MOBILITY Magazine of Worldwide ERC ÂŽ
May 2011
Checking in on
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MOBILITY Magazine of Worldwide ERC 速
May 2011
Checking in on
Mobility Services Procurement Inside This Month:
Property Management Managing Change in Employee Mobility Worldwide ERC速 Regional Groups
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Calendar
MAY 2011 Worldwide ERC® Learning Zone™ SpeedSession™ Webinar From Euros to Yen: How to Best Manage Your International Compensation and Payroll May 3 2:00 p.m. to 3:00 p.m. EDT Sponsored by SIRVA Cost: Free Worldwide ERC® Learning Zone™ SpeedSession™ Webinar Strategies for Designing a Global Talent Management Program May 10 2:00 p.m. to 3:00 p.m. EDT Sponsored by Mobility Services International Cost: Free Global Mobility Specialist (GMS™) Designation Program May 16-18 Las Vegas, NV National Relocation Conference May 18-20 Las Vegas, NV
MOBILITY • Vol. 32 No. 5 • May 2011
EXECUTIVE COMMITTEE President SUSAN SCHNEIDER, SCRP, GMS, Plus Relocation Services, Inc., Minneapolis, MN Vice President PAMELA (PAM) J. O’CONNOR, SCRP, Leading Real Estate Companies of the World®, Chicago, IL Secretary/Treasurer C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN Chairman, Board of Directors MICHAEL (MIKE) C. WASHBOURN, SCRP, SGMS, Pfizer Inc, Peapack, NJ
BOARD OF DIRECTORS CORI L. BEAUDET, SCRP, SGMS, SC Johnson—A Family Company, Racine, WI ANITA BLANCHETT, BP, Sunbury-on-Thames, Middlesex, UNITED KINGDOM LISA CARAVELLA, CRP, Bank of America Home Loans, Plano, TX MARIO FERRARO, Deloitte Consulting Pty Ltd., SINGAPORE DAVID GAGE, SCRP, Federal Government, Baltimore, MD WILLIAM (BILL) GRAEBEL, SGMS, Graebel Relocation Services Worldwide, Denver, CO LARS LYKKE IVERSEN, Santa Fe Relocation Services, Wanchai, Hong Kong, CHINA CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ KAY KUTT, SCRP, SGMS, Asian Tigers Mobility Ltd, Hong Kong, CHINA EARL LEE, Prudential Real Estate and Relocation, Scottsdale, AZ JOY MORRISON, SCRP, SGMS, PepsiCo, Inc., Purchase, NY
Certified Relocation Professional® (CRP®) Examination May 18 Las Vegas, NV; Atlanta, GA; Chicago, IL; Dallas, TX; and Stamford, CT Worldwide ERC® Learning Zone™ SpeedSession™ Webinar Immigration Compliance—What You Need To Know! May 24 2:00 p.m. to 3:00 p.m. EDT Sponsored by Fragomen Cost: Free
JUNE 2011 Global Mobility Specialist (GMS™) Designation Program June 21-22 Amsterdam, the Netherlands
STEVEN A. NORD, Bainbridge, WA JOHN PFEIFFER, GMS, Mustang Engineering, L.P., Houston, TX GAIL H. PLUMMER, SCRP, GMS, Altair Global Relocation, Plano, TX PANDRA RICHIE, SCRP, SGMS, Long & Foster Companies, Chantilly, VA PAT SPARKS, Sprint Nextel Corporation, Lenexa, KS
EX-OFFICIO Chairman, U.S. Advisory Council AL BLUMENBERG, SCRP, NEI Global Relocation, Cedar Hill, MO Chairman, Foundation for Workforce Mobility KEVIN E. RUSSELL, SCRP, PHH Mortgage, Mt. Laurel, NJ Chairman, Government Relations Council C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN Chairman, Global Advisory Council CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ
Global Workforce Summit: Focus on Europe, Middle East, and Africa June 23-24 Amsterdam, the Netherlands
CHIEF EXECUTIVE OFFICER
OCTOBER 2011
MOBILITY (ISSN 0195-8194) is published monthly by Worldwide ERC®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195, +1 703 842 3400. MOBILITY examines key issues affecting the global mobility workforce for the benefit of employers and firms or individuals providing specific services to relocated employees and their families. The opinions expressed in MOBILITY are those of the authors and do not necessarily reflect the opinions of Worldwide ERC®. MOBILITY is printed in the United States of America. Periodical postage paid at Arlington, VA, and additional mailing offices. Worldwide ERC® members receive one annual subscription with their membership dues. Subscriptions are available to both members and non-members at $48 each per year. Copyright © by Worldwide ERC®. All rights reserved. Neither all nor part of the contents published herein may be reproduced in any form without written permission of Worldwide ERC®.
Global Mobility Specialist (GMS™) Designation Program October 10-12 Denver, CO Global Workforce Symposium October 12-14 Denver, CO 4 MOBILITY/MAY 2011
PEGGY SMITH, SCRP, SGMS, Worldwide ERC®, Arlington, VA
POSTMASTER: send address changes to M OBILITY , Worldwide ERC ®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195
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Perceptions
Customization: The New Watchword
C
ustomization is all around us. Nike has made a science of “one size fits one” customer engagement and marketing, with its encouragement to custom-build our own shoes, clothes, and gear. Nike’s timing is perfect, because it reflects a growing proclivity for individualized products; recognition that our lifestyles, needs, and
taste are our own; and an understanding that we like to have a hand in designing for an outcome that suits us well. In an environment like ours, where it makes good business sense to use resources in the most precise manner possible, customization of mobility policies is cropping up more and more frequently in corporate discussions. About a month ago, there was a flurry of activity on our corporate HR Policy and Program Benchmarking Forum. The topic? Flexible policies, under a range of monikers like “menu-driven,” “tiered,” and “flex-core.” There was high interest and equally high concern that should one institute flexible policy, it be administered fairly and consistently. Out of this interest came the concept for a series of webinars I am moderating for our corporate HR members on policy strategy and development. Earlier this spring, in the first of those, “How Flexible Is Your Policy?” Carol Filippi, SCRP, manager, mobility services at The Linde Group, took us through the reasons her company finds customized policies so critical. “Anytime a company is facing major economic challenges—as we had through the recession—or is working under a new business structure, there is an opportunity to evaluate more customized policy. Other reasons for customization include different levels of cutbacks in business divisions; parts of the business expressing different relocation needs or profiles; an increasing number of requests from managers for a lesser amount of assistance; discovery of moves occurring late or after the process has been completed; and overall planned strategy and management of the mobility process, rather than a micro/localized per6 MOBILITY/MAY 2011
spective. The relocation process should not become a bureaucratic roadblock—it should be a business facilitator.” Filippi noted that customization is “mobility friendly” in a range of situations, “through up or down real estate markets, in robust or distressed economic environments, and across job levels and geographies... and makes it possible to address a range of business and budget needs.” A more customizable policy platform brings some decided advantages. When hiring managers are well educated, relocation issues can be recognized earlier in the process. More options for those managing mobility translates into less frequent revisions and updates to policy, enlists hiring managers to take more ownership of the assistance offered to new hires and current employees, and ultimately, gives mobility a much more strategic business purpose and place in the company. Of course, there are plenty of challenges, like developing policy materials to fit the diversity of assistance, consistency of policy application, keeping the customization to a manageable amount of policy options, and working with service providers to fine-tune the reporting, managing, and metrics.
There’s much more going on here than the way we used to talk about tailoring policy to the needs of transferees and assignees. Policy flexibility and customization allows employees’ individual and highest-priority needs to be met within a budget management can support. With most companies going through policy redress in recent years, one of the biggest issues emerging is the need for effective policy customization. As the recovery continues, and hiring ramps up, more organizations will take a strong look at the possibility of complete customization. At least one company I know is on the leading edge of delivering their mobility policy through a point system, shifting the cash aspect of assistance to one where the employee is supplied with a number of points based on his or her career level and path, to use for the services that fit the needs. It will be interesting to see how this new chapter in policy development will evolve (In the meantime, I’m off to my laptop to customize my new workout gear!). If you are a corporate HR member who is interested in our policy webinar series, e-mail meetings@worldwideerc for more information. —Peggy Smith, SCRP, SGMS Chief Executive Officer Worldwide ERC®
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WR R I N E XT P R A CTI CE
#3
There are satisfied customers. And then there are Raving Fans! The quality of service your relocating employees receive impacts more than just their moves. It affects their engagement and productivity, and can color their entire perception of your company. That’s why at Weichert Relocation Resources, we’re committed to turning your employees into Raving Fans®—so impressed with the level of service they’ve received, they feel as good about their moves as they do about the company that relocated them.
Weichert Relocation Resources Ranks #1 in Quality of Service Source: HRO Today Magazine’s 2010 Relocation Baker’s Dozen Customer Satisfaction Survey
...and Earns the Highest Percentage of “Top Block” Scores from Relocating Employees Source: Trippel Survey & Research’s Nationwide Relocating Employee Survey*
Raving Fans has set the standard for customer service programs within our industry, and, as you can see, it’s helped us earn some impressive accolades. If you’d like to discover how we can turn your mobile employees into Raving Fans, just give us a call.
®
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*Report provided by Trippel Survey & Research, LLC. “Top Block” scores indicate rankings of 9 or 10 on a 10 point scale.
| The Next Practices Company®
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2009 Fragomen Mobility Mag Full Page Ad 2.pdf 1 6/11/2009 12:59:55 PM
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MOBILITY Magazine of Worldwide ERC®
Features
36 49 54 64
54
Checking In on Mobility Services Procurement By Frank Mauck
Managing Relocation Service Delivery Risk—Audit and Forget It! By Jill Heineck, CRP
Delivering a Knock-out Mobility Services Partnership By Tracey Gatlin, CRP
64
36
Adapt and Adjust—Managing Change in Employee Mobility By Margie Dillon, CRP, GMS, PHR, and Kate Kelley-Dilts, SCERP, SCRP, SGMS
74
Managing Relocation in a Changing Corporate Environment: On-demand Information Required
74
By Joseph Morabito, SCRP
76
Property Management: Getting the Details Right By James Conigliaro, CRP, GMS, and Ghadeer Hasan, CRP, GMS
86 94
(Not) Leaving Las Vegas By Tim McCarney, GMS
76 94
Worldwide ERC® Regional Groups: Act Locally and Think Industry! By Bill Mulholland, CRP, GMS
102
Advice for First-time Conference Attendees By Chris Chalk, CRP, GMS
86 MOBILITY/MAY 2011 9
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MOBILITY Magazine of Worldwide ERC®
DEPARTMENTS
4 CALENDAR 6 PERCEPTIONS Customization: The New Watchword By Peggy Smith, SCRP, SGMS
12 AROUND THE WORLDWIDE ERC®
MOBILITY STAFF
Vice President & Publisher Jerry Holloman
jholloman@WorldwideERC.org Managing Editor Frank Mauck
fmauck@WorldwideERC.org EDITORIAL ADVISORY COMMITTEE
14 EXECUTIVE SPOTLIGHT
Chairman
17 INDUSTRY SPOTLIGHT
Alex Alpert, Wheaton World Wide Moving, Los Angeles, CA
Jo Lay, SCRP, SGMS, Coldwell Banker Central Region Relocation, Northbrook, IL
Michele Bar-Pereg, Bar-Pereg Group, Amsterdam, THE NETHERLANDS
20 QUICK TAKES 24 TAX AND LEGAL UPDATE 26 2011 SERVICE AWARD RECIPIENTS
Tamara Bianchi, CRP, Capital Relocation Services, Denver, CO Robert F. Burch, SCRP, Alexander’s Mobility Services, Baltimore, MD Christopher R. Chalk, CRP, GMS, Dependable Auto Shippers, Inc., Smyrna, GA Brenda Darrow-Fuhs, Bank of America, Longmont, CO Terry Baxter Davis, SCRP, SGMS, Ernst & Young LLP, Cleveland, OH
28 HALL OF LEADERS
Anne Dean, GMS, Living Abroad, LLC, Norwalk, CT Tim Denney, Stirling Henry Global Migration, Sydney, AUSTRALIA
30 WORLDWIDE ERC® PRESIDENT’S AWARD 32 RECOGNIZING EXCELLENCE 34 SPECIAL ADVERTISEMENT—C-SUITE Q & A
Marge A. Dillon, CRP, GMS, Bank of America Home Loans, Plano, TX Sean Dubberke, RW3 LLC, New York, NY Deborah A. Dull, CRP, GMS, Crown Relocations, Houston, TX Kari Hamilton, ABODA, Inc., Redmond, WA Nancy F. Harmann, CRP, GMS, Latter & Blum, Inc., Realtors, New Orleans, LA
109 ADVERTISERS’ RESOURCE
Gustavo Higuera, CRP, GMS, Prudential Real Estate and Relocation Services, Scottsdale, AZ Christine E. Holland, GMS, Massachusetts Institute of Technology, Cambridge, MA
110 YP40 112 RAC REPORT
Ronald Huiskamp, GMS, Dwellworks, LLC, Kirkland, WA Rob Johnson, SCRP, SGMS, Altair Global Relocation, Plano, TX Jeff Knapton, SIRVA Relocation, Westmont, IL Anne-Claude Lambelet, SGMS, ACL Consulting, Geneva, SWITZERLAND Tacita Lewars, GMS, Globaforce Incorporated, Calgery, Alberta, CANADA Cindy Madden, CRP, Cartus, Danbury, CT Tim McCarney, GMS, Weichert Relocation Resources Inc., Norwell, MA Nino Nelissen, SGMS, Executive Mobility Group, Schlipol Airport, THE NETHERLANDS Constance Pegushin, Berry Appleman & Leiden LLP, San Francisco, CA Elizabeth Perelstein, School Choice International, White Plains, NY
Design/Production: Ideas, Communicated, LLC, Vienna, VA www.ideascommunicated.com Printing: CADMUS Specialty Publications, Richmond, VA Reprints: Katina Moaney, CADMUS Reprint Services ercreprints@cadmus.com +1 866 487 5625 ext. 3736 Advertising Sales: Glen Cox, National Sales Manager, The Townsend Group, Chevy Chase, MD +1 410 321 4723 gcox@townsend-group.com
Patricia Pollard, CRP, GMS, Coldwell Banker United Realtors, Houston, TX Maureen Bridget Rabotin, GMS, Effective Global Leadership, Paris, FRANCE Michelle Sandlin, CRP, John Daugherty Realtors, Inc., Houston, TX Stefanie R. Schreck, CRP, GMS, American International Group, New York, NY Scott T. Sullivan, Brookfield Global Relocation Services, Woodridge, IL Mara Terrace, Siemens Corporation, Global Shared Services NA, Orlando, FL Sherrie Tessier, CVS, Woonsocket, RI Jody Walstrom, Plus Relocation Services Inc., Minneapolis, MN Allie Williamson, CRP, OneWorld Relocation Services, Naples, FL Nick Woodhams, SGMS, Woodhams Relocation Centre, Sydney, AUSTRALIA
10 MOBILITY/MAY 2011
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Prudential Real Estate and Relocation Services
Take the path to a Rock Solid Relocation ®
When you choose Prudential Real Estate and Relocation Services, you do more than secure the most comprehensive range of relocation services in the industry. You also realize the value of an organization that delivers satisfaction, savings and security at every step. It all leads to a better experience — for both you and your transferees. To learn more, call 1-877-418-0617. To download our complimentary relocation tools, visit www.PrudentialRelocation.com Benefit from the experience of our Prudential Real Estate Network.
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Minimize home sale costs, thanks to our revolutionary eValuator SM Market Intelligence Tool.
© 2011 Prudential Financial, Inc., and its related entities. Prudential Real Estate brokerage services are offered through the independently owned and operated franchisees of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc., and its related entities, used under license. Equal Housing Opportunity.
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Around the Worldwide ERC®
Are We on the Same Page?
T
he Worldwide ERC® website (www.WorldwideERC.org) hosts thousands of pages of content. But, who are we kidding; you don’t have time for all that! You need to get in, out, and back to the mounting e-mails in your inbox, with answers. To help you make the most of your time, by finding out which pages other users find most valuable, we asked Heidi Hume, senior manager of the Worldwide ERC® Web Strategy team, to share this list of the website’s most frequently visited pages in 2011 so far:
#7 www.WorldwideERC.org/Education/ CRP—the main information page for the Worldwide ERC® Certified Relocation Professional® (CRP®) designation, which celebrated its 20th anniversary last year. This page contains links for how to earn your CRP®, how to earn continuing education credit to maintain your CRP®, a list of the nearly 4,500 active CRP® designees worldwide, and more.
#6
www.WorldwideERC.org/Education/ Pages/learning-zone-speedsession.aspx —main information page for the Worldwide ERC® new Learning Zone SpeedSessions™—free 45-minute live webinars packed with authoritative insights and information.
#5 www.WorldwideERC.org/MyAccount —the “My Account” page, which, 12 MOBILITY/MAY 2011
once you sign in, lists information specific to you, including your membership contact information (with a link to a form to send an update to it and change your password) and links to Worldwide ERC® resources you have purchased such as webinars, conference materials, and more.
#4 www.WorldwideERC.org/Resources/ USRealEstate/Forms-Portal—the Forms Portal, a simple, low-cost solution for completing standardized U.S. relocation forms electronically, using Adobe® technology. Includes access to the newest Worldwide ERC® Broker’s Market Analysis and Strategy Report (BMA).
#3 www.WorldwideERC.org/Directory— the online Directory, which has information on real estate brokers, real estate appraisers, and specialized relocation service companies that are prepared to give particular attention to effectively serving employers and their transferred employees. And,
within the Directory, the page that allows you to search specifically for real estate brokers is also among the top most frequently visited pages on our website.
#2 www.WorldwideERC.org/NRC11— the main information page for the 2011 National Relocation Conference, being held May 18 through 20, in Las Vegas, NV. For a limited period, conference registration is free for first-time corporate HR attendees responsible for the mobility of their company’s employees. This page contains links to the event’s registration form, session topics, and travel accommodations— three pages that reign among the most frequently visited pages on our website right now!
#1 jobs.WorldwideERC.org—The Career Center, which lists the newest and freshest jobs available to workforce mobility professionals, as well as résumés of qualified candidates with experience in this industry.
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Balancing every variable in your relocation equation. If experience is the best teacher, then no one can offer you a better relocation education than Cartus. Organizations of all sizes rely on us to address their precise needs by applying the insights we’ve gained through thousands of unique engagements. Your Cartus team will align your culture, your resources, and your objectives with the industry’s best practices and emerging trends—developing and delivering a program that achieves your goals in the most cost-effective way possible. And as you move into new markets, know that Cartus is ready to give you and your employees seasoned guidance every step of the way. To put our experience to the test, call on Cartus at trustedguidance@cartus.com.
www.cartus.com Primacy Relocation is now a part of Cartus. ©2011 Cartus Corporation. All rights reserved.
