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Magazine of Worldwide ERC 速
CULTURE AND COMMUNICATION 101
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Real estate valuation issues? Solved. Whether you’re a global relocation services provider, a lender, an HR professional, or a local agent, our Mercury Network system is the solution to your valuation management needs. Using cutting edge technology and innovative workflow tools, Mercury Network eliminates delays and information bottlenecks. Everyone stays in the loop, on point, and happy.
It scales seamlessly to your needs, from handfuls of valuations to hundreds of thousands. You always get 24 x 7 status, a PDF plus full XML data, and automated review rules — even for the ERC form. And it’s of course 100% compliant with GLB, HVCC, USPAP, and every other acronym. But perhaps best of all, it’s fast, secure, and nationwide. You simply can’t lose. Try it today.
Mercury Network Vendor Management Platform We’ve delivered more appraisals than any other company, period. Here’s why. t Use your appraisers, or augment with ours — we cover every county in the U.S. t All appraisals are auto-reviewed for over 1000 items before being transmitted, reducing issues due to oversights t Get a printable PDF, plus full XML data for the entire ERC report (or any other form) t Check the AVM and assessed values, market direction, and other key info with one click t Tie it in to your own back office systems using APIs, or just use it ad hoc on the web t Benefit from the sharpest technology: Proximity selection, 24 x 7 status, appraiser mobile iPhone tools, and much more
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MOBILITY • Vol. 31 No. 5 • May 2010
Worldwide ERC® Learning Zone Webinar Short-term Assignments and the Stealth Expat May 4 2 p.m. to 3:00 p.m. EST
MICHAEL (MIKE) C. WASHBOURN, SCRP, GMS, Pfizer Inc., Peapack, NJ Vice President SUSAN SCHNEIDER, SCRP, GMS, Plus Relocation Services, Inc., Minneapolis, MN Secretary/Treasurer
GMS Training and Certification May 17-19 Orlando, FL National Relocation Conference May 19-21 Orlando, FL
PAMELA (PAM) J. O’CONNOR, SCRP, Leading Real Estate Companies of the World®, Chicago, IL
JAY K. DELICH, SCRP, SRA, IFA, Arizona Appraisal Team, LLC, Scottsdale, AZ
GMS™ Training and Certification June 7-9 Frankfurt, Germany
MARK GIORGINI, GMS, China Vanke Co. Ltd., Shenzhen, CHINA
Chairman, Board of Directors AL BLUMENBERG, SCRP, NEI Global Relocation, Omaha, NE
BOARD OF DIRECTORS CORI L. BEAUDET, SCRP, GMS, SC Johnson—A Family Company, Racine, WI LISA CARAVELLA, CRP, Bank of America, Plano, TX
MARIO FERRARO, International SOS Pte Ltd., SINGAPORE
Global Workforce Summit : Focus on Europe, Middle East & Africa June 10-11 Frankfurt, Germany ®
OCTOBER 2010 GMS Training and Certification October 25-27 Seattle, WA ™
Global Workforce Symposium October 27-29 Seattle, WA
WILLIAM (BILL) GRAEBEL, GMS, Graebel Relocation Services Worldwide, Aurora, CO JOHNNY H. HAINES, SCRP, GMS, Deloitte, Hermitage, TN LARS LYKKE IVERSEN, Santa Fe Relocation Services, Hong Kong, CHINA CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ JO LAY, SCRP, GMS, Coldwell Banker Central Region Relocation, Chicago, IL EARL LEE, Prudential Real Estate and Relocation Services, Scottsdale, AZ STEPHEN C. MCGARRY, SCRP, WPP, New York, NY SANTRUPT MISRA, PH.D., Aditya Birla Management Corporation Ltd., Mumbai, INDIA JOY MORRISON, SCRP, GMS, PepsiCo, Inc., Purchase, NY STEVEN A. NORD, UPS, Atlanta, GA JOHN PFEIFFER, GMS, Mustang Engineering, L.P., Houston, TX PANDRA RICHIE, SCRP, GMS, Long & Foster Corporate Real Estate Services Division, Chantilly, VA C. MATTHEW (MATT) SPINOLO, SCRP, GMS, CARTUS, Memphis, TN
EX-OFFICIO Chairman, U.S. Advisory Council AL BLUMENBERG, SCRP, NEI Global Relocation, Omaha, NE
In Memoriam John A. “Jack” Connelly passed away suddenly on April 15, 2010, at age 67. He is survived by his wife, Mary B. “Bunny” Connelly (nee McKeown); children Patrick Connelly (Jennifer), Michael “Mickey” Connelly (Kelly), Matthew Connelly (Michael), John Connelly (Colleen), and Katherine “Katie” Nocito (Michael); grandchildren, Miriah, Pearce, Michael, Molly, and Fiona. Connelly served in the U.S. Marine Corps. In lieu of flowers, donations may be made in Jack’s memory to the Disabled American Veterans, PO Box 14301, Cincinnati, OH, 45250-0301. Expressions of sympathy may be e-mailed to: Condolences@GardnerFuneralhome.com, or to Connelly’s family at 26540 Old Salt Cove, Long Neck, DE 19966-5955.
Chairman, Foundation for Workforce Mobility KEVIN E. RUSSELL, SCRP, PHH Mortgage, Mt. Laurel, NJ Chairman, Global Advisory Council SANTRUPT MISRA, PH.D., Aditya Birla Management Corporation Ltd., Mumbai, INDIA Chairman, Government Relations Council C. MATTHEW (MATT) SPINOLO, SCRP, GMS, CARTUS, Memphis, TN
MOBILITY (ISSN 0195-8194) is published monthly by Worldwide ERC®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203, +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®. POSTMASTER: send address changes to M OBILITY , Worldwide ERC ®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203
4 MOBILITY/MAY 2010
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An Exclusive Beneﬁt For Your Employees 1% Mortgage Cash Back only from Chase, only for Chase Checking customers. SM
Relocating employees who get a new Chase mortgage can save more with a Chase Checking account! Either we’ll apply an annual 1% Cash Back award to their principal mortgage balance, or we’ll put the money directly into their checking account. To learn more about how Chase can help your employees, visit www.chase.com/relocation or contact: Deborah G. Holiday Senior Vice President, Corporate and Institutional Lending Programs 1-800-362-5332 firstname.lastname@example.org
The patent pending 1% Mortgage Cash BackSM program is available in AZ, CA, CO, CT, FL, GA, ID, IL, IN, KY, LA, MI, NJ, NV, NY, OH, OK, OR, TX, UT, WA, WI, and WV. For certain geographic areas in FL, ID, IN, LA, and MI, eligible applications are those submitted on or after March 1, 2010. Offer available on new Chase first mortgage purchase and refinance applications. A cash back award based on 1% of one month’s scheduled monthly principal and interest (P&I) payment of the new mortgage will be calculated and totaled over a 12-month period. The 1% cash back calculation applies to scheduled principal and interest payments only, and does not apply to additional principal payments made by borrower, or to payments for escrowed items such as taxes and insurance. At discretion of borrower at enrollment, the sum will be awarded via direct deposit into a Chase checking account or applied to the outstanding principal balance on or about each anniversary date of the loan origination. A new or existing Chase personal checking account is required, along with enrollment in Chase’s automatic mortgage payment service where the mortgage payment will be automatically deducted from the Chase checking account. There is a $500 calendar year cap on the principal reduction and cash back amount, including any anniversary award payouts and accrued rewards on a Chase to Chase refinance paid out in the same calendar year. Visit us at chase.com/MortgageCashBack for full program details. The program may be discontinued at any time without notice. The 1% Mortgage Cash Back may result in taxable income to the borrower. We encourage the borrower to consult with a personal tax advisor. Deposit products provided by JPMorgan Chase Bank, N.A. Member FDIC ©2010 JPMorgan Chase & Co. 8580 0510
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Hitting the Refresh Button e’ve all made the rounds of traditional meeting venues, and over time, we could practically recite the drill
without ever opening the program. These days, a meeting has to be pretty special to grab our attention, to compete with all of the competition that’s out there, and to be heard and seen above the clamor of virtual
network options. It needs a strong value proposition, and it must provide a range of content, subject matter expertise, networking, and benchmarking options, giving attendees the comfort and certainty that their time and resources were well spent. That’s why, when I stepped into the vice president’s position this year—which carries with it the stewardship of our annual National Relocation Conference and Global Workforce Symposium—I wanted to build on the successes that we’ve had in years past with my fellow Program Planning Committee members, while adding a bit of originality. And I hit the refresh button! I came armed with three guiding principles for consideration: First on my list was, “make it motivating!” When we were developing content for the National Relocation Conference, which is being held later this month in Orlando, Florida, my committee and I talked about what makes a meeting energizing and intellectually stimulating. Our answers ranged from the “instant gratification” kind of elements, including great takeaways and bright ideas that attendees could easily and quickly implement on their return to work, to the way we wanted people to feel at our meeting— engaged, self-assured, challenged (in a good way!) and ready to take action. We gave attendees choices this year, with track-based learning that allow registrants to take the avenue that best meets their needs. The second principle was, “make it fun!” Gone are the days where 6 MOBILITY/MAY 2010
every session of every meeting is one speaker, or a panel of speakers simply talking to a roomful of listeners. Attendees want humor, interaction, personal participation; something new and active and thought-provoking. They want their learning delivered with a side order of excitement! This is where my group got pretty inventive, and added both “Speed Networking” and a “Geek Speak Room” to the conference. The speed networking session pairs buyers and suppliers for rapid gettingto-know-you conversations, and when we tested it with a group of Worldwide ERC® members in February, the energy in the room went from zero to 80 in seconds! The Geek Speak Room provides attendees with a “wander in” opportunity to ask questions and get some tech tips on such things as learning about Blackberry options they haven’t used, setting up a Facebook account, using the “My Account” function of their Worldwide ERC® membership, deciphering new tools and gadgets… in essence, it’s an “everything you ever wanted to know about technology, but were afraid to ask” opportunity.
And that brings me to the third principle:“Offer hope for the future!” We’re all ready for good news, and we don’t need a history lesson about what’s already happened. I loved what one of our members said last year in the midst of the darkest days of the recession: “the future is not cancelled!” It makes no sense for us to look back, and perfect sense to look forward. To help you on this journey, we will offer great resources to address the new normal, deliver positive messages from expert presenters, introduce achievable and costefficient innovations, and demonstrate unique ways to embrace change in a fluid and productive manner. We are traveling unfamiliar territory these days, and we look to each other to find the answers. Our meetings are one of our greatest success stories in this regard—they allow us to explore each other’s brainpower and expand our collective IQ for some truly collaborative and inspired results. So let’s hit that refresh button together. See you in Orlando! —Susan Schneider, SCRP, GMS 2010 Worldwide ERC® Vice President President, Plus Relocation Services, Inc. Minneapolis, MN
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MOBILITY Magazine of Worldwide ERC®
Crossroads in the Moving and Storage Industry By Eric Reed, CRP, GMS
Risk Management for Our Times By Patrick Moore
Security Impact on the Employee Mobility Industry By Laura May Carmack
Navigating the Comparable Minefield By Joseph Palumbo, SRA, and Alvin “Chip” Wagner III, SCRP, SRA
Standing the Test of Time? Protecting REO and Short Sale Investments By Lindsay Filby
Subpart A and SEVIS II: Will Your J-1 Program Sponsor Be Ready? By Darra Klein
The First Steps in Educating Potential Transferees By Pamela S. Dunleavy, CRP, and Stefanie R. Schreck, CRP, GMS
Regional Real Estate— Planning for the Year Ahead By Mike Puckett, CRP, and Renee Carnes-Rook, CRP
How to Maintain Healthy Sleep Patterns: Issues of Civil Liability in Immigration Matters By Ben Kranc
Managed Care Versus Agent Database: What Works in Relocation? By Pam O’Connor, SCRP, and Sue Carey, SCRP, GMS
Benchmarking Relocation Policies: The Results Are in—Now What? By Janet Olkowski, SCRP, GMS
The Decade in Review: How Technology Has Improved the Mobility Process By Matthew Dickerson, CRP
Technology and Global Mobility: The Future Is Today By Michael S. Cadden, GMS
Culture and Communication 101 By Sean Dubberke
Repatriation— a Stranger at Home By Rashel Meiworm
Safeguarding the Most Precious of Possessions During a Move: One’s Identity By Glenn Maykish
MOBILITY/MAY 2010 9
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MOBILITY Magazine of Worldwide ERC®
Vice President & Publisher
Hitting the Refresh Button By Susan Schneider, SCRP
12 AROUND THE WORLDWIDE ERC® 14 EXECUTIVE SPOTLIGHT
Managing Editor Frank Mauck EDITORIAL ADVISORY COMMITTEE
Chairman Joy Morrison, CRP, GMS, PepsiCo, Inc., Purchase, NY Gaetane Brummett, CRP, GMS, Prudential CA Realty, Huntington Beach, CA
17 INDUSTRY SPOTLIGHT
Claude A. Choate, CRP, Choate Realty Group, Dallas, TX
17 WORLDWIDE ERC TRENDSPOTTING
Sean Dubberke, RW3 LLC, New York, NY
18 2010 SERVICE AWARD RECIPIENTS
Pamela Dunleavy, CRP, Primacy Relocation, LLC, Memphis, TN
22 HALL OF LEADERS
Gustavo Higuera, GMS, Prudential Real Estate and Relocation Services, Washington, DC
28 RECOGNIZING EXCELLENCE
Joleen Lauffer, CRP, GMS, AIReS, Pittsburgh, PA
30 TAX AND LEGAL UPDATE 139 ADVERTISERS’ RESOURCE 140 RAC REPORT 142 MARKETPLACE 143 GLOBILITY® 144 LAST PAGE
Marge A. Dillon, CRP, GMS, Xerox Corporation, Lewisville, TX Deborah A. Dull, CRP, GMS, Crown Relocations, Houston, TX C. William Heald, SCRP, Heald Associates LLC, Boston, MA Tacha Kasper, CRP, Leading Real Estate Companies of the World®, Chicago, IL Mark A. Lozano, CRP, Wells Fargo Home Mortgage, Minneapolis, MN Patrick Moore, Hayden Moore LLC, Chagrin Falls, OH Paul O’Leary, CRP, GMS, The Move Management Center, San Mateo, CA Christopher J. Otteau, Otteau Valuation Group, Inc., East Brunswick, NJ Bari L. Rubenstein, CRP, Consultant, Glenview, IL Stefanie R. Schreck, CRP, GMS, American International Group, New York, NY Carolyn White, Graebel Relocation Services Worldwide, Aurora, CO GLOBAL EDITORIAL ADVISORY COMMITTEE
Chairman Joy Morrison, CRP, GMS, PepsiCo, Inc., Purchase, NY Michele Bar-Pereg, Bar-Pereg Group, Amsterdam, THE NETHERLANDS Lorraine Bello, GMS, Ricklin-Echikson Associates, Inc. (REA), Millburn, NJ Lorelei Carobolante, SCRP, GMS, GPHR, G2nd Systems, LLC, San Ramon, CA Scott Craighead, SCRP, GMS, Blue Sky Executive Search, New York, NY Anne Dean, GMS, Living Abroad, LLC, Norwalk, CT Cindy Madden, CRP, Cartus, Danbury, CT Derrick Kon, Mercer (Singapore), Pte. Ltd, SINGAPORE Anne-Claude Lambelet, GMS, The International Relocation Associates (TIRA), Geneva, SWITZERLAND
Design/Production: Ideas, Communicated, LLC, Vienna, VA, www.ideascommunicated.com Printing: CADMUS Specialty Publications, Richmond, VA Reprints: Katina Moaney, CADMUS Reprint Services, email@example.com; +1 800 487 5625 Advertising Sales: Glen Cox, National Sales Manager, The Townsend Group, +1 301 215 6710; ext. 109; firstname.lastname@example.org
10 MOBILITY/MAY 2010
Tacita Lewars, GMS, Globaforce Incorporated, Calgery, Alberta, CANADA Andrea Massoud, GMS, Living in Brazil, International Relocation Services, Barueri-Sao Paulo, BRAZIL Jeff Knapton, SIRVA Relocation, Westmont, IL Nino Nelissen, GMS, Executive Mobility Group, Schlipol Airport, THE NETHERLANDS Constance Pegushin, Berry Appleman & Leiden LLP, San Francisco, CA Maureen Bridget Rabotin, Effective Global Leadership, Paris, FRANCE René Rosemary Stegmann, GMS, Relocation Africa, Cape Town, SOUTH AFRICA Rita Wagner, GMS, Interdean International Relocation, London, UNITED KINGDOM Nick Woodhams, GMS, Woodhams Relocation Centre, Sydney, AUSTRALIA
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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.prudential.com/relocation/value Benefit from the experience of our Prudential Real Estate Network.
Trust The Rock®, where promises have been kept for more than 130 years.
Increase transferee satisfaction with our caring relocation professionals.
Minimize home sale costs, thanks to our revolutionary eValuator Market Intelligence Tool. SM
© 2010 Prudential Financial, Inc., Newark, NJ, USA. All rights reserved. Prudential Real Estate brokerage services are offered through the independently owned and operated network of broker member franchisees of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. and Prudential are registered service marks of The Prudential Insurance Company of America. Equal Housing Opportunity
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Around the Worldwide ERC®
Are We on the Same Page?
Relocation Conference being held May 17 through 19, in Orlando, FL.
his time last year, Heidi Hume, senior manager of the Worldwide ERC® Marketing and Web Strategy team, published “The Ultimate Guide to the New Worldwide ERC® Website” in MOBILITY, where she explained how the then-recently launched new Worldwide ERC® website was, “the product of extensive research, combined with current website best practices and incorporation of technological advances that make the thousand of pages of content hosted on the site much more accessible.”
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.
Touching base with Hume one year later, she tells us that since the new Worldwide ERC® site was launched, the six most visited pages are:
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).
The main information page for the Worldwide ERC® Certified Relocation Professional (CRP®) designation, which celebrates its 20th anniversary this year.
The “My Account” page, which, 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.
The main information page for the 2010 National 12 MOBILITY/MAY 2010
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. And, Hume told us that she has her eye on the rising popularity of these site resources pages: www.WorldwideERC.org/gov-relations The Government Relations section of the website is newly reorganized and includes links to invaluable up-tothe minute resources provided by members of Worldwide ERC® such as the Global Tax News Library, Global Immigration News Library, and Employment Law Library. www.WorldwideERC.org/Pages/web2.0.aspx The Interactive Communities and eDiscussions page, which includes a link to the China blog and multiple discussion forums where members can ask and answer questions, share insights, and showcase their expertise. www.WorldwideERC.org/Education/Pages/ learning-zone-webinars.aspx The main information page for Worldwide ERC® interactive webinars that includes information about upcoming seminars as well as details and links to past sessions.
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It’s not about getting bigger.
It’s about delivering more.
Primacy and Cartus have joined forces. More choices. More solutions. The two premier companies in the relocation industry have come together to accomplish what neither could do alone. Together, Primacy and Cartus offer a truly comprehensive range of relocation services wherever you need us to be, and we back it up with the most experienced team in the industry. We give you more choices, and more ﬂexibility to access services through local delivery or global engagement. We didn’t join forces just to serve more clients. We joined forces to serve our clients even better. Find out more at www.cartus.com.
Setting a new standard in relocation.
© 2010 Cartus Corporation • All rights reserved Cartus and the Cartus logo are pending or registered trademarks of Cartus Corporation. PRIMACY and the PRIMACY Logo are trademarks or registered trademarks of Primacy Relocation, LLC.
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Executive Spotlight he Metro Atlanta Relocation Council (MARC) has announced its 2010 board of directors. Chris Chalk, CRP, GMS, Graebel Relocation, was named president. Richard Cobb, CRP, Wachovia Mortgage Corporation, was named vice president. Jan FergusonLequier, CRP, The Home Depot, was named secretary. Mack Zittrouer, Cort Furniture, was named treasurer. Committee chairs include Peter Hiro, CRP, Capital Relocation Services, programs; Wallace Hitt, Post Properties, membership; Arnold Schwartz, SCRP, Arnold Schwartz & Associates, assistant treasurer; Rob Kreiling, CRP, GMS, Bank of America, mentorship; Jeff Morris, CRP, GMS, OneSource Relocation, regional groups; and Teresa Palacios Smith, Prudential Georgia Realty, public relations. In addition, serving on the Advisory Council are Carolyn Cherry, CRP, AT&T Relocation; Lynne James, CRP, GMS; Dorsey Alston, Realtors; Karen McRae, SCRP, GMS, Harry Norman Realtors; Ginger Merrick, CRP, GMS, Coca-Cola Enterprises Inc.; Connie Stinson, SCRP, GMS, InterContinental Hotels Group; and Tina Tyler, CRP, GMS, of Coldwell Banker. Toll Transitions’, Melbourne, Australia, Franca Napoli has been named national relocations manager. NOR-CAL Moving Services, San Leandro, CA, has named Dan Shane vice president of sales for the new northAmerican company, NC Moving and Storage Solutions. Univar, Redmond, WA, has named Edward A. Evans senior vice president and chief human resource officer. ORC Worldwide, New York, NY, has named Andrew Walker vice president within the firm’s global compensation services practice. Coleman World Group, Sumner, WA, has named Tracey Pidge vice president of business development for the Northwest and Alaska for Coleman American Allied.
14 MOBILITY/MAY 2010
Coldwell Banker Howard Perry and Walston, Raleigh, NC, has named Nancy Harner, SCRP, senior vice president of relocation/corporate services. “The firm is so excited to welcome Nancy,” said company CEO Eb Moore. “With her vast experience and expertise in the Triangle, as well as repeated national success on the business development end of real estate and relocation, she will undoubtedly be an asset to our team and our clients.” Harner For Worldwide ERC®, Harner has served on the faculty of the Fundamentals of U.S. Domestic Relocation program, as well as the Certification Review Board. She also is a recipient of both the Meritorious Service Award and the Distinguished Service Award.
Toll Transitions, Melbourne, Australia, has named Sue Latina-Cohen, CRP, national corporate account manager. For Worldwide ERC®, Latina-Cohen has served on the Global Workforce Symposium Planning Committee and the Asia Pacific Committee. She also has presented at the National Relocation Conference and served as moderator at the Global Workforce Symposium.
Carmen Mercado, education and diversity manager for NRT LLC, Parsippany, NJ, has been elected national vice chairman and 2011 president elect of the National Association of Hispanic Real Estate Professionals (NAHREP). RealtySouth, Birmingham, AL, has named Monty Bridgewater qualifying broker and manager of the company’s Hoover office. HomeServices Lending, Birmingham, AL, has named Scott Phillips president of HomeServices Lending/ Mortgage South. Crown Worldwide Group, Hong Kong, China, has named Gus van Geijtenbeek business development manager for Crown’s fine arts division in the Middle East. Amanda Jones has been named moving services division manager in Dubai, United Arab Emirates; and Christopher Grimshaw joins Crown Doha, Qatar, as general manager. AIRINC, Cambridge, MA, has named Kay Hall business develop-
ment director for EMEA. Ivana Gibson has been named client solutions executive in North America. Peng Yang Long has been named client solutions executive in Asia Pacific. Crye-Leike REALTORS, Atlanta, GA, has named Leslie Kane, vice president of relocation services. Realogy Corporation, Parsippany, NJ, has named Phillip Hugh executive vice president of franchise sales. Plus Relocation Services, Inc., Minneapolis, MN, has named Edie Stensby global compensation manager. IMPACT Group, St. Louis, MO, has named Mark Lowry, CRP, business development executive. Pro-Link GLOBAL, UK, Limited, London, United Kingdom, has named Sophy King director, knowledge management. School Choice International, White Plains, NY, has appointed Timothy Dwyer as its new chief operating officer.
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New Survey Reveals Growing Optimism for 2010 Workforce Mobility Rebound
lthough the worldwide economic downturn had significant and far-reaching effects for organizations desiring to keep their employees mobile, a recent survey found that many are looking at 2010 with an optimistic eye. The survey, “2010 Global Relocation Trend Survey Report,” is the 15th annual report issued from Brookfield Global Relocation Services, Woodridge, IL. Its 120 respondents represent small, medium, and large organizations with offices around the world, and have a combined worldwide employee population of 5.8 million. According to the release, the global recession led to a 46 percent decrease in the number of international corporate assignments in 2009, almost twice the total forecast in 2008 and the highest rate in the survey’s history. However, 44 percent of survey respondents anticipate their expatriate populations to increase in 2010. Forty-four percent reported that they expect their overseas assignments to remain the same, and only 12 percent predict a decrease. Organizations are reporting that they are turning to older, moreexperienced employees to ensure successful international assignments, according to the release. Expatriates between the ages 40 to 49 increased from 37 percent to 40 percent, while those who are between 50 and 59 years old increased from 14 percent to 16 percent. “Last year, caution seemed to be the overriding sentiment as the thenbleak economic outlook held in check many multinational companies’ overseas assignment activities,” said Rick Schwartz, president of Brookfield Global Relocation Services.
“While the economy clearly remains a factor in 2010, a growing sense of optimism appears to have taken root, as more companies report plans to increase their expatriate activity for the remainder of the year.” According to the survey, expatriates view assignments to China, India, and Russia as the most challenging. China, India, and the United States were ranked top three for the highest rates of assignment failure. China led the pack as the top emerging assignment location, followed by Singapore,
the United States (which was ranked 19 in 2009), and India. Russia fell from number three in 2009 to 21st place, likely a result of the country’s economic difficulties. “Led by strong economic activity from emerging and developing economies in Asia, international assignments in the region are increasing but challenges—mainly due to the difficulty in finding suitable housing, schooling, health care and immigration red tape—remain,” said Schwartz.”
