
◆ Does the RMC share your company’s values and culture?
◆ Can the RMC offer all of the services you need now and expect to use in the future?
◆ Does the RMC have the demonstrated ability to select and manage supporting suppliers (real estate, household goods transportation, destination services, etc.)?
◆ Did the RMC provide thoughtful approaches to your corporate relocation challenges?
◆ Is the RMC’s technology modern and easy to use?
◆ Did you feel a rapport with your potential account team?
The contract should evolve from the continuing discussions that have taken place between your company and the new relocation management company. To ensure that expectations are clearly defined—and met—the contract should stipulate:
◆ The scope of work and services to be provided
◆ Pricing agreements
◆ Key performance metrics (employee satisfaction, cost objectives, management feedback)
◆ Timetable and format for performance reviews
◆ The length of the contract and any provisions for price adjustments during the contract term (if applicable)
◆ The process to audit the RMC’s records
◆ Authorization limits for policy exceptions
◆ Reporting methods
◆ Confidentiality policies
◆ Other areas of importance to you
Establishing Service Level Agreements and Metrics
Many companies develop specific service level agreements with their relocation management company. These agreements become part of the contractual relationship between the company and the RMC. The areas measured, often called key performance indicators or KPIs, usually center on service delivery time, program costs, timeliness and accuracy or other areas of special importance to you.
Each KPI should be measurable and include a stated performance target. Some SLAs also include specific rewards and remedies if the RMC exceeds or fails to meet the objectives.
Your RMC will have sample SLAs for you to consider and adapt for your company. Generally, it is best to limit the KPIs to those areas most important to you. The RMC should be able to provide you with reporting to document how it is performing. You can discuss any notable successes or deficiencies with your account manager.
Implementing Corporate Relocation Management Services
You might have begun the relocation sourcing process because you had an immediate or imminent need. Perhaps you have an executive who needs to begin work in Brazil ASAP. Most RMCs can mobilize to get you through an emergency even before a more formal implementation has occurred. However, a full implementation will take approximately one month.
Building a Long-Term Partnership
This marks the end of your selection process but only the beginning of your relationship with the new RMC. As with any relationship, communication is key. Your RMC has substantial resources and your new account manager will be eager to use them to your company’s advantage. Keep him or her abreast of any program changes you are considering and any company developments that could affect your program.
If you—or your boss—have any concerns, share them early on so the account manager can address them as they arise. Ongoing, frank and constructive communication will allow you to build a collaborative, productive relationship with your account manager and a mutually beneficial relationship between your company and the RMC.
Next Steps in Selecting Corporate Relocation Management Services
For a step-by-step guide on the next steps to take, download the Relocation 101 eBook to learn more about:
1. Issuing an RFIs and RFPs;
2. Evaluating potential relocation service partners and pricing proposals; and
3. Establishing a relationship with the selected relocation management company.