CARTUS-0006 ADS Teacher FINAL.indd 1
3/7/11 4:47 PM
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Executive Spotlight
W
inkelmann Realty, Fullerton, CA, has named Karen Edmonds president and CEO following the untimely passing of Linda Hawkins, SGMS. Plus Relocation Services, Inc., Minneapolis, MN, has named Betsy Welch, CRP, GMS client program manager. John L. Scott Real Estate, Bellevue, WA, has promoted Barry Matheny to vice president of business development. Ineo Relocation Technologies, Centennial, CO, through its merger with Relocation Taxes, LLC, has named David S. Oltman, CRP, chief compliance officer. The Greater Washington Employee Relocation Council (GWERC), Washington, DC, has announced its 2011 board of directors. Connie Dees, CRP, Bank of America Home Loans, is 2010 past president. Bill Mulholland, CRP, GMS, American Relocation Connections, was named president-elect. Pam Silvis-Zelasko, CRP, General Services Administration, was named president. Melissa Moorer, CRP, GMS, Prudential Relocation, will handle communications. Rolanzo Kinniebrew, CRP, WHR Group, was named treasurer. Michael Berry, CRP, GMS, Hilldrup Companies, was named ad hoc. Kathy Lane, CRP, Equity Corporate Housing, was named secretary. Rod Ulrich, Federal Bureau of Prisons, is in charge of bylaws. Joe Poole, Suddath, is in charge of programs. Programs-elect is Paul Dixon, CRP, South Hills Movers. Mark Morgan, Budd Van Lines, is in charge of membership. The Detroit Regional Relocation Council (DRRC), Troy, MI, has announced its 2011 officers and board of directors. Trevor Hewes, Rose Moving-Allied International, has been named president. Kevin R. Pool, CRP, Armstrong Relocation, has been named vice president. Kara 14 MOBILITY/MAY 2011
M. Cyr, PHR, has been named secretary. Shelly Bishop, BLVD Suites Nationwide Corporate Housing, has been named treasurer. Davide Foess, CRP, CMC, Relocation America, has been named chairman of the board. Directors include Cathy Jo Anderson, Coldwell Banker Weir Manuel; Mary Glynn, Hall & Hunter Realtors; Glenn Hummon, Potter Warehouse & Transfer; Kay Munger, Fidelity National Title; Minna Sharrak, Leading Apartments; and Suzanne Thomas Hughes, CRP, JPMorgan Chase Bank. Fry-Wagner Moving and Storage, St. Louis, MO, has promoted Travis Zessinger to a residential sales representative for Illinois. Nomad Temporary Housing, New York, NY, has named Karl Thuge executive vice president of business development. Littler Mendelson, P.C., Pittsburgh, PA, added employment attorney Terrence H. Murphy to its Pittsburgh office. Bristol Global Mobility, Phoenix, AZ, has named Rita Wagner, GMS, vice president, international solutions. Chris Kline has been named executive vice president, business development. Move One, Dubai, United Arab Emirates, has named John Nicholls director of business development. Weichert Relocation Resources Inc. (WRRI), Morris Plains, NJ, has named Paul Bernadou, CRP, vice president business development. Katherine Trachta, SCRP, GMS, has been named vice president of client services. PODS Enterprises Inc., Clearwater, FL, has named Jim Griffin senior vice president of sales. SuiteAmerica, El Dorado Hills, CA, has named Guy Cook chief operating officer. Ace Worldwide, Cudahy, WI, an agent for Atlas Van Lines, has named
Bob Dicke, SCRP, vice president of business development. Daniel Gale Sotheby’s International Realty, Huntington, NY, has promoted Claudia Galvin to assistant sales manager of its Garden City office. Graebel Relocation Services Worldwide, Inc., Aurora, CO, has named Jessica Regenold, GMS, vice president of international client services. Graebel has named Nancy Lempicki, GMS, vice president of client development. Crown Relocations, Los Angeles, CA, has named Norah Franchetti, GMS, vice president of marketing, learning, and development fo r the Crown group.Frank Kursteiner has been named country manager for Crown Cambodia, Phnom Penh. Dependable Auto Shippers (DAS), Dallas, TX, has named Tina Azzarella, CRP, GMS, vice president of corporate sales. Marriott ExecuStay, Bethesda, MD, has named Kenneth Alcott regional sales manager for the Insurance Housing Solutions division, southeast territory. AIReS has named Amber Raach and Dan O’Neill account managers in its West Coast regional office in Huntington Beach, CA.
Send Us Your Announcements Executive Spotlight highlights the job changes and achievements of employee mobility professionals. E-mail your hiring and promotion announcements, as well as your regional group communications, to mobility@WorldwideERC.org. Does Worldwide ERC® have your most up-to-date contact information? If not, let us know at www.WorldwideERC.org/pages/ update.aspx.
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Meet WHR at this year’s National Relocation Conference May 18 – 20 at Caesars Palace
a sure bet for your relocation service Stop by our booth or set up a time to meet to learn more about WHR’s relocation services contactus@whrg.com / 262-548-3020
WWW.WHRG.COM
INNOVATIVE SOLUTIONS. CONCRETE RESULTS.
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Industry Spotlight
Survey Finds International Assignments to China Continue to Grow
M
ultinational organizations long since have viewed The People’s Republic of China as a premier destination for their international expatriates, both as an emerging market and as a long-established center of global commerce. A recent survey has found that interest in the country as an expatriate destination continues to grow. According to a new report from Cartus, Danbury, CT, interest in corporate relocation assignments to China continues to grow, with 96 percent of companies responding to its survey, “Destination: China,” saw increased or stable relocation activity within China during the past two years. The survey, conducted in the fourth quarter of 2010, queried senior executives at 68 multinational companies based in Asia-Pacific, Europe, the Middle East, Africa, and the Americas, representing a total employee population in excess of three million. “Companies are now looking to China for its tremendous market opportunities, and it appears they will continue to do so as world economies improve,” said John Arcario, CRP, executive vice president at Cartus. “Maximizing opportunities for growth will depend on an effective workforce that has been properly trained to be deployed in nontraditional locations and assignment types. Getting the right people to the right place is always a complex yet critical goal, and in China, the challenges are immense.” According to Cartus, one key survey finding is that compared to the last two years, more than one-third more respondents are predicting increases in assignment volumes dur-
ing the next two years. In addition, Tier 2 and Tier 3 cities are estimated to attract more corporate relocation activity, and Tier 1 cities will experience continued growth. Fifty-four percent of respondents said Tier 2 cities are expected to witness an increase in activity during the next two years, and 30 percent of companies said the same for Tier 3 cities. Suzhou, Chongquing, Qingdao, and Chengdu are the top Tier 2 cities for assignment growth. Jiangmen and Nanning are the top Tier 3 cities, according to the survey. With regard to Tier 1 cities, Shanghai and Beijing continue to experience an increase in international assignments, with 50 percent of respondents seeing growth during the past two years and 60 percent indicating expected growth during the next two years. According to Cartus, there are approximately 300 Tier 2 cities, which are defined as having populations in excess of one million but with fewer amenities available to residents. There are approximately 1,200 Tier 3 cities, which are considered economically underdeveloped. The top challenges cited by respondents in Tier 2 and 3 cities are schooling, with 33 percent; family adjustment, with 32 percent; health care, with 29 percent; and cultural differences, with 21 percent. The survey also examined organizations’ decisions to use nontraditional mobility assignments to expand their expatriate base. Nontraditional assignment types, such as permanent one-way moves, returnees, and “localized” assignments, are predicted to grow more than 2.4 times the rate of traditional assignment types when comparing
the next two years against the past two, according to Cartus. Longterm assignments still are the most common type of policy, but the fastest growing assignment segment is short-term assignments—defined by the release as those typically lasting between four and 12 months. Another key finding of the study is that intra-Asia relocations are growing as employers seek regional talent to fill assignments as a strategy to overcome cultural challenges and the cost associated with moving. Thirty-five percent of survey respondents noted an increase in intra-Asia assignments during the past two years, while 46 percent expect intraregion transfer volume to increase. The Cartus report, however, does cite a significant talent shortage because of an inadequate number of employees in China who are equipped with the skills and experience required to work in a multinational corporation. Eighty-eight percent of respondents said the transfer of knowledge and skills is the primary reason to send an executive to China, while 62 percent said that the development of the employee is the main reason for the assignment. “Organizations doing business in China are working to overcome the talent barrier by cultivating intraAsia talent,” said Kenneth Kwek, head of Cartus Asia-Pacific operations. “It’s clear that multinational corporations will also continue to deploy assignees from outside Asia to help establish and expand their presence in China. In addition, the survey shows that multinationals are going to need a combination of staffing approaches from both within and outside of APAC to fulfill their needs in China.” MOBILITY/MAY 2011 17
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Industry Spotlight
FYI Move One, Dubai, United Arab Emirates, has announced the launch of its new community website, expatechodubai.com. Lion Leasing, Boca Raton, FL, has announced the introduction of a new car leasing and financing program that offers professionals access to car financing without a U.S. credit score. PODS Enterprises, Inc., Clearwater, FL, has announced the opening of a new storage center in Medford, OR. Century 21 Real Estate, Parsippany, NJ, has announced that its brokers and agents raised more than $1.8 million in 2010 on behalf of Easter Seals. Orion Mobility, Wilton, CT, has announced a formal partnership with the Dolins Group, Ltd.,Chicago, IL, a certified public accounting firm, to provide its clients with a single-source process for expense management, software, tax preparation, and gross-up audit needs. Sterling, London, United Kingdom, has announced the opening of an office and warehouse in Geneva, Switzerland. Location Strategy Solutions (LSS), London, United Kingdom, has announced the launch of a complete rebrand, including a new website, www.lssrelocation.com, and a new Global Innovation Sphere™ logo. Arpin International Group, East Greenwich, RI, has formed an alliance with Global Visas to provide assistance to customers with immigration service needs. United Van Lines, St. Louis, MO, has announced the launch of a website for consumers using mobile devices, unitedvanlines.com. Mayflower Transit, St. Louis, MO, has announced the launch of a website for consumers using mobile devices, mayflower.com Edina Realty, Edina, MI, has announced that www.edinarealty.com now features sold property data in its property search function. Century 21 Real Estate LLC, Parsippany, NJ, has announced that CENTURY 21 Beggins Enterprises, Tampa Bay, FL has renewed its affiliation with the brand for a second time, through 2021. The company also announced a new agreement with YouReach Media to provide social media training to CENTURY 21® System members. The American Council on International Personnel (ACIP), Washington, DC, has announced the release of a primer, “Solving America’s Employment-based Immigration Puzzle: An Overview of the U.S. Immigration System for Highly Educated Professionals and Solutions for Ensuring U.S. Job Creation, Economic Growth, and Competitiveness.” The primer includes an overview of the employment-based immigration system. Global LT, Troy, MI, has announced a partnership with Career Growth Associates (CGA) to include a broad spectrum of workplace learning and leadership development solutions to global corporations. The Council of Residential Specialists, Chicago, IL, has announced a new course, “Guiding the Buyer in the Distressed Property Market.” UniGroup, St. Louis, MO, has announced the launch of a new business unit: UniGroup Worldwide Logistics, a combination of the company’s non-asset and asset-based businesses to provide supply chain solutions. Crown Relocations, London, United Kingdom, has announced it has been awarded a three-year, global contract by UniLever to provide household goods services. The United States Citizenship and Immigration Services (USCIS), Washington, DC, has announced the launch of the E-Verify Self Check Program.
18 MOBILITY/MAY 2011
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Bridging Continents & Cultures Chicago San Francisco
Houston Calgary
Los Angeles New York Toronto Vancouver London, UK
Philadelphia Hong Kong
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Quick Takes
Study Finds Less Business Travel Adversely Affects Bottom Line It is no secret that corporate travel budgets were closely monitored in 2010, and a new survey from CareerBuilder, Chicago, IL, has found that employers’ reluctance to send employees on business travel adversely affected their businesses. According to the survey, 30 percent of respondents said they cut back on business travel in 2010, and of those companies, 37 percent reported a negative effect on their business. The survey queried more than 2,400 U.S. employers and more than 3,900 U.S. workers. According to the release, when asked how fewer business trips had affected their bottom lines, 12 percent of companies said less effective internal communication; 11 percent said fewer sales, 10 percent said less effective execution on internal business initiatives, and 8 percent said less customer loyalty. Concerning business travel in 2011, 77 percent of companies said levels will stay the same as 2010. Eleven percent said they will have an increased number of trips, and 13 percent expect a decrease in business travel. “Business travel is an important part of many companies’ operations as it lets them stay connected with clients and employees across the globe,” said Rosemary Haefner, vice president of human resources for CareerBuilder. “Some companies are revisiting their policies, though, to ensure they’re maximizing the effectiveness of their business travel initiatives.”
Corporate HR Communities
R
ight now Worldwide ERC® corporate HR members constantly are exchanging questions, answers, and ideas online in our two eDiscussion: Policy and Program Benchmarking Forums. Some of the recent topics discussed are: In the Global eDiscussions Forum: “Do you offer education assistance for children accompanying an employee moving to the United States? Do you put any restrictions on the employees who you offer this benefit to?” “Are your U.S. expatriates on long-term assignments (1-5 years) paid through the home payroll, host payroll or a split payroll (part processed in the home and part in the host)? If the expatriates are paid through the home U.S. payroll only, is the net pay distributed in the home, host or split?” In the U.S. Relocation eDiscussions Forum: “With the high cost of loss on sale right now, we are looking to add a repayment agreement schedule to our exception policy. Has anyone set something like this up? Did you use a flat rate or a graduated scale?” If you are a corporate HR member, read the answers solicited by these questions and add your comments and questions today. To get there visit www.WorldwideERC.org/pages/web2.0.aspx or click on the white “Communities” hyperlink at the top of every page of www.WorldwideERC.org. Note that access to eDiscussion Forums is provided exclusively to corporate and government Worldwide ERC® members who have no commercial interest in relocation. Not sure if that’s you? E-mail Membership@WorldwideERC.org or call +1 703 842 3410. 20 MOBILITY/MAY 2011
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With you when
As the mortgage industry changes, it is important to have clear direction on the impact to your mobility program. Consult with The Relocation Mortgage ProgramŽ team from Wells Fargo Home Mortgage. Our industry professionals provide access to the latest research to help you understand today’s homebuyers. And as you shape your relocation policies, we’re here to help you keep your program operating at an optimal level in the current regulatory environment. To learn more, call us at 612-312-4206 or visit www.wellsfargo.com/relocation.
Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. Š 2011 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801. #560882 3/11
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KEEP YOUR RELOCATION PROGRAM AHEAD OF THE CURVE WITH GRAEBEL Call: 800.723.6683
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© 2010-2011, Graebel Companies, Inc. All rights reserved. Graebel Movers International Quality Management System is registered to ISO 9001:2008. Graebel Movers International headquarters is registered to ISO 14001:2004 EMS. DOT #220843 MC #158651
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3/10/2011 7:41:29 AM
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Tax and Legal Update
Repeal of New Form 1099 Requirements Picks up Steam
I
ncluded in the new Health Care law to raise revenue, enhanced information reporting requirements to go into effect in 2012, so far have raised more outrage than revenue, and Congress now is moving toward repeal. In addition, the House has included in its repeal legislation new reporting provisions for landlords that already have gone into effect in 2011. Form 1099s currently are required to be filed by businesses when they make payments to individuals aggregating more than $600 during the year for income items such as services. Beginning in 2012, however, reports also will be required for payments to corporations, and for payments for property as well as income items. The specter of billions of additional Form 1099s for such items as 24 MOBILITY/MAY 2011
supplies purchased from Office Depot, and the enormous recordkeeping burden this might entail, has the business community, large and small, up in arms. Filing a Form 1099 for this broad new category of required reports would necessitate a business obtaining a taxpayer information number from everyone to whom it makes payments during the year, and maintaining records necessary to determine whether payments to each recipient exceeded $600 during the year. In the mobility industry, this would impose significant new burdens related to supply chain management. Further, as a revenue raising provision included in the Jobs Act of 2010, Congress imposed new information reporting requirements for
individuals who rent out their property. Beginning this year, such individuals must file Form 1099s for payments aggregating over $600 to individuals for such items as maintenance and repairs and, in 2012, will become subject to the enhanced requirements discussed above. Congress is listening to the complaints. Although repeal efforts in the Senate failed late last year due to differences as to how to replace the $19.3 billion in revenue the Joint Tax Committee says would be raised over 10 years, they have escalated in the new Congress. On February 2, the Senate voted 81-17 to attach an amendment repealing the information reporting requirements imposed by the Health Care law to legislation that would reauthorize the Federal Aviation
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Administration. The amendment, offered by Senator Stabenow (D-MI), is paid for by rescinding some $44 billion in funds that have been appropriated but not yet spent. The amendment specifies that the rescinded funds cannot come from the Social Security Administration or the departments of Defense or Veterans Affairs. Although the FAA legislation was later passed without the information reporting amendment, the amendment now has been attached to other noncontroversial legislation that would reauthorize small business programs. Meanwhile, on March 3, 2011, the House passed stand-alone repeal legislation of its own. H.R. 4 would repeal both the new reporting requirements described above, and also the new requirement for landlords to report payments to others on Form 1099 that went into effect in 2011. That legislation has been sent to the Senate. However, it contains a revenue offset provision modifying a part of the Health Care Reform law that is objected to by Senate Democrats and the Administration, so negotiations are ongoing between Democrats and Republicans in the Senate, and between the House and Senate. The Senate version of repeal does not include the rental 1099 provision, and as noted relies on a different revenue offset. As of March 30, 2011, the Senate had yet to take up consideration of H.R. 4, and disagreement as to revenue offsets remained. However, it is clear that both houses of Congress are committed to repeal; the issue is simply how to pay for it. It is also noteworthy that, unlike last year, there seem to be no proposals to keep the rules but seek to make them less burdensome (for example, by increasing the threshold amount of $600, which has not been changed in decades).
In short, it is growing more likely that the enhanced information reporting requirements of the Health Care law will be repealed entirely before they go into effect. Nevertheless, companies should at least become familiar with the requirements, and do some preliminary analysis of what additional reports they might need to file, and what additional information from other businesses they might need to do so.
In addition, there is some likelihood that repeal may extend to the rental reporting provision as well. This is good news. Worldwide ERC® will continue to monitor the situation closely. Peter K. Scott is tax counsel for Worldwide ERC®, Arlington, VA. He can be reached at +1 703 893 8566 or e-mail pscott@worldwideerc.org. Richard Mansfield is general counsel for Worldwide ERC®, Arlington, VA. He can be reached at +1 703 842 3428 or e-mail rmansfield@worldwideerc.org.