PEACE OF MIND. WORLDWIDESM MOBILITY/MAY 2010 17
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2010 Service Award Recipients To recognize and extend its gratitude for the invaluable contributions of its members, Worldwide ERC速 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速 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: Joseph V. Benevides, Jr., SCRP Assonet, MA Deborah Ann Conlan, SCRP, GMS SYNAXIS Alexandria, VA Jay K. Delich, SRA, SCRP, IFA Arizona Appraisal Team, LLC Scottsdale, AZ Linda Howard, SCRP Prudential California/Nevada Realty Roseville, CA
Two-time Award Recipients Rachel K. Frenette, SCRP, GMS Lexicon Relocation Roswell, GA Lawrence K. Porter, SCRP Macdonal Porter Drees, Attorneys Toronto, Ontario, Canada Dr. Sheri Sinaga, SCRP, GMS Primacy/Cartus Irvine, CA Beverly L W Sunn, GMS Asia Pacific Properties, Ltd. Central, Hong Kong, China Michael C. Washbourn, SCRP, GMS Pfizer Inc. Peapack, NJ
Sue Carey, SCRP, GMS CENTURY 21 Kreuser & Seiler, Ltd. Danbury, CT Jack Cotter New World Van Lines, Inc. Bethlehem, NH Russell B. Cunningham, Esq., SCRP Larrabee, Cunningham & McGowan, P.C. Philadelphia, PA Denise M. Davis, SCRP, GMS ExxonMobil Dallas, TX Robert L. Dicke, SCRP Blackhawk Moving & Storage, Inc. Sycamore, IL
First-time Award Recipients
William Graebel, GMS Graebel Relocation Services Worldwide Aurora, CO
Gill L. Aldred, GMS Brookfield Global Relocation Services London, United Kingdom
Geeta Gwalani, GMS VFS Global Services Pvt Ltd Mumbai, India
Three-time Award Recipients
Michele Bar-Pereg Bar-Pereg Group Amsterdam, The Netherlands
Johnny H. Haines, SCRP, GMS Deloitte Hermitage, TN
Lorelei Carobolante, SCRP, GMS G2nd Systems, LLC San Diego, CA
Sheila V. Barr, SCRP Patterson-Schwartz Real Estate Hockessin, DE
Laura J. Henneberry, SCRP, GMS Morreale Real Estate Services, Inc. Glen Ellyn, IL
Gary F. Dittrich Altair Global Relocation Shelton, CT
Helmut Berg RSB Deutschland GmbH Frankfurt/Main, Germany
Christopher James Bechtel Glendale, AZ
Dean Foster Dean Foster Associates, International Consulting Brooklyn, NY
John M. Brennan, SCRP Brennan Title Company Camp Springs, MD
Carol A. Kelly, SCRP, GMS The Corcoran Group New York, NY
Charles Caldwell Juniper Networks, Inc. Taikoo Shoo, Hong Kong, China
Robert W. Kelly, Jr., SCRP, GMS New World Van Lines, Inc. Aurora, CO
Pandra Dickson Richie, SCRP, GMS Long & Foster Companies Chantilly, VA Peggy Smith, SCRP, GMS Microsoft Corporation Redmond, WA
Ellie Sullivan, SCRP, GMS Weichert Relocation Resources Inc. Norwell, MA 18 MOBILITY/MAY 2010
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2010 Service Award Recipients Gordon J. Kerr TEAM Relocations Limited London, United Kingdom
Carol E. Card FM Global Johnston, RI
Maggie Kiesow, SCRP, GMS Coldwell Banker Prime Properties Green Island, NY
Bonnie Fritsch Casper, CRP Comey & Shepherd, LLC Cincinnati, OH
Kay J. Kutt, SCRP, GMS Asian Tigers Mobility Ltd. Hong Kong, China Michael J. LeQuier, SCRP Weichert Relocation Resources Inc. Morris Plains, NJ Santrupt Misra, Ph.D. Aditya Birla Management Corporation Ltd. Mumbai, India Joy Morrison, SCRP, GMS PepsiCo, Inc. Purchase, NY Frances Martinez Myers Employee Transfer Corporation Philadelphia, PA John Pfeiffer, GMS Mustang Engineering, LP Houston, TX Nancy A. Sharp Ziegler Fragomen, Del Rey, Bernsen & Loewy, LLP Matawan, NJ
Meritorious Service Award Recipients Edward R. Barwick, CRP Budd Van Lines Somerset, NJ Anita Blanchett BP Middlesex, United Kingdom Margaret Briney, CRP, GMS NEI Global Relocation Omaha, NE
20 MOBILITY/MAY 2010
Jennifer M. Connell, CRP, GMS Weichert Relocation Resources Inc. Norwell, MA Peter Alexander Conner Morgan Stanley Kowloon, Hong Kong, China Ron Contarino, CRP Infinity Management, Inc. Flemington, NJ Jeffrey T. Cromie, CRP Wells Fargo Home Mortgage North Brunswick, NJ David J. Crosby, CRP, GMS Covidien Mansfield, MA Linda Bauer Darr American Moving and Storage Association Alexandria, VA Robert Fletcher Interdean International Relocation London, United Kingdom Richard W. Foos, SRA Foos & Associates, Inc. San Diego, CA Austin T. Fragomen, Jr. Fragomen, Del Rey, Bernsen & Loewy, LLP SINGAPORE Linda K. Fredeking, CRP Yerman, Whitman, Gaines and Conklin Baltimore, MD
Beatrice Galindo Chicago Title Insurance Company Houston, TX
Brendan Ryan Fragomen, Del Rey, Bernsen & Loewy, LLP Matawan, NJ
Sai Gandhi SIPCO, Pepsi Cola Jeddah, Saudi Arabia
Alfred K. Schlomann AIRINC Asia-Pacific Limited Central, Hong Kong, China
Jacob George, CRP Primacy Relocation, LLC Singapore
Piper Sheffield, CRP Stewart Relocation Services, a Division of Stewart Title Guaranty Company Houston, TX
Linda J. Hargreaves, CRP, GMS Old Republic Title Relocation Services Concord, CA
Sandy Shipley, CRP, GMS Cartus/Primacy Plano, TX
Debbie Haynes, GMS JDSU Milipitas, CA
Regan Taikitsadaporn Marriott International, Inc. Miami, FL
Gardiner Hempel, Jr. Deloitte Tax LLP New York, NY
Rita Tolotti Air Products and Chemicals, Inc. Allentown, PA
Lauren M. Herring, CRP, GMS IMPACT Group St. Louis, MO Terry Hogan Cartus Danbury, CT Leah Johnson Chesterfield, MO Carol C. Joy, CRP, GMS Northrop Grumman Corporation Glen Allen, VA Earl Lee Prudential Real Estate and Relocation Scottsdale, AZ David G. Macpherson Capital Relocation Services Sterling, VA Angela Pirrie, GMS Paragon Global Resources, Inc. Wanchai, Hong Kong, China
Mike G. Wagner, CRP RAL Inspection Services Westfield, IN Catherine P. Whitener, CRP, GMS Hilldrup Companies Mechanicsville, VA Deborah A. Wiley Metropolitan Title Company/First American Title Brighton, MI Ronal Willig HoganWillig Getzville, NY Randy L. Wilson, CRP NEI Global Relocation Omaha, NE Susan L. Zandarski, GMS Whirlpool Corporation Benton Harbor, MI
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Hall of Leaders
SIX MEMBERS ADDED TO WORLDWIDE ERC® HALL OF LEADERS hen I was interviewed for MOBILITY as my presidency was beginning, I remember saying, ‘No one chooses the relocation industry as a profession. It chooses you.’ I think that’s true of all of us. I ended up entering relocation through the mortgage portal and haven’t looked back since. Once I found the workforce mobility industry, it was clear that it was about more than just doing a job. It was about building trust, friendships, and relationships in order to do business with others who expected that same combination of business and courtesy, of intelligence and empathy. I was hooked. “Being a member of Worldwide ERC® would have been an exceptional experience all on its own. But having the opportunity to first serve on committees and then on the Board of Directors has been lifechanging. During my tenure on the board, I have met with governmental authorities at one of our AsiaPacific Summits in Shanghai; I was honored by one of our members from Chennai, India, when she told me I was one of her gurus; and I have ridden a motorcycle inside Caesar’s Palace at a National Relocation Conference in Las Vegas. “Motorcycles aside, there have been some other defining moments for us as an industry in recent years that I have been proud to experience with you, such as the issuance of Revenue Ruling 2005-74 by IRS after many years of effort on behalf of the Coalition and Worldwide
22 MOBILITY/MAY 2010
ERC®, which has saved our industry millions of dollars; the relocation of the Worldwide ERC® offices from Washington, DC, to a beautiful, ecological, and more cost-effective location in Arlington, VA; the introduction of a new BMA form that helps our members more effectively address the current status of the real estate market; the introduction of our new website and Web 2.0 tools; and the growth in our global footprint that allows us to reach out to workforce mobility professionals around the world. “I want to express my appreciation to our members, because they create our community and make it so welcoming and bright and talented. Worldwide ERC® is blessed with some of the best minds in the business, and it’s critical to share that intelligence with each other. In the fabric of our industry is woven all of the ways we support each other: as educators, clients, colleagues, committee members, employees and employers, friends and partners. We share an uncommon bond. “I was asked recently what advice I had for young people who might be entering the industry as new professionals… and my answer is no different than for anyone else. We’re better when we reach beyond the parameters of our jobs and professions. Getting involved outside of our comfort zones, taking on responsibilities beyond our day jobs and into other professional spheres, seeing how other businesses are run… all of those actions help us build mental muscle and skills that
Joseph V. Benevides, Jr., SCRP
we might never have grown. Looking for opportunities to be educated, and to educate up—like mentoring that technologically talented newcomer in exchange for a fresh college grad’s Facebook savvy—are terrific ways to stay sharp and keep honing our skills for new opportunities. “I encourage each of you to offer your special skills to this organization. We need you to put your hand up. I promise that, like me, you will get much more out of it than you will ever put in.” —-Joseph V. Benevides, Jr., SCRP
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W O R L D W I D E E R C ® is proud to announce the newest members of its Hall of Leaders, who will be inducted at the annual awards luncheon during the National Relocation Conference in Orlando, FL: Joseph V. Benevides, Jr., SCRP, Assonet, MA; Deborah Ann Conlan, SCRP, GMS, Principal, SYNAXIS, Alexandria, VA; Jay K. Delich, SRA, SCRP, IFA, President, Arizona Appraisal Team, LLC, Scottsdale, AZ; Linda Howard, SCRP, President, Network Services, Prudential California/Nevada Realty, Roseville, CA; Pandra Dickson Richie, SCRP, GMS, Vice President, Corporate Real Estate Services, Long & Foster Companies, Chantilly, VA; and Peggy Smith, SCRP, GMS, Director, Global Mobility, Microsoft Corporation, Redmond, WA.
remember the excitement and anticipation around the first Worldwide ERC® international exhibit. That was 1987 and the half-day exhibit was planned to precede the Fall U.S. Domestic Conference. While employers had been moving employees around the world for hundreds of years, in lots of ways it was a new world for the relocation industry. Corporations were beginning to leverage their U.S. domestic and global relocation activity and relocation providers began to create new support options to meet the evolving service needs. “Fast forward to today—the 12,000+ Worldwide ERC® members are from 64 countries around the globe! Our breadth of services, know-how, and resources has grown exponentially. From those early days as a chairman for the Worldwide ERC® Center for International Assignment Management (remember CIAM?) and the International Initiatives Advisory Council, to last year’s review and refresh of the Worldwide ERC® Global Strategy, I’m proud to have participated with so many fellow members eager to embrace our industry’s challenges. It is one of the cornerstones that have helped in creating a richer association and new opportunities for us all. “I am grateful for the abundance of benefits that my membership has delivered through the years—personal and professional education, a network of friends and coaches, the volunteer opportunities that expanded my experience in different areas, as well as the technical and professional knowledge
of colleagues and friends that I was lucky to experience first-hand. Worldwide ERC® has been the primary constant throughout my career and I have always benefited in more ways than I could hope. “My special memory of Worldwide ERC® occurred in 2007. My appreciation of the talent, engagement, challenges, and opportunities that make up our association was heightened by becoming part of the Worldwide ERC® Board of Directors. In every area of mobility we’ve got the best and brightest! Teaching GMS in Shanghai and London and participating in Spring and Fall Conferences in Las Vegas and Denver all helped make that a particularly memorable year for me. Shopping in Shanghai was a lot of fun too! “I have two messages I would like to deliver—one is to staff, friends, and colleagues—thank you. You have enriched my career and my life. My second message is to our broad membership—this is a critical juncture for Worldwide ERC®. Now is the time to recommit ourselves. Last decade delivered significant change and shifts. This next decade we are charged to design new and more responsive solutions to mobility and talent management. We’ve got the right people, we’ve got the knowledge, and we’ve got the energy and commitment. This is a great time for renewal and reinvigoration. Together, we will accomplish new heights.”
Deborah Ann Conlan, SCRP, GMS
—- Deborah Ann Conlan, SCRP, GMS MOBILITY/MAY 2010 23
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Hall of Leaders
t has been an honor to participate on numerous committees with Worldwide ERC®, but to serve on the Appraisal Standards Committee (ASC) was the pinnacle of service to the relocation industry. The first exposure to the ASC was for the revision of the Worldwide ERC® Appraisal Report in 1994 and working on the Guidebook. Shortly after that, with Karen Reid and Arnold Schwartz, we authored the Fundamentals of Relocation Appraisal seminar, which led to the current Worldwide ERC® online appraisal seminar training. Before the next revision of the form, I participated in several committees and, in early 2001, we once again revised the appraisal report form. Now, for the third time, I am enjoying participating in the current appraisal form and Guidebook updating. “Concurrent with the Worldwide ERC® service, the Relocation Appraisers and Consultants (RAC) began and became dedicated to the Worldwide ERC® mission. There were many important contributions from the appraiser community through Worldwide ERC®. “I have participated in numerous Worldwide ERC® conferences, served on panels and made presentations, and have focused on education and training to promote Worldwide ERC® guidelines and professionalism.
24 MOBILITY/MAY 2010
“As I enter my last year serving on the Worldwide ERC® Board of Directors, it has been enjoyable to actively participate in the business operations while having the opportunity to work with the greatest organizational staff assembled. “The ultimate benefit of Worldwide ERC® is definitely the special friendships of the relocation family. Those involved with the industry develop a lasting bond that allows our families to grow together. Without question, the strengths of this industry are the quality people and trusted camaraderie. The relocation family is very special. “I learned tremendously from the professional staff of Worldwide ERC®, and everyone appreciates their efforts and accomplishments. “Professionally, the opportunity that Worldwide ERC® provided to showcase advanced skills as a relocation appraisal specialist is cherished. From the SCRP® to training and conferences, the mission of Worldwide ERC® is the continual growth and development of the members. “In 1982, I attended the Worldwide ERC® conference in San Antonio, TX, and really enjoyed getting to know Cris Collie, Cici Thompson, and the rest of the staff. The meetings at that time were regional and I enjoyed making my first presentation about relocation appraising, not realizing that I would receive an appreciation gift. Worldwide ERC® presented the speakers with a six-pack Coleman cooler with identification of the 1982 ERC® Conference. To this day, I still use that cooler when I leave the house, and smile about the relocation family and the great memories. “My special message to the membership is that you receive what you invest in this industry. With an open and trusting attitude, and efforts to assist the industry whatever way you can, the relocation family rewards
Jay Delich, SRA, SCRP, IFA
you immensely. Become involved, participate, and you will improve yourself and the relocation family.” —-Jay Delich, SRA, SCRP, IFA
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consider my major accomplishments/contributions to Worldwide ERC® and our mobility business community to be my service on the Board of Directors. I also have been privileged to serve as Foundation secretary-treasurer, and to participate on the Foundation Board of Trustees, the Coalition Board of Directors, the Public Policy Committee, Conference Planning Committees, the CRP® Certification Committee, and multiple times as a conference speaker. “My involvement in Worldwide ERC® has brought an important market presence to me and my company. I have learned skills to improve my career and have acquired many business relationships and personal friends. Attending conferences is like attending a large family reunion! “My favorite Worldwide ERC®
memory occurred in 1990 in Nashville, TN, at The Grand Ole Opry. I was among the first members to take the CRP® Certification exam. We studied, we discussed, we sweated. I got up early the day of the exam to eat bagels and lox. Someone told me it was brain food. It all worked—I passed and was so excited to be among the first Worldwide ERC® members to be CRP® certified. Twenty years of being a SCRP® has brought me a wealth of recognition and business relationships. “My special message to the membership is—get involved! Volunteering your time and talents gives back to you much more than the time you will spend. You will learn new skills and make new business relationships—which is priceless!”
hrough not only writing and speaking, but in my willingness to share in conversations and meetings, I feel I have helped others develop meaningful and profitable mobility programs. I’ve always tried to be accessible to others in the industry, even the competition! Worldwide ERC® brings the mobility community together and presents us all with the opportunity to share and grow. I think the biggest contribution I, or anyone, can make is to be willing to give of your time and offer to help others be successful. “On a professional level, I feel so many doors have been opened to me because of my involvement in Worldwide ERC®. Being asked to speak, contributing to MOBILITY, and service on committees all has contributed to my professional success. On a personal level, I have made incredible friendships that will last
throughout my lifetime. “My most special Worldwide ERC® memory by far was the walk held at the Global Workforce Symposium in October 2006 in Dallas, TX. Proceeds went to the John Dickson Kidney Cancer Research Foundation, a charity I established in memory of my late husband. The turnout was impressive, and being presented with the check at the closing session was very emotional and humbling. “To the Worldwide ERC® membership, my message is—get involved! I can’t stress that enough. If you want to receive back, ten-fold, the benefits of being in this great organization, then step out and volunteer. Your life will be blessed in many ways, both professionally and personally.”
Linda Howard, SCRP
—-Linda Howard, SCRP
Pandra Dickson Richie, SCRP, GMS
—-Pandra Dickson Richie, SCRP, GMS MOBILITY/MAY 2010 25
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Hall of Leaders
have had the privilege of serving as vice president, president, and chairman of the Worldwide ERC® Board of Directors. During my presidency, I felt that I contributed a touch of fun to my position while still keeping that necessary sense of business. I challenged our providers to think beyond the traditional models and to develop products/services that were more relevant to what was needed. “Being a part of Worldwide ERC® has been invaluable to me on many levels. It is my family away from my family. The relationships I have developed are those that transcend boundaries and geographies. The members are a network of resources who speak in a fluent common lan-
26 MOBILITY/MAY 2010
guage, share a mutual passion for this industry, and are always supportive and willing to teach. “My favorite memory of Worldwide ERC® is the video montage we played to the tune of John Denver’s ‘Take Me Home, Country Roads.’ It brings me to tears nearly every time I hear it as we close our conferences. And, I think about how special and remarkable it is for me to be a part of something so very extraordinary. “As a member, my advice is to get involved—share your passion and dare to learn—you won’t be let down.” —-Peggy Smith, SCRP, GMS Peggy Smith, SCRP, GMS
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Recognizing Excellence Worldwide ERC® and MOBILITY would like to thank each of its volunteer authors, and look forward to announcing the winner of the 2009 Editorial Achievement Award during the Awards Luncheon at the National Relocation Conference in Orlando, FL. The nominees, in alphabetical order: • Crystal Abbey Cartus (September) • Jason Adwin Sibson Consulting (July) • Steve Alverson, CRP, GMS Primacy Relocation (January) • Katie Auffenorde RAI (April) • Alex Bailey ACS International Schools (September) • David B. Barlow, Jr., SCRP, GMS SIRVA Relocation (February) • Michele Bar-Pereg Bar-Pareg Group (March) • Ed Barwick, CRP Budd Van Lines (July) • Daniel T. Bloom, SPHR, SSBB, SCRP Daniel Bloom & Associates, Inc. (October) • Stacie Nevadomski Berdan Consultant (November) • Marti Briney, CRP, GMS NEI Global Relocation (May) • William C. Byham, Ph.D. Development Dimensions International (August) • Patrick Cacho, CRP Channel Match Consulting (February) • Daniel J. Cahill Sibcy Cline Relocation Services (December) • Paula Caligiuri, Ph.D. Center for HR Strategy (November) • Hannah Camm, BSc vielife (March) • Vince Carida Weichert Financial Services (March) • Jennifer Connell, CRP, GMS Weichert Relocation Resources, Inc. (January, March) • Amy Reece Connelly RicklinEchikson Associates (November) • Kathy Connelly, SCRP Prudential Georgia Realty (February) • Anne P. Copeland, Ph.D. The Interchange Institute (February) • Scott Craighead, SCRP, GMS Bluesky Executive Search (February, July) • Linda Bauer Darr American Moving & Storage Association (December) • Anne Dean, GMS Living Abroad, LLC (June, October) • Marie DeMego, CRP, GMS Mobility Services International (May) • Bob Dicke, SCRP Blackhawk Moving and Storage (August, December) • Krista Dieffenbach, GPHR Crown Relocations (October) • JoAnn Dobres, SPHR, CRP JPMorgan Chase & Co. (January, August) • Kate Dodge, SCRP NEI Global Relocation (May) • Chris Draeger, GMS Crown Relocations (March) • Michael Drew, CRP AIReS (May) • Sean Dubberke RW3 LLC (October) • Pamela Dunleavy, CRP Primacy Relocation LLC (October) • Timothy Dwyer Entitle Direct Group, Inc. (July) • Molly Feldman, CRP, GMS RAI (January) • Robert Fletcher Interdean Group (June) • Patricia Fluck Transpack Group of Companies (October) • Hank Fontes Fontes Appraisals, Inc. (May) • Dean Foster DFA International Global Solutions (April) • Ed Gaydos, Ph.D. Selection Research International, Inc. (May) • Dr. Ana Gazarian, GMS Employee Mobility Solutions (July) • Angie Gilbreath, CRP, GMS Primacy Relocation (January) • Frank Gillingham, M.D. HTH Worldwide (August, November) • Natalie Graveney Crown Worldwide Group (July) • Anton Haidorfer, Ph.D. Economist (August) • Jill Heineck Heineck & Company, Inc. (August, December) • Laura Henneberry, SCRP, GMS, Morreale Real Estate Services (December) • Mima Hillier TTH Relocation Services (June) • Sheida Hodge Hodge International Advisors (December) • Terry Hogan Aperian Global (February) • Mia Huddleston, CRP JPMorgan Chase & Co. (January, August) • Rebecca Jin Santa Fe Relocation Services (December) • GeLaine Joachim, SCRP Promisor Relocation (October) • Amberley Johnson, GMS VISANOW (October) • Leah Johnson Mobility Services International (May) • Terry J. Johnson Writer (March) • Larry Kaminer The Personal Safety Training Group (November) • Ellyn Karetnick Cartus (August) • Ernie Kassoff PODS (December) • Theo Kenealy, CRP, GMS RAI (January) • Maggie Kiesow, SCRP, GMS Coldwell Banker Prime Properties (September) • Sophy King Emigra Espana (March, June, August) ) • Barry Kozloff Selection Research International, Inc. (May) • Neil B. Krupp, CMC TheMIGroup (March) • Jacob LaConte, GMS Community Orientation Service, Inc. (October) • Sandy LaConte Community Orientation Service, Inc. (October) • Robin LaSure Leading Real Estate Companies of the World® (March) • Lynda Lawless, CRP Real Living Mortgage, LLC (April) • Johannes Laxafoss Meridian Global 28 MOBILITY/MAY 2010
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Services (October) • Louis Lima Prudential Real Estate and Relocation Services (June) • Cindy Madden, CRP Cartus (December) • Ranjini Manian Global Adjustments Services Private Ltd. (November) • Donna Marsh Culture Unveiled (November) • Tim McCarney, GMS Weichert Relocation Resources, Inc. (January, March) • Lucy Mellors School Choice International (September) • Sharon Michnay, CRP, GMS Halstead Property, LLC (March) • Peter Mills, MD CIGNA (March) • Lisa R. Mitchell Wells Fargo (June, November) • Priscila A. C. Montana Cultural Awareness International (July) • Patrick Moore Real Living Relocation Management (August) • Joseph Morabito, SCRP Paragon Global Resources (October) • Achim Mossmann KPMG (February) • Frances Martinez Myers Employee Transfer Corporation (July) • Ward C. Naughton HiFX Inc. (June) • Nino Nelissen, GMS Executive Mobility Group (February, June) • Mary Beth Nitz, CRP, GMS Signature Source (October) • Elizabeth D. Nunan, CRP, GMS Houlihan Lawrence Real Estate (April, August) • Steven P. Nurney ORC Worldwide (August) • Janet Olkowski, SCRP, GMS Cornerstone Relocation Group (May) • Jeffrey Otteau Otteau Valuation Group (November) • Joseph Palumbo, SRA Weichert Relocation Resources (May) • Vanessa N. Pantano Environmental Data Resources Inc. (May, October) • Lina Paskevicius, CRP Cartus (September) • Liz Perelstein School Choice International (September) • Rebecca Peters, ACIP American Council on International Personnel (November) • Cathleen Podell, CRP Wells Fargo Home Mortgage (December) • Kelly Pratt RAI (April) • Mike Pressman Sibson Consulting (July) • Bryan Putt, CRP, GMS AIReS (October) • Laurent Quistrebert Resident Vietnam (March) • Mark Rabe, CRP, GMS Primacy Home Loans (October, November) • Krishna Ramesh School Choice International (March) • Danielle Rizk, MBA, MHSA CIGNA International (March) • Jennifer Rowe Prudential Relocation Real Estate Services (June) • Jo Rust, GMS Primacy Relocation, LLC (June) • Brendan Ryan Fragomen, Del Rey, Bernsen & Loewy (January) • Michelle Sandlin, CRP John Daugherty, Realtors (September) • Marian Weilert Sauvey, Esq. Atlas World Group, Inc. (September) • Stefanie Schreck, CRP, GMS American International Group, Inc. (March, December) • Edward Seiler, Ph.D. Economist (August) • Craig Selders, SCRP, GMS Paragon Global Resources, Inc. (April) • Christina Seskey AIReS (October) • Michael Shore AIRINC (April) • Lynn Shotwell American Council on International Personnel (November) • Dr. Sheri Sinaga, SCRP, GMS Primacy Relocation, LLC (October) • Kimberly Smith AvenueWest Corporate Housing (April) • Peggy Smith, SCRP, GMS Microsoft Corporation (October) • Elaine C. Smythe, CRP, GMS Crown Relocations (October) • Donna M. Socha, GMS Sibcy Cline Relocation Services (December) • Paul Soley, CRP, GMS Full Circle (April) • Cheryl Spielman Ernst and Young LLP (November) • Jenny Staehle ORC Worldwide (May) • Tricia Stewart, CRP, GMS Crown Relocations (October) • Charlie Strater, GMS Bennett Educational Resources, Inc. (September) • Jean Strickland, CPC, CRB, CRP Signature Source (October) • Joan Harpootlian Thomas, SCRP Allen Tate Relocation Services (February, May, September) • Galen Tinder Ricklin-Echikson Associates, Inc. (REA) (August) • Kathy Trachta, SCRP, GMS Paragon Global Resources, Inc. (April) • Betsy Utterback, CRP NRI Relocation, Inc. (January) • Michelle Vallejo, SCRP, GMS Primacy Relocation (February) • Susan Vittorio, PHR, CRP Ciba Corporation (September) • Alvin L. Wagner, Jr., SCRP, SRA Consultant (July) • Bruce W. Waller, CRP Armstrong Relocation (October) • Peter Wayman, SCRP, GMS Atlas World Group (July) • Cliff Williamson Transpack Group of Companies (October) • Zanine Wolf Asia Pacific Access (March) • Lee F. Wong Reloc8 Asia Pacific Group (October) MOBILITY/MAY 2010 29
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Tax and Legal Update
Revisiting the FHA Anti-flipping Rule n recent discussions with lenders, one of the most apparent developments affecting the industry is a reinvigorated approach to ensure that their loans comply with all applicable underwriting guidelines. Secondary market investors typically reserve the right to sell back non-conforming loans, and in the current market climate it is more important than ever for lenders to ensure they will not be left holding problematic mortgages. On mobility transactions, this enhanced scrutiny is seen most often in objections relating to the FHA Antiflipping Rule, a subject of much discussion in our industry in years past. Generally, the rule prohibits FHA financing in two circumstances: when the seller has not owned the property for a certain period of time, typically 90 days; and when the seller is someone other than the owner of record. Thanks to Worldwide ERC® lobbying efforts, mobility transactions are exempt from the time restrictions on resales, but there is no such exemption from the owner of record requirement. From its adoption in 2003 to the latter months of 2008, the rule was not a common cause for objections to the sale of relocation property to FHA borrowers. While the two sales might objectively look like a flip, it was generally understood that there was little risk of fraud or inflated sale prices because of a relocation management company’s (RMC) involvement in the transaction. However, as FHA loans became more popular and underwriting scrutiny increased, lenders began objecting to the use of a single deed based on the rule. Namely, if a RMC sells property to a resale purchaser when they are not in title, they are not the owner of record and FHA will not insure the borrower’s loan. Therefore, two deeds are now almost universally required for an FHA lender to fund the loan. It may even be the case that a lender will require the first deed be recorded before resale closing, so that the RMC is the “owner of record” when underwriting decisions are being made on the borrower’s loan. Attorney Burton S. Kliman of Kliman Law Offices, P.C., Newton, MA, who specializes in both relocation and investor transactions, adds, “when two deeds are used in a relocation transaction, instead of recording them simultaneously as is currently the practice, it may be better to split them up with the deed from the transferee to the RMC recorded first and then the deed from the RMC to the third-party buyer recorded at least 30 days later in conjunction with the purchase money closing. The splitting up of the process coupled with any supporting documents relating to the transfer may be enough to satisfy most lenders” Although the rule explicitly exempts mobility transactions from the rule’s time restrictions on resales, there are still instances where it can pose a problem. In an abundance of caution, certain lenders may still require a written
30 MOBILITY/MAY 2010
approval from HUD stating that the transaction qualifies for the relocation exemption before they will fund the loan. Generally, this is only the practice of smaller, regional lenders that do not have the mobility expertise of national lenders. If they feel they are not in a position to determine whether the exemption applies, they will wait for HUD to explicitly approve the transaction, which may take from one to six weeks. This issue may be alleviated, at least temporarily, by HUD’s recent one year waiver of the time restrictions. Effective February 1, 2010, properties that have been owned for less than 90 days will be eligible for FHA insurance if the lender determines that the transaction is conducted at arms-length (no identity of interest between the parties to the transaction). While this provides further heft to the argument that the time restrictions should not apply, it remains to be seen whether lenders that required a written approval from HUD regarding the mobility exemption will do the same with regard to the arms-length requirement. With FHA borrowers comprising a historically high percentage of the market, it is no small matter to plan for compliance with the Anti-flipping Rule. While the availability of FHA financing certainly has increased the potential liquidity of transferee property, it should be understood from the outset that FHA transactions may introduce new costs, complexities, and even delays to the homesale process. If one deed typically is used in the state, a second deed, and all its attendant costs, may be necessary to convey title to an FHA borrower. If a property is already in inventory, it may be necessary to restructure the conveyance once it becomes clear that a potential purchaser will be obtaining FHA financing. Various third-party titleholder arrangements—nominee services, trusts, and the like—may be called into question. If the lender will require a waiver from HUD, it may require copies of the sales contracts, an updated title commitment showing the RMC in title, and other evidence of the transaction. If HUD does not respond in a timely manner, closing may have to be delayed and additional carrying costs incurred. Finally, while the Anti-flipping Rule is FHA-specific, it certainly is possible that the VA or even conventional lenders and investors may explicitly incorporate its key provisions into their underwriting guidelines, and we recently have seen indications that this may be on the horizon. One thing is certain: the FHA Anti-flipping Rule is not something to be overlooked as in times past, and planning accordingly will be key to a successful closing. Eric Arnold is counsel for Stewart Relocation Services, Houston, TX. He can be reached at +1 713 561 7974 or e-mail email@example.com. Piper Sheffield, CRP, is senior vice president, director, for Stewart Relocation Services, Houston, TX. She can be reached at +1 713 625 8194 or e-mail firstname.lastname@example.org.
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Crossroads in the
Moving & Storage Industry
34 MOBILITY/MAY 2010
The moving and storage industry finds itself at a crossroads, and must examine both the past and future to ensure success when faced with today’s challenges. Reed offers a history of the moving and storage industry to better enable understanding of the conditions facing today’s moving professionals.
B Y E R I C R E E D , C R P, G M S
anus was the Roman god of change and transition. He had the ability to see both the future and past—a gift from the Roman god Saturn for his generous hospitality. The Romans represented Janus as having two heads facing opposite directions—one reflects on the past while the other contemplates the future. Few would disagree that the moving and storage industry is currently in the process of change and transition. The industry has a history of competitive, regulatory, and financial challenges and today’s industry leaders are faced with even greater issues as they prepare for the future. Similar to Janus, the current situation demands that the industry look to the past as well as the future to survive the journey ahead. I began my career in the moving and storage industry in 1983 as a mover. The transportation industry was three years into operating in a deregulated environment. At that time, moving and storage benchmark
rates were collectively agreed to by industry participants as a result of the antitrust immunity provided for the industry. However, all activity of the rate bureau was still under the watchful eye of the federal government. Latitude was given to moving companies, allowing them to discount the benchmark or tariff rates. I recall hearing a lot of drivers complaining about how tough the industry was getting and how they could no longer make a buck “hauling sticks” (a term used for moving furniture in the trucking industry). They blamed salespeople and their discounts for reduced driver earnings. I went into sales in 1988, and can recall a customer asking me why all the moving companies were discounting their prices. It was such a part of the industry that I never really questioned it. It was just something we did. Most moving companies at the time allowed discounting of 20 to 25 percent. The reason I discounted our services was to remain competitive and win the business. The bigger question was, “why MOBILITY/MAY 2010 35
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is discounting such a common practice in the moving industry?” Even today, it is common to see discounting levels of 50, 60, and even 70 percent in some cases. One cannot fully grasp the moving and storage industry’s current practices without understanding its history. Our story begins during a time when dirt roads and horse-drawn carts were commonplace but hiring someone to move your household possessions was not…
Humble Beginnings In the early days of civilization, only rulers and the wealthy could afford the luxury of paying someone to transport their household goods. Common modes of transportation at the time were animal, cart, wagon, or ship. The average person owned few possessions and families often stayed in the same home for multiple generations. For these reasons (and the fact that for most people unforced movement of homes and possessions was an unaffordable luxury at the time), professional moving was a rare occurrence. As waves of immigrants started migrating to America, they often brought a few of their prized possessions with them to the “New World.” The United States population grew rapidly and this expansion helped foster a more mobile society. Covered wagons were the first “selfmove” option for transporting possessions as countless families moved West. Years later, after undergoing a railroad construction boom between 1830 and 1860, railroads became America’s primary mode of transportation for passengers, freight, and 36 MOBILITY/MAY 2010
the long-distance movement of household goods. During this time, local delivery companies would transport household goods by horse-drawn wagon to a warehouse where they would be packed and crated for shipping. The items then would be moved to a rail depot and placed in a rail car. Many moving companies were built adjacent to rail lines so that rail cars could be loaded directly from the floor of the warehouse. After the rail car reached the final destination, the crates would then be unloaded at the warehouse, uncrated, and finally delivered to the new home—by a different local delivery company. Most of these early delivery companies—or “wagon firms”—performed moving services as a sideline to their primary business of drayage and livery stable (livery stables boarded horses and kept horses and carriages for hire).
From Rails to Roads During World War I (1917-1918), paved roads and motorized trucks were becoming more commonplace in the United States as a result of a greater need for efficient transportation to support the war effort. In his book “History of the Moving & Storage Industry in the United States,” Stanley “G” Alexander credits Ward B. Hiner (founder of American Red Ball Transit Company) as the first interstate mover in 1919. Hiner conceived the idea of moving household goods from city to city in motorized vans rather than by railroad. Long distance “motor-van” moves eliminated the cost and trouble of crating furniture and reduced the number of times that furniture had to be handled. Hiner’s vision that the
future of interstate moving was in motorized vehicles came to fruition. By the mid 1920s, motorized vehicles were an integral part of the industry as significant highway construction projects were being subsidized by the government. This took place in part because of the government’s desire to limit the American economy’s dependence on the powerful railroad industry. Until 1928, the moving industry consisted of a number of individual companies operating independently. These companies had no problem finding customers for local moves or moving out of the area; however, they struggled to find customers for outof-state return shipments. For a number of years, the only way an out-oftown driver could find a return shipment was to ask a local moving and storage company if it had a shipment going to (or near) a desired destination. Many companies established “move boards” in their offices where they posted available shipments for out-of-town drivers on bulletin boards. An out-of-town driver considered himself lucky to find a shipment going to his next destination. This inefficient system caused drivers to sit idle for long periods of time while they waited for a return shipment. If none were found, they would simply return home with an empty truck, thereby cutting into their profits.
‘Co-Operation’ In 1927, Aero Mayflower Transit Company of Indianapolis, IN (which later became Mayflower Transit), earned the distinction of being the first household goods carrier to be granted a 48-state operating certificate by the Interstate Commerce
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Commission. In 1928, the National Furniture Warehouseman’s Association (NFWA) organized the InterCity Removals Bureau. An important outgrowth of this bureau was a nonprofit organization created to assist independent moving companies in finding return shipments for their drivers. According to Alexander’s book, Martin J. Kennelly from the Chicago. IL, firm of WernerKennelly and a group of his associates in the industry formed this cooperative organization. These companies “allied” together to serve a common purpose and formed the first moving “van line” in the industry. The name of this new van line was Allied Van Lines. Allied provided
38 MOBILITY/MAY 2010
its members with a communication and dispatching service that supplied information on shipment locations as well as where trucks and equipment were positioned to haul these shipments. This resulted in greater dispatching efficiency and profitability for member companies and their drivers. It also allowed these companies to expand their service coverage area as they relied more on their cooperative networks, rather than their individual hauling resources. During World War II (19411945), the moving and storage industry briefly reverted to transporting long-distance moves by rail car because there was a shortages of vehicles, tires, and fuel that were diverted
to the war effort. After World War II, the industry saw a dramatic increase in personal and business moves as soldiers returned home from the war and the economy blossomed. Homebuying increased and businesses grew to keep up with new consumer demands. The United States Census Bureau shows that approximately 20 percent of the population moved each year from 1946 through 1967. Subsequently, these reports show a steady decline in the annual mobility rate—with the exception of a 20 percent anomaly in 1983. According to the Pew Research Center, the most recent Census Bureau mobility statistic shows that “…only 11.9 percent of American’s changed residences
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between 2007 and 2008, the smallest share since the government began tracking this trend in the late 1940s.”
Rates and Regulation Arguably, the two issues having the greatest effect on the industry during the past 100 years are rates and regulation. More specifically, the manner in which the industry establishes rates for the services it provides and the extent of government regulation in the industry. Since the early 1930s, the government has struggled with how rates should be developed in the moving and storage industry, as well as in the entire motor carrier industry. Prior to 1935, the motor carrier industry was subject only to state regulation. In the article, “Unfinished Business in the Motor Carrier Deregulation,” Thomas Gale Moore, a senior fellow at the Hoover Institution, discusses the influence over state regulations by the powerful railroad industry: “Between 1914 and 1931 pressure from railroads and
court decisions based on railroad suits were the chief forces behind the state regulation of trucks and buses... Railroads had recognized almost from their inception that motor carriers, trucks, and buses offered competition in the most lucrative portion of the railroad market….” The railroad industry attempted to minimize their competition by influencing state regulations that soon became “unfriendly” to motor carriers. Concurrently, the United States was experiencing the Great Depression (1929-1941). In 1932, President Franklin Roosevelt created an economic recovery plan called the “New Deal” in an effort to restore the economy. During this time period, many economists said that it was important for the United States government to control free market enterprise by regulating certain competitive practices. Their belief was that “cut-throat” competition had hurt many businesses, causing “deflation” in the United States (prices had fallen by more than
20 percent in some industries), which was hampering the economic recovery. In 1933, the National Industrial Recovery Act (NIRA) was passed by Congress to promote “codes of fair competition.” As a result of NIRA, each carrier in the motor carrier industry was required to file a schedule of minimum rates and tariffs with the motor carrier rate bureaus. This was the beginning of federal regulation in the moving and storage industry. In 1935, NIRA was struck down by the United States Supreme Court when a decision found the act to be unconstitutional. To continue their objective of promoting “fair competition” in the motor carrier industry, Congress passed The Motor Carrier Act of 1935 after NIRA was struck down. This new act stabilized pricing and placed the motor carrier industry under federal regulation, instead of state regulation, to protect the young industry from the railroad. The act also helped smaller companies survive
R E L O C A T I O N
40 MOBILITY/MAY 2010
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by preventing larger companies from offering volume discounts resulting in lower freight costs. The Interstate Commerce Commission (ICC) received authority from this act to regulate the moving industry and all motor carriers that were engaged in interstate commerce. The ICC restricted entry into the industry and approved specific carrier routes. It also required that each carrier provide reasonable “minimum and maximum” rates for their services. Congress later passed the ReedBullwinkle Act in 1948, allowing rate bureaus operating under “ICCapproved agreements” to establish rates “collectively” with full immunity from antitrust laws. During the
42 MOBILITY/MAY 2010
next several years, the industry became stronger and more profitable within this regulated environment and the governmental fear of “cutthroat” competitors disappeared.
De-regulation The pendulum for regulation began swinging back toward deregulation in the 1980s when the 1980 Motor Carrier Act repealed interstate motor carrier regulation to promote increased competition. The household goods moving industry, along with other transportation related industries, were given the right to collectively establish a benchmark tariff. This “antitrust” immunity allowed for a level playing field and made it easier
for purchasers of moving services to compare prices. The moving companies were free to discount rates in the published tariff to compete for business. Discounting in the industry began with a few high-volume business contracts and later spread to the private transferee market. The Household Goods Carrier Bureau would meet periodically to determine the base tariff level and recommend modifications to the tariff to reflect marketplace conditions. Carriers that participated in the tariff were then free to discount from the tariff rates to compete as they saw fit. This led to a “vicious cycle” of tariff modifications followed by increased discounts as moving companies tried to balance
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the cost of doing business with the necessity of remaining competitive. As a result, during the past 30 years, profit margins in the industry have continued to shrink while the cost of labor, fuel, equipment, real estate, and insurance continue to increase. Further deregulation took place in 1995 with the ICC Termination Act of 1995 (ICCTA). This act “terminated” the existence of the Interstate Commerce Commission and placed the moving and storage industry under the authority of the Federal Highway Administration within the Department of Transportation. The act removed more of the original economic control in favor of greater competition by removing most of the remaining regulatory framework that was established in 1935. The ICCTA also requires a periodic review every five years of motor carrier bureau agreements by the newly established Surface Transportation Board (STB). The industry experienced a drastic regulatory change on May 7, 2007, when the Surface Transportation Board announced the decision to end “collective ratemaking.” The board decided that the rate bureaus were no longer needed in the current deregulated environment. The STB further stated that these bureaus were “anti-competitive” and no longer served the public interest. As a result, collective actions ended and individual carriers had to publish their own separate tariffs. This ruling went into effect on January 1, 2008. Despite developing their tariffs independently and now having new rate and pricing freedom, individual carriers structured their new tariffs similar to the original industry-wide tariff that existed in 2007. Some com44 MOBILITY/MAY 2010
panies also offer a “flat-rate, all inclusive” option based on weight and distance (sometimes referred to as single-factor rate pricing). Although an improvement because of its simplification compared to traditional pricing, this method is still based on a discounted tariff. Both the industry and its clients have clung to a pricing methodology that is similar to the original tariff. This has allowed corporate customers to easily compare pricing differences between vendors of household goods moving services. While there is logic behind this, it also seems reasonable for innovative companies and corporate clients to move beyond these traditional methods of pricing. The new deregulated environment presents opportunities for tariff simplification, discount elimination, and, perhaps, newer pricing formats with greater cost predictability.
Containerized Competition In the 1990s, the moving industry was faced with a new competitor commonly referred to as containerized moving and storage. New companies and existing freight companies were now offering to transport containers that were loaded and unloaded by customers as an economical alternative to full-service moving. Some of those companies soon enhanced their containerized moving by providing professional loading and unloading services. Some traditional movers and van lines have developed an “in-house” containerized moving program or have chosen to partner with existing containerized moving or freight companies. Containerized moving draws market share from both the self-moving as well as the full-service moving and storage indus-
tries. It remains to be seen what effect this niche industry will have on the moving and storage industry in the future.
Crossroads From horse-drawn carts on dusty roads to a $12 billion industry with 8,000 companies across the United States, the moving industry once again stands at a crossroads. In this deregulated environment, industry leaders must decide how to prepare for the future. Will we learn from the lessons of the past? Will a visionary leader emerge such as Hiner, who in 1919 could visualize the future of long-distance moving in motorized vehicles? Will the industry grow? Conversely, will the industry shrink due to telecommuting, driver shortages, containerized alternatives, and a decrease in overall demand? These are questions that need to be considered as the industry chooses the direction of its future. In reflecting on the history of the moving and storage industry it seems appropriate to close with a quote by Mignon McLaughlin that offers a fitting analogy: “the past is strapped to our backs. We do not have to see it; we can always feel it.” While many may never take the time to “see” and understand the history of the moving industry, the effect from its past can nonetheless still be “felt” in many of its current practices today. By learning from its past, perhaps the industry will be in a position to create a better future. Eric Reed, CRP, GMS, is director of business development for Berger/Allied, Fullerton, CA. He can be reached at +1 714 449 6671, via e-mail at firstname.lastname@example.org, or www.ericreed-online.com.
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Moore_MOBILITY 4/14/10 2:41 PM Page 2
Risk Management for Our Times BY PATRICK MOORE
The adversity caused by the mortgage market meltdown is driving change within the employee mobility industry. Moore says that these adjustments should provide the impetus for embracing a more sophisticated and comprehensive approach to managing risk.
46 MOBILITY/MAY 2010
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ne year past relocation’s winter of discontent and we are all adjusting to the new normal or, as one executive told me, the “no normal.” The real estate markets continue to send varying signals. In some places, the dizzying ascent of values that raised debt and consumption has reversed its trajectory, leaving many with depreciation-induced nosebleeds. There has been no better time to expand our use of risk management tools and principles to manage our business. The appearance and spread of pre-decision tools, valuation products, and policy adaptations indicate the general buy-in of the notion that change is essential. But we can all benefit from broader and deeper use of risk management to deal with the present, and to create a sounder footing for the future. Each of the types of risk in the chart labeled “Real Estate Risk” (see page 48) has a solution, even if applied ad hoc. But the broader question is how to incorporate all of the salient factors that contribute to the risk picture into a better risk management and assessment program for homesale.
breadth. One can break down each market and apply key data and market factors to normalize data and optimize a value result. In addition to a quantitative algorithm, someone needs to do the thinking that underpins real analysis. Numbers and formulas are great, but judgment is crucial. Industries such as insurance and banking have long taken a risk management approach to their businesses. They use tools and follow a process to assess risk based on continuously tested principles measure factors that affect results. Most of all, they install and maintain a company culture that regards risk management as essential to success. There is no doubt many mobility professionals have taken similar steps. Risk management begins early, perhaps even prior to client implementation. The sales process should uncover information that will allow a rigorous evaluation of the potential client for the third-party company. Items such as prior year’s loss results, locations of likely departure and destination cities, and policy factors relative to time on market all are crucial data elements to be gathered and analyzed.
Valuation in Departure and Destination Markets
Risk management is the application of tools and data with the most predictive and diagnostic qualities to a subject (such as home value) to quantify or account for risk. Loss on sale may be the primary concern. Frequently, it is for the purpose of setting a price for a risk to be undertaken and to identify practices that reduce the frequency and severity of loss. Risk management has been used formally at least since Lloyds of London first invited men of means in 1688 to underwrite cargo bound for places far and wide. The risk assessment made then was based more on the ship and its captain than a regression analysis. Today, we have data and analytical tools and computers to fine-tune the process and result. The chart on page 49 illustrates the challenges presented by real estate markets during the past three years. It also clearly illustrates the point that some markets have been on a far bumpier ride than others. Yet, this downturn is unprecedented only in its degree and
Prior to a decision to accept a new position, transferees and employers need to understand what they are facing in departure and destination markets. To satisfy the impairment issue, an inspection of the property should reveal any deficiencies. In addition, a Comprehensive Loss Underwriting Exchange (CLUE) report will reveal loss history and identify any claims paid for repairs that have not actually occurred. The inspection and CLUE reports also will identify any property deficiencies that impede the sale of the home, or that disqualify the home for mortgage financing. In a world where one in four homes is worth less than debt outstanding, the negative equity position of the employee needs to be established. A realistic home value needs to be set to complete the assessment, properly set expectations, and evaluate the financial risk to all parties of the prospective move. MOBILITY/MAY 2010 47
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Real Estate Risk There are many kinds of risk associated with real estate. To a greater or lesser extent, we encounter all of these in our homesale transactions: TYPE
Loss on Sale
Sales price is lower than purchase price
Transferee or employer take a financial hit
An insurable interest
Home may not be marketed; is unresolved until the matter is resolved
An issue with structure or repair required
Home may not be marketed or purchase unfinanceable
Transferee owes more than home value
The financial gap may impede the completion of the move
An outside factor that affects marketing/value
Places constraints on sale of a home within policy timeframes
The chart below illustrates the special challenges of setting a value in today’s market. However, there are ways to use risk principles to arrive at a reliable value in advance of marketing a home. By assembling all of the relevant data and running it through a risk matrix, a good analyst can provide sound direction on value. Employer and employee are then in a position to evaluate the overall effect of a move. Following are some of the factors we use to arrive at a result: • market price volatility;
• effect of foreclosures and short sales; • inventory and absorption rate; • compatibility of home to the market; • adverse site conditions; • property condition; and • economic factors for the area. By applying these factors to a risk algorithm, a quantitative assessment can be delivered for use in mobility planning. The methods used by other financial industries (yes, mobility is a financial services business) can and should be applied to obtain better results.