Breaking News... On April 5, 2011, the Senate voted 87-12 to adopt the House bill repealing both the new information reporting requirements for businesses that would have begun in 2012, and the new information reporting requirements for landlords that went into effect this year. The President is expected to sign the bill. In legislating repeal, Congress has relieved businesses of enormous new information collection burdens and billions of additional Form 1099s. In addition, “accidental” landlords such as expatriates and relocated employees who retain and rent out their old homes will be relieved of the substantial burden of collecting identification information for all who provide services or goods to them, and filing Form 1099s. As reported in the Tax Hotline column in these pages, both houses of Congress had previously passed repeal legislation, but were divided over how to pay for the revenue that would be lost by the repeal. In the end, the Senate capitulated, and accepted the revenue offset in the House bill. The bill raises $24.9 billion by reducing income thresholds for taxpayers who enroll in health care plans offered by exchanges beginning in 2014, so that more of them will be subject to repayment of a tax credit that is available for those below the thresholds. Democrats had objected on the basis that the provision would impose unacceptable tax burdens on middle-income families, but eventually the desire to get rid of the new reporting requirements overwhelmed all opposition. Worldwide ERC® has reported extensively on these burdensome reporting provisions, filed comments with the U.S. Treasury Department, and is pleased that its members will be relieved of unnecessary information reporting obligations.
MOBILITY/MAY 2011 25
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2011 Service Award Recipients To recognize and extend its gratitude for the invaluable contributions of its members, Worldwide ERC® implemented a Service Recognition Awards Program in 1989. This program, open to the entire membership, offers two levels of service awards, Distinguished and Meritorious. The program formally acknowledges that the success of Worldwide ERC® is a direct result of the dedication of its members and the devotion of their time and expertise for the betterment of the industry. Distinguished Service Award Recipients Four-time Recipients and Hall of Leaders Inductees: David B. Barlow, Jr., SCRP, SGMS SIRVA Relocation San Ramon, CA Dean Foster DFA Intercultural Global Solutions Brooklyn, NY Alvin L. (Chip) Wagner, III, SCRP, SRA A. L. Wagner Appraisal Group, Inc. Naperville, IL
Three-time Award Recipients Jeffrey M. Barta, SCRP Jeff Barta Valuations Waukesha, WI Al Blumenberg, SCRP NEI Global Relocation Cedar Hill, MO Rob Johnson, SCRP, SGMS Altair Global Relocation Plano, TX Kevin E. Russell, SCRP PHH Mortgage Mt. Laurel, NJ Michael C. Washbourn, SCRP, SGMS Pfizer Inc. Peapack, NJ 26 MOBILITY/MAY 2011
Two-time Award Recipients
First-time Award Recipients
Cori L. Beaudet, SCRP, SGMS SC Johnson—A Family Company Racine, WI
Anita Blanchett BP International Middlesex, United Kingdom
Ellen Borofsky, SCRP CARTUS Danbury, CT
Cheah Chin Teik Chin Teik Consulting Ltd. Hong Kong China
Anne Dean, GMS Living Abroad, LLC Norwalk, CT
Mario Ferraro Deloitte Consulting Pty Ltd. Singapore
Rebecca Kirschbaum, SCRP Automatic Data Processing, Inc. Roseland, NJ
Sheida Hodge Hodge International Advisors Mercer Island, WA
Stephen C. McGarry, SCRP WPP New York, NY
Neil B. Krupp TheMIGroup Buffalo Grove, IL
Nino Nelissen, SGMS Executive Mobility Group Schiphol Airport Netherlands
Tim McCarney, GMS Weichert Relocation Resources Inc. Norwell, MA
John Pfeiffer, GMS Mustang Engineering, LP Houston, TX
Robert A. Portale, SCRP, SGMS RELO Direct®, Inc. Chicago, IL
David J. Rooney, GMS PricewaterhouseCoopers AG Frankfurt am Main, Germany
Michael S. Schell RW3 New York, NY
Susan Schneider, SCRP, GMS Plus Relocation Services, Inc. Minneapolis, MN
Stefanie R. Schreck, SCRP, SGMS American International Group, Inc. New York, NY James Scott Sibold McManamy McLeod Heller, LLC Atlanta, GA
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Meritorious Service Award Recipients Dr. Ritu Anand TATA Consultancy Services Limited Mumbai, India Michael S. Cadden, SGMS Living Abroad, LLC Norwalk, CT Maureen Campbell, CRP, GMS Pearce Plus Relocation & Senior Services a Subsidiary of H. Pearce Company, Realtors North Haven, CT Lisa M. Caravella, CRP, GMS Bank of America Home Loans Plano, TX Michael Carrier Mortgage Bankers Association Washington, DC Casey Clemence Jacobs Engineering Saudi Arabia Paul Crouch, CRP, GMS BP America Inc. Houston, TX Margie A. Dillon, CRP, GMS, PHR Bank of America Home Loans Plano, TX Michael G. Drew, II, CRP AIReS Danbury, CT Sean Dubberke RW3 New York, NY
Deborah A. Dull, CRP, SGMS Crown Relocations Houston, TX
Jane Malecki, SGMS Weichert Relocation Resources Inc. Morris Plains, NJ
Maureen Bridget Rabotin, GMS Effective Global Leadership Paris, France
Pamela Dunleavy, CRP Crown Relocations Huntington Beach, CA
Leigh Massey Atlanta Fine Homes Sotheby’s International Realty Atlanta, GA
Lawrence M. Riefberg Riefberg, Smart, Donohue & NeJame P.C. Danbury, CT
Cheryl Matz, CRP, GMS Stewart Relocation Services, a Division of Stewart Title Guaranty Company Bloomington, MN
Jo Rust, GMS CARTUS Memphis, TN
Alan L. Freeman, GPHR LOF International Human Resources Solutions, Inc. La Crescenta, CA Tonya L. Hamilton, CRP, GMS Prudential Woodmont Realty Brentwood, TN Ellen Harris, GMS Living Abroad, LLC Norwalk, CT Robert J. Horsley Fragomen, Del Rey, Bernsen & Loewy, LLP Santa Clara, CA Luis Carlos Infante Unirecursos S.L. Madrid Spain Lars Lykke Iversen Santa Fe Relocation Services Wanchai, Hong Kong China Sophy King Pro-Link Global Madrid Spain Marcia Kistner Enterprise Holdings, Inc. St. Louis, MO Ron Labin, CRP, SGMS Cornerstone Relocation Group Basking Ridge, NJ
Greg Morley Hong Kong Disneyland Hong Kong, China Noelle K. Nish, CRP ROBERT J. NISH, P.C. Attorneys-at-Law Morristown, NJ Michi E. Olson, SGMS Alain Pinel Realtors San Ramon, CA Constance E. Pegushin Berry Appleman & Leiden LLP San Francisco, CA Elizabeth Perelstein School Choice International White Plains, NY Janelle Piatkowski, SGMS Cornerstone Relocation Group Basking Ridge, NJ
Geremie Sawadogo The World Bank Washington, DC Pamela R. Silvis-Zelasko, CRP General Services Administration Washington, DC Roy Sooman, CRP, GMS On Call Relocation Consulting Services LLC Glendale, AZ Cheryl D. Spielman New York, NY Barbara Kay Springer, CRP, GMS @Properties Chicago, IL Susan Vittorio, CRP, PHR BASF Corporation Tarrytown, NY
Boris A. Populoh FIDI Global Alliance Brussels, Belgium
Ruth Lockwood, SGMS Santa Fe Relocation Services Wanchai, Hong Kong China
MOBILITY/MAY 2011 27
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Hall of Leaders
THREE MEMBERS JOIN WORLDWIDE ERC® HALL OF LEADERS
“B
eing on many Worldwide ERC® panels and programs, doing Worldwide ERC® webinars, writing numerous articles for MOBILITY, teaching the Fundamentals of Relocation, and planning programs for Worldwide ERC® conferences were all great, but my major contribution to the organization, in my view, was doing all that Worldwide ERC® asked of me with passion and enthusiasm! “Worldwide ERC® is where I met people who helped me be a better relocation professional and where
now I have the same opportunity to help others as well. “My most special Worldwide ERC® memory was when we honored (former CEO) Cris Collie and his legacy. “To our membership I ask that you share what you know with other people so that by individual effort we all collectively have a stronger relocation industry.”
“W
life’s meaning would be starkly diminished without the treasured friendships that I’ve made through Worldwide ERC®. I cannot imagine my life without these friends. “Every time someone comes up to me after a presentation I make, and shares their personal experience, making their contribution to the larger intercultural story, it always amazes and dazzles me. The net that Worldwide ERC® casts is global and varied, and the human adventures, particularly as they relate to the intercultural story we are trying to tell, all become part of my beloved Worldwide ERC® memory. “As individuals responsible for global mobility, we are privileged to be in the vanguard of the greatest moment of human cross-cultural interactivity the world has ever known. Such intercultural contact can inevitably lead to frustration and misunderstanding in our daily global work. But each frustration is really a gift; the opportunity to learn a differ-
orking together with the support of Worldwide ERC® and the talents of many like-minded individuals in the international mobility industry, I am heartened that we’ve witnessed the wide acknowledgement of intercultural awareness and skills as a necessary requirement not only for successful international relocations, but for successful international work, and the advancement of global understanding between individuals and nations, in the 21st century. “Whatever professional accomplishments I may have achieved, it was only because interculturalists who came before me allowed me to stand on their shoulders, visionaries gave me a hand, and colleagues opened their hearts. I could not have found the talents, vision, and soul necessary to do any of this in any other organization but Worldwide ERC®. That was the case when we first began our efforts many years ago, and still is, after all these years. Personally, my 28 MOBILITY/MAY 2011
—David Barlow, SCRP, SGMS David Barlow, SCRP, SGMS
Dean Foster
ent way of thinking, the chance to see reality through a different set of eyes, the possibility of solving a problem in an unimagined way. If we are to succeed in our work, and succeed as a species, from this point forward, we need to think and act differently than we ever did before. Fundamentally, every day, on every level, that is the most important work we can do.” —Dean Foster
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W O R L D W I D E E R C ® is proud to announce the newest class of its Hall of Leaders, who will be inducted at the annual awards luncheon during the National Relocation Conference in Las Vegas, NV: David Barlow, Jr., SCRP, SGMS, SIRVA Relocation, San Ramon, CA; Dean Foster, DFA Intercultural Global Solutions, Brooklyn, NY; and A. L. (Chip) Wagner, SRA, IFA, SCRP, A.L. Wagner Appraisal Group, Inc., Naperville, IL.
“A
t this juncture, I feel honored to have participated in both presenting and speaking at conferences, adding my observations and contributions on committees and focus groups as well as writing articles for MOBILITY. As a real estate appraiser, I have gained a broad knowledge of the entire mobility process that goes far beyond the scope of my daily appraisal work; this in itself has been very rewarding and educational. “There have been so many accomplishments and contributions: passing the CRP® exam; on stage for my first Meritorious Service Award and then each of the following Distinguished Service Awards; the genuine applause after a presentation; or the telephone calls and e-mails received after an article had been published. But none will compare with the hours and hours of commitment, dedication, and work put into the 2009-2010 Appraisal Task Force (redesigning the relocation appraisal form) with peers who I have respected and admired for so many years: Arnold Schwartz, Jay Delich, and Jeff Barta. My father Al Wagner, Jr. (now retired) had worked on the committee that standardized the first relocation appraisal form in the 1980s, so it was quite special for me to follow the same path. Beyond the efforts put forth, the fact that the relocation industry will use the form for many years to come gives me great pride to know I helped develop it. “My Worldwide ERC® membership has been fulfilling both personally and professionally, beginning with the first conference I attended. When asked to be a moderator, it was a confidence builder and established credibility among my peers; it also opened doors that have lead to dynamic business opportunities as well as life-long friendships. “Whether feeling the synergy of working on a conference planning committee, the adrenalin of presenting to a captive audience in a packed room, or the feeling when seeing my name on the byline in a MOBILITY article, each has contributed to my professional growth and development. I have gained confidence as a writer and speaker, which has opened doors in both the relocation and appraisal communities. “There are so many special Worldwide ERC® memories beginning with my first conference in Las Vegas in 1996, which really opened my eyes to the Worldwide ERC® family; my second conference in Dallas when I took the CRP® exam. Meeting First Lady Barbara Bush in Chicago after the closing ceremony in 1998 was an incredible moment, as was saying hello to President Clinton in Washington, DC, while participating in a Certification Review Board
meeting in 2002. It was amazing sharing the stage last year with Arnold Schwartz and Jay Delich after admiring and learning so much from them throughout out my career. “But a ‘special memory’ that will always stand out was my participation on a session called ‘The People vs. the Relocation Appraisal Process’ in Orlando in 2006. The session highlighted the good aspects and poked fun at the ‘not-so-good’ Chip Wagner, SRA, IFA, SCRP aspects of the relocation appraisal process in a mock of the television show ‘The People’s Court.’ We had an all-star cast with Ellen Borofsky, Jim Gargano, Bob Headrick, Rob Johnson, Marie Robbins-Marine, Janet Schaeffer, and Jill Silvas. The room was packed—standing room only, and people still talk about the session years later. The most enjoyable sessions are those that break the mold of a basic panel discussion, are creative and fun, yet still offer educational value. “The Worldwide ERC® staff has a brilliant ability to bring out the best in the member who volunteers his/her time and expertise. When I am in the DC area, I enjoy stopping by Worldwide ERC® headquarters and visiting with them even if it is for a few minutes. When we see staff at conferences they are working so hard behind the scenes making sure that everything runs smoothly; the staff is a dynamic group of men and women and I highly recommend taking a few minutes to get to know these genuinely warm and friendly people. I treasure my friendships with all of you—and you know who you are! “For me, the past 15 years have flown by—many enjoyable, happy, and memorable times. Volunteering is truly rewarding, reminds me of an old adage: ‘Life is like an echo—what you send out—you get back and what you give—you get.’ My involvement has opened so many doors both professionally and personally. I thank those who have paved the way—yesterday’s leaders in our industry—my mentors! I encourage tomorrow’s leaders to join the ‘family’ and get involved, share your knowledge and ideas, and reap the rewards!” —Chip Wagner, SRA, IFA, SCRP MOBILITY/MAY 2011 29
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Worldwide ERC® President’s Award
IN RECOGNITION OF THEIR EXCEPTIONAL LEADERSHIP
and most noteworthy contributions to the appraisal profession and the relocation business community. Presented with special thanks and appreciation for ther distinguished service as co-chairman of the 2009-2010 Appraisal Taskforce, their role in the development of the Worldwide ERC® Summary Appraisal Report, and as co-author of The Relocation Appraisal Guide. Jeffrey M. Barta, SCRP Jeff Barta Valuations, Inc. Waukesha, WI U.S.A. Jay K. Delich, SCRP, SRA, IFA Arizona Appraisal Team LLC Scottsdale, AZ U.S.A.
IN RECOGNITION OF HIS EXCEPTIONAL LEADERSHIP
and most noteworthy contributions to the appraisal profession and the relocation business community. Presented with special thanks and appreciation for his distinguished service on the 2009-2010 Appraisal Taskforce, his role in the development of the Worldwide ERC® Summary Appraisal Report, and as co-author of The Relocation Appraisal Guide. Arnold M. Schwartz, SCRP, SRA Arnold M. Schwartz & Associates, Inc. Atlanta, GA U.S.A.
IN RECOGNITION OF THEIR EXCEPTIONAL LEADERSHIP
and most noteworthy contributions to the appraisal profession and the relocation business community. Presented with special thanks and appreciation for their distinguished service on the 2009-2010 Appraisal Taskforce, and their role in the development of the Worldwide ERC® Summary Appraisal Report. Craig Gilbert, CRP, SRA Craig Gilbert Appraisals Huntington Beach, CA U.S.A. Alvin L. (Chip) Wagner, III, SCRP, SRA A. L. WAGNER APPRAISAL GROUP, INC. Naperville, IL U.S.A.
30 MOBILITY/MAY 2011
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Extending Your Reach, without Rolling the Dice Through the experience and leadership of Paragon Relocation, your global mobility objectives will be meticulously managed. With Paragon, you are partnering with a company that is ready to lead your company into the future with innovative solutions and service offerings. Don’t gamble with your relocation program, contact Paragon Relocation today and make the sure bet.