Risk Process Examples It may be useful, by analogy, to look at two familiar examples where risk processes are well developed. In both the car insurance and mortgage lending examples, this information is evaluated consistently prior to making the decision to offer insurance or make a loan. While the mobility industry is moving toward “pre-decision” models, most are employed on an ad hoc basis. This inconsistency in application of predecision tools not only creates gaps that permit some properties to slip
Common Risk Variables Evaluated There are many kinds of risk associated with real estate. To a greater or lesser extent, we encounter all of these in our homesale transactions: CAR INSURANCE
MOBILITY HOMESALE PROGRAM
Vehicle Make & Model
Age & Gender
Collateral Value & Marketability
Adverse External Conditions
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Is Your Relocation Supply Chain Safe?
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Assess Your Relocation Supply Chain Risk The financial health of your relocation supply chain impacts your program, your mobile talent and your job. Why rely on some other department to monitor it? If you’re responsible for your company’s workforce mobility program, Weichert Relocation Resources’ latest whitepaper, Managing Relocation Supply Chain Risk, is required reading! In it, you’ll find: The five questions you absolutely, positively need to ask existing or prospective relocation suppliers to insulate your program from risk Professional insight into some of the financial challenges affecting the relocation industry Strategies for monitoring financial and credit performance across your relocation supply chain It’s the information you can’t afford to be without in the current economy. And you can get it free by e-mailing your request to email@example.com.
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through, but it also can open the employer to claims of discrimination. The evaluation of these risk process factors also affects the terms. For car insurance, the amount of the premium is based on the evaluation of these factors. In mortgage lending the interest rate, down payment, and the loan amount all can be affected by the evaluation of this data. The data collected are input into formulas or algorithms that compute the terms indicated by the risk. These formulas/ algorithms are grounded in statistical analysis. It is time our industry adopts a similar approach to homesale issues. There are a variety of data sources and tools currently available to evaluate risk. The end-user must exercise diligence and caution deciding which product(s) to use. Some questions to consider include: • Is the underlying data that fuels the analytics accurate and recent? • Is the provider of the data/analysis objective? • How is the accuracy of the analysis tested?
• Are market volatility and forecasting appropriately considered? • When you have technical questions about a specific transaction, does the provider have trained representatives available to answer them? Of course, a Worldwide ERC® appraisal is the best means of establishing value. But the cost relative to automated value models has influenced many to delay appraisals for a less reliable value. Others say that in this market, a relocation appraiser is in a better position to deliver a reliable value result—with better forecasting—when the property has been marketed for some time. A property risk analysis is another option available to employers and employees at the start of a transfer. It incorporates risk management methods and also takes into account property and market conditions. When beneficial, valuation models are employed for their wealth of data that can be used in the risk algorithm.
Looking Toward the Future It is past time for our industry to apply the rigor of risk management to our real estate challenges. There are several tools and sources of data available that, when applied to homes, can improve expectations, support better counseling, apply more torque where needed, and uplift inventory results. In our work, we draw on banking, insurance, and valuation backgrounds to synthesize a quality result on the front end and throughout the transaction. As is true of most industries, adversity drives innovation and change. The meltdown of real estate markets throughout the country should provide the impetus for the mobility industry to embrace a more sophisticated, consistent, and comprehensive approach to managing risk. Patrick Moore is president of Hayden Moore Associates, Chagrin Falls, OH, and a member of the MOBILITY Editorial Advisory Committee. He can be reached at +1 216 338 7081 or e-mail firstname.lastname@example.org. MOBILITY/MAY 2010 49
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Security Impact on the Employee Mobility Industry B Y L A U R A M AY C A R M A C K
he post-Cold War environment has opened the borders to which internal and international aspects of security are linked. Flows of trade and investment, technological developments, and changing political systems have fueled globalization. These developments also have increased the scope of an interconnected infrastructure in transportation, energy, and information. Nevertheless, many regions are caught in a cycle of conflict and insecurity as sovereign nations struggle to protect themselves against the rippling effects of unrest. The threats of
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terrorism, weapons of mass destruction, and biological warfare compel nations to implement costly programs that provide adequate security against these dangers. Recently, the U.S. Department of Homeland Security (DHS) linked its 48 terrorist watch list databases from multiple departments, including the Transportation Security Administration (TSA), Customs-Trade Partnership against Terrorism (CTPAT), and Food and Drug Administration (FDA). This enables DHS to quickly flag personal data and escalate a watch list match through its branches. This
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With increased focus on terrorist threats, worldwide governmentsÂ and the 153 World Trade Organization members have tightened trade security requirements. These changes have significant effects on various aspects of the employee mobility industry, including household goods shipping, employee travel, and immigration. Carmack analyzes the effects of these changes, focusing on the U.S. international household goods industry.Â
MOBILITY/MAY 2010 51
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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.
flag triggers additional investigation, often resulting in requests for supplementary transferee and family information such as passport copy, visa, airline ticket data, shipment inventory, and airline or steamship line routing or other documentation before releasing goods for transport. Similarly, worldwide government shipping and immigration requirements, especially in Brazil, Russia, India, and China (BRIC countries), have tightened and require additional personal documentation for shipment of household goods and personal effects. World Trade Organization (WTO) members have responded with steps to attack terrorist financing and an agreement on mutual legal assistance from its members, including the United States and EU members. Consequently, the employee mobility industry is tasked with complying with each of the new regulations while promoting security of sensitive transferee data. The quality of international mobility depends on the quality of its associations and initiatives. The best protection for the mobility industry is a network of worldwide experts and partners to facilitate and execute appropriate security measures.
U.S. Customs and Border Protection
www.one-group.org Your relocation partner in Spain:
Phone: +34 91 671 06 08 Web: www.one-sit.com
52 MOBILITY/MAY 2010
U.S. Customs and Border Protection (CBP) continues to expand and revise the collection of data from carriers and importers to the Automated Commercial System (ACS) in an effort to prevent terrorist weapons from being transported to the United States. Using ACS, CBP collects cargo, carrier, importer, and other data to achieve improved high-risk cargo targeting as required by the SAFE Port Act of 2006.
According to U.S. Customs and Border Protection 2009 statistics: • U.S. Customs entries and revenue are down 15 percent from 2008 and the value of imports has declined 25 percent from 2008. • Despite the decrease in entries and revenue, U.S. Customs increased its workforce by 10 percent from 51,553 to 57,519 agents. • Customs made more than 18,000 seizures valued at more than $300 million. “Intellectual Property Rights” (copyright) infringement accounted for most of the seizures. This includes designer knock-off items such as purses, shoes, jewelry, clothing, perfume, and luggage. • CBP officers at 327 ports of entry inspected 361.2 million travelers and more than 108.5 million cars, trucks, buses, trains, vessels, and aircraft. • Eighty-six percent of sea cargo entering the United States comes from Container Security Initiative (CSI) ports and Customs performed 56,000 examinations overseas as part of the CSI program. According to The U.S. Patent and Trademark Office, more than 600 technological patent applications for shipment Radio Frequency Identification (RFID), GPS tracking devices, and radiation portal monitors are underway. Use of these devices has been deployed at various U.S. ports of entry, allowing U.S. Customs to scan 99 percent of truck cargo from Canada, 100 percent of truck cargo from Mexico, 100 percent of all mail and express consignment packages, and 98 percent of ocean containers. As part of CBP’s efforts to secure our nation’s ports of entry, its Container Security Initiative (CSI), remains operational in 58 seaports
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We design, implement and administer global relocation programs to meet each client’s unique needs using a flexible service delivery approach that reduces the total cost of ownership, provides specialized expertise and achieves award winning transferee satisfaction.
Premier Service is not just our business philosophy; it is the core of our culture and the experience we strive to provide to every transferring employee that we touch. Delivering on Premier Service is what deﬁnes our business and everything we do on our client's behalf, backed by our promise to deliver the best relocation management services – period.
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within 32 countries worldwide. Eighty-six percent of the maritime containerized cargo destined for the United States originates or passes through a CSI port, affording the U.S. government the opportunity to identify and examine the highest risk containers prior to arrival. In 2009, more than 56,000 examinations were performed overseas as part of the CSI program, according to the 2009 CBP Importer’s Fact Sheet.
Mutual Recognition of Security Programs No single country is able to tackle today’s complex problems alone. The United States has participated extensively in European security initiatives, in particular through NATO and WTO. Arrangements have been developed between countries that support mutual recognition of each other’s trusted shipper supply chain programs. In June, a mutual recognition arrangement was signed between the United States and Japan, increasing the number of mutual recognition arrangements to four (including Canada, Jordan, and New Zealand). According to the 2009 C-TPAT Fact Sheet, C-TPAT’s 187 Supply Chain Security Specialists (SCSS) completed more than 2,500 validations in 90 foreign countries in 2009, anticipating 20 percent growth in 2010. Similar to the U.S. Customs-Trade Partnership Against Terrorism (CTPAT) program, Canada executes a program called Partners in Protection (PIP). The U.S. Department of Homeland Security and Canada’s Public Safety Ministry are aligning the two programs to achieve a harmonization as quickly as possible. FAST (Free and Secure Trade) cards will now be accepted at all 54 MOBILITY/MAY 2010
U.S.-Canada land and sea border ports. FAST has more than 92,000 members and the program is available to commercial drivers crossing both our northern and southern borders. The FAST Program only certifies individual drivers. Similarly, joint ventures between worldwide governments, airports, airlines, and the travel industry have improved processes for screening and clearing international travelers. Airports were selected based on the locations with the largest number of foreign visitors arriving annually. The United States and Canada have announced their commitment to share security initiatives to combat terrorism and organized crime while
ensuring the lawful flow of travel and trade across the border, in addition to expanding integrated law enforcement. The United States also will join a biometric data sharing initiative with Canada, Australia, the United Kingdom, and New Zealand to strengthen the integrity of immigration systems. International shipment of household goods has been affected by a number of recent regulatory changes. In 2010, guidelines began across all EU territories related to mandatory electronic submission of entry summary declarations (ENS) and Exit Summary Declarations (EXS) for the import and export of shipments. Similarly, the U.S. Census Bureau
10 + 2 Document Requirements Importer requirements (required prior to loading): 1. Importer of Record Number: For U.S. residents, a Social Security number may be provided. Alternatively, (and for non-U.S. residents), a passport number, with country of issuance and a date of birth must be provided. 2. Consignee Number: May be the same as Importer of Record. 3. Seller (Owner): Owner’s name and last foreign address/address from which shipment packs. 4. Buyer (Owner): Owner’s name and new address in the United States. 5. Ship-to Party: The importer’s new address in the United States. 6. Manufacturer (Supplier) Name/Address: Owner’s last foreign address. 7. Country of Origin: Country code from Owner’s last foreign address. 8. Commodity HTS-6: 9804.00 for household goods and personal effects. 9. Container Stuffing Location: Owner’s residence or Origin Agent’s address. 10. Consolidator (Stuffer) Name/Address: Consolidator’s name and address.
Carrier requirements (required after departure): 1. Vessel Stow Plans required for arriving vessels with containers 2. Container Status Messages required for containers arriving via vessel.
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THANK YOU. 245% growth in the last 36 months. We’re especially grateful that during this difficult economic environment, our clients and colleagues have seen fit to entrust their most valuable resource — their employees — to our practiced care. We are honored to take our position among the top relocation management service firms and thank all the corporate and government employees, the excellent service providers, and — most of all — our professional staff, all of whom have helped make this possible.
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What Can You Do? Five Tips to Promote Security In Your Employee Mobility Program
Ensure that your U.S. household goods forwarder and/or supply chain is C-TPAT certified.
Verify adequate data security measures are in place in all company and service provider systems, including rolebased access to sensitive information and masking of transferee dataâ€”including personal identification numbers and bank account information such as *** ** 1234.
Educate international transferees in advance of the relocation regarding the importance of security, as well as the expectations for their participation and compliance.
Ensure all country-specific requirements are known by the selected immigration, household goods, and travel partners in order to ensure proactive compliance.
Stay informed and be prepared. Sign up for government websites to stay ahead of upcoming law changes that affect mobility requirements in your trade lanes.
implemented a final rule stating that all transferees holding U.S. Citizenship must submit an individual Employer Identification Number (EIN) when registering to file and filing electronic export information in the Automated Export System (AES) or AESDIRECT.Â 56 MOBILITY/MAY 2010
For assignees involved in exporting household goods and personal effects, this regulation requires U.S. transferees relocating to a foreign country to obtain an EIN from the Internal Revenue Service (IRS) prior to exporting their shipment. Companies may apply for an EIN on behalf of their transferees, but will need to know the his or her Social Security number prior to applying on the IRS website: (http://www.irs.gov/businesses/ small/article/0,,id=97860,00.html). Once the EIN has been obtained, export can proceed on entry of the EIN into the AES or the AESDIRECT as the identification number for the transferee. Typically, the household goods company completes the AES filing on behalf of the transferee. This regulation was implemented in accordance with the Privacy Act of 1974 and its stated goal is to eliminate the Social Security number as the identifier in the AES because U.S. Export Customs data is public record. U.S. Customs and Border Patrol (CBP) may refuse to export any container where the electronic export information is submitted incorrectly. Transferees wishing to import household goods to the United States face increased regulations, as well. On January 26, 2010, the U.S. Bureau of Customs and Border Protection (CBP) began enforcing the new Importer Security Filing (ISF) and Additional Carrier Requirements, known as the 10+2 ISF rule for importer and carrier requirements, in an effort to identify high-risk shipments and ensure security when importing to the United States from abroad. The 10+2 ISF requires that both the transferee/forwarding agent and
steamship line submit 10 pieces of cargo information at least 24 hours prior to the vessel loading overseas. The CBP uses transferee information to search against 48 terrorist and watch lists. A resulting flag on transferee data may require additional investigation and/or delay in shipment loading. The remaining two data elements are provided by the steamship line after vessel departure. CBP will assess fees for neglecting to file, reporting inaccurate information, or loading a shipment without authorization. Fees can be up to $5,000 per violation, with a total amount up to $10,000. Fines are assessed directly by CBP to the transferee importer.
Welcome to the New World This is a world of new dangers but also one of opportunity. The employee mobility industry has the potential to make a major contribution, not only by implementing sound security practices to protect transferee goods and information, but also by implementing proactive processes to comply with new government security programs. These actions will ensure a seamless and efficient relocation experience for transferring families. An active mobility industry has a security impact on a global scale and contributes to effective transportation and immigration systems, leading to a safer and more united world. For further information, visit U.S. Customs and Border Protection at www.cbp.gov or the World Trade Organization at www.wto.org. Laura May Carmack is quality manager for AIReS, Pittsburgh, PA. She can be reached at +1 412 788 0461 or e-mail email@example.com.
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Home Financing Solutions.
The Comforts of Home.
Take Comfort in Our Experience. At Citi, we are proud of our more than 25 year tenure dedicated to the relocation mortgage industry. With CitiMortgage Corporate Programs, your relocating and non-relocating employees can take comfort in our comprehensive home ﬁnancing solutions, individualized mortgage counseling and valuable ﬁnancial education resources. Whether your employees are reﬁnancing an existing mortgage, relocating across the country or moving just down the street, our mortgage experts can provide the guidance they need.
To learn more about bringing CitiMortgage Corporate Programs to your organization please contact:
Wendy Morrell at 1-636-261-1296 or email: firstname.lastname@example.org
©2010 CitiMortgage, Inc. CitiMortgage, Inc. does business as Citicorp Mortgage in NM. CitiMortgage, Inc. is an equal housing lender. Citi, Arc Design, Citi and Arc Design and Citi Never Sleeps are registered service marks of Citigroup Inc.
RELO sprinkler COMFORT 032210.in1 1
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Navigating the Comparable Minefield The current realities of how appraisers navigate the “comparable landscape” begs the question,“what kind of value is it anyway?” Palumbo and Wagner present a case study to demonstrate how complex valuation can be, even when data is plentiful.
BY JOSEPH PALUMBO, SRA, A N D A L V I N “ C H I P ” W A G N E R I I I , S C R P, S R A s the dust settles on the real estate market and the world is hoping to get “back to normal” as soon as possible, a harsh reality is facing the valuation professional. The reality is that in the “new world,” the definitions of various types of value are meshing or becoming hybrid-type “values” that contain a few elements of different definitions.
‘The Value Problem The “Dictionary of Real Estate Appraisal,” 5th Edition, published by the Appraisal Institute, contains several types of “value” definitions including “liquidation value,” “market value,” “business value,” and “disposition value,” among a few others. Add the Worldwide ERC® definition of “anticipated sales price” to the list of published value definitions and you can cre58 MOBILITY/MAY 2010
ate a list and an argument that value comes in many shapes and sizes. Value can be a difficult thing to evaluate, especially when the elements of the definition are questionable or partially present. Therein is the problem. Other referenced and defined terms within the real estate industry include “forced sale,” “short sale,” and “distressed sale.” These terms are helpful and specific but may, in the end, be less meaningful if the entire market segment is interspersed with different “kinds” of sales. In other words, is there a way to ensure that the “anticipated sales price” value is “pure” and only consists of arms-length “vanillatype” transactions, sold in an unaffected environment, even if that environment may not exist? Take, for example, the following description of a recently “completed” relocation appraisal.
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Appraisal Example The home being appraised was a 3-year-old property located in a townhome development in suburban Chicago, IL. The neighborhood was about 75 percent complete and still had competition from the builder. Initial research found 23 properties had sold in the prior year in the local MLS system, so it appeared that sales data was plentiful to develop a reliable anticipated sales price. After a closer examination of the available data, 14 of the 23 sales were new construction builder sales, some recently closed, others older sales. Of these sales, there was a large range of value and many had both advertised and non-advertised builder concessions. The builder was selling new units for a lower price than original
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purchase price of the subject property. Typically, when a property is 3 years old and there is plenty of resale data available, new construction sales are excluded from the analysis. It should be noted that builder competition always plays an important role in developing value, as buyers typically will select a new property over a used property. The remaining nine comparable sales were found to have a mix of conditions and sales terms that were not evident until closer examination. • Five sales were bank-owned foreclosure sales or short sales (a short sale is a property that sells below its mortgage loan balance). Four of these five sales had closed in the past one to four months. These sales all closed for $20,000 to
$50,000 less than their new purchase price. • One sale was a relocation sale that occurred three months ago. This sale closed for $10,000 less than its new purchase price. • Three were arms-length sales between a typically motivated seller and buyer, not under duress. These properties closed nine months, 11 months, and 12 months prior. These three sales all resold near a breakeven point to slightly above the new price. The 23 sales under consideration suddenly became a complex “minefield” of data. Each sale was carefully researched and examined and, depending on which comparables were selected for the final appraisal report, the final value conclusion
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could have in excess of a 25 percent range in adjusted values. The appraiser is hired for his or her local expertise and, under these circumstances, the final value opinions can vary significantly, say, if one appraiser elects to use the most recent data and another elects to exclude distressed sales in the appraisal reports. Another concern is the arms-length transactions that were 9 to 12 months old soon will be too dated for a future buyer’s mortgage appraisal. Shortly, unless new sales occur, the only resale data will be the distressed sales. The relocation appraisal was completed using data that included the 3month-old relocation sale, a 9-monthold arms-length sale, a 1-month-old new construction sale, and a 1month-old foreclosure sale. After reasonable adjustments were applied, the adjusted value range was more than 15 percent. The value was concluded nearest to the adjusted relocation sale.
A Prevailing Misconception There is a prevailing misconception that one “should not use” any sales other than arms-length in developing an opinion of anticipated sales price. The second criteria under the definition of anticipated sales price in the Worldwide ERC® Summary Appraisal Report reads, “Both Buyer and Seller are typically motivated or well advised and acting in what they consider their best interest.” When the prevailing economic situation is not favorable, sellers are motivated by the need to sell and a specified time period can affect the net result. “Well advised” can be taken to mean many things for both the buyer and seller, but the bottom line is the sellers generally know market conditions are “favorable or unfavorable.” Regardless, they want the most they
can get for their property. By logical extension, the buyer is motivated by similar forces on the opposite side, which is to not pay too much. How can the appraiser be expected to find such sales data when it does not exist or is overwhelmed by the prevalence of other types of sales? If the market is dominated by short sales, foreclosures, and distressed sales, how can the argument be made that there is “another market” that will ignore or side-step the price levels and the trend these sales indicate. Ignoring this crucial aspect of the market is the equivalent of creating false expectations. If the reason for disposition of each sale is taken at face value and eliminated solely based on the category in which they fit, there would be very little data left from which to draw conclusions. Foreclosures, short sales, and distressed sales must be considered in the mix as part of the “normal market” in the current environment because, for the most part, they sell and compete in the marketplace. If the sales are below the normal market range or are not exposed properly, they could be thrown out. It is a common misconception that the use of sales and listings of shorts sales and foreclosures are “unfair benchmarks” at face value. This is not practical thinking for two reasons. First, buyers see prices of homes sold and expect the same prices—they do not care how the prices were achieved. Prospective buyers also see listings and sales and negotiate the best price they can regardless of the seller’s situation. As long as all sales and listings are exposed in the market through the same mechanism (i.e., MLS, open to the masses, willing buyers, and will-
ing sellers), everything becomes relative and market forces will prevail. Short sales or foreclosures not exposed in this manner should be analyzed to determine if they should be discarded in the same manner as sales outside the market norm. In the end, it is the appraiser’s job to identify what the market is based on the data.
The Solution There may not be a perfect solution to combat this minefield, but there is a way to survive it. Just the realization of the potential issues and having a “best practice” in dealing with such obstacles is enough. In the end, that “best practice” is to navigate with caution, dig deeper, and use a comprehensive narrative when necessary. Careful and time-consuming verification can aid this process but, even after diligent study, there may be a wider range of value than desired. An effective solution to justify the final value conclusion in those cases where a variety of sales data is used is a simple and concise “reconciliation.” In the reconciliation part of the appraisal, the appraiser discusses why the final value was chosen given the quality and quantity of data. It is here that specifics in a clear narrative can be indentified. The reader should leave with a clear understanding of why the subject lands in a particular spot on the “minefield.” After all, the subject property will become a comparable sale someday, and it too will have a “story” that someone will attempt to verify and analyze. Joseph Palumbo, SRA, is director of appraisal management with Weichert Relocation Resources, Morris Plains, NJ. He can be reached at +1 973 630 5380 or e-mail email@example.com. Alvin “Chip” Wagner III, SCRP, SRA, is president of A. L. Wagner Appraisal Group, Inc., Naperville, IL. He can be reached at +1 630 416 6556, or e-mail firstname.lastname@example.org. MOBILITY/MAY 2010 61
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B Y P A M E L A S . D U N L E A V Y, C R P, A N D S T E F A N I E R . S C H R E C K , C R P, G M S
ith the extreme changes in the United States economy, many companies have opted to either limit the number of employees transferred or modify the level of assistance offered to transferring employees. While the real estate market has declined, not all companies will offer 100 percent loss-on-sale reimbursement, temporary housing for an extended time, or duplicate housing reimbursement. Because of the cost, time, and resources involved in transferring employees, it is in the employee’s and the company’s best interests to ensure the transfer is suitable for both parties. Following are tips on conversation items that mobility coordinators can offer to guide both the company and the employee in making the decision to move.
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Explaining Preappraisals, Process, and Benefits The real estate market has declined, and homes are not selling as quickly or for as high a price as in previous years. To sell the home in a reasonable time frame, the home should be priced aggressively relative to other homes on the market. If the mobility policy does not include a guaranteed buy out, temporary housing, or duplicate living reimbursement, the list price of the home may need to be substantially reduced to limit the employee’s out-of-pocket expenses. Some organizations choose to have one relocation appraisal performed on a potential transferring employee’s home prior to presenting the employment offer. While it is generally accepted that real estate markets have declined, it is not always crystal clear to homeowners that the market has not rebounded to pre-2008 strength.
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The tumultuous nature of the global economy has affected the way in which an organization manages its mobile human capital. Dunleavy and Schreck offer tips for mobility professionals to assist in the decision-making process both for organizations mulling a transfer, as well as the potential transferee.
They always are hopeful, often over-valuing their home based on emotion and need. By having the appraisal completed at the beginning of the process, employers are providing information to their employee that is instrumental in making the decision to accept the transfer. Once the employee is armed with the knowledge of what the home realistically could sell for within the next 120 days, some companies also require that the homeowner does not list for more than a certain amount greater than the appraised value. Others may strongly recommend the list price is not more than a determined amount greater than the appraised value; however, if the home is not sold within a certain time frame, the employee may forfeit the homesale assistance.
The sale of an employeeâ€™s home can be one of the most stressful aspects of the mobility process, and by disclosing all information regarding current market conditions, the appraised value, and the companyâ€™s mobility policy up front, the employee has an opportunity to decide if the transfer is a financially sound option.
Explaining the Relocation Appraisal Also critical for the employee to understand is the intent of the relocation appraisal. Many homeowners assume that the outcome of the relocation appraisal will be similar to a mortgage appraisal and do not understand why the values can be substantially different. Worldwide ERCÂŽ offers a summary of the differences between the relocation appraisal and a bank (or mortgage) appraisal:
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Relocation appraisals: • Are intended to facilitate relocation by developing an opinion of anticipated sales price for a timeframe of up to 120 days after the appraisal has been done. • Includes expanded analysis of market trends on the Worldwide ERC® summary appraisal report. • Emphasizes “appeal” and “décor” as critical items for consideration. • Includes cash equivalency adjustments for sales and financing concessions. • Focuses on prospective analysis (i.e., forecasting) for a reasonable market time not to exceed 120 days. • Requires closed sales and competing properties, and also considers pending sales. Mortgage appraisals: • Are intended to facilitate mortgage lending by developing an opinion of market value, which precedes the date of the appraisal, for long-term decision making (up to 30 years). • Produced on a uniform residential appraisal report for comprehensive analysis. • Identifies category for “design” and “appeal.” • Includes cash equivalency, but no adjustments for normal seller costs. • Is a retrospective analysis (no forecasting). • Is based on normal marketing time with no limit.