SM
Services Worldwide The Americas EMEA APAC t: +1.972.819.5100 t: +353.1.811.6630 t: +852.2907.5880 w: paragonrelocation.com e: info@paragonrelocation.com
Drinks Are On Us in Vegas! Enjoy Your Complimentary Paragon Water Bottle at the National Relocation Conference. PR201-011211-May11 Mobility
PR201-011211-May11 Mobility.indd 1
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Recognizing Excellence
Worldwide ERC® and MOBILITY look forward to announcing the winner of the 2010 Editorial Achievement Award during the awards luncheon at the 2011 National Relocation Conference in Las Vegas, NV. The nominees, in alphabetical order: • Amit Acco Kan-Tor & Acco (October) • Waqas Akkawi, CISM SIRVA (November) • Chris Ahearn Oakwood Worldwide (April) • Joe Anderson Champion Mortgage (January) • Amit Banker Ernst & Young LLP (April) • Nicole Barile, GMS DFA Intercultural Global Solutions (February) • David B. Barlow, Jr., SCRP, SGMS SIRVA Relocation (January, December) • Michele Bar-Pareg Bar-Pareg Group (June) • Débora Bigio PriceWaterhouseCoopers (July) • Yvonne Bosson, GMS Bosson Consulting (February) • Ron Box, SRA, CRP Box & Associates, Inc. (January) • Gaetane R. Brummett, CRP, GMS Prudential California/Mulhearn Realty (April) • Cullen Bunn Vandover (September) • Robert F. Burch, SCRP Alexander’s Mobility Services (October) • Michael S. Cadden, SGMS Living Abroad (May, November) • Sue Carey, SCRP, SGMS CENTURY 21 Kreuser & Seiler, Ltd. (May) • Laura May Carmack AIReS (May) • Jay Carmichael Gunster, Yoakley & Stewart (August) • Renee Carnes-Rook, CRP Cartus (May) • Sheila Castellanos, CRP JM Family Enterprises, Inc. (April) • Alex Chua, GMS Asian Tigers Mobility Ltd. (October) • Jana Coleman, SCRP, SGMS Leading Real Estate Companies of the World® (April) • Michelle Colona CIGNA International Expatriate Benefits (June) • Amanda Cook Corporate Housing Providers of America (April, September) • Michael Cook, SRA, MAI Michael S. Cook & Associates, Inc. (January) • John D’Ambrogio, CRP, Baird Warner (February) • Anne Dean, GMS Living Abroad, LLC (March, June, July, November) • Michael Deane, CRP All Points Relocation Services Inc. (January) • Matthew Dickerson, CRP SIRVA (May, November) • Margie Dillon, CRP, GMS, PHR Nationstar Mortgage (November) • Monique Disseldorp Executive Mobility Group (March) • Christi Dominguez Emigra USA, LLC (July) • Sean Dubberke RW3 LLC (May, October) • Deborah Dull, CRP, SGMS Crown Relocations (November) • Pamela Dunleavy, CRP Primacy Relocation LLC (February, May) • Shari Dunn CompAnalysis (August) • Gene Edgerton Cultural Awareness International (October) • Ilona Eichler Dutch Living Services BV (June) • Andrea Elliott Pro-Link GLOBAL (August) • Rachel Farris PetRelocation.com (March) • Lindsay Filby Cook Realty Inc. (May) • Charlie Flagg, SRA (February) • Greg Forgrave Move One Logistics (June) • Dean Foster DFA International Global Solutions (February, October) • Suzanne Garber International SOS (July) • Ed Gaydos, Ph.D. Selection Research International, Inc. (November) • Karen Gerba, CRP Bank of America Home Loans (October) • Angie Gilbreath, CRP, GMS Primacy Relocation (April) • Avrom Goldberg SIRVA Relocation (October) • Jim Goodrich, SRA, MAI Goodrich & Associates (January) • Adam Greenstein Kan-Tor & Acco (October) • Kari Hamilton ABODA, Inc. (October) • Ellen Harris, GMS Living Abroad, LLC (June) • Jennifer Harvey Crown Relocations (December) • Jill Heineck, CRP Focus Relocation, LLC (March, December) • Lauren Herring, CRP, SGMS IMPACT Group (October) • Sheida Hodge Hodge International Advisors (October) • Ronald Huiskamp, GMS Dwellworks, LLC (October) • Lorraine Jennings SIRVA Relocation (October) • Tsvi Kan-Tor Kan-Tor & Acco (October) • Wendy Kendall SARL Marengo (November) • Sophy King Pro-Link GLOBAL (August) • Darra Klein American Council on International Personnel (May) Tatyana Kovalchuk Ernst and Young LLP’s Human Capital practice (January) • Ben Kranc Emigra Canada, Ltd (May) • Neil B. Krupp, CMC TheMIGroup (March) • Anne-Claude Lambelet, SGMS ACL Consulting (September) • Joleen Lauffer, CRP, GMS AIRes (February, April) • Johannes 32 MOBILITY/MAY 2011
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Laxafoss Meridian Global Services (December) • Tacita Lewars, CHRP, GMS, GPHR Globaforce Incorporated (January) • Andrea Martins www.ExpatWomen.com (August) • Glen Maykish Europ Assistance USA (May) • Tim McCarney, GMS Weichert Relocation Resources, Inc. (January, October) • Stephen McGarry, SCRP WPP (July) • Virginia G. McMorrow Mercer (September) • Rashel Meiworm KPMG (May) • Luciani C. Melo, Esq. Gunster, Yoakley & Stewart (August) • Patrick Moore Hayden Moore Associates (May) • Joseph Morabito, SCRP Paragon Global Resources (December) • Jorge Morazzani PriceWaterhouseCoopers (July) • Bill Mulholland, CRP, GMS American Relocation Connections, LLC (July) • Nino Nelissen, SGMS Executive Mobility Group (March) • Siew Kiang Ng Singapore Economic Development (August) • Pamela J. O’Connor, SCRP Leading Real Estate Companies of the World® (May) • Paul O’Leary, CRP, GMS The Move Management Center (April) • Janet Olkowski, SCRP, SGMS Cornerstone Relocation Group (May, July) • Joseph Palumbo, SRA Weichert Relocation Resources (May) • Chris Pardo, GMS Plus Relocation Services, Inc. (October) • Amy Parrent, GMS, CCP, CBP Deloitte Tax LLP (June) • Liz Perelstein School Choice International (September) • Matthew T. Phillips Cohen & Grigsby (August) • Molly Phillips, ABR, SRS, EcoBroker®, Green RE/MAX on Track • Boris A. Populoh FIDI Global Alliance (June, December) • Mike Puckett, CRP Primacy Relocation (May) • Robert Quigley. M.D., D. Phil International SOS Assistance, Inc. (November) • Maureen Bridget Rabotin, GMS Effective Global Leadership (June) • Lisa Rambert ARIANNE Relocation (January) • Dr. Mostafa Reda GRC (November) • Eric Reed, CRP, GMS Berger/Allied (May, June, December) • Mariana R. Ribeiro, Esq. Gunster, Yoakley & Stewart (August) • Jo Rust, GMS Primacy Relocation, LLC (January) • Nancy Ruth Cultural Awareness International (October) • Michelle Sandlin, CRP John Daugherty, Realtors (October) • Michael Schell RW3 CultureWizard (March) • Stefanie Schreck, SCRP, SGMS American International Group, Inc. (February, May, August) • Peggy Scott, GRI, CRP, GMS Windermere Relocation and Referral Service (September) • Kathy Sharo Runzheimer International (September, October) • Adam Sherer, CCHP Marriott ExecuStay (April) • Margarita Golkun Silver Global Coach Center (October) • Charlene Solomon RW3 CultureWizard (March, October) • Roy Sooman, CRP, GMS NuCompass Mobility Services (March) • Cheryl Spielman Ernst and Young LLP (April) • Tricia Stewart, CRP, GMS Crown Relocations (January, April) • Ellie Sullivan, SCRP, SGMS Weichert Relocation Resources Inc. (October) • Scott Sullivan Brookfield Global Relocation Services, Inc. (October) • Beverly L W Sunn, GMS Asia Pacific Properties (March) • Eric Tate, CRP AIReS (April) • Galen Tinder Ricklin-Echikson Associates, Inc. (REA) (August) • Sarah L. Tobocman, Esq., GMS Gunster, Yoakley & Stewart (August) • Danielle Turner CIGNA International Expatriate Benefits (June) • Dave Underhill Underhill Training and Development (March) • Ken Vaughan CIGNA International Expatriate Benefits (January) • Analisa Villalaz de Lafitte LARM (July) • Susan Vittorio, CRP, PHR Ciba Corporation (February) • Alvin “Chip” Wagner III, SCRP, SRA A.L. Wagner Appraisal Group (May) • Doug Weed, SCRP, SGMS NSA Consultants (July) • Rebecca Weiner Consultant (March) • Betsy Welch, CRP, GMS Cornerstone Relocation Group (July) • Deborah Wilkes Lexicon Relocation (February) • Allie Williamson, CRP, GMS OneWorld Relocation Services (August) • Jeff Wills Deloitte Tax (January) • Walter M. Woolf, V.M.D. Air Animal Pet Movers (November) • Tom Wortham, CRP, GMS Primacy Relocation (June) • Julian Yates SIRVA (September) MOBILITY/MAY 2011 33
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mauck3_MOBILITY 4/6/11 4:24 PM Page 2
More and more often, the procurement function sits within the same tent as the mobility team in an organization, but their styles are still distinctive.
36 MOBILITY/MAY 2011
mauck3_MOBILITY 4/6/11 4:25 PM Page 3
Checking In On
Mobility Services Procurement BY FRANK MAUCK
I
n the 1924 play, “Beggar on Horseback,” by George S. Kaufman and Marc Connelly, Neil McRae, a young classical composer of humble means, gets engaged to Gladys Cady, the daughter of a wealthy industrialist, even though he is in love with another woman. A nightmare of his future life with
Gladys posits his future father-in-law offering him a substantial income if he will agree to abandon his interest in classical music. Asks McRae, “What business are we in?” The gentleman Cady replies, “Widgets. We’re in the widget business.” This, one of the earliest known uses of the word, came long before the efficient sourcing of an organization’s “widgets”—raw materials and services—was viewed as a strategic business initiative. MOBILITY/MAY 2011 37
mauck3_MOBILITY 4/6/11 4:51 PM Page 4
From Purchasing to Sourcing Back in 1983, Peter Kraljicâ&#x20AC;&#x2122;s September Harvard Business Review article began this way: â&#x20AC;&#x153;Purchasing must become supply management.â&#x20AC;? Kraljic goes on to say, â&#x20AC;&#x153;The stable way of business life many corporate purchasing departments enjoy has been increasingly imperiled. Threats of resource depletion and raw materials scarcity, political turbulence and government intervention in supply markets, intensified competition, and accelerating technological change have ended the day of no surprises.â&#x20AC;? Widely cited for its impact, the article marks a turning point when the corporate viewpoint of procurement shifted from being seen as a functional effort to a business strategy. For most of its history, the HR
function of a corporation was responsible for purchasing and managing HR-related services, including those related to workforce mobility. But by 2005, many companies had begun to separate the responsibility of purchasing services from the departments using them. At first there was clear stress in the relationship, with the HR function reporting difficulty working with a procurement function perceived to be unaware of the needs or value of the services employee mobility programs provided. By 2008, Worldwide ERCÂŽ members were reporting growing involvement by procurement/purchasing professionals in both the solicitation of mobility services and the ongoing monitoring of mobility partnerships, and data from that period showed
SELLING RELOCATION SERVICES IS COMPLICATED.
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nearly a 30 percent jump in procurementâ&#x20AC;&#x2122;s involvement in the purchase of mobility services over a three-year span. Worldwide ERCÂŽ research noted the increased involvement of procurement in the purchase of mobility services was most readily apparent in the acquisition process, the frequency of conducting formal bidding, and the interaction between HR and procurement during the purchase of mobility services. The shift in managing the sourcing of mobility services from HR to procurement, driven by the need to adhere to regulatory requirements and to benefit from the strengths of both functions, offered these key benefitsâ&#x20AC;&#x201D;less subjective evaluations, better pricing, and more measurable service level agreements. But as many procurement professionals are viewed as â&#x20AC;&#x153;generalistsâ&#x20AC;? who may not understand the nuances of workforce mobility services, it came with an overriding concern from the HR manager: too much cost focus might hinder the ability to improve, or at least preserve, the quality of services provided. But in a final analysis, the research noted that, â&#x20AC;&#x153;Although cost savings likely always will be part of the scorecard for procurementâ&#x20AC;Ś the focus is not based totally on cost savings for all organizations, but actually has a stronger focus on balancing cost and service.â&#x20AC;? These days, procurement functions in organizations take a significant place at the table and play a critical part in balancing cost and service, and fulfilling the business initiatives and global success of companies. And as companies work to mitigate increasing costs of mobility in a competitive global environment, they can use the mastery of their mobility team and look through the lens of procurement professionals to develop the strategy
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On the Web
Worldwide ERC® maintains a wealth of procurement-oriented materials at www.WorldwideERC.org For corporate members, a library of RFPs: www.WorldwideERC.org/Resources/PolicyProgramTools/Corporate/Pages/Sample-RFPs-US.aspx The Process Flow for Procuring and Maintaining Mobility Services: www.WorldwideERC.org/Resources/Research/Pages/process-flow-procuring-maintaining-mobility-servicesreport.aspx Successful Synergy: What HR and Procurement Have Learned from Each Other, and How It’s Making Relocation Better www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1108craven.aspx Procurement’s Involvement in Mobility Services Contracting: Results of a Worldwide ERC® Survey www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0908acker.aspx Guide for Managing the Mobile Workforce—Chapter 16 www.WorldwideERC.org/Resources/Research/Pages/guide-managing-mobile-workforce.aspx RFPs—The Good, Bad, and Ugly www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0108mcgarry.aspx Navigating the Process Flow for Procuring and Maintaining Mobility Services Part I: Preparing for Take-off—Pre-work, RFP Development, and RFP Launch www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1106mcgarry.aspx Part II: Charting the Course—Service Provider Evaluation and Selection www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1106acker.aspx Part III: Mind the Current—Contract Development and Account Transition www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1106mansfield.aspx Part IV: Staying Afloat—Ongoing Supply Chain Management www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1106clarke.aspx
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that works for this environment. “In the midst of a challenging real estate market,” says Jon Gilbertson, GMS, vice president, risk, global supply chain and procurement for SIRVA Relocation, Plymouth, MN, “It is more important than ever for corporations and relocation management companies to be aware of the whole supply chain from employer to individual; all the steps, hand-offs, and various communications throughout the process, within each relocation service and collectively across the program. “Ensuring the supply chain is continually streamlined by identifying and eliminating non-value steps within the process, and increasing the efficient delivery of all data and communication is key. In addition, being proactive is critical—having the ability to move from supply chain to the field seamlessly and deliver timely information at the opportune time ensures risk is mitigated and performance is maximized,” he said.
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The Selection Process “Expectations for suppliers need to be clear,” said Gilbertson of the selection process. “It’s important to begin the process with general qualifications and a wide selection of candidates and from there utilize specific qualification details to narrow down the selection. Within each mobility service—visa, immigration, crosscultural, home sale and so forth— there are specific components which must be addressed with Tier 1 and Tier 2 suppliers in order to meet the key service deliverables.”
Mobility Services as Commodities “One of the good things about the whole process, even though it’s a long and arduous process, is that it can actually strengthen the relationship between the provider and the corporate client,” said Stephen McGarry,
42 MOBILITY/MAY 2011
SCRP, director of global mobility for WPP, New York, NY. “One of the reasons why is that it can actually detail the risk management in itself. It indemnifies parties against each other, puts all contract terms in writing, making it much easier for everyone involved (corporate client, procurement, and the supplier) to know who is doing what, and when they’re
going to do it. Sometimes the whole ‘working on a handshake’ thing just can’t work anymore.” Jack Clarke, SCRP, FMC Technologies, Chicago, IL, agrees: “Industry has gotten more comfortable with procurement’s involvement in all aspects of sourcing materials and services for their companies. Additionally, staff departments like HR have come to rely on procurement to provide intelligent and objective direction when selecting service providers. It’s clearly given the service side of the business more discipline and a more analytical way of presenting their services. Long-term, there may be less turnover among a service firm’s client base. Relationship management is still important… but not like it was at one time.” HR still has a responsibility to educate the procurement function about
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the industry in which it is purchasing services, and is making progress. Jack Craven, SCRP, SGMS, Weichert Relocation Resources Inc., Downers Grove, IL, notes that, “Over time, procurement has done a better job with relocation services, which I believe is due to HR educating them more about this specific category. But there still must be more understanding of the difference between direct costs and service fees, revenue recognition that all relocation suppliers are not the same and have different capabilities, and an awareness of which companies have services which best match a corporation’s needs.” Sometimes the actions of supply chain managers seeking efficiency in processes becomes perceived as commoditization. “If you look across
44 MOBILITY/MAY 2011
most services, evaluating the evolution of procurement over time, they have become more commoditized,” said Gilbertson. “However, this doesn’t ring true for relocation services, due to the unique nature of every employee’s needs. In working to increase efficiencies within this service, procurement professionals strive to identify components and processes which can be standardized without sacrificing quality.”
Service Levels and Performance Indicators At the end of the day, one of the overarching goals of HR and procurement cooperation is to be able to quantify, measure, and determine ROI, which is a challenge in light of the nature of the services in question.
One thing is certain: continuous communication is paramount. “With KPIs [key performance indicators], the number one thing is that you have to be able to meet with the supplier on a regular basis to actually go over what’s been met and what hasn’t been met,” said McGarry. “I know that there are KPIs put into agreements, and if you don’t have an annual, bi-annual or even quarterly update with your vendor, how can you sit down and talk to somebody about what’s working and what isn’t working? So actually the communication between the two organizations has got to be there on a continual basis to make sure the KPIs are being met and the SLAs [service level agreements] are being adhered to.” Gilbertson suggests thinking about
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managing supplier relationships the same way in which a corporation manages its employees. With a new hire, the corporation invests time and resources to ensure that the employee is performing at the desired level through performance objectives and
other KPIs. In the same way, suppliers should feel the relationship is worthwhile and that they are growing as an organization by partnering with the company. â&#x20AC;&#x153;Going through the RFP process and selecting suppliers takes time and resources,â&#x20AC;? Gil-
Glossary of Terms Strategic sourcing. An institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it often is considered one component of supply chain management. Strategic sourcing techniques also are applied to non-traditional areas such as services or capital. Co-sourcing. A business practice where a service is performed by staff from inside an organization and also by an external service provider. Second-tier sourcing. A procurement policy used by many Fortune 500 corporations. It is a practice of rewarding those suppliers that achieve or attempt to achieve the minorityowned business (MBE) spending goals of their customer. The program was started by Chrysler Corporation in 1993, and now extends throughout the Fortune 500. In 2005, Toyota set a goal of 10 percent for their suppliers and holds an annual matchmaking event to help their suppliers achieve those goals. Procurement. The acquisition of goods and/or services. It is favorable that the goods/services are appropriate and that they are procured at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality and quantity, time, and location. Corporations and public bodies often define processes
intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion. Economies of scale. In microeconomics, refers to the cost advantages that a business obtains due to expansion. There are factors that cause a producerâ&#x20AC;&#x2122;s average cost per unit to fall as the scale of output is increased. â&#x20AC;&#x153;Economies of scaleâ&#x20AC;? is a long-run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase. Request for proposal (RFP). The RFP is a formal invitation issued by a business or government agency requesting interested service providers to submit written proposals meeting a particular set of requirements. Their format and length vary considerably, but all require an interested service provider to respond to specific questions. Service providers are most often required to respond with a description of the techniques they would employ to meet the requirements, a plan of work, and a detailed budget for the project, along with supporting information. Service level agreements (SLAs). SLAs are mutually agreed on contractual performance metrics that typically involve penalties or bonuses based on performance.
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bertson said. “But if you do the appropriate due diligence, you will establish a foundation for mutual growth and continuous improvement with your suppliers. This leads to increased productivity each year, delivering additional value for customers without increasing the total cost of ownership.”
A Continued Evolution With regard to RFPs and RFIs, according to McGarry, concerns have been growing around data security and protecting an employee’s data. Although an industry practice for some time now, it is only recently that a greater focus has developed. “As we get more and more into a technology-based world, it’s something that’s becoming much more important to everybody,” he said. There is another chapter opening in the procurement/mobility scenario: green issues are of growing concern to most companies, and so is the focus on whether suppliers and corporations share similar sustainability-focused cultures and business practices. But that, too, likely will be addressed by the way the growing partnership between procurement and mobility professionals has evolved. Together, mobility and procurement professionals are committed to deliver cost savings, improve working capital, and preserve supplier capability, and do so in a way that supports a competitive edge over others in their respective industries. Says McGarry,“It still comes down to the company that you’re going to hire being able to work with you and your employees.” Frank Mauck is managing editor of MOBILITY, magazine of Worldwide ERC®, Arlington, VA. He can be reached at +1 703 842 3432 or e-mail fmauck@worldwideerc.org. 46 MOBILITY/MAY 2011
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Managing Relocation Service Delivery Risk—Audit and Forget it BY JILL HEINECK, CRP, AND SYLKIA NEGRON, CRP, SGMS HR and mobility professionals alike are actively evaluating their supply chains to ensure value for the corporate mobility spend, not only to cut costs but increase standardization and efficiency. Heineck and Negron offer an outline for managing relocation service delivery risk. Otherwise, they write, your practices could be costing your company in both dollars and ‘sense.’