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• Requires closed sales. When companies base mobility assistance on relocation appraisals, the employee needs to understand how the anticipated sales price is derived and that benefits are based on this figure versus an opinion of current market value.
Creating a Marketing Plan The most cost-effective move for the employer and generally for the employee is to sell the property prior to acquisition. It is, therefore, imperative that the employee receive assistance in determining not only the reasonable value of the property, but the best strategy to achieve desired results. To assemble an effective market strategy, the obvious information gathering comes from the real estate agent concerning the location, desirability, market advantages, disadvantages, and price. Talking with the employee and sharing this information candidly is the first step in establishing a plan to sell quickly. With these critical pieces of information, the mobility coordinator can work to assist the employee in preparing the home for sale. It is never easy to tell the employee that his or her favorite navy blue room with gold trim is in need of an overhaul or that closets need to be cleaned out; but, when handled delicately, superior results are achieved. Once the home has been prepared for market—which needs to occur quickly—developing a buyer profile becomes key to a successful marketing assistance plan. Questions to ask the employee, as well as the real estate agent and anyone else who could be of assistance, include, who is the most likely buyer? Where will
the buyer likely work? Will it be a first-time buyer, or an upgrading buyer? Will the buyer likely be single or with a family? What makes the community surroundings attractive? With this key information in hand, the mobility coordinator can work with both the employee and real estate agent to determine how to attract their most likely buyer. An example recently occurred when an employee transferred from an area near a large hospital. In developing the buyer profile, the mobility coordinator recognized that the most likely buyer was going to be someone who worked at that hospital. As a result, open houses were held during the hospital shift change and offered a box lunch to those visiting the home. The average marketing time in this area was more than 100 days when working the normal advertising channels only, yet this property sold in two weeks.
Maximizing Incentives One size does not fit all when considering incentives. To achieve the best results in offering an incentive to sell homes more quickly, it is important to develop an incentive structure that eliminates or assists in overcoming the challenges with a particular property. Some strategic examples that have worked for other companies include: • An incentive to be used for “fixing up” or preparing the property for sale—this can help the employee to overcome the personal style of a colorful home. • Gas card—have a rural property that no one wants to show? Provide a gas card to the real estate agent when they show the property. • Cash-deficient buyers—offer to
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pay new home closing costs or provide a move in or decorating allowance. • Offer a bonus to the selling real estate agent in a bad market where homesales are stagnant. Incentives vary in range and scope. Developing the right incentive to achieve overall hard dollar savings requires building a strategy that ensures that the home will sell quickly as a result of the incentive. The carry costs for a $250,000 home likely will equate to $3,750 per month (1.5 percent per month), coupled with a potential loss on sale once it enters inventory. It becomes apparent that the right incentive can have a tremendous return on investment.
Adapting to Feedback As essential as the marketing strategy is, it is important to secure weekly feedback of those efforts. Prospective buyers and their real estate agents are the best field eyes for a mobility coordinator. If there are no showings, the advertising efforts are not reaching the right buyers. Similarly, if there are a number of showings and no offers, something needs to be changed. The ultimate key to selling homes quickly is to work the market, not let the market work you. Price is only half the battle when executing a successful marketing assistance plan.
Purchasing a Home Mortgages are not as easy to secure as they once were because of financing restrictions, and can be even more difficult for employees who do not have established U.S. credit. Matt Canfield, CRP, vice president of Premia Relocation Mortgage, Sparta, NJ, advises staying
up to date on current topics in mortgage lending including RESPA reform, the expanded version of the tax credit, foreclosures, mortgage delinquencies (especially in markets such as Las Vegas, NV; Phoenix, AZ; Detroit, MI; Florida, and California), and lenders’ inability to use the assumed income for an accompanying spouse for mortgage qualification. In addition to current events, Canfield suggests the employee research interest rates and home price trends, as they may affect his or her ability to secure a home in the destination location.
Changing Benefits It is necessary, given the economy, for most companies to cut back or change the way the relocation programs are being administered. Average cost data reinforces that moving an employee is an expensive benefit, and employees need to understand that it is indeed a benefit. While emotional and difficult, many employees move simply to be assured that they have a position in their organization. The mobility program is still a benefit offered. There is no governing rule that says companies must pay for employees to move; rather, the assistance provided is generally meant to help keep employees whole. Relocation coordinators play a key role in ensuring that the employee fully understands the benefits and sets expectations accordingly. Perhaps an employee has moved previously and benefits are different, so the employee may claim that he or she is being taken advantage of because he or she no longer receives unpacking services, for example.
Educating employees on the cost of their move, and the many things their employer does for them is a win/win/win for the employees, the client, and the mobility coordinator. Changing benefits are necessary to the livelihood of organizations that move employees, and employees who value this contribution on their behalf are more likely to be productive in the new location.
Coming to Terms Any transferring employee needs to understand that what he or she views as a unique situation is not likely so unique. As a result, alternative policy considerations when determining mobility assistance is not always warranted. Through the employer’s and mobility coordinator’s setting reasonable expectations, the employee has the information available to make a sound decision on whether or not to proceed with the transfer, while the employer is aware of what concerns the employee may address during the course of the transfer. Mobility professionals understand that not all employees’ needs align precisely with the policy; however, if mobility coordinators understand costs of benefits and the return of investment in the employee, they are better equipped to strategize alternatives for employees to maximize their benefits. Pamela Dunleavy, CRP, is vice president, business development for Primacy Relocation, LLC, Memphis, TN, and a member of the MOBILITY Editorial Advisory Committee. She can be reached at +1 734 354 1910 or e-mail email@example.com. Stefanie R. Schreck, CRP, GMS, is manager, corporate relocation for American International Group, Inc., New York, NY, and a member of the MOBILITY Editorial Advisory Committee. She can be reached at +1 212 770 8094 or e-mail firstname.lastname@example.org. MOBILITY/MAY 2010 65
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Regional Real Estate Planning for the Year Ahead B Y M I K E P U C K E T T , C R P, A N D R E N E E C A R N E S - R O O K , C R P The current real estate markets have been a considerable challenge for managers of mobility programs. Puckett and Carnes-Rook explore the reasons for the fluctuation in home values, demonstrate the differences in markets around the country, and provide recommendations for companies operating homesale programs.
nalyzing the cycles in real estate values going back decades, it is now clear that the most recent prolonged up cycle was a historically significant one, aggregately running from 1992 to 2006. We also know that the length of this up cycle was, in part, because of the artificial stimulant of excess mortgage lending, including sub-prime lending and home equity lending that, in some cases, exceeded 100 percent of the then-value of the home. Exacerbating the real estate bubble was the explosion of new home construction in some markets fueled by buyers with ample access to credit at record-low interest rates. Current market conditions differ from those of decades past because of the oversaturation of lending and the fallout from the enormous mortgage derivatives market. These must be absorbed by the business investment community, as well as on Main Street, as baby boomers begin facing retirement with increasing concern for their 401(k) accounts. 66 MOBILITY/MAY 2010
Real estate values languish under the wet blanket of foreclosures, as homeowners owing more on their homes than what the properties are worth face difficult decisions. Homeowners who are fortunate enough not to have to sell have not entered the market as sellers, knowing that their properties would have to compete with foreclosures and other distressed sales in the area. If these homeowners are not selling, they also are not buying. Consumer confidence now has become an even more critical factor in recovery. So the question becomes, where do we go from here, and how long will it take to get there?
An Upswing? Metrics are beginning to confirm that we are at least at the bottom of the decline in real estate values in some markets, if not in the beginning stages of recovery. One reference point is the Federal Housing Finance Agency (FHFA) House Price Index (Figure 1 on page 68). The index reflects the prolonged up cycle leading to the peak
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MOBILITY/MAY 2010 67
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Figure 1: FHFA House Price Index
in 2006, the rapid decline from 2006 to 2009, and, thankfully, a bottoming out and rebound in late 2009. Many markets still must, however, absorb any remaining oversupply from overbuilding, excess lending, and foreclosures—some of which have yet to come to pass as more adjustable rate mortgages have yet to mature. There are some markets in which values have recovered to 200304 levels, while in other markets it could take years to reach those levels. Federal tax incentives contributed to the upsurge in sales in 2009, and that trend is expected to continue during the first half of 2010 with an extended and expanded homebuyer tax credit in place. This will continue to spur the home price recovery curves in the short term in most markets, although the longer-term effects are beyond the scope of this article. Although there is a growing consensus that the worst is behind us, mitigating factors may mean that recovery curves that have in the past been predictable become far less so. These factors include the expiration of tax incentives, the arrival of new foreclosures on the market, and the presence of a new funding source for 68 MOBILITY/MAY 2010
the secondary market as the Fed ended its $1.25 trillion mortgagebacked securities purchasing program in the first quarter of 2010.
Regional Review Those tracking the number of units sold and home prices had cause for optimism in recent industry reports. “While the results for January 2010
were down somewhat from December 2009, the fact that every region showed improvement in housing sales over the same month in 2009 indicates that housing is slowly but surely on the road to improvement,” wrote Steve Murray, editor of REAL Trends and author of the REAL Trends “Housing Market Report, ” in the publication’s February 2010 issue. The chart below demonstrates the progress of unit sales and prices both nationally and regionally. In addition, while recent statistics show the closings of newly-constructed homes are down, this is a direct result of new home construction inventories beginning to disappear as healthy and necessary absorption takes place, reducing oversupply and creating a better scenario for resales. The National Association of Realtors® (NAR) noted that sales in the fourth quarter of 2009 increased from the third quarter in 48 states and the District of Columbia. Year-
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over-year sales were higher in 49 states and DC; all but three states had double-digit annual increases. Lawrence Yun, NAR chief economist, said the first-time homebuyer tax credit was the dominant factor. “The surge in homesales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he said. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.” NAR also stated that in the fourth quarter of 2009, 67 of 151 metropolitan statistical areas boasted higher median existing single-family home prices compared with prices registered
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in the fourth quarter of 2008. In the third quarter, only 30 metropolitan areas showed annual price increases.
Effectively Navigating the Current Market Employers, like the employees they are asking to move, must face the realities of the market with strategies that address their corporate recruitment and retention goals while limiting costs to the extent possible. The ideas that follow can point the way to forming a comprehensive strategy to developing a best-in-class homesale program. Right-sizing the homesale benefit as a relocation component. Employers must find a comfort level with the balance between risk and costs when setting benefit levels for
the sale of the employee’s home. Guaranteed buy outs (GBOs) are still offered by a significant percentage of employers. The tax savings and defined sale date that a GBO provides can be of great value on key moves. Because of the slow market, however, the risk of the employer owning the home under a GBO remains high—in some cases 50 percent or more depending on where the house is located. The buyer value option (BVO) program remains the most popular choice of homesale for many employers. Cartus’ 2009 “U.S. Domestic Relocation Policy” survey found that 42 percent of companies considered BVO to be their primary homesale program, followed by GBO at 29 percent.
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The BVO program can be structured with or without a buy-out offer, or sunset clause, that follows the set period for employee marketing of the home. Employers may shy away from incorporating a sunset clause into their BVO programs, as they assume by including it they will
automatically increase costs. Worldwide ERC® has long recommended that a sunset clause be included in policies because it shows IRS that a client is not seeking to avoid all risk of acquiring a home. In tough housing markets, a sunset clause ensures that the employee will be able to dis-
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pose of the home, thus relieving stress, increasing productivity, and making the family’s transition easier. To best withstand an IRS audit of a BVO transaction, it is strongly suggested that corporations follow the Worldwide ERC® 11 Key Elements process. Employers should be aware that, in the event that the outside sale falls through, the home will need to be marketed and sold to a new buyer. Historically, the industry’s incidence of sale fall-throughs has been 3 percent or less, but employers should understand the potential cost of the risk, remote though it may be. The product known as “fixed-fee” seems appealing to some employers— advertising a “no risk” position—but this product comes at an often enormous premium over traditional BVO costs simply to average out the program cost to enable the provider to earn a profit. As with adjustable rate mortgages, contracts for this product may include the option for the provider to adjust the fees being charged the client to ensure that the provider can maintain its profit. Supplier management. The importance of using real estate agents, appraisers, and home inspectors trained to work with relocation properties cannot be overstated, as the Worldwide ERC® broker’s market analyses, appraisals, and general home inspections all are of central importance when working with homesales. Home values can vary even within strong or weak regional markets, so city-specific, neighborhood-specific, or even lot-specific data is needed to understand values and projected marketing times. An enormous part of the value proposition of a capable relocation management company (RMC), therefore, is the value it brings in compre-
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hensive third-party supplier pricing, performance, and management across a wide geographic area. Employers are advised to seek out providers that conduct background checks of supplier personnel, have established performance metrics, implement service level agreements, and protect personally identifiable information (PII). Mobility policy benchmarking and design. There is no substitute for effective policy benchmarking and design. In the October 2009 MOBILITY article, “How Much Does It Cost to Save Money?” authors Pam Dunleavy, CRP, and Dr. Sheri Sinaga, SCRP, GMS, emphasize the importance of carefully crafting an organization’s mobility policy as the foundation for cost control. Policy design has the potential to save more costs than the expectation of lower fees from a different supplier. Understanding the employer’s past mobility spend, its current and future goals, and an analysis of policy exceptions during the past year often can result in effective changes to the policy to better level benefits where they are needed most while limiting the spend to the benefits that best achieve the employer’s goals. The 2009 Worldwide ERC® “U.S. Benchmarking Survey” shows that as many as 70 percent of survey participants made changes to their policies during the past year. Cartus’ 2009 survey further supports these findings, as 74 percent of respondents made changes to their homesale policy in 2008. Even more—79 percent—were considering making changes during the next year.
times even within the same industry. Some of the best practices that corporate employers have found to be of value include: Mandatory broker registration— important that the transferring employer list the home for sale with a broker specifically trained in manag-
ing corporate transfers, and held to performance standards. Mandatory list price guidelines— pricing is one of the most crucial elements of the homesale. The pricing must be realistic, which can be a challenge in this changing market. The application of these restrictions is not
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Five Best Practices for the Homesale Policy Every corporate employer’s situation is different from the next, someMOBILITY/MAY 2010 73
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meant to be punitive, but to drive favorable results. Sales incentives—these have proven effective in generating faster sales, and can be directed toward the transferring employee or the buyer. Though these may seem to add expense, however, when administered properly they reduce costs and time spent on the transfer. Homesale incentives paid to the employee focus him or her on selling the home quickly. A tiered incentive program based on the timing of the sale encourages the employee to price the home appropriately and can be used in conjunction with the list price restrictions. Buyer incentives are used to increase interest in the property; the more showings, the better the chance for securing a sale. Anything that makes a home more compelling can make it seem preferable to the competition. In some cases, the incentives are negotiated out of the ultimate contract, but, even so, are effective in selling the home. These incentives may include paying the buyer’s closing costs, paying points, providing a mortgage buy down, or paying the costs of a buyer’s household goods move. Loss on sale—this is a policy component designed to share or absorb the financial burden an employee may confront if the sales price is less than the original purchase price. An employee may be hesitant to reduce the list price of a property when he or she faces the possibility of a loss. Best practices for a loss-on-sale provision should require the employee to participate in the loss, cap the total loss amount, exclude capital improvements, and implement a policy for loss on sale even if this benefit
is only administered on a case-bycase basis. Tiering of benefits—as the market and their goals change, employers are finding that it makes good sense to level benefits in tiers. This is an effective way to ensure that the mobility spend is maximized so that employees get the benefits they need while controlling costs. Recent studies indicate that upward of 73 percent of employers currently use a tiered format for their benefits. Understanding any geographic move concentrations and how regional real estate in those markets are affected also can help determine the need for targeting benefits and the need to include provisions to the policy to address.
Structuring Operations Clients are advised to consider the following services to enhance their home sale programs: Pre-decision counseling. Predecision counseling is offered to the employee prior to him or her accepting the relocation. It allows the employee to better understand the implications of accepting a move, including the financial effects of buying and selling a home. Educating the employee on the current market conditions in both the departure and destination locations and the effects of those circumstances allows him or her to make an informed decision. For example, employers often find themselves in a negative equity or loss-on-sale situation because of decreased home values in many areas. This counseling helps those accepting the move to create a more successful listing and selling experience, and assists the employee with leveraging his or her buying power in the new location. An increasing number
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of corporations have considered adding this as a separate service under their benefits. Direct delivery. With the direct delivery service model, a real estate specialist works directly with the transferring employee on all aspects of the homesale process, from making improvements and selecting a broker to determining a listing price and evaluating offers. The benefit to the transferring employee is that he or she receives advice from the real estate expert, not from an intermediary. Departure appraisals only. This service, often used in conjunction with pre-decision counseling, makes it possible for a relocating employee to get an estimate of the potential value of the home to assist in determining whether he or she can accept the move. Many sellers think their homes are worth more than they will likely get for them on the open market. Obtaining a preliminary estimate of value helps employees set realistic expectations and even establish a reasonable list price, which can result in shorter marketing times and lower homesale expenses for the company. It also allows the employer to make financial decisions about the employee’s move. The organization can evaluate whether there will be a loss on sale, the potential cost to carry the home, marketability of the property, and the anticipated days on market. It also can identify potential property conditions and impediments early. Cartus’ 2010 pulse survey report, “Home Valuation in the U.S. Market,” focused on early home valuation and the reasoning behind this strategy. Early home valuation is being used when assessing candidates for domestic relocation and budgeting purposes. In 46 percent of the
cases, the outcome of the early valuation influenced the relocation, resulting in either de-selection of the candidate or an increase in the level of benefits or support provided.
Sound Marketing Strategies on Inventory Sales First among marketing strategies for inventory sales is to price the house correctly—even aggressively— from the start. The value lost both in terms of holding costs and eventual lower sales price make selling the home quickly cost effective. Remember to condition the house well, do it quickly, and require the real estate agent to maintain it with fervency. A house that is not maintained or that is in a state of disrepair will not be competitive in this market. Advertise well, and use incentives to draw in real estate agents and/or buyers. The first offer usually is the best offer. Generally, negotiating and accepting the offer from the first buyer that makes a bona-fide offer on a home often works out better than losing that buyer in the hopes of getting a better one later. One day we will look back and recall stories of today’s real estate environment. Indications during the past few months are that home values are rising, although how quickly they will rise, or how high they will rebound, has yet to be determined and will certainly vary by market. In the meantime, good decisions can be made by employers to most effectively manage real estate conditions. Mike Puckett, CRP, is director of business development for Primacy Relocation, Suwanee, GA. He can be reached at +1 770 904 0526 or e-mail email@example.com. Renee Carnes-Rook, CRP, is vice president, real estate services for Cartus, Danbury, CT. She can be reached at +1 203 205 6610 or e-mail firstname.lastname@example.org.
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SRA. Look for the designated difference behind the name.
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king_MOBILITY 4/19/10 5:59 PM Page 2
How to Maintain
Healthy Sleep Patterns: Issues of Civil Liability in Immigration Matters BY BEN KRANC veryone is excited. You, the HR manager of AlwaysPreparedCo (“APC”), just hired Bob Smith to lead your operations in Bolivia (the name of the real country has been changed to protect the innocent). Bob is quite the catch, and you are proud that you were the one to get him to sign on the dotted line. The line found at the end of the employment agreement that you drafted. Now the wheels are in motion. Bob has sold his house, bought a new one in Bolivia, enrolled his kids in the prestigious Le Paz Academy for the Children of Foreign Executives, secured the services of an appropriate dog walking service, and so forth. You go to bed feeling good, knowing that Bob is happy, your boss is happy, and your company is set to increase its global footprint. You get the best sleep of your life. The next morning, you make a self-congratulatory visit to your favorite café du jour and order the premium cappuccino extraordinaire, the one to which you never thought you were entitled. You proceed to your office (making sure your beverage is fully visible to all that you pass). Then, you innocently push the red flashing button on your phone.
The Fallout What happens next is beyond your wildest imagination. The decibel level of the voice on the
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other end of that voicemail button is so high that you lose the grip on your cup, and your expensive drink is now just a refreshment for your lap. It seems everyone was happy with the Bob Smith endeavor, except… the Bolivian immigration department. They seem to not be not so keen on letting him in. In fact, they sent him back. Everyone scrambles to get the Boblivian affair (as it has come to be known ) back on track, but to no avail. Hours on the phone, enough e-mails to fill your outbox for a year, and on and on, but the Bolivians are not budging. At the end of the day, Bob is just not going to Bolivia. And guess what? It is not over yet. Now Bob is suing, claiming he has incurred huge costs, lost opportunities, and has been misled by you. He says you told him he was hired. But now, it seems, he is not. And Bob is only one of your problems, because your boss is screaming like you have never heard, and the company has had to shut Bolivian operations. Your sleep patterns now have been irrevocably altered.
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Who doesn’t like a good night’s rest? Certainly global mobility professionals appreciate the opportunity to catch up on their sleep. Kranc details a situation that certainly will keep even the most accomplished HR professionals awake at night—that of issues of civil liability in immigration matters.
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What Went Wrong? Perhaps it goes without saying, but what went wrong is simple: a failure to recognize that an immigration procedure is a legal procedure. There is a “judge” (usually known as the immigration officer) who will be making a decision, and you simply cannot take that decision for granted. The factors involved will be different in every country, will involve assessment of factual issues, and will include the application of that country’s law to those facts. No more or less than what a judge in court may be required to do (A sub-issue of the problem is the assumption sometimes made that different countries’ laws are the same or similar—this is a dangerous presumption.).
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Further, the underlying immigration issue for most countries is whether local jobs are affected by the hire of a foreign worker. In today’s economy, as can be appreciated, that issue is even more highly accentuated. We constantly see, unfortunately, that people do take the immigration decision for granted. From the vice president who set up the entire Bolivian operation around Bob, never considering whether Bob had the legal right to work in Bolivia, to the HR manager who had Bob sign the employment agreement and “arrange” for his visa, to the relocation company for whom a visa is just one piece of a puzzle—like arranging for school, and establishing a bank account—all the players involved in
getting Bob up and running must recognize the issues.
Avoid Being Sent to Boblivian So what is an HR manager (or other responsible person) to do? There are two parts in answering this question. Immigration planning. The responsible person/people must, of course, take all necessary steps with regard to the immigration process in the relevant country. This may involve securing appropriate counsel or advice, or otherwise investigating all the requirements of being able to work in that place. It is important to note here that a work permit alone does not necessarily confer the right to work in the destination country. In many countries, post arrival formali-
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Employment Contracts in the Immigration Process — Global Examples R U S S I A — a local employment contract is a requirement for the work permit application, but this must not be signed until the permit has been approved. A signed contract will not be accepted for the permit application as the authorities reason, with logic, that the contract should not be binding until the permit has been approved. I T A L Y — To send an employee to Italy, you will need to secure a work permit and a Type D visa. However, an important step that must be taken before the employee can legally start work is the signing of the employment contract in front of Italian immigration officials. This is done only after the work permit and Type D visa have been obtained and the employee has entered Italy with the Type D visa. C A N A D A — The Canadian government warns applicants in the permanent residence realm generally not to quit their jobs or sell their assets until they have their visas. L A T I N A M E R I C A — Brazil’s consulate in Los Angeles, CA, has clearly had some trouble with disappointed visa applicants, and now carries the following stern announcement on its website: “Please note that issuing or denying a visa is a sovereign act of Governments. It is a prerogative applied by every country and strengthened by international practice. The kind of visa, if it is granted, and its validity are also a sovereign decision of the Consulate. No discussion on this matter will be accepted.” Despite this warning, however, several countries in Latin America (Chile, Colombia, Argentina, and Panama—depending on the process followed) require that a signed employment contract be submitted as part of the supporting documentation for the work permit application. Even though these contracts may be prepared for “immigration purposes only,” it still is of huge importance to include a contingency clause for all the reasons outlined in this article. P H I L I P P I N E S — In October 2009, the authorities announced that the start date in the Employment Offer should be a future date. The Employment Offer letter can be signed in advance but the effective start date must be after the employee’s arrival date in the Philippines.
ties (registrations, residence permits) must be completed before the worker can commence employment—and the approval of these applications, such as the work permit, should not be taken for granted. Of course, to the extent possible, this should be done in advance of hiring a worker, and company plans contingent on a particular worker must be carefully considered before being executed. This is a very important topic, and is a treatise unto itself. Certainly, it is a topic with which people should be concerned; however, this article’s focus is avoiding worst-case scenarios when things do not go as planned. Which brings us to… Contingency planning—limiting legal exposure. The responsible person/people must prepare for contingencies/legal exposure. You do not have to be a rocket scientist or a lawyer to know that when an agreement or other legal “event” is conditional on the cooperation of a third-party (i.e., an immigration offi-
cer); you cannot just assume the cooperation of that third-party. You have to know that there is a possibility that the answer to a visa application will be “no,” and you have to make sure that all those reliant on that visa—from the worker, to the hiring VP, to employment law counsel, and the like—understand the risks. From a business point of view, it is contingency planning and setting expectations; from a legal point of view, it is preventing or limiting legal exposure. And it is as much a part of the process as part one above.