I
t is on the minds of most senior HR and relocation managers: how are we doing? How does our relocation program stack up? Are there gaps or inefficiencies we need to address? Because of the economic climate we are in, audits are trending. An increasing number of companies are seeking ways to not only to cut costs within their relocation programs, but also to get more for their money from their supply chains that support their global transferees. So what is the first step? Whether you choose to conduct the evaluation strictly from within, or use an outside consultant to help with the process, the first step in any case, is an executivelevel review of the current situation with the organization’s stakeholders, be they HR, finance, accounts payable, recruiting, or another party. Are the transferees’ needs being met? Are the business
units’ needs being met? Are the service providers staying within budget? How are exceptions being managed? Are they being tracked? Concrete answers to these initial questions are an excellent start. Critical to the success of any audit or evaluation is that all departments and business unit heads are aware of the common goal and are all on board. It seems like common sense, right? Believe it or not, many companies, where the departments are affected by the relocation process, do not have open communication among between functions, making it very difficult to conduct an audit, much less provide practical results. To get the most bang for the buck, and for the time invested, senior management must MOBILITY/MAY 2011 49
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Approaching the Audit Process A suggested approach to the audit process might include: • review of agreements and service delivery; • review of contracts to validate compliance and transparency; • review, research performance metrics, forecasting and trends; and • perform employee surveys. A suggested framework from which to work from might include: • How are clarifications to the agreements communicated? • Are the required metrics or milestones known by all relevant team members? • What are the escalation protocols for day-to-day disagreements and for possible breaches of contract? • Are company objectives maximized? • What is the process for renewing, expanding, or terminating? What information is available and considered? • Is the company active or passive in enforcing contract terms and conditions? • What criteria exist to help determine when a relationship should be terminated? • Is there sufficient visibility and transparency into these processes? rally the troops before, during, and after the audit and evaluation process by defining the goals of the audit, as well as set expectations for each department’s cooperation. Often, most companies have not taken a hard look at the relocation supply chain and process in a long time, and the internal lines of responsibility for managing suppliers have blurred. There may have been a re-organization in recent years, so relocation just went about its business functioning like it always has. One day, someone takes notice of a “red flag” or two, and so begins the audit process. Not all suppliers have systems in place to support this critical need for global companies. Here is where additional vetting out is resourceful, and should be an expected part of due diligence.
The Supplier Relationship Let us take a topical look at the supplier relationship. Part of your audit includes evaluating if there is a 50 MOBILITY/MAY 2011
true partnership among your suppliers. Is there an open line of communication? If you do not see a supplier performing per the agreement, can you make a call and address it immediately? And then do you see immediate results? What is the existing control environment at the company, and at the supplier’s company? What is management’s level of involvement and scrutiny of vendor performance? Defined expectations, roles, and responsibilities should be integral parts of your service agreement. • Be sure the supplier makes a point to have a thorough understanding of the company’s business model. • Know that the company trusts that the supplier will educate the client when it comes to their services and industry trends. Will the supplier commit to that? • Make sure the suppliers have a back-up plan in the event something goes wrong. Can the supplier describe what Plan B looks like?
• Insist on open, frequent, and candid communication between client and the supplier. • Ensure that pricing and service offerings are easily understood. • Clarify what the “out of scope” services are and what that means in terms of cost to the company. It is difficult to do everything well. That is why it is crucial to the relocation process that the vendors in the supply chain are true experts in their area. What (still) distinguishes them from their competitors? What are their core competencies, and are they staying true to them? Can you actually list them out loud?
Parallels of Performance and Cost There are several parallels between supplier performance and its associated costs. One is managing varying risks, depending on the types of services provided, the type of delivery model used, and the extent of outsourcing each vendor is employing. Are they relying too heavily on other providers to perform what was sold as their specialty? How much of the work is done remotely or onsite? Another is invoice accuracy and compliance. Who within the organization is monitoring this aspect? Some companies have two- or threeperson teams who realistically cannot keep up with all that goes into performing their daily duties while keeping a sharp eye on relocation expenses and making sure all vendors are in compliance, all of the time. Senior relocation managers tell us that busy schedules increase the challenge of monitoring suppliers. Another parallel drawn between supplier performance and cost savings is transferee satisfaction. If your organization values transferee satisfaction, surveying recent transferees
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through an external consultant will garner candid responses and provide an important metric for your auditing process. This is in addition to other surveys they are likely to take from the relocation management company to the household good movers to the real estate agents. You need to know if they are going above and beyond. Are they going the extra mile to be sure your employee has a satisfactory experience? After all, if you find that your suppliers are not providing a pleasant relocation experience, they could be costing your company in both dollars and sense.
Transparency in Auditing and Evaluation Transparency seems to be the buzz word lately. Clients that I am work-
ing with want to have more of this with both the transferees and the relocation supply chain. So how does a company achieve transparency? And how do you know when you have achieved it? Transparency is defined differently depending on the organization. For some, transparency within the transferee population is having clear, concise, tiered policies with very few exceptions. With others, transparency among suppliers is the evidence of collaboration and a free and nonthreatening exchange of information. For one company, mistakes are expected; repeated mistakes are not. It is more important how a supplier recovers from an incident than the mistake itself. This is where the rubber meets the road when it comes to transparency. It also is the fragile
moment where a strong partnership can unnecessarily dissolve. One mistake many companies make is rushing through the audit and evaluation process. It takes time to evaluate a dusty process and evaluate a big book of vendors. It is timeconsuming to review months of invoices, expenses, and exceptions reports. However, to achieve true cost savings and improved supplier performance, this is a process that cannot be rushed. There is more involved than just looking at the supplier list and saying, “Hmm, maybe we need to cut them and look for a new one.” There must be a management discussion and there must be a management-supplier discussion.
Audit and Forget It In today’s corporate environment, companies require key internal controls and systems to manage and monitor the process. To meet management’s goals, you are most likely going to need to help. It is okay to ask for help. You may very well have just the people you need within your organization. But more than likely, with all the responsibilities departments have on their plates these days; you will need to seek out subject matter experts. The key is to take the audit and evaluation process as seriously as any other responsibility, and see this process through to the end. Trust me; your company will thank you for it. Just audit and forget it! Jill Heineck, CRP, is the founder and chief [Relocation] officer of Focus Relocation LLC, Atlanta, GA. She can be reached at +1 877 550 7356 or e-mail jill@focusrelocation.com. Sylkia Negron, CRP, SGMS, is the global mobility specialist for FMC Technologies Incorporated, Chicago, IL. She can be reached at+1 312 861 6728 or e-mail Sylkia.negron@fmcti.com.
52 MOBILITY/MAY 2011
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Mobility Services Partnership BY TRACEY GATLIN, CRP ou have to know you can win. You have to think you can win. You have to feel you can win.” These are the words of boxing champion Sugar Ray Leonard, reflecting on what it took to achieve victory in one of his championship bouts. A similar philosophy can be applied to the employee mobility industry. When doing so, it is critical to take into account that Tier 2 suppliers have a direct effect on whether the mobility program achieves that winning “knock-out.” Working with Tier 2 suppliers that go above and beyond company expectations can be invaluable to the success of the mobility program. How can companies 54 MOBILITY/MAY 2011
achieve this? By constructing a well-thought-out partnership infrastructure built on best practices for continuous process improvement and cost reduction.
Round 1—Don’t Go Down for the Count: Determining Partnership Ownership Up-front For a company that historically has worked directly with Tier 2 suppliers such as corporate housing providers, destination service companies, or real estate brokerages, moving to an outsourced model where a relocation management company (RMC) sources and manages these suppliers may create unexpected confusion. To eliminate this potential point of confusion, companies and their RMCs need
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Regardless of supplier size or location, it is time to lace up the gloves to ensure a mobility programâ&#x20AC;&#x2122;s long-term success and get serious about implementing exceptional supply-chain management tactics. Gatlin outlines several practices for rolling with the punches and offers methods to better monitor supplier performance and ensure they are in your corner. MOBILITY/MAY 2011 55
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to discuss the ownership of supplier relationships up-front. In doing so, critical process points are addressed and managed at the beginning. For example, the company may find that its RMC already has partnerships with some of the same Tier 2 suppliers, but not with others. Depending on the relocation program, the company may not be able to direct the usage of certain suppliers. In addition, the company can communicate to its RMC both its desired level of supplier ownership and how it historically has sourced suppliers. For example, Company A has followed a strategic-sourcing philosophy where suppliers were chosen for the value and knowledge base they provided, but not necessarily at
56 MOBILITY/MAY 2011
the lowest cost. Company A also prefers to have the RMC completely own the selection and management of Tier 2 suppliers. Conversely, Company B always has selected suppliers based on cost alone, choosing the lowest bidder, and it wants to be involved heavily in managing the Tier 2 suppliers, including owning some of the relationships. This type of discussion between the two parties on the partnership infrastructure before beginning their RMC partnership will help to ensure that their visions of supplier management are aligned. The company then will know—up-front—what is plausible and what is not, helping to ensure that potential long-term issues are avoided.
Round 2—Don’t Throw in the Towel: Using Supplier Management Best Practices to Go the Distance Whether the company is directly managing Tier 2 suppliers or outsourcing to a RMC, a basic supplier management process should be followed and should be comprised of the following steps: sourcing, contract and implementation, performance management, and reporting. Following these four steps helps to ensure the managing party can handle the rigors of supplier management in today’s marketplace. “Select hard; manage easy.” This saying could be the mantra of an effective sourcing process. When a company selects the right suppliers for the right reasons, the remaining steps in the supplier management process are more likely to be successful. The COURT sourcing guide, a helpful acronym tool, can assist companies in creating a sustainable and effective sourcing process. COURT stands for consistent, objective, universal, resource-driven, and transparent. • To be consistent, company documents, processes, and forms used in the sourcing process must be similar, regardless of supplier type or scope of work. • To be objective, a company must judge prospective suppliers equally, and all parties must be given equal opportunity. • Instilling a universal sourcing process across supplier types and geographies can be difficult, especially when companies manage suppliers globally, but it is critical. A successful universal process must reflect all the nuances of working with the local cultures and customs of the individual areas being serviced. The process must remain con-
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• Finally, enabling a transparent sourcing process will help ensure the company’s process is available, simple and user-friendly so that it can be shared easily with any internal or external party. Make contracts meaningful. Sure, having a supplier contract is a given, but the content of that contract is what is essential. A clear scope of work and billing terms is important, but more focus should be put on valuable, trackable key performance indicators (KPIs) and associated goals. For companies that employ RMCs, having KPIs built into the supplier’s contract that are meaningful to both parties is essential. This helps ensure the KPIs reflect both the company’s and the RMC’s interests. During supplier implementation, it is critical to revisit KPIs to ensure the supplier understands the impact of not performing to expectations. Consequential performance management. Performance management means many things—measuring inputs against desired outputs, tracking results against KPIs, and using scorecards as supplier evaluation tools, to name a few. Regardless of the methods used, ensuring suppliers understand how they will be measured and the repercussions of low performance are basic to performance management. But what companies do with their performance results varies greatly, and this can have either a minimal or significant effect. Depending on the approach, a company successfully can improve the performance of one supplier—or the overall performance of every supplier across the board. For example, when a company analyzes the performance data of suppliers, it might find trends that indicate
2.
sistent on a high level, while allowing for those differences on a local level. • To achieve a resource-driven selection process, the company must collaborate with the end users
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Our secret: s Reducing touch points for your employees and controlling quality by delivering services in-house s Providing flexible service and delivery options focused on the customer while leveraging the local knowledge, culture, and presence in over 55 countries
The world may have changed, but service delivery should not have to. Successful service delivery is a natural consequence of consistently applying the basic fundamentals.
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certain actions need to be taken. Let us analyze the following scenario: a company finds that the percentage of household goods claims has risen 20 points every third quarter for the past three years. This likely indicates that the company should uncover the root cause of the occurrence and then implement an action plan to correct this defect. The company may discover this is simply an anomaly associated with a higher volume of household goods moves in the summer, noting that the claims ratio equalizes this spike. But it also could discover that this has been caused by household goods providers hiring underqualified packers in the summer. The resulting action could be that the company requires its household goods providers to hire packers with
60 MOBILITY/MAY 2011
qualifications “A, B, and C.” The company also may decide to include additional consequential language into the providers’ contracts, penalizing them if claims reach a certain level in any given period. Prevent-correct-prevent reoccurrence. After analyzing results, the next step of an effective performance management plan is to have a corrective action process. This begins with building the supplier management program on the philosophy of prevention. A company can work to prevent underperformance with a comprehensive implementation process and ongoing training for suppliers. When the need to correct underperformance arises, companies have a variety of corrective options to choose from, such as:
3.
• Placing suppliers on “probation,” whereby they are temporarily put on “hold” from receiving business. • Implementing a corrective action plan that requires suppliers to document the actions they will take to identify and correct issues associated with underperformance. • Implement a “no tolerance” policy, which dismisses underperforming suppliers. Whatever the approach, the company needs to clearly outline the corrective action process so suppliers are aware of the risks associated with underperformance. Other tactics to prevent reoccurrence include conducting a rootcause analysis, creating process improvements, and analyzing the
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company’s expectations. The company may discover that the expectations and process are not aligned, and will not produce the results needed. Reporting with a purpose. What should reporting be used for? Who evaluates the reports and for what reasons? How can one use report data to calculate what is a need versus a want? The reporting step of the supplier management process will address these questions and more. Providing the data is essential to demonstrating that the company has indeed implemented appropriate supplier management and a transparent, sustainable supplier process. Keep in mind, however, that data can be overwhelming. Data exists to tell a story, illustrating the highlights and flaws of any pro-
4.
62 MOBILITY/MAY 2011
cess; but data also can muddy the waters if left to its own interpretation. Using defined reports to summarize data is critical to prioritizing action. Although detail behind the summary should exist, it should serve solely as a reference point and not as the reporting tool itself.
The Knock-out Excellence in Supplier Management After the basics are established, excellence in supplier management is possible. With a well-thought-out management process that is continuously evaluated and improved, plus a clear understanding of supplier ownership, a company can ensure lasting quality and increased value throughout its supply chain. With the ability to stretch outside the basics, it can
build a more robust supplier management program that includes initiatives such as motivation and recognition programs, ongoing processimprovement procedures, strategicsupplier sourcing that supports a total-cost-of-management approach, and green initiatives. Incorporated into the supplier management program, these initiatives successfully can drive significant productivity and growth within a company. In the end, each company will have its own measurement of “excellence,” but having an effective supplier management process is a “knock-out” across the board. Tracey Gatlin, CRP, is manager, preferred broker network, for SIRVA, Minneapolis, MN. She can be reached at +1 763 525 3642 or e-mail tracey.gatlin@sirva.com.
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Adapt and Adjust—
Managing Change in Employee Mobility BY MARGIE DILLON, CRP, GMS, PHR, AND KATE KELLEY-DILTS, SCERP, SCRP, SGMS Corporate change has been examined in keynote speeches, contemporary business books, and learning seminars. Dillon and Kelley-Dilts discovered there is an inextinguishable thirst for the knowledge of managing change as organizations continue to develop effective team leaders, re-engineer their workforce and services, and develop new and improved process maps.
O
rganizations must continually adapt, modify, adjust, and differentiate to remain competitive. No line of business is exempt. It is our goal to determine how corporate change has touched employee mobility and the courses of action that may be useful to a larger audience, sharing these positive solutions. We requested input from HR and mobility experts who have worked in environments of volatile change to learn how they have succeeded. We wanted to learn why change propels some organizations while hindering others, as well as how some companies manage change to stay ahead of the competition and use change to contribute to their success. Through surveys and interviews with senior-level managers from varied business sectors, including insurance and finance, technology, pharmaceuticals, food and beverage, and energy, we have documented their 64 MOBILITY/MAY 2011
expert input to share insight into the following questions: What successful communication processes were used to manage corporate change? How did the corporate change affect global mobility programs, HR managers, and their provider partners? What were the primary factors in your success? How did you accomplish the melding of multiple directives, goals, and programs? It is important to note that the majority of participants interviewed had experienced an acquisition— either acquiring another company or being acquired by a competitor. Some of the companies contacted had succeeded through multiple acquisitions and melding of corporate cultures. While some corporate philosophies were similar, others embodied “stark differences… where we are still working through it, trying to merge met-
1. 2. 3.
rics.” As one manager described, “our change has been evolutionary, not revolutionary.” The companies with a longer history and stronger culture reported the potential for more challenges when combining their company’s vision and future goals with another organization. However, deep-seated philosophies and history can be melded, as reported by one manager who said, “we proactively coordinated the joint venture of two rival companies with mutual respect and planned for shared new goals for cost-effectiveness.” How did the vision/mission of the company affect the objectives of the HR group? For companies with similar cultures, there was assistance to help each other get up to speed while integrating the combined HR philosophies. These companies retained their joint focus as they restated their vision and mission
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MOBILITY/MAY 2011 65
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Managing Changeâ&#x20AC;&#x201D;Lessons Learned Observations to assist us when faced with managing change in the months and years ahead: â&#x20AC;˘ Know your personal and corporate core values and what is truly important in a time of change. â&#x20AC;˘ Be open to learningâ&#x20AC;&#x201D;embrace change, recognizing that a different global corporate process may offer new opportunities. â&#x20AC;˘ In acquisitions, be respectful and recognize that many talented people can accomplish more than a single person or entity. It is a great time to listen, broaden horizons, and gain an understanding that may be different from your own. â&#x20AC;˘ Implement open and honest communication as quickly as possible. This action facilitates positive employee morale, an open exchange of ideas, and a shared vision. â&#x20AC;˘ Develop and use an internal and external network of professional contacts. All parties gain when comparing policies and brainstorming on problem-solving. Should it become necessary, this exercise also will facilitate a job search for yourself or others affected by corporate change. â&#x20AC;˘ Be active in organizations and peer groups; through an exchange of ideas and concepts, you will learn new ideas, validate theories, and stay connected. â&#x20AC;˘ Use the time of change to re-evaluate all processes and programs; and to determine if there are efficiencies to gain from technology tools or a streamlined approach. â&#x20AC;˘ Do not underestimate the challenges and complexities of a merger or acquisition. Understand the scope of change for both entities and the employees. â&#x20AC;˘ Treat all people with dignity and respect.
statements. Strong brand names required equally strong joint goals while integrating systems and tools to assist with business and career objectives. Some found complimentary programs and were able to forge
consistency in the new venture; however, others found dramatic differences as reflected in the statement, â&#x20AC;&#x153;...(we) found very different approachesâ&#x20AC;Ś we were a hands-off culture and they were very hands-on
and interactiveâ&#x20AC;&#x201D;even with their mobility program and vendors.â&#x20AC;? Another company that found a new challenge going from a geographically centralized operation to a decentralized model shared, â&#x20AC;&#x153;teach-
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ing the human resource professionals how to manage staff remotely was one of the most challenging aspects impacting the HR group.” How were the new corporate strategy and goals communicated? Were there specific plans that worked well? While the expected technology tools such as webcasts, weekly e-mail updates, video conferencing, and televised meetings were prevalent communication tools to share news and direction, there was a constant focus on open communication throughout the change process. Most respondents shared the messages of change from the top—CEO level and above—to all employees. These releases were conducted through company-wide webcasts, e-mails, and intra-company publications or newsletters; however, other companies carried the communication of change further using video conferencing and televised town hall meetings to provide news and interaction opportunities. Other technology tools such as desktop broadcasts and
68 MOBILITY/MAY 2011
intranet postings kept all employees apprised. These communications, along with corporate banners displayed in office buildings, focused on the combined goals and “shared visions and values.” One-on-one employee/manager meetings promoted personal questions and answers. In the end, the focus on open communication allowed the successfully merged organizations to inform employees of the company’s goals and direction and receive information critical to ensure understanding and alignment of shared visions and goals going forward.