What Is the Legal Exposure? In addition to serious negative business consequences for failed visa applications (for the business and the applicant), there can be civil legal exposure. In our example, it appears that Bob has a simple, binding employment agreement that says “you are hired.” Bob relied on this, to his detriment. He indeed went off
and changed his life, based on your legal commitment to him. Legal exposure can include liability for breach of contract, liability for “hard” costs such as expenditures on a new home, liability for loss of previous work, and more. Further, it may not be enough to say, “they didn’t give you a visa, sorry, goodbye.” There may be a civil obligation to use reasonable efforts to obtain a visa. For example, in one case in Canada, a court held that an employer had a duty to a prospective employee to assist in the securing of his visa and not just leave it in the hands of the employee alone. There was a duty of good faith. The company’s failure to have met its duty led to civil liability.
So What to Do? The general answer is to prepare for unforeseen contingencies. Because you know that a visa is not a sure thing, ensure that your employMOBILITY/MAY 2010 81
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Moving Targets As Kranc has noted, each country to which you may be sending employees on assignment has unique rules and procedures to follow. This is complicated by the fact that they frequently change those rules and procedures. To help busy mobility professionals who need an easy method of keeping up to date with changes, Worldwide ERC® has partnered with members in the compliance sector to create a library of newsletters and client alerts that identify many of the changes of which you need to be aware. Three libraries exist: one for immigration; one for taxes; and one for employment law, and they are updated every time a newsletter is published or client alert issued by the following companies: Baker & McKenzie Berry Appleman & Leiden LLP Deloitte Touche Tohmatsu Emigra Ogletree Worldwide Fragomen, Del Rey, Bernsen & Loewy, LLP Nachman & Associates, PC PricewaterhouseCoopers LLP Pro-Link GLOBAL Inc. To visit the libraries, go to the Worldwide ERC® website at: www.WorldwideERC.org and click on “Global Tax and Legal Resources” dropdown located under the silver “Government Relations” main navigation tab. And, the Worldwide ERC® twice-monthly eNewsletter, GLOBILITY®, in addition to a wide variety of other topics, often carries announcements of legal changes announced by various countries. This resource is available free of charge. If you are not already receiving it, visit www.WorldwideERC.org and click on the “GLOBILITY®” dropdown located under the silver “Resources” main navigation tab. ment agreement is conditional on the obtainment of a work permit. Set out what the employer’s obligations are in terms of assisting in the securing of the work permit. Caution that the agreement is not binding until the necessary conditions have been met. Perhaps even caution that you have no liability for any costs or losses of the employee if he takes any actions before knowing that the condition is met. Taking immigration approval for granted is a common problem, to the extent that in many countries, immigration authorities have taken steps to actively advise or stipulate that assignments are not finalized until immigra82 MOBILITY/MAY 2010
tion documents are approved. Some examples are given in the text box on page 81. It also is interesting to note that we have seen agreements reviewed by employment law counsel, where the issues discussed in this article still are not addressed. Employment law counsel may be focused on knowing the rights and responsibilities of employer and employee in the context of the work pursuant to the agreement, but there sometimes is a failure to consider the immigration element—the condition of the obtainment of a work permit. Therefore, it is important to have employment agreements for foreign
workers reviewed by immigration counsel in addition to employment law counsel. Had APC inserted a clause in their agreement making the entire agreement conditional on the immigration approval by the Bolivian authorities, and perhaps added a further clause limiting liability for any activity by Bob unless and until such approval was obtained, much of the HR manager’s woes could have been resolved.
The Moral of the Story As suggested in the title, the real purpose of this article is to help improve your sleep patterns. That requires foresight. As cliché as it sounds, the basic moral of the story is that an ounce of prevention is worth a pound of cure. It is imperative that while planning is done with a positive eye on the future, you also need a skeptical eye that recognizes the contingency of a third-party entity (a foreign immigration department) not going along with “the plan.” In addition to immigration planning for immigration planning’s sake (as noted above, a separate but obviously very crucial topic unto itself), and employment law planning for employment law’s sake, you need immigration planning for employment law’s sake. Hopefully, you will sleep better. Also, get a firm mattress. This article is intended as general information only, and not as legal advice for any particular scenario. Please contact competent counsel with regard to specific situations you may be dealing with. Ben Kranc is country manager of Emigra Canada Ltd, Toronto, Ontario, Canada, and principal of Kranc Associates, Emigra Canada’s affiliated Canadian immigration law firm. He can be reached at +1 416 979 9600 ext. 206 or e-mail email@example.com.
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As organizations continue to address the effects of the economic downturn, new strategies are attempted to reduce costs while maintaining service levels. Concerning the options available to relocation management companies for working with a relocation department that provides local managed care, or working directly with agents, O’Connor and Carey say it is important to examine the differences to make informed decisions.
B Y P A M O ’ C O N N O R , S C R P, A N D S U E C A R E Y, S C R P, G M S ever waste a good crisis. In this challenging economic environment, many are adopting that mantra to make overdue changes to their business practices—changes that might not be possible in a thriving economy. Exploring new solutions is always a good thing, as long as we are mindful not to “throw the baby out with the bath water” when experimenting with new approaches. One such experiment undertaken by some relocation management companies (RMCs) for their real estate assignments is the “agent-direct” referral model, eliminating or minimizing the involvement of real estate relocation departments. The reasons cited are greater efficiency by eliminating a layer of communication and leveraging Internet technology; lower costs for clients by removing the “up-charge” of many relocation departments; and helping brokers’ profitability by eliminating the costs of a relocation department. At first glance, these claims seem logical, but there are many misconceptions—even among seasoned relocation management professionals—about the economics of real estate brokerages and their relocation departments, about the services provided by those departments, and about the role that license law plays in a brokerage operation. In the agent-direct model, there is an assumption that simply developing a profile database of agents who have performed well in the past (probably
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because they were trained, handselected, and held accountable by a relocation department) and training them in RMC practices and standards will deliver the same result without the layer of a relocation department. However, while some relocation departments are more proficient than others, the majority typically perform multiple tasks behind the scenes that RMCs sometimes assume are being handled by the agent, so they often underestimate the value added by the department. Ironically, the opportunity to pursue an agent-direct model is not new. For more than 30 years, RMCs have been able to work with individual agents associated with 100 percent firms that have no relocation depart-
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ment. The fact that most RMCs are still working predominantly with traditional real estate companies and their relocation departments speaks to the value that exists. Regardless, given the two options available to RMCs of working with a relocation department that provides local “managed care,” or working directly with agents, it is important to examine the differences in order to make informed decisions.
The Optimal Relocation Experience: People Versus Process In the agent-direct model, the needs assessment is likely to begin with the RMC or national real estate service company consultant. Using a thorough but consistent format,
questions will be asked about the home currently owned, as well as the transferring employee’s destination needs in identifying temporary living, permanent housing, schools, and other family issues. The consultant will determine the work location and desired commute time, thereby narrowing down a geographic area. This information will be used to search a database of previously screened agents. The type of information likely to be included in the agent database would be years of experience, conversion ratios, service area(s), familiarity with relocation, and types of certifications. The agent will need to complete training for use of the company’s Internet-based client platform. Some companies will require background checks. Searchable by geographic area and acceptable conversion ratios, the database software will assign agents to transferees. The needs assessment, procedures, direction, and a referral agreement will be given to the selected agent(s) by the referring RMC, and a schedule likely will be set with the agent to provide a Broker’s Market Analysis (BMA), update reports, and eventually report the sale and/or purchase of real estate. The agent will be responsible for managing all details of the process. For a homesale, the BMA and listing agreement will be sent directly to the consultant by the agent. When utilities are no longer the responsibility of the transferee, the agent will be required to arrange for a change in service and pay bills. If repairs or improvements are needed, they will use their personal list of suppliers for carpet, paint, plumbing, electrical, and will coordinate all expenses and final documentation needed to close
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the sale of the home. In the case of a buyer client, the agent will need to be aware of policy nuances with regard to lenders, inspections, and equity advances. He or she will need to be informed of homes that may not meet company policy guidelines for resale in the future. The agent will be accountable for a well-defined process, and the RMC will have to follow up to ensure that all steps are completed because automation alone will not suffice. Conversely, let us review a similar scenario in which the agent’s involvement is initiated and monitored by a local relocation director and staff closer to the transaction. The RMC will use the transferee’s homesale and destination location to identify the qualified real estate brokerages within those geographic areas to which the initiation will be sent. On a homesale, the real estate relocation department coordinator likely will have access to the local MLS, enabling them to pull property history prior to their initial call. This allows the coordinator to demonstrate area knowledge to the transferee and build confidence in his or her ability to select the right agent. For homefinding, someone familiar with the destination is able to ask more specific questions that often will result in a much more thorough, personalized needs assessment and a clearer picture for purposes of agent selection. Concerning agent selection, most relocation departments also will have a database of previously screened and trained agents. Similar information analyzed in an agent-direct model also is maintained and used by many relocation directors. In addition to a general qualifying database, however, the relocation department has the advantage of local, real-time knowl88 MOBILITY/MAY 2010
edge through MLS access and related market trend reports of the best performing agents within a county, city, and even down to the specific neighborhood or desired school district. Technology has enabled agent selection based on metrics, the agent’s training history, and other factors for several years now. The difference in what is available to an RMC using an agent-direct model versus a relocation department, however, lies in the information that cannot be quantified in a database. Will RMC consultants work enough with the same agents to know personality nuances that might present an “oil and water” combination with a particular transferee? Are agents too busy with their own sphere of influence or with a daughter’s impending wedding to focus on the assignment? Have they had recent personal or financial difficulties that might make them a better choice in a few months? What is their specific experience with a particular price point or micro-market that could make a significant difference? Even in a large firm, the relocation director will be able to tap the local sales manager to help make the right agent selection and, if a client’s plans
change or an agent takes ill, the relocation department will see that a qualified agent is put in place without missing a beat, rather than relying on the agent to make a reassignment. The growing number of RMCs with proprietary certification and technology tracking platforms has created the need for an in-house agent “help desk” in many brokerages; i.e., the relocation department. In the real world, it is possible that an individual agent may see the same forms, the same policies, update schedules, log-ins, and the like only a handful of times each year. The relocation department’s ability to oversee each RMC’s process, track due dates, update the outdated forms, and review the BMAs (with access to the local MLS) to ensure accurate pricing prior to submission, is invaluable. These oversight responsibilities will fall to the RMC counselor in most cases in the absence of relocation department involvement. Should corporate clients also be concerned about the financial ability of an individual agent to carry utility, repairs, and improvement expenses for 60 days or more? How much will an agent be willing to invest in a client or transaction if the payoff is far down the line? Brokerages most certainly are better equipped to make timely vendor payments and be outof-pocket while waiting for reimbursement. Who has greater buying power when it comes to winterizing, landscaping, carpet, and paint? Relocation departments are more likely able to negotiate volume discounts, confirm that vendors entering corporate inventory properties are bonded and insured, and deliver peace of mind and real cost savings to the client as a result. Critical to the success of a negoti-
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ated homesale contract is the coordination of proprietary addendums and relocation disclosures that must accompany the contract, followed by the coordination of closing estimates and expenses. Only experience can keep this portion of the transaction from running amok. Not all sales associates are adept at administrative tasks and reports and, even when the agent has an assistant, that individual must be trained in transaction features unique to relocation. There are many areas in which the managed care offered by relocation directors and departments can make the true difference in a smooth relocation transaction, such as: • calming an agent who has been running with a client for seven months and is losing patience; • filling in to assist a transferee when an emergency call makes the agent unavailable; • troubleshooting with a relocation issue the agent has not experienced before and that also may be beyond the expertise of his or her manager; • Tracking inbound referrals to avoid committing duplicate referral fees that could put the RMCs revenue at risk; and • providing the basic relocation training and ongoing updates that often are the foundation on which RMC training programs are based. In addition, relocation departments often are called on to invest time, talent, and resources to coordinate group moves while busy agents would be hard-pressed to take time away from other business to devote weekends to bus tours, stocking destination area libraries, and preparing presentations. These and other relocation department services provide for a seamless relocation experience for transferees, 90 MOBILITY/MAY 2010
RMCs, and, ultimately, the corporate client; in today’s economic climate, the role of the relocation director has been expanded to cover the reduced resources of many RMCs. Removing this “layer” in the name of efficiency may in fact be detrimental to the desired outcome. It is unlikely that relocation directors will step in to provide this level of support when they have no accountability for the referral and no department income, particularly when they have other business that does respect and reward their time and experience.
Brokerage Interference There is another assumption in the agent-direct model that, because agents are independent contractors who are on straight commission, they can just as easily be accountable to an outside RMC as to their own brokerage relocation department, but there are legal, licensing, liability, and business management issues that need to be considered here, too. In nearly all states, license law provides that the agent has an independent contractor agreement with the brokerage and thus serves as a “subagent” of that brokerage. The broker
thereby accepts liability for that agent’s actions and typically is unwilling to cede control of that agent to an outside entity who does not have that same liability. The relocation department, however, represents the brokerage company’s interests, as well as those of the RMC. Real estate law also stipulates that transactions are with the real estate company and broker of record and that the agent operates under that broker’s license. Also, in all except 100 percent brokerages, every commission is shared by the company and agent, with the referral fee paid “off the top” and, therefore, coming out of both pockets. As a result, most non-100 percent brokerages prohibit an agent from obligating the company for a referral fee without the broker’s permission. Likewise, most would be unwilling to sign a blanket agreement to pay referral fees on all transactions from a particular RMC without some type of protective provisions, given that no relocation department oversight exists. When agents receive business that they did not generate personally from an individual buyer or seller, they feel a sense of accountability to the source of business for high performance, which benefits the enduser corporate transferee and corporate client. An in-house relocation department has even greater leverage based on the amount of business it generates to a single agent from multiple sources and its ties to the agent’s manager and other companygenerated business. Unless a RMC has a tremendous volume of business in a particular area, a discrepancy exists with respect to volume (how much business any one RMC can give any one agent so
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that the RMC becomes a top priority to that agent) versus choice (having a large enough pool of agents to truly match transferees to the right professional). Most RMC executives would strongly object to an outsider telling their employees what to do and committing RMC company revenue in the process, yet that is exactly what the agent-direct model requires of the brokerage. Agents are the principal asset of a brokerage. Concerns are raised when an outside business entity attempts to establish a direct relationship and loyalty. Ultimately, what prevents the RMC from establishing its own brokerage with those assets? Would that type of interference with its employees be tolerated by the RMC?
a relocation department and, if not, will the client be the one experiencing the shortfall when monitoring does not occur that could generate better financial results? Is it really logical that a RMC thousands of miles from the brokerage can exercise the same kind of oversight as an onsite relocation department? Does the practice of moving the dollars around really produce a better outcome, or in fact, an inferior one that could potentially cost the client? And does this model even benefit the RMC, which takes on more responsibility for no additional margin? Finally, the stakes are high for the RMC if service delivery suffers. A corporate transferee expects a high
level of hand-holding and “managed care” when agreeing to uproot his or her family, and the selection and monitoring of the real estate agent’s performance is critical to an efficient, cost-effective outcome. If the lack of local control impairs the result, an entire account could be jeopardized, which is very different than is the case with a single “discretionary move” individual. The other argument is that eliminating the relocation department saves the brokerage dollars. At present, many of these departments have evolved into “business development” arms of the company with responsibility for Internet leads, REO business, and target-audience marketing to local consumers, in addition to
A Cost Savings? The agent-direct model purports to save the client and the brokerage money, but is that really the case? It is true that, in many brokerage companies, when a referral fee is charged an additional “up-charge” (often 5 percent) is added to cover relocation department operating costs but, in recent years of 38 and 40 percent referral fees, even that is not universally the case because many good agents will not accept referrals with a 43 percent or 45 percent price tag. In the agent-direct model, the fee seems to be hovering between 40 and 48 percent, so the reality is that there is no savings to the client and no financial advantage to the agent. Even if this additional fee to the RMC is justified because it is handling duties previously administered by the relocation department, there is some question as to whether that margin will cover the RMC’s costs if it performs all of the same services as MOBILITY/MAY 2010 91
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traditional relocation business. Often, those other types of business are more profitable, so most brokers would find it impractical to close those departments. The agent-direct model could be compared to the movement that began years ago in which corporations began to outsource the administration of employee relocation. Have costs been lowered and have service and transferee satisfaction escalated since? The answer to that, at a minimum, is debatable.
What Truly Matters? Successful relocation transactions are a factor of both process and people. Processes can be automated, but just as having the right people in the right location is what workforce mo-
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bility is all about, the same is true of having the right people in place closest to the front line of the transferee’s relocation experience. Ultimately, the corporate client’s view of relocation is influenced by the satisfaction levels of its transferring employees manifested by their ratings of the mobility process and people, their on-the-job productivity, and their loyalty to the employer, coupled with bottom-line costs (not fees, but overall relocation program costs). While it is wise and reasonable to always evaluate whether there is a better way to achieve this end result, doing so merits a thoughtful assessment of everything that contributes to that result. What should be happening is a healthy and constructive dialogue
among the parties—the clients, the RMCs, and the real estate relocation departments—to fully understand each other’s business practices and economic models. There is no doubt some solutions could be identified that would enhance efficiencies and savings for all parties without compromising the essence of effective workforce mobility, creating a “wow” transferee experience. Pamela J. O’Connor, SCRP, is president/ CEO of Leading Real Estate Companies of the World®, Chicago, IL, and Worldwide ERC® Secretary/Treasurer. She can be reached at +1 312 424 0400 or e-mail email@example.com. Sue Carey, SCRP, GMS, is 2010 president of the Relocation Directors Council®, and vice president, relocation for CENTURY 21 Kreuser & Seiler, Ltd., Libertyville, IL. She can be reached at +1 847 367 1171 ext 233 or e-mail firstname.lastname@example.org.
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Benchmarking Relocation Policies: B Y J A N E T O L K O W S K I , S C R P, G M S
enchmarking of mobility policies is an age-old way of ensuring that a company’s policy is competitive and in line with industry best practices. But what happens after the results are in? How often do companies take action and make changes to reflect what others are doing? Are the results of changes measured? Benchmarking is time-consuming and, as we all know, time is money in business. Consider the time it takes to: • determine the goals of the project; • ascertain which companies to benchmark; • develop a questionnaire that not only will achieve the intended goals, but one that will encourage responses (i.e., not take too much time to complete!); • contact potential participants to get permission to send the survey; • distribute the survey; • send a follow-up reminder to encourage participation; • review the results of the survey; • analyze the data; • report back to the client on the data with recommendations; • present internally to get buy-in on recommendations; • revise the policy; and • communicate the new policy to all stakeholders. In the end, was the benchmarking exercise worth the time, effort, and expense? Following are some recommendations in terms of the benchmarking process, as well as examples of how other employers have engaged in benchmarking mobility policies, and the end result of their benchmarking exercises.
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Who Should Be Surveyed? Benchmarking companies within your own industry is one way to determine how your company stacks up. However, it also might be helpful to benchmark against companies that have similar recruiting challenges, transfer volume, and/or geographic and demographic profiles. By ascertaining how these companies are successful in a particular process, you may be able to close the gap on areas for improvement in your own mobility program. Let us take this one step further. It is a given that benchmarking projects involve surveying or interviewing the policies and practices of “bestin-class” organizations. I am suggesting that you first survey or interview your internal stakeholders. Determining what is most important to the end user can sometimes help define the areas to be benchmarked. Survey your transferring employee population, as well as the hiring executives and managers throughout your organization. Knowing what is most important to the end users can help determine the focus of your benchmarking initiative.
Consideration for Participants I have already acknowledged that time is money in business. In these extremely difficult economic times, just about everyone is being asked to do more with less. Keep that in mind when developing your benchmark study. Whether interviewing by telephone, face-to-face, or via a web-based survey, try to limit the focus of the study to ensure brevity and ease of response. If it becomes too difficult or time consuming to respond, your response rates will be disappointing. Also, ensure the confidentiality of the data and offer to provide a copy of the results.
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The Results are in窶年ow What?
Benchmarking, by which one organization gauges itself against others, has long been an effective method for determining where one stands among its contemporaries. But what to do with all the data? Olkowski offers benchmarking recommendations, as well as examples of how other employers have engaged in benchmarking mobility policies and the results of their exercises.
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Start by Benchmarking Meaningful Data When a company embarks on a benchmarking project, it is important to focus on areas that may be key performance indicators of overall performance. For example, if one of your company’s challenges is the number of properties entering inventory, benchmark home marketing and homesale components of policies. Inquire about homesale bonuses, acceptance of offers below guaranteed home buy out, and mandatory listing requirements. If you are experiencing high turnover rates after repatriation, consider benchmarking companies’ repatriation practices, as well as their pre-assignment planning policies. Be certain that the information gathered will help solve a specific problem or challenge.
Analyzing the Data It is dangerous to analyze the data in a vacuum. You must consider your company’s culture and financial objectives when making recommendations. Taking the data at face value without deeper analysis likely will result in a failed outcome. What works for even “best-in-class” companies may not work within your organization. If you are trying to recommend colossal changes, be prepared with the data, but also be prepared with the cost/benefit analysis if it contradicts your company’s current culture or financial objectives.
Using the Information and Measuring Success Once you gather the information, make appropriate recommendations for policy changes and be sure those changes are clearly communicated to all stakeholders: senior management, internal business partners, payroll, HR managers, legal, finance, trans96 MOBILITY/MAY 2010
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ferees or assignees in process (if they are affected), and service providers. Determine key performance indicators and be sure you and/or your service providers are tracking and reporting the results of the program. In the dynamic environment in which we are all trying to operate, it is important to revisit policies on an annual basis to ensure they still complement your company’s strategic goals. What worked just 12 months ago may not work today.
Case Studies A large global pharmaceutical company was having difficulty with employees selling their homes in the United States. They had a buyer value option policy, but the homes were lingering on the market, making it difficult for transferees to move on and get settled in the new location. They also experienced increased costs because of exceptions to policy for extended temporary living and storage, as well as the distraction and stress that goes with having a property (often vacant) in another state. The company engaged their relocation management services provider to conduct a benchmark study, including national data and data within the pharmaceutical industry. The information was presented to senior management and, as a result, the company implemented a guaranteed buy out program on a trial basis. They also implemented duplicate housing and loss-on-sale policies. The program was successful in terms of selling the lingering properties and allowing the employees to move on. However, the financial management team at the company was not thrilled with the idea of “owning homes,” so they reverted
back to the BVO program after approximately six months, but incorporated more stringent home marketing guidelines with a mandatory list price of no more than 105 percent of the average of two broker’s market analyses. They kept the duplicate housing and loss-on-sale benefits to be used on a case-by-case basis working with guidelines they established during the “trial” period. According to the senior director of human resources, “having the data enabled us to make informed decisions on our program. Our culture is one where we do whatever we can to assist our employees, but within fiscally responsible guidelines. The changes to our policy have helped our recruiting efforts and enhanced the satisfaction levels of our transferees.” Another company, Diversey, Inc., Sturtevant, WI, benchmarked its policy against others of similar size, location, and number of moves and, as a result, implemented interim policy adjustments in the form of a “slow market addendum.” The addendum to the policy was implemented on July 1, 2008, and is reviewed every six months. This temporary adjustment provides for enhanced loss-on-sale as well as a home marketing incentive. According to Nan Sheppard, Diversey’s manager of global mobility services, “although we could not actually point to rejections (of relocations) based on our current policy, our philosophy is one of partnering with the employee to make the viability of relocation at this time more practical and lessen the cost impact to the employee. The intent is not to eliminate the burden, but to share the burden that the current market creates.” Finally, CUNA Mutual Group, Madison, WI, a financial services
company that was under new management, benchmarked its policy with the intention of identifying cost-saving opportunities in the current economic environment. According to Annette Haak, CRP, GMS, the relocation manager at the time, “the new regime was more open to change in order to address the current economy.” The company reviewed policy components related to the current market and made changes to its policy accordingly. During an 18-year period, CUNA Mutual had conducted complete and formal benchmarking about three or four times; however, they benchmarked specific policy components three or four times per year depending on the current environment. When asked if she felt the benchmarking efforts were worth the time and effort, Haak replied, “Yes, absolutely. I was hired to do a job and conduct proper due diligence. I wouldn’t be doing my part if I wasn’t constantly researching cost-saving alternatives and creative ways to help employees.”
The Bottom Line Sometimes the bottom line is the bottom line. Other times, it may be to ensure that your policy is competitive from a recruiting standpoint. It typically is a combination of the two. Whether you make changes to policy or not, benchmarking against other companies’ global mobility programs demonstrates to senior management that you have done your due diligence and have made informed recommendations and decisions. Janet Olkowski, SCRP, GMS, is vice president, consulting services for Cornerstone Relocation Group, Basking Ridge, NJ. She can be reached at +1 908 484 1054 or e-mail email@example.com. MOBILITY/MAY 2010 99
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Standing the Test of Time? Protecting REO and Short Sale Investments B Y L I N D S AY F I L B Y It is no secret foreclosed (REOs) properties have been a growing segment of the resale real estate inventory. Those properties routinely sit vacant, and this vacancy carries with it its own set of issues. Filby says the new enemy of confident homebuying is long-term vacancy, and suggests that organizations should take a look at home warranties and inspections of REOs to assist in ameliorating these issues.
s if you needed another magazine article about the real estate crisis, foreclosures, defaults, recession, the state of the economy, or the mortgage industry. There are resources aplenty (whether you want them or not) for all the gory details and dark predictions related to those topics. There are real people out there with real problems. Many families are struggling with homeownership. This story will not revolve around those issues, as important as they are. What about all the homes left behind? It is not unusual to find a house sitting vacant for several months in a foreclosure and, many times, it can stand idle for a year or more. These vacant structures present challenges to both the house itself and the principals involved in the ultimate transaction. Its no secret foreclosed (REOs) properties have been a growing segment of the resale real estate inventory during the past 36 to 48 months. Those properties routinely sat vacant for a minimum (in most cases) of six months and often sit for far longer.
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What you may not know is the socalled â€œshort saleâ€? is now supplanting the REO as the leading segment of the distressed property inventory. While it may be comforting to see a reduction in REO inventory, the growing number of short sale candidates continues to leave houses on the market and often vacant for long periods of time.
A New Market Enemy The new enemy of confident home buying is long-term vacancy. Why the concern? Because of theft, vandalism, and unauthorized entry or occupation. Also of concern are weather conditions and unaddressed maintenance or monitoring. First, these vacant properties become vulnerable to episodes of vandalism and theft. It is not uncommon in all regions of the country to witness removal of appliances. In some cases, even larger systems such as the HVAC have been stolen or vandalized for their copper components. While these conditions generally are easily recognizableâ€Ś the damage when they are removed may not. The cost factor in replacing
missing components can rise unexpectedly when facing the replacement or repair of infrastructure items. Occasionally, theft and vandalism is reported to window and door casings and even expensive pool equipment. Although rare in upper price neighborhoods, many middle and lower valued communities have suffered from illegal occupancy of these homes. These unlawful parties have contributed to the disrepair (in mild circumstances) and outright damage (in the extreme) of the properties they choose to inhabit. There is another worry. As indicated, these houses stand idle and out of use. This can mean they pass through at least one season and routinely two or more of harsh weather. Depending on the part of the country in which the home is located, this can leave structures and systems exposed to danger. In most parts of the nation, winter will be at least cold enough (if for only a short time) to freeze pipes or crack bath basins. Many regions experience subfreezing temperatures that can become destructive quickly. Unheated struc-
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tures can be in danger of all the expanding and contracting that extreme cold can bring to construction elements. Floors, windows, doors, and finishes all can become threatened. Summer, too, brings its own set of maladies. Again, regions of the country are susceptible to high temperatures that can wreak havoc on unattended structures and their finishes and furnishings. What about rodents and pests? Sure. Full menageries have been detailed in the analogs of vacant housedom. Common are termites, mice, and other vermin—live and otherwise. In addition, cats, birds (although not often in the same building), reptiles, and even raccoons have been spied making the vacant home their residence. What has not yet been touched on are the contrasting disclosure obligations in different states and in different kinds of transactions (i.e., REO versus short sale). Banks typically are not in a position of knowledge to reveal much of a property’s condition. It is not that they are not required to disclose but, rather, in most cases they simply do not know. Sellers in short sale agreements conversely do have some awareness of a home’s condition, but that can be limited to the time in which they exited. Be cautious not to rely exclusively on the disclosures of either party.
So What To Do So what can you do? First, get a professional home inspection. When so many contracts are initiated on “as-is” properties, parties may (sometimes real estate agents, too) mistakenly assume an inspection to be unnecessary. This can be true as well 102 MOBILITY/MAY 2010
of the home warranty product, so look carefully at this resource. Exercise your right (in most cases, check with your agent) to do a thorough investigation of the property with an experienced professional. “Most conditions are recognizable with a systematic investigation,” said Kelly Morris of Morris Certified Inspections, Sacramento, CA. Further, in cases where disputes arise after a close of escrow, it often is the written home inspection that provides the insight needed to identify who may hold responsibility. Remember how mom and dad would warn you, “get the car looked over by my mechanic?” Simply put: inspections are very effective and usually root out major defects and issues that a house may hold. A complete professional home inspection is a way to achieve the highest degree of awareness of the property’s condition. It may not be perfect, but it is the best we have. Get one every time for each transaction. A policy of home warranty protection also should be considered. A home warranty is a service contract that covers the repair or replacement of many of the most frequently occurring breakdowns of home systems and appliances. A new homeowner occasionally is burdened with paying for permits and repairing anything that the safety inspectors call for before gas, electric, or water may be turned back on. Many home warranty companies further protect (with add-on coverage) to include some of confounding permit items needed when replacing some components. Mikey Miller, senior account executive for American Home Shield, Sacramento, said, “AHS currently provides over 1.3 million homes war-
ranties nationwide and the average customer makes over two service requests a year.” It is occasionally perceived (sometimes for real, sometimes not) that the cost of such coverage makes an offer less competitive if the seller is asked to pay for it (and banks often will not). Buyers can be reluctant to purchase the plan when they see their costs mounting on other fees, leaving the home unprotected. It is almost always a good idea to obtain this high degree of coverage for at least the first year. After you have settled in then revisit the decision. Miller agrees. “Some of the most expensive items for homeowners to repair or replace are also some of the most common service requests of the first year,” he said.
Understanding REOs and Short Sales Leaders of the real estate industry and banking industry seem to agree on two things. It appears most likely that REO foreclosure transactions will still be with us for some time to come. Second, that institution awareness and government nudging will continue to grow the short sale segment of inventory and sales. Most agree outstanding real estate values have been plentiful in recent years. It has never been more important to know what you are getting. What was true before this new environment started is even more true today. If you buy a home (occupied or not), you have a responsibility to yourself. Get an inspection and protect your asset. Things really have come full circle. Let the buyer beware indeed! Lindsay Filby is relocation director for Cook Realty Inc. Sacramento, CA. She can be reached at +1 916 451 6702 or e-mail firstname.lastname@example.org.
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Subpart A and SEVIS II
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J-1 visa exchange programs, whose categories include such employment descriptions as intern, au pair, alien physician, secondary school student, and teacher, face new restrictions and tightened scrutiny. Klein offers an analysis of proposed changes to Subpart A of the Exchange Visitor Program Regulations, as well the forthcoming launch of SEVIS II, a Department of Homeland Security database that program sponsors are required to use to provide information on participants and program activity.
BY DARRA KLEIN
s evidenced in recent speeches given by President Obama and Secretary of State Hillary Clinton, the White House considers citizen exchanges a powerful tool in its public diplomacy arsenal. Focus on â€œsmartâ€? power has been a hallmark of the administration, which has resulted in increased emphasis on engagement with other countries through citizen exchanges. Along with the push for increased exchanges, however, comes an equally vigorous push for increased restrictions and tightened scrutiny of J-1 exchange programs falling under the purview of the Private Sector Programs Division of the Office of Designation at Department of State. These J-1 categories include trainee, intern, au pair, camp counselor, summer work/travel, alien physician, secondary school student, and teacher.
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Subpart A Citing the need for tougher measures to ensure participant safety and proper usage of program categories, Department of State published a notice in the Federal Register on September 22, 2009, proposing drastic changes to Subpart A (the general provisions) of the Exchange Visitor Program Regulations [74 Fed. Reg 48177]. Among other requirements, the proposed rule would institute annual management audits of program sponsors (which are anticipated to cost $10,000 per program per year), criminal background checks for personnel working with exchange programs, and Department of State site visits to all organizations seeking new program designation and of existing sponsors on an as-needed basis. Collection of more in-depth information on potential host employers also would be required. The proposal also seeks to increase the minimum insurance coverage requirements for participants who have been in place since 1993. In yet another new provision, sponsors would be tasked with tracking the employment activities of accompanying J-2 dependents. This requirement will add significant reporting burden to sponsors, requiring them to divert scarce resources away from core program goals and objectives. The deadline for submission of comments was November 23, 2009.
SEVIS II Aside from these significant proposed policy changes, sponsors can expect sweeping new changes to the way they administer their programs with the forthcoming launch of SEVIS II. Created in response to the 106 MOBILITY/MAY 2010
events of 9/11, SEVIS (Student and Exchange Visitor Information System) is a Department of Homeland Security database that program sponsors are required to use to provide information on participants and program activity. Since its inception in 2003, the database has gone through six major release versions, but next year a brand new version known as “SEVIS II” is scheduled to be implemented. The new database, which is slated to be rolled out over two phases, will move program administration to a paperless platform and will establish a “one person/one account” system, similar to the e-filing accounts that have been proposed by the U.S. Citizenship and Immigration Services. The original timeline for rollout called for implementation of the first phase in February 2010, but a notice from the Student and Exchange Visitor Program (SEVP) published on December 4, 2009, indicated that this date would be revised because of the complexity of the project. At the present time, SEVP is working to establish a new time frame for implementation. Foreign nationals seeking a J-1 visa, as well as sponsor program personnel, will be required to create customer accounts that will result in establishment of a unique Immigration Identification Number (IIN) to be used for program administration and visa application. Once assigned, this number will be used for all programs in the visa categories of F, M, and J during the course of an individual’s lifetime. Also new with SEVIS II is that the exchange visitor will have online access to his or her SEVIS II record, the goal of which is to provide
greater transparency and to charge the exchange visitor with increased responsibility for ensuring his or her legal status. Creation of customer accounts will take place during the first phase of implementation, which is being called “Initial Operating Capability” by SEVP.
Questions and Improvements While there are still many questions about the mechanics of SEVIS II, there are equally as many eagerly anticipated improvements. The move to a paperless system and assignment of a unique Immigration Identification Number should help to ensure the integrity of an individual’s personal immigration record. SEVIS II also will offer more robust reporting capabilities that will help sponsors with program administration and the Department of Homeland Security in monitoring exchange visitor activity. To ensure a smooth transition to SEVIS II, the Student and Exchange Visitor Program (SEVP) has dedicated a section of its website (http://www.ice.gov/sevis/sevisii/ index.htm) to the project. New information is added as it becomes available. The site offers resources for users of SEVIS and showcases anticipated system changes and mock-ups of screens from the new database. As with any new technology, there undoubtedly will be bumps in the road ahead, but the long-term goal of putting the United States in a better position than ever to engage the world through meaningful, highimpact, and secure exchanges well merits the effort. Darra Klein is director of exchange visitor programs for the American Council on International Personnel (ACIP), Washington, DC. She can be reached at +1202 371 6789 or e-mail email@example.com.
Reed_MOBILITY 4/14/10 11:19 AM Page 9 AMSA Award Ad Mobility 04_Layout 1 4/5/10 11:37 AM Page 1
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The Decade in Review: How Technology Has Improved the Mobility Process BY MATTHEW DICKERSON, CRP
Technology has undergone significant change in just 10 short years, and subsequently has altered the mobility industry. Dickerson discusses how technology has changed during the past decade, as well as how these changes have affected the client and transferee experience.
t the stroke of midnight on January 1, 2000, I excused myself from a New Year’s Eve party to dial into my office network. Like many others, I wanted to confirm that nothing had fallen victim to Y2K. The dawn of a new decade— January 1, 2010—got me thinking how dramatically technology has changed since that memorable New Year’s Eve. The past decade’s technology advances have had a significant effect on the mobility industry and have transformed the experience for both the corporate client and transferee. These technology changes affect how mobility services are delivered to transferees while providing invaluable insight into their lives during the move and on their assignment. As applications of existing technology evolve, and new technology
emerges on a daily basis, it is challenging to list all the transformations of the past decade. However, let us take a look at some of the significant technology advances that directly affect the client and transferee experience today.
Simplifying Banking Through Technology Technology has changed dramatically for the transferee from a financial perspective. In 2000, banking could be a challenge for transferees. In fact, I have heard stories of transferees on homefinding trips with bills paid and sealed in envelopes, and the due dates written on the back indicating when to mail the payment. Today, lenders make scheduled withdrawals out of bank accounts for car and mortgage payments, and transferees simply can log into their bank’s website—from anywhere in MOBILITY/MAY 2010 109
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the world—and schedule payments, which increases efficiency and saves valuable time. How the transferee is reimbursed also has changed. In 2000, a transferee would fill out a manual expense report and mail it along with the receipts to the mobility services provider. Today, reports are submitted directly online, which has vastly improved establishing the appropriate expectations for reimbursement. In addition, the quality of the data has improved, as the person entering the expenses is more likely the one being reimbursed.
Using Technology to Expedite the Homesale Process In terms of specific mobility transactions, the transferee has seen major adjustments during the past 10 years. Third-party service providers have worked and succeeded to enhance the experience for the transferee. For example, in 2000, a relocation management company (RMC) would contact a real estate agent to perform a Broker’s Market Analysis (BMA). The agent would schedule a time with the transferee to conduct the review at his or her home, complete 110 MOBILITY/MAY 2010
the Worldwide ERC® BMA form, and fax it back to the RMC. While it sounds simplistic, the process did have its challenges: • How did the RMC know that the agent was going to confirm the order? • How long did it take to complete the form? • Was the form completed with legible handwriting? • What happened if the fax was lost? Today, RMCs have become increasingly sophisticated with their supply chain integration. Agents receive orders via e-mail and confirm them by a designated deadline by simply clicking on a link. These activities are recorded to monitor the overall cycle time of the transaction. While the agent still goes to the home, he or she completes the Worldwide ERC® BMA directly on the provider’s site, which improves accuracy and dramatically reduces the time to complete. In addition, the automation enables the RMC to share detailed performance with corporate clients through business intelligence and analytic toolsets, using these automatically tracked statistics. And the real estate agent has visibility into his or her overall performance and accuracy.
Today’s Transferees Are Increasingly Mobile A decade ago, transferees were not nearly as connected through wireless devices. In 2000, the idea of “notion of presence” existed only through instant messaging (IM) services. Now, those services and others have gradually made their way into the enterprise and onto wireless handhelds. A transferee using these tools is easy to reach, and real-time communication is now a reality.
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We also have developed the “notion of location.” GPS technology, coupled with location services and applications on smart phones, now enables transferees to automatically geotag a photo taken with their smart phone. Geotagging allows the user to note the date, time, and physical latitude and longitude where a photo was taken. Moreover, it introduces the next evolution of efficiency and organization to transferee househunting and site visits. Integrated mapping services on wireless devices enable a transferee to say “show me the nearest Irish pub” based on the user’s location. Without knowing the name of the street or crossroads, he or she can simply tell the app to find a place for Irish food. Within seconds, the app provides recommendations, ratings, and directions to the nearest establishment. For those transferees new to their destination location, this instant access to such comprehensive information is invaluable.
Social Networking and Collaboration— the New Watercooler The overall proliferation of social networking sites such as Facebook, MySpace, and LinkedIn during the past decade has been amazing. Millions of subscribers actively post photos from their mobile phones, indicate their personal status, and support causes on social networking sites. These social networking sites allow subscribers to update their contact information and have it automatically available to anyone in their network. This information tells colleagues and friends that contacts have changed jobs, received an award, updated contact information, and the like. Think of it as a virtual change-ofaddress card. In addition, transferees
can use social networking to keep in touch with contacts in their previous location and become quickly connected with those in their new community. How information is pushed to the Internet also is changing. In 2000, a tweet was a noise that a bird made and twitter was a verb describing what a bird does. Today, Twitter is a premier micro-blogging site that allows its subscribers to answer one question in 140 characters or less: “what’s happening?” These social networking and micro-blogging sites are the new watercooler for corporate gossip. Transferees now can share information instantaneously for the entire world to see. Although this widespread, free exchange of information and ideas has numerous benefits, it also introduces some potential challenges for HR professionals depending on the transferee’s view of his or her mobility experience.
The Moving Experience The moving experience often begins with the packing of boxes. From a technology perspective, this MOBILITY/MAY 2010 111
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process has been transformed significantly and the contents of these boxes have changed, as well. During the past 10 years, technology has gotten smaller and more connected; in 2000, a transferee’s home typically had one computer. Now, homeowners have multiple, networked computers that serve as a hub for their digital life. Photos, music, video, and other media now reside in digital form. So, boxes and boxes of media— such as large photo albums, CDs, photo negatives, VCR videotapes, DVDs, and CDs—are being replaced with the hard drive of a computer. Today’s homeowners are more likely to keep their precious memories and entertainment on a $200 removable hard drive and place it in a safedeposit box. As a result, transferees’ personal effects become far more portable, and high-value electronics have proliferated in quantity. Once the home is packed, transferees used to wave goodbye to the moving truck and anxiously await all their possessions to arrive at the new home. Although the care it takes to transport these packages has not changed, the technology used to follow them has evolved. Today’s integration with moving service partners provides transferees and RMCs more peace of mind from a location and status perspective as the status of goods can be accessed through a web-based portal. The next step in the move is getting from the old location to the new destination, another experience that has been transformed. Ten years ago, when someone was traveling, he or she likely was unreachable for a period of time. Today, most airports offer wireless Internet connectivity from laptops or mobile phones, and 112 MOBILITY/MAY 2010
air cards allow for Internet access even when not in a Wi-Fi hotspot. Some airlines are even offering Wi-Fi access during the flight, enabling transferees to have a virtual office on the plane. Once the transferee’s family arrived at their new home, the first order of business used to be unpacking the boxes. In 2010, families are more likely to set up their home wireless network so that they can get online instantly and update their extended family and friends. Wireless networking and high-speed Internet access enable families to become connected and settled in their new community at a faster pace.
What This Means For You As technology continues to accelerate the pace at which the world operates, RMCs must continue to adapt and accept new technology as it is introduced. The next “big thing” used to be measured in years—now it happens every few months. These technology advances continue to make the mobility process smoother and more efficient. From social networking and online banking to information portals designed to provide instant access to moving information, technology developments during the past decade have made the mobility process increasingly informative and less burdensome on the client and the transferee. Quicker technology adoption rates can ensure that the transferee, clients, and relocation service providers are all on the same page—even if that page is virtual, not paper. Matthew Dickerson, CRP, is customer experience, operational excellence, and chief innovation officer for SIRVA, Independence, OH. He can be reached at +1 216 606 4000 or e-mail firstname.lastname@example.org.
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Technology and Global Mobility
The Future Is Today Todayâ€™s technological tools continue to evolve, aiding in our personal and professional lives. Cadden explores mobile technology, tools, and information that are aiding mobility professionals, HR departments, and transferees.
BY MICHAEL S. CADDEN, GMS hen was the last time you found yourself completely unplugged? We all experience minor interruptions in our connectivity: perhaps you travel through a dead zone and cannot use your mobile phone, or your vacation takes you to a locale with no Internet. Sure, it is important to step away from the grid to recharge your personal batteries but, the fact is, most people rely a great deal on all the tools of technology that keep us continually connected, both in business and personally. Technology has evolved a long way beyond simply logging on and reading static content. Todayâ€™s tools are interactive, dynamic, and display astounding examples of creativity that lay behind their technological framework. Technology is poised to dramatically affect the world of global mobility in more ways than ever before imagined. Since the late 1990s, tools and information have migrated online. More recently, Web 2.0 capabilities have helped us connect and now mobility technology will solve many important issues with mobile employee and raise many more.
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Tracking Whereabouts Now that mobile phones are all equipped with GPS locaters, it soon will be possible to view where any of your employees are across the globe in real time. There will then be reduced need to rely on travelers to log into a travel-tracking system so you know where and how long they have been in a location. The major mobile phone companies are now offering family tracking plans for consumers. The first application? Knowing the location of your teens. While companies are implementing this kind of access, governments around the world are implementing their own technology so they can know (by biometric passports) who is in their country under what kind of work permits. The names of suspi-
cious people, who may be in violation of work permits, are logged and forwarded to tax and immigration authorities. This easily could result in fines and bad publicity for the companies they represent. It behooves all of us responsible for people working globally to know where our people are. “Stealth expats” are something nobody can excuse or afford in the future.
Applications You cannot turn on the television or look at a website without seeing ads for smart phone applications called “apps.” The iPhone is estimated to support more than 100,000 and Blackberries now have more than 10,000. They range from mobile versions of web applications such as
Salesforce or Facebook to games to unique tools for smart phones like restaurant locaters. Try Ubertwitter and let your followers see where you are in real space. We are quickly approaching 4.6 billion mobile phones on this planet, with a population of just 6.6 billion. Are we getting close to connecting everybody?
Social Networks Social networks use a framework to connect people using all sorts of criteria, and allow them to share all sorts of things—from personal messages, documents, and educative material, to photos and videos—to access to other people. This last item is key, and creates the “network” in social networks. They can be critical to assignees moving internationally.
How do I adjust for a tombstone in the basement? With over 500 case studies that cover items like high-tension wires, adjacent landﬁlls causing oders, and homes built by prominent architects, Worldwide ERC®’s Unique Property Database is quickly becoming the go-to industry resource for properties that have a feature so unique that they make you scratch your head and say “huh?” And the best part...the database is available to all Worldwide ERC® members at no additional cost!
THE UNIQUE PROPERTY DATABASE To access and search the Unique Property Database, please visit: https://www.WorldwideERC.org/Resources/USRealEstate/Pages/ssl-unique-property-database.aspx The UPD is a beneﬁt of Worldwide ERC® membership. Not a member? Call or contact us at +1 703 842 3427 or membership@WorldwideERC.
Copyright © 2010, Worldwide ERC®
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A major benefit is to ease the “soft” issues by keeping everyone— assignee and family—connected in the new country and to people back home. Before the move, news of departure can be shared easily and support swiftly extended via myriad electronic means. Social networks further allow introductions and building relationships between people who now share—or will share—a common location. When facing something as exciting, yet daunting, as immersing yourself in a new culture, there are few things more comforting than knowing you already have a human connection there. These person-to-person connections come from many directions, thanks to the common bond of
shared experience or of experiences passed from a veteran to a newcomer. People can meet in online language training sessions or via Facebook pages originated by anyone interested in the destination location. Social media can be described as usergenerated online content that is equally easy to read and contribute,
with no advance technical skills, allowing for the wide exchange of all sorts of information—be it personal, news-related, or covering any number of other topics. Facebook alone claims more than 400 million active users—more than half of whom visit the site daily. Once a tool for college students, this 6year-old site’s fastest growing demographic is now people 35 and older. Clearly, the trend is expanding across generations and sectors—and across borders, as 70 percent of Facebook users are outside of the United States. Access via mobile device makes it easy to stay in touch, wherever the user is. Many companies ban the use of public social networks on company computers on company time because
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of concerns about productivity and security.
Databases There are three main areas covered by comprehensive databases today and they are general country, career, and school information. Country information. Some of the first online applications came in this space as printed booklets were put online in the late 1990s. Companies went from photocopying them to sending links to assignees. Ten years later, the demand for difficult destinations, such as Afghanistan, have proliferated and these providers have responded by continually expanding their portfolios for destinations. New tools make it easy for in-country resources to get online and make real-time updates. Think about the questions you get that sites like these answer. Career information database. Career coach Susan Musich, GMS, says, “in my experience, it is rare that a spouse who wants to work cannot find a job with the proper strategy, network, and knowledge of the local business culture. The fact that the vast majority still do not find employment is a travesty.” Now all the career resources one needs for the accompanying spouse can be found on the web. International school information database. Like the other database services, international schools and reviews are now organized into an easily searchable database. Again, let the assignees “do the work” and not HR.
Destination Videos Increasingly, videos are permeating the Internet with short vignettes about nearly any topic in which expa118 MOBILITY/MAY 2010
triates have an interest, including places, housing, and schools. In addition, there are professional videos being produced specifically for assignees that, at the moment, are free. Before videos there were still images; there must be billions on the web by now many of which can be linked to maps. And let us not forget the new 3-D satellite views and Google Maps with Street Views now being offered.
Cultural Tools While there is no such thing as online cross-cultural training, there are some web tools that introduce employees to cultural concepts and can help assess one’s cultural work style. Effective cultural training is very much geared toward the individual’s native cultural orientation and his or her destination’s. It also can encompass behavioral styles that may require professional counseling to best prepare an assignee. Many firms are filling in the gaps in this cultural space by merging some broad cultural guidance with country-specific information. Because only a fraction of assignees get live cross-cultural training, this is a good way to reach many more people who can benefit.
Candidate Assessment Like cultural training, candidate assessment cannot (yet) be accomplished with technology tools as they are not able to predict performance and only serve as a guide.
Immigration Compliance As discussed earlier, immigration compliance is a serious worldwide issue with new technologies aiding enforcement. Tools from immigration legal firms can help HR keep track of an assignee’s work visa status and other immigration documentation.
Relocation Management Companies All the major relocation management companies (RMCs) have varying degrees of sophisticated tools that allow assignees and HR to track the progress of an international assignment. In the old days, there would be many phone calls and faxes between the assignee, HR, and RMCs. Now all the information is updated and accessible online. HR has been asked to do more with less during the past decade and it is no coincidence that technologies tools have proliferated during that time. Social networks. Among the more well-known names are Facebook, Twitter, and Linkedin. Some firms are trying to selectively use tools like these and relocation-specific ones to keep assignees connected to home and introduce them to connections in the host country.