In one instance, to support a number of employees moving to a new headquarters location, a company developed a “marketing team” to coordinate employee meetings at the new location. As they learned about the new city and traffic patterns, and toured area homes as well as the new office, employees in transition thought about how the potential move would affect them, personally and professionally. The excitement created by the employee meetings generated an environment to move the joint venture forward. In addition, through follow-up intranet pictures and updates, the company kept the momentum going to ensure the eventual success of the moves. In all instances, communication plans provided a vehicle during the time of change; the results allowing employees “to be in the know.” Recognizing that a lack of information can demotivate all levels of employees, extensive updates are required to develop a continued positive momentum. Communication
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back, and appreciate another perspective.
extending well beyond initial announcements and becoming part of an ongoing strategy help to ensure an embracing of change. What priority did â&#x20AC;&#x153;cost savingsâ&#x20AC;? have for the new corporate culture? How did the company change affect your mobility policy benefits? Fifty percent of all respondents noted that in the new environment there was increased focus on combined cost savings and policy restructuring. While some participants experienced minimal mobility policy changes, several companies underwent significant change when melding two different approaches. Benefit cost-saving opportunities were seized and processes streamlined for efficiency. For example, in anticipation of the potential outplacement of the management staff at the acquired companyâ&#x20AC;&#x2122;s headquarters, one company benchmarked their current policy to revise the offering to these managers with the hope they would relocate to
the new headquarters location. A welcome kit was shared at onsite meetings to encourage their acceptance. Another corporation developed a new HR position to continue to develop the combined organization with a focus on â&#x20AC;&#x153;retain and retrain.â&#x20AC;? Ongoing opportunities were examined to learn if modifications could be incorporated to better serve the new organization. Open communication was encouraged to promote â&#x20AC;&#x153;talking about what the future looks like.â&#x20AC;? This followed a new company objective to encourage different opinions, take a step
From an operational standpoint, what impact did your organizational change have on the company and your position? While in many instances the initial intent was to absorb the acquired company headquarters, some corporations found a decentralized approach and retention of multiple corporate facilities made for a stronger presence in a new geographic area of operation. When necessary, realignment of the retained manpower also provided an opportunity to consider the stronger performer when duplicate positions arose. Relocations and assignments temporarily spiked to accommodate this realignment of manpower. For those whose jobs were redundant, most companies offered internal opportunities and/or support for job searches outside of the new company. Severance programs and outplacement assistance also were offered. While successful overall, one respon-
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dent reported â&#x20AC;&#x153;survivor guilt syndromeâ&#x20AC;? by some remaining workers. The added responsibility for policy consolidation and relocation increased the workload for the majority of participantsâ&#x20AC;&#x201D;only one changed positions within the company. With the environment of increased cost-sensitivity, these savvy managers also used this opportunity to re-evaluate their internal processes for efficiencies and capitalize on the ability to â&#x20AC;&#x153;work smarter.â&#x20AC;? Those not already embracing technology tools, for example, found this time of change an excellent opportunity to incorporate systems and processes to assist in the new management structure. With speed and efficiency as a new corporate directive, technology increased service levels to internal managers, transferee/assignees, and service partners through online portals and real-time reporting. What changes were necessary in service delivery or provider under the new organization? With the same, or fewer, relocation staff in place, challenges cen-
tered on legacy programs and the melding of many policy components to meet the new companyâ&#x20AC;&#x2122;s vision and strategies. Most companies continued offering existing programs while developing a new policy approach with renewed cost controls. Though more leniencies to tolerate exceptions during the transition were reported, new policies emerged with additional cost savings, streamlined processes, and tracking tools. Green initiatives also were incorporated into the new program and process. With most corporate change management, service partners were impacted; in a few cases, relationships were replaced. For those who retained their partners, all reported a close alignment to accomplish goals of increased technology tools, benchmarking policy components prior to modifications, and delivery of onsite meetings. U.S.-based companies acquired by foreign entities found additional challenges because of time differences for communication, language
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barriers, and varying corporate priorities. One example cited was the necessity to â&#x20AC;&#x153;raise the barâ&#x20AC;? to manage new business needs, e.g., split payrolls for assignees. To manage the policy and provider changes internally, helpful tools included process maps, punch lists with assigned tasks and timelines, as well as matrices and charts to assist in communication.
Overall Lessons Learned Respondents who participated in our study proved they can manage change, learned lessons to apply in the future, and adjusted their focus to reach goals for themselves and their respective companies. Margie Dillon, CRP, GMS, PHR, is vice president, client operations manager, Bank of America Home Loans, Plano, TX, and a member of the MOBILITY Editorial Advisory Committee. She can be reached at +1 972 378 3025 or e-mail marjorie.dillon@bankofamerica.com. Kate Kelley-Dilts, SCERP, SCRP, SGMS, is vice president, client developmentâ&#x20AC;&#x201D;western region, for NEI Global Relocation, Omaha, NE. She can be reached at +1 402 397 8486 or e-mail kkelley-dilts@neirelo.com.
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72 MOBILITY/MAY 2011
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Managing Relocation in a Changing Corporate Environment On-demand Information Required BY JOSEPH MORABITO, SCRP Welcome to the ‘New Normal,’ writes Morabito, where many in the employee mobility industry— whether as the result of a lagging economy or corporate downsizing—have grown accustomed to working with HR generalists and must adapt to the demand to provide new approaches in employee mobility training and education.
W
ith the advent of outsourcing the relocation function and the downsizing that has occurred in Corporate America during the past decade, the full-time, experienced, corporate relocation manager has, in many cases, become an endangered species. Instead, relocation companies today are, more often than not, dealing with HR generalists wearing many hats and sometimes doing two or more jobs. As such, when normal day-to-day issues arise that are common in any relocation program requiring problem resolution, the interaction between the relocation company and the internal HR generalist can be less than satisfactory—sometimes it even could be characterized as strained. This is because old-style relationships that were predicated on relocation experience often are not there today. In other words, we are speaking very different languages. 74 MOBILITY/MAY 2011
This is the case because in outsourcing the mobility function, there may be an assumption that it actually will require little or no interaction on a day-to-day basis; yet perhaps 10 percent of moves involve exceptions to policy and/or problem resolution that requires both experience and intense interaction, often perceived as an intrusion into an already busy day for the HR generalist. Corporate contacts today have so many other responsibilities that they just do not have the time to attend relocation industry conferences, or even webinars, to gain relocationspecific knowledge. This makes problem-solving difficult because the HR generalist, who may have little relocation experience, just wants to focus on other responsibilities that may have a lower “noise level” and a bit less emotional visibility. Face it: some of the issues we encounter in relocation are not fun, particularly if the HR generalist must
interface with senior management for a bigger dollar exception that was unanticipated.
The Current Real Estate Market The HR generalist may be illprepared to address the current real estate market, where we are not only facing old-style loss on the sale of the home, but short sales in which transferring employees are upside-down, owing more on the home than the current market value. That used to happen once in a while in the “Old Normal.” In the “New Normal,” it is a scenario that is occurring increasingly and will continue to happen for the next several years. Yet, many corporations are still implementing relocation plans that were designed to respond to the Old Normal and really do not work well in the New Normal. The real test is the incidence of exceptions to policy, which have become more frequent and more
painful from a financial perspective, resulting in an even higher “noise level” than was common in the past. This is the reason that pre-decision move consulting should be implemented for all homeowners, in particular, to determine their home value and other factors that could negatively affect move cost so that there are no costly surprises after the move has begun. Without pre-decision move consulting, when there are problems or costly surprises, there is a tendency for some client contacts to conclude that service levels have dipped when, in fact, major program revision may be needed to address the New Normal marketplace. Experienced corporate relocation managers who understand how all the pieces of the puzzle fit together to comprise a well-managed relocation program are in a better position to recognize the need for changes in program design. In addition, flexible benefit relocation plans that often do not cover the cost of a move can be problematic, particularly if there are disconnects in policy elements (i.e., insufficient temporary living reimbursements to accommodate a home marketing assistance program without the potential for guaranteed buy out after a period of time).
Missing the Big Picture Corporate HR generalists, who tend to be more transaction-oriented, often see the noise level from a transferring employee or individual policy issues, rather than the interrelationship between policy elements that are needed to comprise an entire well-
designed relocation program. So rather than address issues from an overall cause and effect perspective, which should be the paradigm, there is a tendency for the HR generalist to miss the big picture and focus on the problem at hand, which only will ensure that the problem will reoccur with another transferee. It can be much harder for relocation companies to maintain the working relationship needed to successfully manage a relocation program if communication occurs only when a problem arises. As such, new approaches in training and education are needed by relocation companies to better assist HR generalists concerning the relocation function they have been charged with managing. Relocation companies must be more proactive rather than reactive,
attempting to grab “teachable moments” when we can, prior to the need for problem resolution.
Information must be provided in smaller bits, because the HR generalists often have so much on their plate that they cannot possibly absorb all the information they are encountering on a daily basis. To the degree possible, relationships must be built not on the basis of relocation experience, but rather on the basis of best practice HR management, so that together we are speaking the same language. The changing corporate environment is not going back to the Old Normal any time soon. As such, to be successful, relocation companies must adjust to the New Normal in dealings with our clients. Joseph Morabito, SCRP, is president and CEO of Paragon Global Resources, Rancho Santa Margarita, CA. He can be reached at +1 949 635 6000 or e-mail jmorabito@paragongri.com. MOBILITY/MAY 2011 75
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Property Management Getting the Details Right
76 MOBILITY/MAY 2011
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BY JAMES CONIGLIARO, CRP, GMS, AND GHADEER HASAN, CRP, GMS Employers increasingly are offering property management programs as a temporary solution for employees who are unable—or unwilling—to sell their homes because of local market conditions. Even within its more common application to international assignees, property management presents unique challenges requiring a specialized set of solutions. Conigliaro and Hasan provide an overview of the risks and responsibilities associated with property management, as well as the strategies, policies, and best practices that will aid in minimizing and managing these risks.
I
n employee mobility, a property management program typically is defined as a benefit providing financial administration and administrative support in managing an employee’s (the landlord’s) primary residence in the departure location. Property management includes a range of service components such as: collection of rent; payment of monthly carrying costs; rental marketing; tenant screening; lease administration; tenant relations; periodic inspections; supplier selection and management; and household repairs and maintenance. In general, the three areas of managing employee homes that pose the greatest risk are the actions and responsibilities of the landlord, compliance issues with state and local laws, and asset management of the property.
Landlord Responsibilities More often than not, the employee entering a property management program has limited or no experience as a landlord, and may be wholly unprepared for the responsibilities associated with this role. Trouble may arise when determining fair rental market value; selecting qualified suppliers; screening and selecting tenants; addressing property damage; and complying with security deposit regulations.
While a well-defined program and benefits package will do much to assist the employee in this new role, ultimately there are decisions and obligations that remain with the employee. It is essential that the employee’s expectations are set and managed properly, and that program guidelines and processes are designed to assist the employee in successfully fulfilling his or her obligations: Marketing the property for rent. Identify a fair and unbiased real estate agent with a proven track record of renting properties and experience in the market. Tenant screening and selection. Conduct credit and background checks that comply with personal identifiable information laws. Keep the landlord-tenant relationship at arm’s length and avoid renting to “family and friends.” Lease administration. Use a lease that complies with local laws and customs, and best protects the employee. The lease should be written or reviewed by an attorney. Property insurance. The employee’s current insurance may not include vacant properties, so suitable coverage should be obtained for employees leaving homes vacant. Good tenant relations. Balance the tenant’s right to “quiet enjoyment” with the employee’s need to
know. Respond promptly to fair maintenance requests. Proper budgeting. Prepare for periods of vacancy during marketing or between tenants when the property may not be generating income. Some repairs that a homeowner may decide to delay when occupying the property may not be advisable or allowable under the lease. The mobility professional should provide one-on-one counseling combined with detailed initiation materials (typically in the form of a landlord manual or handbook) to prepare employees for their new role as landlords. Well-defined program guidelines and policies will further ensure the employee’s success.
Compliance with State and Local Law Laws and regulations pertaining to rental properties vary widely by state, county, or city. These regulations touch on issues such as security deposit administration, taxes, the right to enter the property, and management of personally identifiable information (PII). Failure to comply with these laws may expose the employee, the employer, and/or property manager to legal liability and financial penalties. Security deposit administration is one such area where it is critical to comply with state and local laws. States differ on what can and cannot MOBILITY/MAY 2011 77
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I
n property management policy, there are three important policy considerations: program eligibility; maintenance and repairs; and financial guarantees.
Property Management Policy — Program Eligibility International program eligibility
•
Benefit runs parallel with assignment term
Domestic program eligibility
•
Benefit as a temporary or permanent alternative to home sale Best practice: minimum of 18 months’ eligibility to allow for effective marketing period and standard 12-month lease
•
Tenant-occupied versus vacant home
• • •
Property type
• •
be deducted from security deposits; whether interest needs to be tracked and paid to the tenant at the end of the lease term; and how much security deposit may be held legally by the landlord. State laws on the timing for refunding security deposits at the end of the lease term vary greatly. Thirty states require 30 days to refund security deposits to the tenant, while other states range from as few as 14 to as many as 60 days. Failure to comply may result in penalties as high as two times the amount of the original security deposit. Many states and counties have specific taxes applicable to landlords. For example: Maricopa County, AZ, requires all landlords to collect and pay sales tax on all rents. This is in 78 MOBILITY/MAY 2011
60 percent permit both, based on employee choice 25 percent only occupied 15 percent only vacant Most policies silent on property type Best practice: primary home only; no farms, trailers, more than five acres, or under construction
addition to any income tax that is already the responsibility of the employee. Similarly, California requires landlords to pay business taxes on top of any applicable individual income tax. Other examples of state laws pertaining to rental properties include: limitations on when and how the landlord may enter the property, requirements for written and executed disclosures, landlord licensing requirements, and state-specific housing discrimination laws. It, therefore, is critical that the mobility professional has a process and system in place to ensure compliance with all state and local laws to avoid legal liability and possible fines for the employee or corporation.
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The complete cost of a program includes administrative costs—both internal and supplier expenses—as well as the costs associated with securing a tenant and ongoing maintenance and repairs.
Property Management Policy — Program Costs Administrative costs
• •
Covered by 100 percent of companies for international programs Covered by 65 percent of companies for domestic programs
Marketing the property
•
Of those companies that cover administrative costs, 100 percent cover the cost of rental broker fees 100 percent cover the costs of tenant screening and background checks <1 percent cover legal cost of lease review
• • Maintenance and repairs
• • • • • • •
Asset Management What happens when services authorized or conditions at the property are not in alignment with the employee’s financial needs and goals?
80 MOBILITY/MAY 2011
50 percent of companies cover some costs for maintenance and repairs Of those, maintenance costs covered include: Lawn care—98 percent Snow removal—89 percent Seasonal climatization—89 percent Pool care—82 percent Utilities for vacant periods—50 percent
The value of the employee’s home is affected significantly by the conditions on the ground at the property. Proper inspections are critical to contributing to the overall fiscal health of the property. For tenant-
occupied properties, it is recommended to conduct quarterly inspections of both the exterior and interior of the home. Not only does this document property conditions and identify possible deficiencies early
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TRC’s CustomSource™ Program: Relocation Benefits That Are Most Important To Your Employees And Lower Costs! TRC’s CustomSourceTM program allows our clients to begin with a best-practice relocation program and adjust line-item benefits as needed. We’ll work with your existing policies or help you to develop up-to-date, best-practice policies as the core of your relocation program. Using TRC’s proprietary, interactive authorization form, just select the core policy for the relocation then adjust line-item benefits to suite your budget and your
Your company benefits from: • Reduced total program costs: offer only the benefits needed to accomplish the relocation • Increased transferee satisfaction: offer the benefits that are meaningful to each individual transferee • Access to TRC’s proprietary tools, exclusive programs and best practices
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Approximately 30 percent of employers with property management programs offer financial guarantees in those situations where the rental income generated does not cover the ongoing carrying costs on the property. This level of financial guarantee more commonly is offered to senior employees and tends to be aligned with existing policy tiers. Financial guarantees should be viewed in the context of the entire benefits package at both departure and destination. For example, if the employee is receiving a full housing allowance at destination, it should be questioned whether any sort of rental guarantee on the home location side is necessary at all. For those companies that do decide to offer a guarantee, there are two methods for calculating the guarantee:
Property Management Policy â&#x20AC;&#x201D; Financial Guarantees Rental value as determined by an independent rental market analysis (RMA)
12 percent of companies
Actual monthly carrying costs
88 percent of companies
In addition, 19 percent of companies offering a guarantee provide some level of support when rental income falls short of the monthly carrying cost. Whether a full rental guarantee or a shortfall guarantee, 76 percent of companies put a cap on the amount offered. Typically, companies provide this benefit for a three-month periodâ&#x20AC;&#x201D;either annually, per vacancy period, or per length of the assignment. The statistics in these sidebars are based on a survey of more than 200 property management policies from Dwellworksâ&#x20AC;&#x2122; clients.
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When your employees are on the move, we’re here to help. Bank of America’s centralized team of relocation specialists provides the personal and professional service that makes even the most complicated moves more manageable. Plus, we offer a wide array of home financing options for employees on the move. And our commitment to responsible lending means that loans come with our Clarity Commitment® document, which summarizes key loan terms in plain language. It’s all part of our dedication to efficient relocation and successful homeownership.
Call 1.866.709.3094 to learn more about our Relocation and Corporate Services Programs.
The Clarity Commitment® summary is provided as a convenience, does not serve as a substitute for a borrower’s actual loan documents and is not a commitment to lend. Borrowers should become fully informed by reviewing all of the loan and disclosure documentation provided. Clarity Commitment is not available on all products. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. Bank of America, N.A., Member FDIC. Equal Housing Lender © 2011 Bank of America Corporation. AD-02-11-0672 03-11 ARU5R3T2
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On the Web
F
or further information regarding managing real estate risk, please visit www.WorldwideERC.org
Risk Management for Our Times www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/ 0510-Moore.aspx Canâ&#x20AC;&#x2122;t Sell It? Rent It! a Creative Alternative to Carrying Inventory www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/0908barr.aspx Real Estate Risk Reviewâ&#x20AC;&#x201D;Shadow Inventory and Loan Buybacks www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/1110-Last-Page.aspx on, it also makes tenants better caretakers when they know the landlordâ&#x20AC;&#x2122;s representative is regularly visiting the property. For vacant properties, inspections should be conducted on a weekly
basis. In addition, the local property managers need to align themselves with neighbors and others who are willing to communicate regularly in the event of unforeseen emergencies.
All inspections should be performed by trained, qualified professionals; include both the interior and exterior of the property; be documented in writing and with photos; and be reviewed and compared with previous inspection reports to identify a change in condition. Inspection management procedures are essential to minimizing property deficiencies resulting from the long-term vacancy of the property or the behavior of a tenant. An equally important aspect of asset management that affects the employeeâ&#x20AC;&#x2122;s financial health is the rent being collected during the lease term. Specifically, for tenant-occupied properties, it is important to look at rental income versus carrying costs. Just as an employee may be upside-down when comparing the amount he or
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she owes on the home compared to the value under current market conditions, a property also may be unable to generate rental income sufficient to cover the monthly carrying costs on the property. This “loss-on-rental” may affect the employee’s ability and willingness to accept a transfer or assignment. In instances where the property management program fails to adequately address the employee’s financial needs, the company runs the risk of the employee refusing an assignment, or of an existing assignment failing. This may be addressed, however, in a well-crafted policy that stipulates financial guarantees (See sidebar beginning on page 78 for policy considerations.). The successful property manager will plan for problems, keep excellent files and records of every activity, and continually assess these functions to determine if change is necessary.
Plan for the Risks It is essential to understand and plan for the risks associated with managing employee homes. Proper program and policy design are critical to minimize employee inconvenience and reduce the risk liability for both the homeowner and the employer. A consistent review of program and policy compliance is imperative as it is typically easier, less costly, and less disruptive to make changes and correct efforts during the earlier phases of the property management cycle. James Conigliaro, CRP, GMS, is senior vice president, property management and destination services for Dwellworks, LLC, Cleveland OH. He can be reached at +1 212 768 7272 or e-mail james.conigliaro@dwellworks.com. Ghadeer Hasan, CRP, GMS, is vice president, quality for Dwellworks, LLC, McLean, VA. She can be reached at +1 703 448 1902 or e-mail ghadeer.hasan@dwellworks.com. MOBILITY/MAY 2011 85
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BY TIM MCCARNEY, GMS McCarney offers an introduction to Las Vegas,NV, site of the Worldwide ERC® 2011 National Relocation Conference, including overviews of the city’s real estate market, history, people, and economy.
B
lame it on Elvis. Or the Rat Pack. Or the immortal image of Jon Favreau and Vince Vaughn tearing down the highway yelling, “Vegas baby, Vegas!” in Swingers. But the fact is that no other city in the world has had its reputation shaped by popular culture quite like Las Vegas, NV. Even to those who have never set foot within its city limits, Las Vegas is the land of glitz and glamour, of all-night parties and bustling casinos, of bright lights and showgirls. It is the place where Elvis impersonators roam the streets, hipsters troll the high stakes tables, and Hollywood stars lounge in dark corners of pulsating nightclubs. It is where inhibitions are checked at the door, where drive-thru chapels stand ready to accommodate the impulsive romantics and, perhaps most important, where everything that happens is relegated to secrecy. That is what Las Vegas means to anyone weaned on Dean Martin or “The Hangover.” But there is far more to this city than the casinos, bars, and tales of debauchery. And while you may know it today as the “Entertainment Capital of the World,” you may not know that Las Vegas rose from mostly humble beginnings as a stopover for westbound pioneers and a cool pace to watch atomic bomb testing.
The History If you think Vegas is just an oasis in the desert originally built on Mob money… well, you are partly right. Named by Spaniards who drank of its waters while traveling the Old Spanish Trail (“vegas” means “meadows” in Spanish), Las Vegas was incorporated as a city in 1911. From that point, it experienced a population boom like no other city in U.S. history, becoming the mostpopulous American city founded in the 20th century. To many of its earliest settlers, Vegas was viewed as a stopover town—a short-term assignment, if you will—for those heading west on the pioneer trails. But two important developments helped spur its growth. One was World War II atom bomb research, which led an influx of scientists, soldiers, and project researchers to the area, and made bomb test-watching parties all the rage, as mushroom clouds and light pulses MOBILITY/MAY 2011 87
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from bomb test sites just over the mountains could be seen easily for miles in Vegas. The other, of course, was the legalization of gambling in 1931, which led to the proliferation of casinos and hotels. Yes, in the early days, most of these casinos were mob-owned or mob-funded. But when businessman Howard Hughes showed up in the 1960s, buying hotels and other local businesses, he paved the way for other, “legitimate” companies to jump into the game. Before long, the city became a mecca for job hunters, entrepreneurs, gamblers, and wistful dreamers. In other words, anyone looking for new opportunities.
The Climate The most important thing you need to know about the Las Vegas weather is this: it is in the Mojave Desert. That means it gets hot here. Real hot. As in I-just-walked-twoblocks-between-casinos-but-I’msweating-like-Ned-Beatty hot. From May through September, temperatures typically hover around 100°F, and while it is a “dry” heat, those of us with fair skin and a propensity for sunburns can practically feel the sun tapping us on the shoulder, telling us to put on some stronger sunblock, or, preferably, a hazmat suit. The winters are fairly mild, with daytime temperatures in the 50s and 60s, enabling year-round sunbathing,
hot tubbing, and poolside lounging. Snow falls on the strip very rarely— about once every five years. But when it does, it is said to incite panic, curiosity, confusion, and widespread traffic jams for the few hours it lasts on the ground.
The People At a time when nothing is more important to companies with mobile workforces than “selling candidates on the destination area,” Las Vegas remains a desirable location with ample nightlife options and amenities for both indoor and outdoor enthusiasts. Despite the harsh summers, crowded strip, and non-stop onslaught of tourists, Vegas continues to attract a steady stream of new
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residents. Perhaps not as much as it did during the period between 1985 and 1995, when the city experienced a 97.6 percent population increase, but enough to keep Vegas a fixture on most major lists of the “Best Places to Live.” As of 2010, according to the U.S.
Census, there were 583,756 people living in Las Vegas. Of these people, 25.9 percent were under the age of 18, 8.8 percent were between 18 and 24, 32 percent were from 25 to 44, 21.7 percent were from 45 to 64, and 11.6 percent were over 65.
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The Housing Market When you are one of the country’s most populated cities, you need housing. A lot of it. With people flocking to Vegas through the 1980s and 1990s and early 2000s, local housing construction and real estate industries thrived; in 2000 alone, more than 21,000 new homes and 26,000 resale homes were purchased. But the economic recession that shook across the United States between 2007 and 2010 hit Vegas particularly hard. With disposable income drying up and companies restricting corporate travel and entertainment, casinos, hotels, and restaurants suffered. At the height of the crisis, Las Vegas had the dubious distinction of owning one of the country’s highest home foreclosure rates. Today, however, Las Vegas is bouncing back. According to Buck Wargo’s article in the February 21, 2011 issue of the Las Vegas Sun, “Distressed real estate market alive in Las Vegas,” of the $1.86 billion in distressed property sales during the previous 12 months, $458 million was in the Las Vegas market. In the same article, California research firm Marcus & Millichap ranks Vegas number 40 among U.S. retail markets, and expects local companies—especially casinos—to expand their payrolls for the first time since 2007. By the end of 2011, Las Vegas employers are expected to add 14,000 new positions—a 1.8 percent increase.
The Job Market Every trailing spouse or partner being relocated to Las Vegas and looking for work may well feel resigned to a life of dealing cards or serving drinks to surly gamblers. And 90 MOBILITY/MAY 2011
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while it is true that this city is built on the gaming industry and the major casinos offer the bulk of local jobs, the city’s largest single employer is, intriguingly, the Clark County School District. Another large, nongaming employer is the University of Nevada at Las Vegas. With hotels, housing developments, and other buildings in a seemingly perpetual state of development across Las Vegas, it is little surprise that the construction industry offers a multitude of opportunities, as well. Statistics show that approximately 86,000 Southern Nevadans are employed in construction trades, including electricians, engineers, project managers, and superintendents. And out on the far reaches of the city limits, Nellis Air Force Base employs close to 13,000 people. Other companies with headquarters in Las Vegas include Stephens Media Group, Southwest Gas Company, and Rockstar, Inc., makers of the energy drink.
The Great Outdoors? On any given day, at any given moment, there are literally thousands of options in Vegas for whiling away the time, and only a few of them involve Celine Dion or Cirque Du Soleil. Like looking at pretty pictures? Check out the Fine Art Gallery at the Bellagio. Want to know how much that 1932 quarter you found on the street might be worth? Stroll down to Gold & Silver Pawn, the shop immortalized in TV’s Pawn Stars. Or you could spend a day in the mountains. Among the masses barreling through the turnstiles at McCarran Airport on their way to the strip, very few are likely thinking of getting back to nature—unless that nature
comes in the form of a slot machine. But those people are missing out. Because a four-hour perimeter around Las Vegas contains a half dozen national parks (including the Grand Canyon), a dozen state parks, and hundreds of thousands of acres of national forest.
The closest of these attractions, roughly 30 miles northwest of the strip, is Mount Charleston, a calm retreat from the packed streets and buzzing neon. Here, visitors can enjoy fresh air, mountain breezes and real—not man-made—waterfalls. Mount Charleston is Nevada’s
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welcome home and let one-group be your qualified partner for allinclusive relocation services. To make your employees feel at home from the first day.
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eighth-highest mountain peak, rich with hiking, bike and ski trails, breathtaking scenery and panoramic views. Indeed, standing atop its elevations, surrounded by aspen and juniper trees and crossing paths with the occasional deer or desert tortoise, can make one feel a million miles removed from what we typically envision when we think of Las Vegas.
Everything is Illuminated At the end of the day, people do not move to Las Vegas to be closer to 24-hour chapels or Penn & Teller shows. They move here to take advantage of the opportunity that the city represents. It is the place for sec-
ond chances and new beginnings. Clichéd though it may sound, it is also the place where dreams can come true—especially if those dreams include standing in buffet lines. New York may be the city that never sleeps, but Las Vegas is the city that never stops, rich with entertainment and activity options more varied than perhaps any other place on earth. Yes, it is a nice place to visit. But you may just want to live there, too. Tim McCarney, GMS, is manager of marketing communications with Weichert Relocation Resources, Norwell, MA, and a member of the MOBILITY Editorial Advisory Committee. He can be reached at +1 781 982 5026 or tmccarney@wrri.com.
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Worldwide ERC® Regional Groups: Act Locally and Think Industry! BY BILL MULHOLLAND, CRP, GMS Mulholland, membership chair of the Greater Washington Area Employee Relocation Council (GWERC) during 2009 and 2010, and the 2011 president-elect, writes about the value of joining a Worldwide ERC® regional relocation group for connections and experience... and the support provided by the global association.
T
hree years ago it was suggested to me that I join my “local” Worldwide ERC® regional relocation group. At the time, I had been in the relocation industry for seven years—and to be honest, I had no idea that “local” ERC® groups even existed. Living in a suburb of Washington, DC, I learned that my local group was known as the Greater Washington Area Employee Relocation Council, or “GWERC” for short. I decided to research GWERC online before attending a meeting, and found that its website was well done with iconic pictures of Washington, DC, and it spoke of the organization, its purpose, and its 94 MOBILITY/MAY 2011
goals. I remember what stood out to me most was the strict “no solicitation policy” under the “code of conduct.” After all, if I am being honest—as a service provider—one of my motivations for joining groups and attending events is to meet new people, network, and bring new business to my company. But joining the GWERC was suggested to me by someone whose opinion I greatly respect as a fellow service provider... so I decided to press on. I paid to attend my first GWERC meeting as a guest and see first-hand what a regional Worldwide ERC® group was all about (I must admit, having to fork over a $125 “guest fee” just to attend a meeting made me both a lit-
tle hesitant and skeptical right off the bat about this group. But my concerns were soon dispelled!).
The Agenda The meeting was four hours long (8 a.m. to noon) and highly organized. Held at the headquarters of the Bureau of Alcohol, Tobacco, Firearms, and Explosives in downtown Washington, DC, the venue was both convenient (with metro access) and an exciting treat! The meeting had approximately 75 attendees, about half of whom were corporate HR professionals and half service providers. Most GWERC meetings have a similar attendance and format, and a
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normal agenda consists of a continental breakfast and networking, president’s welcome, industry updates, and a program session. The industry updates were a total of 45 minutes and offered reports from five different people. Brief regional updates were given by a mortgage representative, a moving and storage representative, a real estate brokerage, a corporate professional, and a government professional. As a rule, the regional report-outs are rotated so that each meeting has an update from a new company or organization. Not only was this very informative to me as a third-party relocation provider, but it educated everyone in the room for different reasons, no matter what side of the industry they may have represented. It is a great way for attendees to benchmark and get a quarterly update on all facets of the industry. The program sessions also were impressive. Each meeting, the program session can vary, and often is approved by Worldwide ERC® for CRP® recertification credit. One session was on IT security in the mobility industry (a hot topic then and now) and the panel consisted of an
IT expert from the FBI, State Department, and a relocation software company. Another session was presented by a motivational speaker about how to apply change in a positive way to employee mobility. Each session I have experienced is timely to the industry, informative, and educational.
Unique Meeting Venues Logically, being in the Washington, DC-area, the membership for GWERC is largely composed of government agencies such as the GSA, DEA, IRS, and ATF, to name just a few. This strong government concentration is one of the unique features of our group and could be a huge benefit to any service provider wanting to learn more about doing business with the government. As
previously mentioned, one of the first meetings I attended was at ATF headquarters and our third quarter 2010 meeting was held at the U.S. Secret Service headquarters. Venues like these are not only unique, but are powerful tools to attract new members (and retain current members). And from my and some other service providers’ perspectives, getting to see an employer contact on their turf is a pretty rare and cool thing (When is the last time you have been in the Secret Service’s headquarters?).
Benefits for Corporate HR Professionals Now that I have noted a couple of the service provider benefits through regional groups, how about a look at MOBILITY/MAY 2011 95
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the benefits for the other half of our industry—the corporate HR professionals! A central focus of global and national Worldwide ERC® meetings is education, and regional groups continue that emphasis. At the regional level, a meeting often consists of subject matter experts, corporate roundtables, benchmarking sessions, and the aforementioned CRP® credit potential. In the corporate roundtable meetings, which are closed to service providers, participants benchmark relocation policies, share ideas, pose questions, and openly discuss lessons learned along with their local peers. And outside of the corporate roundtables, there are industry updates and programs presented by a variety of service providers—so
they can reap the benefits of industry summaries and “best-in-practice” approaches without the promise of a follow-up sales pitch!
The Regional Group Business Model GWERC (like many other local groups) charges service providers to join the group and/or to attend the meetings. Even as a guest, a service provider must pay to attend a meeting, and having the service providers pay fees covers the operating costs of the local organization. On the flip side, corporate HR professionals receive free membership. Clearly, the theory is that if a high number of clients sign up for the free membership, the service providers will come in large numbers (and at the end of the day the group is actually more
profitable and successful than if you charged everyone). And, in an economic climate in which most companies are cutting back—a no-cost membership makes a lot of sense! So how is this business model working out for our local group? During our monthly board calls, one of our most common discussions is where to spend our revenue to maintain our status as a nonprofit organization (a problem most companies and organizations in this economic climate would love to have!). What I have now come to understand is that “guest fees” and strict “no solicitation policies” are a stroke of genius!
Worldwide ERC ®: a Tradition of Support Since the 1970s, Worldwide ERC® has been supporting the development of regional groups, which were formed by association members gathering locally to share information and extend the learning that they gained from their Worldwide ERC® membership. Since then, the number of groups has grown from a single-digit handful to nearly 40 regional groups that are recognized by Worldwide ERC®. To aid in the development of the groups, Worldwide ERC® provides the following services: • A listing on www.Worldwide ERC.org , which can be found from the “Regional Relocation Group” tab under the “About Us” section. • Publicity in MOBILITY magazine’s Around the Worldwide ERC®, where groups can share board announcements, meeting highlights, community service announcements, or other news with MOBILITY readers (To submit an item for Around the Worldwide ERC®, e-mail it to
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mobility@WorldwideERC.org). • Advice for “starter” groups and assistance with identification of Worldwide ERC® members within the new regional group’s target region. • Visibility at each annual National Relocation Conference and Global Workforce Symposium held in a group’s local area, through the opportunity to host a regional group welcome table. • Benchmarking with other regional groups through the Worldwide ERC® periodic survey of regional relocation groups (Topics covered include dues structures, programs, and governance.). Regional relocation group leaders get strong support as well. Worldwide ERC® provides:
98 MOBILITY/MAY 2011
On the Web
F
or further information on regional groups, and worldwide ERC® membership, please visit www.WorldwideERC.org
Become a Member of Worldwide ERC® www.WorldwideERC.org/Membership/Pages/ become-a-member.aspx Resources for Regional Groups www.WorldwideERC.org/about_us/Pages/ regional-groups-resources.aspx Charity & Compassion-Who Gives? www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/1209-henneberry.aspx
• The Regional LEADERLine, a periodic electronic newsletter for
regional group leaders. • The Regional Leaders Forum— an online communication instrument that provides access to Regional Group Leaders-only discussions for enabling direct contact between regional group leaders to exchange information, ask questions, and draw on the expertise and experiences of each other. • The Regional Relocation Group Leadership Session, an annual networking and idea exchange opportunity at the National Relocation Conference. I am not finished yet! Worldwide ERC® is tremendously supportive of regional relocation group meetings. In addition to providing materials, MOBILITY magazines, and program planning guidance on request, Worldwide ERC® offers regional relocation groups the opportunity to host an official CRP® exam site and approves eligible courses for CRP® credit hours at special discounted rates. Perhaps most important, Worldwide ERC® leadership and staff par-
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ticipate regularly as presenters for the groups—in fact, at this writing, CEO Peggy Smith SCRP, SGMS, has shared her wit and wisdom with a large percentage of our regional groups... and has several more keynote presentations coming in future months. If you have had the pleasure of hearing Smith speak, you know that her vision for the future of Worldwide ERC® is optimistic, open to and poised for change, focused on programs and services that fit the needs of our membership, and offer the highest returns on our investment as members. There is synergy, too, in the way that regional groups donate to the charitable causes of the Foundation for Workforce Mobility, and receive Foundation support for their scholarship programs, or contribute generously and wisely to ensure that our industry’s government relations efforts are properly funded. In addition to the relationships that have been formed with regional groups during a 35-year span, Smith says, “I see significant and distinctive partnership opportunities with regional groups in our future, and I’m looking forward to the ways that we can maximize both a global and local association presence.”
What About Your Local Regional Group? After three years with the GWERC I have asked myself, what other groups are out there and what do they have to offer? Surely not all can be as awesome as the GWERC, or can they? In all, Worldwide ERC® lists 39 Recognized Regional Relocation Groups. Considering the fact that many of these groups include multi100 MOBILITY/MAY 2011
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ple states, a person can locate a local group to join in almost any area in the United States. I sent off e-mails to the listed point of contact on a few of these groups to find out what they do and what their groups are all about. Below are just a few examples of the responses I received: Southeastern Regional Relocation Council (SRRC). SRRC is based in Orlando, FL, has 140 members, and holds two meetings a year. Says SRRC President Faye Chadwick, SCRP, SGMS, “Our group is friendly, fun-loving, and very serious about relocation. Being in Orlando, there are unlimited fun things to do and everyone has a ball! As the current SRRC president, I take great pride in the fact that I have been with the group almost as long as I have been in relocation, nearly 22 years!” Greater Richmond Relocation Council (GRRC). GRRC, based in Richmond, VA, was formed in 1994 and holds two meetings a year. The group started a scholarship program to recognize local high school seniors who relocated to the Richmond area during high school (see page 73 of the January 2011 issue of MOBILITY, for the winning essay, “Lessons Learned,” from this year’s scholarship recipient, Jennifer Rosene). Carolyn Huxford, SCRP, chair of GRRC’s board said, “We have awarded scholarships to approximately 28 students, and in April 2010, we awarded a special scholarship sponsored by the Worldwide ERC® Foundation. Our scholarship winners have come from as close as Virginia Beach, and as far away as South Korea, Russia, and Afghanistan.”
Minnesota Employee Relocation Council (MERC). MERC is located in Minneapolis, MN, and was started in 1983. It currently has approximately 75 members. Patti J. Holey, CRP, president of MERC’s board of directors remarked, “While our main focus is education, we have a secondary focus of giving back to our community through our Community Cares program. Last year, at our two fundraising events, we raised over $7,000 for two local charities.” Charlotte Metro Area Relocation Council (CMARC). CMARC is comprised of 75 members who meet once per quarter. Holly Clontz, president of CMARC noted that, “For the last 12 years, we’ve raised money for Friendship Trays, the local meals-on-wheels program here in Charlotte. In the last five years, we’ve donated close to $20,000 to Friendship Trays. This is separate from our annual Jane Osborne Memorial Scholarship to high school seniors. I mention this because I believe it speaks to the dedication and community commitment of our members. Be on the lookout for new and exciting things next year!”
Providing the tools to help your TALENT become more MOBILE
The Worldwide ERC ® Spirit After talking to and e-mailing board members from regional groups all over the country, I was blown away by the abundance of creativity, passion, sense of community, generosity, and enthusiasm! There is so much one can take away from these venues. I have done it, and so have my GWERC peers. How about you? Bill Mulholland, CRP, GMS, is director of American Relocation Connections, LLC, Fairfax, VA. He can be reached at +1 703 352 9701 or e-mail bill.mulholland@ arconnections.com.
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Advice for
First-time Conference Attendees BY CHRIS CHALK, CRP, GMS The Worldwide ERC® Global Workforce Symposium (GWS), held in October 2010, in Seattle, WA, featured an opportunity from CEO Peggy Smith, SCRP, SGMS, to allow corporate HR professionals who had not attended that meeting in the last three years to come as her guests. Chalk connected with six HR professionals to better understand their perspectives as first-time attendees.
A
s I was registering for the Global Workforce Symposium (GWS) in Seattle, WA, I tried to remember how many Worldwide ERC® conferences I had attended. I have been in this industry for a little more than 10 years and still could be considered by some to be a relocation newbie. Thinking back to taking my Certified Relocation Professional (CRP®) exam in Nashville, TN, and completing my Global Mobility Specialist™ designation in San Diego, CA, I found it interesting to think about how my conference experience has changed over time. I put myself in the shoes of people who would be attending a Worldwide ERC® conference for the first time and thought it would be interesting to get their perspectives before and after the conference. What did they like? What were they unprepared for or surprised about? I set out to identify, interview, and learn from their experiences. 102 MOBILITY/MAY 2011
Prior to the Meeting I asked the six first-time attendees a series of questions prior to GWS and here is what I found: most had been involved in relocation for fewer than two years, with the range from five months to 10 years. The conference scholarship offer from Worldwide ERC® CEO Peggy Smith, SCRP, GMS, to those who had not attended a conference in three years (or ever) weighed significantly in their decision to attend the conference. Possible free registration in the future, they said, would have a big effect on their decision to attend future conferences. So, what are your initial thoughts about the upcoming Global Workforce Symposium in Seattle, WA? Kevin: I hope to learn more about what’s out in the industry, and what can improve our program. With only about four years of experience in supporting relocation, learning more
about vendors and capabilities from a relocation perspective is one of my objectives. This is my first big conference, so I am looking forward to a great experience. Julie: There will be a lot to soak in. A lot of information will be thrown at us; we are hoping to learn a lot. Allison: Our purpose is to be in sponge mode, to take in as much as possible about the industry, the players, the vendors, the trends, and best practices. Laura: The sheer number of courses is phenomenal. Christian: I am looking forward to getting back to Seattle, and for me, this trip is more about growing my international network and taking my GMS™. How will you decide which sessions to attend? Kevin: I asked for feedback from my colleagues in global mobility, and
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they have given me sound guidance. I plan to review the list again the day before the conference to get an idea of what might be most suitable for me. One of my global mobility colleagues is speaking on a panel, so his session is a must-see for me. Christian: I went through and identified which sessions I thought would be most valuable, then had my director reconfirm what she thought would be most valuable. We are at a crossroads with our program because we are integrating a new global policy for a Korean company that uses a balance sheet approach. Why do you feel it is important to attend? Allison: We are always looking at fine-tuning our processes and policies, so we want to learn best practices in the industry. Julie: We don’t know what we don’t know, so we are on a fact-
finding journey to learn what’s out there. Brad: It is important to get to know the industry better, to network, to keep in touch with current trends and, in general, to pick up on the things that will improve our program. Kevin: I think it will give me a better sense of how the industry works on a big picture basis. Plus, I am hoping to gain additional knowledge in terms of best practices and benchmarking that will be helpful for some of the larger projects I am working on. Laura: To network, gain a connection with the industry, understand the industry better, and learn how other people use Worldwide ERC® to stay on top of compliance issues. I have spent the last year surviving in this role and drinking from the fire hydrant, so to speak. Christian: More international networking. We face a lot of challenges
in Asia and South America. We need to expand our network. How did you get approval to attend? Allison: I pitched it to my boss, the VP of HR, and it helps that we are first-time attendees and get free registration. That was huge. It was easy to justify. Brad: From our business unit leader. The conference is very relevant to our new polices. When I said, “oh by the way the conference fee is waived,” that finalized it. Laura: The internal approval process—you work with your manager. These are the things I need to go to and here is why. There were not a lot of hoops to jump through. You need to go in armed with ‘I want to go because of the knowledge I will gain,’ and how that translates back to your job, as opposed to, ‘because it’s fun!’ Christian: I told my director I wanted to go and get the Global MOBILITY/MAY 2011 103
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Mail??? Tips for Attending a Conference
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• As my friend Bill Graebel likes to say, “stay hydrated!” Water is your friend. • Book your hotel early. Even if you are not 100 percent sure you are attending, you can always cancel your reservation. • Bring an extra battery or emergency charger for your cell phone/PDA. • Bring lots of business cards. • Wear comfortable shoes. • Do not overschedule yourself with meetings —Chris Chalk, CRP, GMS First-time attendees often feel left out because so many of the participants have been attending these conferences for years and have developed relationships. I would recommend that they definitely attend the first-time attendee reception as this will give them a chance to meet similarly situated individuals. I also would recommend that they walk through the exhibit hall and engage those suppliers that may bring value to their business—and if they are overwhelmed by the prospect of suppliers approaching them for business, they should tuck their ID badge in their jacket once they enter the hall. —Gina Haesloop, GMS, I’d say plan ahead.... Know who is going to be attending, and set up meetings/lunches/coffee in advance. Clients get pulled in so many directions at (the conference), it’s never safe to assume that you’ll be able to get face time with the target audience. Put a few meetings on their calendar prior to (the conference) and you will get the most out of your Worldwide ERC® experience. —Jamie KuBrock, CRP
On the Web The Worldwide ERC® website, www.WorldwideERC.org, has a variety of resources for those new to the industry. Glossary of U.S. Domestic Relocation Terms www.WorldwideERC.org/Resources/PolicyProgramTools/ Pages/relocation-glossary-us.aspx
973-543-6001 email: askpmi@pmipmi.com www.pmipmi.com
Glossary of International Relocation Terms www.WorldwideERC.org/Resources/PolicyProgramTools/ Pages/glossary-workforce-mobility.aspx YP40 (Young Professionals Under 40) www.WorldwideERC.org/Education/Pages/YP40.aspx Upcoming Worldwide ERC® Events www.WorldwideERC.org/Events/Pages/index.aspx
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Mobility Specialist™ training. Since the conference would be free, she thought it was a good idea. What do you hope to gain from your conference experience? Christian: My GMS™ designation, hopefully, networking, and industry
updates. It looks like there will be a number of good courses. I have been more focused on domestic relocation my whole career so this will be a great opportunity. Julie: Networking, seeing who is out there. Allison: For me, a better under-
standing of the industry both globally and domestically. What are you most excited about? Laura: Speed networking. Kevin: Probably attending the opening session as well as some of the breakouts. I enjoy the rah-rah stuff. I have heard Tony Robbins and Lou Holtz speak, and have gained valuable insight. Christian: The networking. Is there anything about attending the conference that you are nervous or unsure about? Laura: I worry that I might miss some great content in one session while I am in another. I made the rookie mistake of not booking my hotel when I registered. I waited until one month before and everything was sold out. Christian: Late nights and early mornings. What is your purpose in the exhibit hall? Kevin: I plan to visit the booths of our current providers but there is no way I can attend all the events, so I’ll just do the best I can to maximize the experience. Allison: To meet people and see what is out there. Julie: To see software demos. What else are you looking forward to? Laura: The vendor fair (exhibit hall). It’s good for people new to the industry and new to the conference to learn who is in the market and what they do—where do their services start and end, and what vendors do I not even know about? Kevin: Absorbing as much information as I can, and observing what
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goes on—I am a people person, so I enjoy meeting people in the industry. Brad: I have a young baby at home, 18 months old, and I get to sleep in past 6:00 a.m.
Post-conference I followed up with my interviewees two weeks after the conference to get their impressions and found that they consistently felt there was a significant return on their investment of money and time out of office for this conference. I also asked each of them if they had employed any knowledge gained at the conference in their job and each of them indicated they had, or had plans to in areas like policy review and revision. Many of them found the tax and legal session useful immediately. Allison had used the blog and Tax and Legal MasterSource™ three or four times already. Laura really enjoyed the taboo session and thought it was cleverly done. The advanced discussion on localization was great for her, too. The corporate
benchmark was another highly rated session among the interviewees. Christian listed the talent management session as his favorite and mentioned that a Q&A session on “everything relocation” would be helpful. More takeaways would be good. I asked Kevin about his preferred session: “Gary Hamel’s keynote speech was tremendous, and my favorite. My perspective is a little different being in supplier management. I learned a lot in all the sessions, though. I even did a little white paper on his presentation to my team internally on his speech.” What would you do differently next time you attend? Kevin: Good question. I probably would not do much different. I probably only booked a couple of appointments. I got good advice not to overschedule myself and not overcommit. Flexibility was very valuable to me. Laura: I would have stayed longer to take advantage of some of the classes they offer up-front.
Like GMS™? Laura: Yes, or the benchmarking workshop. I knew about it, but I just had a lot going on at work. In hindsight, I should have gone to that. All of the interviewees agreed that the conference met or greatly exceeded their expectations and learning objectives, and all of them said they would really like to attend again, especially if registration was waived. They all felt that Worldwide ERC® did an outstanding job putting together the conference and delivering the content necessary for them to grow in this industry. So what is next for Worldwide ERC® and our conferences? That is another article, but is great to know that we have at least six new fans who hopefully will be a part of this industry for a long time to come. Keep a lookout for them in Las Vegas! Chris Chalk, CRP, GMS, is director of business development for Dependable Auto Shippers, Inc., Smyrna, GA, and a member of the MOBILITY Editorial Advisory Committee. He can be reached at +1 678 852 7790 or e-mail cchalk@dasautoshippers.com.
R E L O C A T I O N
108 MOBILITY/MAY 2011
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new_YP40_member profile07 4/7/11 9:12 AM Page 2
YP40
YP40s Are Taking Over: First Vegas, Then the Industry! Join Us! BY NIKKI BURGESS SMITH, CRP, GMS, SFR
A
ccording to “The Aging Workforce and Retiring Baby Boomer Population, ”an article by Mitchell Langbert, Ph.D., published by the American Institute of CPAs in November 2009, more than 20 million Baby Boomers will hit retirement age by 2012, and the number will increase through the following decade. As Boomers retire, with them will go experience and commitment to the workforce mobility industry. That trend begins next year! Worldwide ERC® formed the YP40 Committee in recognition of the need to identify future leaders and tap into the innovative potential of talented younger professionals. Some of that potential will have been realized at the National Relocation Conference in Las Vegas, NV, May 18 through 20, with the creation of a “YP40 track” designed to create a conference experience that will integrate educational programming with networking opportunities. Step 1: Identify some sessions you want to attend. The National Relocation Conference offers a rich menu of educational sessions. There is something for everyone, whether you are new to the industry or experienced for your age. Nowhere else can you learn from the best and the brightest in the business through sessions or roundtable discussions with them. Just a few of the notable sessions include: • Relocation 101 • The Hamster Revolution: Get Organized, Get Control and Get More Done • Social Media Lab-Bring Your Own Laptop • Intern Programs, Student Assistance and the Unfunded Move • Winning Partnerships Through Service Level Agreements • The Keys to Successful Program Implementation • Selection and Assessment Tools: Key Steps to Managing Mobile Talent Step 2: Join us for the first ever “YP40 Town Hall Meeting” on Wednesday at 4 p.m. Bring your questions, ideas, and enthusiasm. We will clarify some myths, explain our mission, and brainstorm about how to take Worldwide ERC® and our industry to new heights. Step 3: Network during our highly popular “YP40 Reception,” which will immediately follow the Town 110 MOBILITY/MAY 2011
Hall Meeting from 5:00 to 6:30 p.m. Connecting with other YP40 professionals, developing business, and socializing could not be any easier. Not only will we engage with our own peers but we will be meeting with all the industry leaders and professionals at the kick-off event. Then, build on your networking experience by going from there right into the exhibit hall for the opening reception for all attendees. Step 4: Reconvene with the YP40s on Friday, May 20, from 2:30 to 3:30 p.m., to connect all the dots. You’ve participated in the sessions, had “ah ha” moments, and probably have a few questions. Join us for this end-onconference session to share your ideas and seek answers in an informal roundtable discussion. We’ll cover several specific sessions and have an open forum for those wishing to discuss other topics. Step 5: Give back! Let us show our colleagues we can unite for more than drinks and socializing—participate in the Foundation Walk for charity as part of the YP40 group and make a difference! Cannot bear to wake up at 7 a.m. on Friday? Make sure you join using the “sleepwalk” donation. We are the future of the workforce mobility industry. We are the faces of the next leaders, developers, and trendsetters. We are YP40... The Young Professionals of Worldwide ERC®. Nikki Burgess Smith, CRP, GMS, SFR, is with Long & Foster Corporate Real Estate Services, Richmond, VA. She can be reached at +1 804 446 6009 or e-mail nikki.smith@longandfoster.com.
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RAC Report
Regional Market Summary: Greater Las Vegas, NV, Metro Area
T
he Las Vegas valley continues to experience difficult economic conditions that, in turn, are severely affecting the housing market. While recent unemployment figures show a slight hint of improvement, the one tenth of one percent decline in unemployment (compared to a year ago) is because of a shrinking labor force, not the result of increased employment. The annualized sales volume as reported by the Greater Las Vegas Association of Realtors® indicates a 32.7 percent rise in supply of available homes (actively listed) and a 10.8 percent decline in sales volume (annualized basis). The median price of a single-family resale home is down 3 percent from $139,550 to $135,347 and the average days on market is up slightly from 55 to 75 days. This may seem dire; however, there are some bright spots in the economic picture. Residential permit values for 2010 remained constant with 2009 ($561,165,121 in 2010 compared to $560,608,082 in 2009). During the same time, the overall taxable sales were down on a gross basis, but up slightly on a per capita basis, from $14,442 per person in 2009, to $14,686 in 2010. The Las Vegas economy (and local job market) is largely dependent on gaming, conventions, and tourism. We did see some improvement in those areas during 2010. With the opening of the new Cosmopolitan Resort, the number of available rooms increased by more than 3,000; however, visitor volume also increased from 39,870,781 in 2009 to 40,705,384 in 2010. Hotel occupancy remained constant at about 81 percent, and convention attendance was down less than half of a percent from the prior year. Most important, gaming revenue was up slightly over the prior year. Several factors will continue to resonate through the local housing market during 2011. Foreclosures and short sales, along with investor flips 112 MOBILITY/MAY 2011
STATISTICAL SNAPSHOT TIME PERIOD
Unemployment Months of Supply Annualized Sales Volume Annualized Average Sale Price Average DOM
TODAY
1 YEAR AGO
CHANGE
13.7 4.9 34,335 $166,283 75
13.8 3.3 38,511 $168,294 55
-0.1% +32.7% -10.8% -1.2% +27.0%
likely will dominate the housing market. Last year, it was estimated that at least 60 percent of the REO and short sale activity was “all cash” investor purchases. While the singlefamily resale volume was near the peak level of 2004, the majority (some 60+ percent ) were not to end users (those that would occupy the units), but rather to the investor middlemen that would renovate the units and return them to the market. Effectively, more than 20,000 units were sold twice. First to the investor and then from the investor to a final buyer that would occupy the unit. Statistically, we are seeing a healthy resale volume; however, it is important to dig deeper to see how we truly compare to past years. In this case (on a net basis), 2010 had less than onehalf of our normal 30,000-plus singlefamily annual resales go to buyers that will occupy the homes. A healthy housing market depends on employment and that remains the key factor affecting the local housing market. Jobs equal housing demand. Without improvement in the job market, we are simply shuffling existing cards, moving people out of apartments into better priced singlefamily units and treading water until the employment market improves. What will make the difference? During the next 12 months, any number of factors could either improve or impair the local employment picture and, in turn, the housing market. Budget cuts at all levels (state, county, city, public and private sectors) will play a role as public and private employers scramble to eliminate
MARKET AT A GLANCE Economic Climate Fair New Construction Low REO Activity High Supply Medium Demand Medium Market Direction Down Market Mood Poor
red ink. Distressed sales (REOs and short sales) will continue to place downward pressure on housing prices. On the upside, the record low housing prices should begin to attract more than just investors. Five years ago, record high prices forced many seniors to look elsewhere for retirement housing. This year, record low prices (combined with record bad weather elsewhere) should have retirees penciling in Las Vegas on their lists. Seniors are the wild card in housing. They buy local with money from elsewhere, do not need or take a job, and infuse cash into the local economy. Direction of the housing market recovery will depend on many factors. At this point, there are far more unknowns than there are knowns. We can expect to see a fairly flat market during the next 12 months. There may be some fluctuations (seasonal conditions) because of short-term increases in inventory or investor activity. In Las Vegas, we import money from visitors, gaming, conventions, and retirees. To improve locally, we depend on other economies to improve and for weather conditions to drive retirees this way. R. Scott Dugan, SRA, is with R.Scott Dugan Appraisal Co., Inc., Las Vegas, NV. He can be reached at +1 702 876 2000 ext 1, or e-mail Scott@rsdugan.com.
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