Candidate Assessment There is a growing number of new and updated resources and tools, all designed to lighten HR’s workload, enhance compliance, or aid in the preparation of international assignees and families that can be far less costly than the pre-technology alternatives. One thing is certain: most of these applications are stand-alone and not designed to cohesively work with others, but that is likely to change, too. In this day and age, there is no excuse for you to be using outdated tools and applications—talk with your technology partners to determine how you can be better connected in the present and beyond. Michael S. Cadden, GMS, is managing director, international operations for Living Abroad, LLC, Norwalk, CT. He can be reached at1 203.221.1997 ext. 111 or e-mail email@example.com
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CULTURE AND COMMUNICATION 101 BY SEAN DUBBERKE
o you know why communicating with people across borders is often one of the hardest aspects of an international business relationship? Communication styles vary greatly from country to country and even across regions and cities. It may come as a surprise, but the frustration of losing 30 minutes to an unproductive, confusing conversation can be attributed in large part to culture. Culture plays a fundamental role in the way we send and receive messages. The other large piece is personal style, which is formed through family background and personality, but powerful societal norms are instilled in us from a young age as we are socialized to longstanding national cultures. “Managing Across Cultures: the Seven Keys to Doing Business With a Global Mindset,” by Charlene Solomon and Michael Schell, tells a story about an American, John, who on a recent trip to Japan met with one of his customers, Sato-san. John felt he had a nice relationship with him, and felt ready to push the sale. “To his surprise, as soon as he quoted the fee, Sato-san fell silent. In his discomfort with the silence, John assumed that he must have surprised
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Sato-san with the amount and… quickly lowered the price… Sato-san remained silent.” The story continues until John reached a very low price, and his customer said that he would think about it. The next day Sato-san called, placing the order at a price that was not lucrative for John. The awkward feeling Americans experience during silence was a negotiating strength for the Japanese customer. In Japan, silence indicates that a person is taking time to seriously think about what the other person says, and does not necessarily mean disagreement. The moral of this story, according to Schell and Solomon, is that nonverbal, indirect communication can seriously affect business. Culture is commonly defined as a set of values, beliefs, social norms, and rules that make one community of people distinct from another. Culture manifests itself through behavior, so learning to recognize culture starts by narrowing down these behaviors into a few categories. Why would you want to learn how to recognize cultural behaviors in your colleagues and friends? Simply put: to be successful. Leaders in all fields and industries are increasingly global thinkers and come from a number of internation-
al, multicultural experiences. The more you know about the culture of your co-workers, clients, customers, and business partners, the more empowered you will be to effectively and successfully manage your career and your business. There are a number of ways to categorize culture. Many of the keys to cultural understanding are not easily recognized through behavior, but communication styles can present overt challenges at work while causing frustration and slowing down the business process. Why is this, and how can professionals address cross-cultural communication issues?
Misleading Language For North Americans, “we say what we mean and mean what we say.” This simple policy deceives many to believe that direct, unfettered communication is a universally shared value. In many parts of the world, the norm is just the opposite: language is eloquent, restrained, and heavily marked by non-verbal expressions. In the Middle East, people commonly express themselves through body language, whereas Asians use subtle physical gestures and speak indirectly. Even in parts of Europe, Italy for example, language
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B E H A V I O R and communication are interpreted through a cultural filter. As global thinkers with international and multicultural experiences increasingly interact with each other in the business world, opportunities for misunderstanding and communication breakdowns increase. Dubberke offers methods for identifying cultural clues among your colleagues and clients and how to best use them for addressing communication issues. MOBILITY/MAY 2010 121
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is elaborate and roundabout because of a strong value placed on the way thoughts are presented. Personality, of course, will affect the communication style of an individual, but cultural values instilled from childhood are apparent in all of us. Ask yourself and your peers these questions to determine a successful way of adapting to diverse styles: • Do you speak frankly and in explicit terms, or do you find this impolite? • Do you value high-context conversation, or is less information better? • Do you rely on the tone of your voice, body language, eye contact, or other non-verbal actions to convey a message?
Defining Communication Communication styles refer to… • The ways societies use language, both verbal and nonverbal. • The amount of information people need to receive or share in order to understand a message. Is it brief and task-relevant, or does it include background information as well? • The directness or subtleness of the language people use. • The way people use words or gestures to express feelings or moods. • The importance of harmony and saving face through language. • Do you avoid conflict or strive to “save face” when speaking with others, or do you value confrontation and debate? Aaron Arun Baharani, a crosscultural business consultant in New York, NY, is an expert on Asian cultures, especially on China and India.
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In his experience, communication was repeatedly the top challenge in a world tour of intercultural training for a global news agency. The organization’s offices in India, Singapore, Thailand, and the United Kingdom all experienced the most cultural disconnect when it came to communication. In Baharani’s experience with Asians, many may be too polite to tell someone if they make a mistake, or have misunderstood a message because it would cause that person to lose face. In addition, Baharani says there is another issue: “The language of global business is English. The person who speaks English as a second language may feel embarrassed to tell a native speaker that they are not communicating effectively with them.” The communication liberties that a native speaker of any language takes with another native are not applicable to non-native speakers. Colloquialisms, jargon, and metaphorical language are best avoided.
Culture in Communication Because communication is where cultural ideals converge and are expressed, you can determine a person’s beliefs in hierarchy through body language and the level of politeness or formality one employs. Do individuals talk about themselves when they describe their work, using 122 MOBILITY/MAY 2010
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‘Country Rankings: Communication Styles’
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Sidebar on page122 and figure from “Managing Across Cultures: the Seven Keys to Doing Business With a Global Mindset,” by Charlene Solomon and Michael Schell.
“I” frequently, or do they refer to a team and say “we”? You also can measure the importance of relationships in word choice, tactful language, and attitudes toward saving face and avoiding conflict by the emotion of the message. The treacherous word “yes” is frequently misunderstood in multicultural teams. Does it mean “yes, I hear you,” “yes, I understand, but I don’t necessarily agree,” or “yes, I can do this”? In cultures where saving face for others is a top priority, this word will be used regardless of the person’s stance on the issue because it would be disrespectful to openly disagree. Ask clarifying, openended questions to get to the bottom of an issue. Elicit opinions on an individual basis for colleagues in Asia, and expect to spend more time establishing trust before your counterparts are comfortable working with you. The obvious difference North Americans have with colleagues in
places like China and India can create a strong cultural awareness of yourself and of your peers, but how do Europeans and other Anglophone countries differ? Let us take a specific, real-life example. In an international publishing company headquartered in the United States, a marketing team with members located in Canada, the United Kingdom, and the United States initially did not attribute their disjointed team approach to culture; it was a rather abstract, irrelevant concept to them. The group said communication was not difficult because of linguistic commonality but, once they considered culture and their diverse personal backgrounds, each team member’s approach to communication quickly appeared variegated. Because the three cultures are popularly considered close relatives, any company might think that culture would never be at the heart of a problem with a
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global initiative. However, in this case, British responsiveness to e-mails was never fast enough for the Americans, while both the Americans and Canadians were too direct in their communication with their British counterparts. In meetings, Americans dominated discussions with questions and ideas, while the British and Canadians felt they had no outlet to express their opinions. Culturally, the British team was more comfortable conveying their thoughts in smaller forums, or only when asked directly by their superiors. U.S. management was culturally egalitarian, and expected everyone to contribute freely, regardless of corporate stature. The many hidden obstacles to effective teamwork, even in close cultural cousins, compound the challenges of
working in virtual teams and across time zones.
Best Global Practices for Global Conversation Baharani affirms that “Americans can be very intimidating. Understand how this impacts your global team.” In other words, the effusive and sometimes loud approach Americans often take can be a source of discomfort for others, discouraging participation in a group. On the other hand, he says that, “Asians have to be more assertive when working with Americans.” In Baharani’s experience, the communication process breaks when there is conflict or when there is misunderstanding in language. Syntax, workrelated or political issues, and ego-
driven clashes have been at the top of his list. When under stress, we tend to revert to our cultural roots and lose sensitivity to the needs of others. When teaching how communication varies across cultures and why it matters, Baharani finds that an awareness of the meaning behind words is important. Take, for example, the word “failure” in a business sense. “In the U.S., failure could be interpreted as room for recovery. In Japan, failure means shame and possibly the end of one’s career.” Baharani suggests individuals can be more effective understanding others if they use lots of questioning, clarification, and patience. Do not assume everything is completely understood, emphasize and repeat key points, encourage written communi-
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cation for non-native speakers, and use visual aids to reinforce key ideas. When communicating across accent barriers, listen carefully, allow for pauses, and have patience. Probing questions are essential, even if they may feel awkward. Ask your colleagues to give examples, to explain in greater detail, or to use alternative expressions if you do not understand. Finally, it is important to establish a solid follow-up process because it is important around the world to acknowledge communication and to inform your colleagues of your schedule, considering time zone differences. The best way to do this is with a web-based tool. Baharani says that, “checking in regularly with teams on communication successes and challenges is vital. So, if you are a manager and you have a global team, it is good practice to update everyone on ‘team health’ regarding the communication process.”
A Communication Road Map When there are many different cultural styles at play, it is important to create a road map for effective communication. Creating new rules through group consensus, and a discussion surrounding the issues a team experiences, is an effective method. Here are some rules that you can use to draft your own map: • Reassess how your team communicates via e-mail, a vital medium. • Opt to communicate via telephone every so often, i.e., 30 minutes a month, which will build trust, strengthening relationships. Consider making video calls with a webcam. • Respond to e-mails immediately to acknowledge receipt and to give a time line. • Be aware of the tone of language when speaking and writing e-mails.
• Face-to-face interaction helps foster the communication process and builds trust. Regular conferences or summits with global colleagues are instrumental. • If your organization is closely bound to schedules and time, everyone should be sensitive to this need, regardless of personal style. • Ensure that team members in all countries are notified in advance of new projects, meetings, and discussions. Context also is important when colleagues are brought into a project, so it is significant to understand the amount of context individuals need to feel prepared. • During meetings, actively ask team members if they have anything to contribute. To accommodate less direct communicators and more hierarchical individuals, invite comments and questions via e-mail or one-onone discussions. • Understand your own personal culture and how this differs from your colleagues’. Individual communication styles can reflect differences in expectations when engaging with others. It is a good idea to customize these rules into personal action plans, creating a straightforward way to enact new behaviors on multicultural international teams without making any single person feel obligated to change alone. Most important, the goal is to build awareness of other individual’s styles and adapt your behavior to achieve your goals. Taking ownership of cultural knowledge empowers you as a global professional, a global leader, and builds the global mindset you need to be innovative in the 21st century. Sean Dubberke is marketing and program coordinator, RW3 CultureWizard, New York, NY. He can be reached at +1 212 691 8900 or e-mail email@example.com. MOBILITY/MAY 2010 125
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Repatriation—A Stranger at Home BY RASHEL MEIWORM
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Numerous articles and testimonials have been written about embarking on expatriate assignments and the accompanying experiences of such overseas adventures, and most include personal reflections discussing the repatriation process and reverse culture shock. Meiworm, a global mobility and expatriate tax advisor, addresses repatriation issues in light of her and her family’s own experiences returning to the United States from an overseas assignment, and offers some insights on policies and procedures companies may consider adopting to facilitate the repatriation process.
hen I was given an opportunity to take a foreign assignment in Germany, I thought to myself, “why not?” A few years earlier, my husband’s job had taken us to Japan. We thoroughly enjoyed our three years there and the prospect of another adventure was thrilling. Granted, the situation was different this time; I was being given the opportunity by my employer for the assignment and we now had a 2 1/2year-old son to consider. We discussed the details of the assignment at great length. We were quite confident we had considered everything because we already had an expatriate experience. We were familiar with the logistics of an international move, the financial considerations, and the phases of adjusting to a new culture. We discussed my husband’s career and what an absence from the workforce could mean for him. We expressed reservations about another lengthy separation from our families, and both the possible career opportunities and obstacles on repatriation. Yet the chance to live in another culture, meet new people, and see new places were significant benefits that tipped the scale in favor of accepting the position. And we did.
Coming Home My assignment in Germany was originally planned to last two years, but eventually turned into five based on business needs as well as personal interest. When we moved back to Colorado in September 2007, we had spent eight of the past 11 years living outside of the United States, including our time in Japan. On the surface, it did not seem like we had been gone for that long. While we had been immersed in the German culture, we had done many of the things expatriates are counseled to do to maintain ties to their home country. We visited home annually, kept in contact with family, friends, and colleagues, and traveled to the United States frequently on business. With the Internet, we watched popular television programs, listened to radio and news personalities, and kept up with current affairs by reading U.S. publications as much as possible. Notwithstanding these connections, when we got back, something felt different.
Viewing the move through our son’s perspective was particularly eye-opening. Now 7 years old, leaving Germany meant he was leaving the country he considered home. He had many awkward and precious moments when we moved back to Colorado. He said the buildings looked “strange” and noted that the police and ambulance sirens sounded “funny.” He was introduced to unfamiliar activities, games, and songs considered American childhood classics. After only four days in Colorado, we took him to his first day of school. That night, he explained in colorful detail how his day unfolded, including his first time playing American football. He said the “pitcher” threw him the ball, everyone started to run at him, and then he threw the ball to someone else—quite logical thinking for a 7-year old who had spent the past four years on a soccer team. When his teammates pointed out this was a mistake, he simply explained, “I’m not from around here.”
My Difficulty Adjusting On my end, I suppose I expected to pick up where I left off. During my time abroad, I periodically would recall details of my former life. In my mind’s eye, the streets and buildings looked the same, my family had not aged, and my office with its views of the Rocky Mountains awaited my return. Time stood still. But five years later, despite visiting home annually, business trips to the United States and recurring contact with colleagues, friends, and family, the reality was that things had changed. While I was away, my father’s hair had completely grayed and he was now enjoying his retirement. My neighborhood changed dramatically with new construction, a beautifully developed and mature landscape, and a new light rail public transportation system. My office had moved into a new location with which I was unfamiliar. In and outside of the office, I noticed pop culture framed much of my public social interaction. And even though I followed the major developments in politics, sports, and watched a few favorite shows, I missed the daily details and knew more about German TV shows and European football than about what was going on in the MOBILITY/MAY 2010 127
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United States. Consequently, I initially did not have much to contribute to watercooler conversations when topics switched to last night’s (or last season’s) episode of a popular TV show or the most recent winner (or loser) of the World Series or Super Bowl. I failed to understand popular language that contained phrases from recent movies, television shows, or pop songs. I was surprised to find I felt like a visitor in a place I had lived for the better part of 31 years and it took some time for me to feel like I had “caught up.” Not only were some conversations difficult, I was even more surprised by the trickiness of some everyday activities. For example, at some point in the five years we were gone, Americans quit handing their debit and credit cards to the check-out clerks and took on “swiping” the cards themselves. At the supermarket, when I tried to hand my debit card to the clerk to complete the transaction, the clerk simply pointed
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to the self-service credit card machine. Cash still was the most common form of payment at the grocery store where I lived in Germany. This experience was just one example of public situations where I found myself unfamiliar and confused with what was familiar to those around me. Life at the office also was somewhat challenging. During the course of my assignment, I was diligent about keeping in touch with my colleagues and obtaining regular office updates. I was kept abreast of the goals, activities, and results of, and personnel changes in, the practice. Despite this regular contact, it was difficult to “keep up” with everything, and I had to take some time to better understand some fundamental changes that had occurred. Some of the policies and procedures and technology that I was familiar with had been updated and personnel and leadership changes created a new direction and office environment.
Lessons Learned All of these unexpected repatriation experiences yield some possible tips for companies with employees on overseas assignments. Following are some suggested components of a well-rounded international assignment program that your company and assignees may want to consider, based on my personal experience. Provide reintegration training. Do not let this be optional. Reintegration training can help contribute to a successful repatriation experience. Discussions about the changed home environment can better prepare assignees for some of the “physical” changes that may otherwise surprise them. Verbalizing and legitimizing the changes that the assignee has undergone as an individual may ease some discomfort. An update on certain changes in the home culture may reduce potentially awkward situations. Guidance on how to deal with perception gaps may save time and emotional energy in the long run. A successful expatri-
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ate program should consider reintegration training even for those seasoned and experienced expatriates. Establish a coaching system. At the office, my colleagues helped me get acclimated. They welcomed me back with open arms. Their patience in answering what may have seemed to be obvious questions was greatly appreciated. Their understanding of my need to be educated about new people and processes helped my transition. Their willingness to listen to my stories of life abroad made me feel as if I had important ideas and comments to contribute. These small acts undoubtedly contributed immensely to my successful re-introduction to the workplace in the United States. Although my colleagues were willing to lend a helping hand, having an additional formal structure to support my reintegration at the office also proved helpful. Designate assignment mentors and buddies to facilitate issues and questions before, during, and after the assignment. Having a dedicated personnel resource or “mobility coach” is beneficial. His availability to address the awkward questions to my team members or peers reduced potentially stressful moments of insecurity. Regular contact with a “mobility coach” before repatriation can help employees get ready for the return to their home office more gradually. This can help prevent a dramatic reintroduction to office life. In addition, organizations have a great wealth of knowledge and experience within their population of employees who have successfully completed foreign assignments. This is a valuable and potentially untapped resource that companies can leverage throughout the assignment and repa-
triation process to offer mentoring and practical assistance to their colleagues. I truly enjoyed sharing my experiences and hearing the experiences of others. The “you are not alone” philosophy can go a long way in building a successful expatriate program at any stage in the assignment. Keep your overseas employees connected to the home country work environment. Although I was regularly in contact with the home office, there were still changes— leadership, company policy, technology, and the like—of which I did not understand the full effect until I had to deal with them regularly. On a daily basis, these changes may be imperceptible; however, to someone outside of the office, these small and ordinary daily changes may become significant during an extended period of absence. A mobility coach also can help in this area. A checklist noting various home office changes and other cultural items to highlight and share with an assignee can serve as a guideline for regular discussions between the mobility coach and assignee. Ensuring assignees are on the office communication distribution list is another avenue to keep the assignee abreast of the regular changes and goings-on at the office. These communications often contain useful information, formal and informal,
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that mobility coaches may want to further discuss with assignees. It keeps the distribution of the information current and timely. As an assignee away from the home office, it feels nice to be remembered and still valued back at home through channels of continued correspondence and contact with the home team. To facilitate this, my firm allows assignees to keep their home country computer and log-in credentials. Allow time for readjustment. As a family, we never really stopped to recognize or talk about the tremendous change we had gone through together and whether we were satisfied with the habits we were building into our new life back in the United States. Months earlier, we were taking long weekend trips to neighboring countries, attending international social functions, and taking long walks through our neighborhood marveling at our surroundings. It was just the three of us in Germany. We grew extremely close as a family. Back in Colorado, we were all so busy with our “new lives” that we completely let go of our former life without so much as a look back.
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Moving forward and embracing our new life here was an important step toward a successful reintegration. However, we failed to remember how much our lives—individually and as a family—were shaped by our experiences in Germany. We should have realized that a balance of celebrating our new life and preserving our old life would have made for a better transition. I was fortunate enough to have a business trip back to Germany within months of my repatriation (I was selected for this trip because of my experience in Germany and I greatly appreciated the opportunity to “reconnect” with my German colleagues and friends). This trip brought back many good memories and reminded me how my family and I could carry over the experiences of our old life into our new one. In the end, I brought back many valuable lessons from my time overseas. I learned it is impossible to plan for everything. I also better understand the critical importance of repatriation and, to the extent I have the opportunity to serve as an assignment sponsor or mentor, I will
try to put my lessons learned to good use. Repatriation is much more than moving household goods, finding a new place to live, and starting a new position. The possibility of having your home country seem unfamiliar is one to prepare for, and from a company perspective, one to facilitate given the tremendous financial investment made in international assignments. Companies would be well-served to evaluate their repatriation processes to help employees productively manage the transition back to their home counties. Is your company doing enough? This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG LLP. The information contained herein is of general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax advisor. Rashel Meiworm is a senior manager in KPMG LLP’s International Executive Services practice, Denver, CO. She can be reached at +1 303 382 7298 or e-mail firstname.lastname@example.org.
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Safeguarding the Most Precious of Possessions During a Move:
One’s Identity B Y G L E N N M AY K I S H
A transferee’s most valuable possession—his or her identity—is at risk of falling into the wrong hands during a move. Maykish offers some steps that can be taken by both the individual and the employer coordinating the corporate move.
oving is among life’s most stressful events. While many people focus on making sure their furniture does not get scratched and Grandma’s china set does not get broken, they often forget to safeguard the most valuable of possessions—their identity. There are many to-dos that must be tackled during a move and, given the sheer number of logistics that need to be coordinated, it is easy for even the
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most careful person to become less than diligent about his or her personal information while relocating. It is this carelessness on which identity thieves prey. In fact, negligence with personal information is reported to be one of the primary contributors to the continued rise in identity theft. According to Javelin Strategy & Research, Pleasanton, CA, the number of identity theft victims rose by 12 percent in 2009, the biggest increase since
the survey was first launched in 2003. Identity theft costs $54 billion per year, with the average victim paying $373 to resolve the crime and 21 hours to repair it. To further complicate the matter, if an individual is being moved by his or her employer, there are additional safeguards that should be considered given the number of people involved in the move, many of whom could have access to the employee’s personal information.
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For Employers Coordinating a Transfer Given that a lot of strangers will be coming in and out of their home during the move, employees should make it a priority to safely store any valuable information and ensure that it is not left unsupervised for long periods of time.
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Companies and HR departments involved in coordinating employee mobility must be vigilant about securing employees’ personal information, especially data that is transmitted to vendors involved in the transfer such as real estate companies, mortgage companies, household goods movers, and career counseling firms that may be working with the employee’s spouse. HR departments should properly vet these vendors and their subcontractors and proactively ask about policies related to obtaining, storing, transmitting, and disposing of sensitive employee information. At the minimum, one should ensure these vendors are compliant with the laws that govern their industry and that contracts with these vendors (and their contracts with subvendors) contain the appropriate language around information security, confidentiality, and background checks, and bonding of their employees. HR also should establish information access guidelines based on the type of vendor (i.e., a vendor handling immigration issues will need a different level of information than a moving company) and discuss these guidelines with each vendor that is part of the mobility process. HR also should ensure that the transmission of sensitive employee information, such as compensation data and passport and other financial information is done via secure encryption, and that vendors who in turn transmit this data to subcontractors have similarly strong safeguards in place to ensure the confidentiality of information.
Ultimately, HR will want to look at the entire data-flow around employee mobility to ensure that all parties who touch the data have the right policies, processes, and technology in place to secure employees’ information along the entire data chain.
For the Employee Who Is Moving Employees themselves can and should also take extra care as they begin the moving processing. As vendors are notified of the impending move and utility accounts are cancelled, individuals should schedule a closing date that is no later than the move date to prevent identity thieves from reactivating any accounts after the move. They also should schedule address changes a couple of days before the actual move date to confirm that all mail is being delivered successfully to the new address. This is an important step in ensuring that identity thieves do not gain access to one’s mail. As employees prepare to move and throw away unwanted items, they need to be careful about how sensitive information is disposed. If it is necessary to discard old bills, financial statements, and tax documents, one should use a cross-cut shredder. Personal information stored on an electronic device or computer that is to be donated or disposed of, including data stored on any financial software programs, should be erased. Employees should personally pack all sensitive documents and place them in a secure container, as well as plan for a secure means of transporting these documents. They should
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not be left for the movers to carry, nor should they be left unattended in a car where they can be easily stolen. Computers with sensitive personal information stored on them, or the hard drive itself, should be carried by the employee during the move. If it is not feasible to transport large amounts of files or documents because of the long distance being traveled, individuals should consider having friends or family temporarily hold them until situated at the new address. A second option is to purchase a secure and lockable file cabinet that the moving company can ship to the new residence. Prior to the moving date, all essential financial and personal identification documents, such as social security cards, birth certificates, wills, insurance documents, and blank checks should be secured. If the move is local, then an easy and safe choice would be to store them in a bank safety deposit box. For a long trip, employees should carry the documents on their person at all times. Given that a lot of strangers will be coming in and out of their home during the move, employees should make it a priority to safely store any valuable information and ensure that it is not left unsupervised for long periods of time. One should not write any additional information on a personal check when paying movers such as phone number, driver’s license number, or social security number. Employees should check the credibility of the moving company, especially if they were found online. There are “moving companies” that
are merely fronts for criminal enterprises; while you think they are there to move your belongings, they literally pack your things in a truck and drive away never to be seen again. Use companies that friends, colleagues, or family have recommended and used. Check with the local Better Business Bureau and ask about what bonding and protections the moving company has in place to prevent theft. After settling in, employees should do a post-move checkup to make sure their sensitive information is secure. This is essential in ensuring that all the steps taken before and during the move were successful and that any irregularities that may have occurred are caught in time. Research has shown that the longer it takes an individual to discover he or she has become a victim of identity theft, the more damage the criminal can do. This is the equivalent of dotting the I’s in the initial check list. Follow-up calls should be made to all accounts linked to the old address, which at that moment should be closed and report zero activity. Employees then can confirm that all mail is being sent to the new home address, especially any sensitive documents such as credit card, car loan, and bank/401(k)/mortgage statements or any financiallylinked documents. If the employee has a name that includes two “first names”—such as George Scott—he or she should be even more vigilant as identity thieves may try to switch the order of the name and use the old address as a mailing address. Once they have a few pieces of mail, they redirect the mail to a post office
Research has shown that the longer it takes an individual to discover he or she has become a victim of identity theft, the more damage the criminal can do. This is the equivalent of dotting the I’s in the initial check list.
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box or mail drop until they eventually get a bank statement, check, or other personal information that they then use to commit even more fraud. If the employee is attempting to sell a house and it remains vacant after the move, he or she should check on it frequently or have a neighbor do so to make sure mail is not still being delivered there, as identity thieves have begun to use empty houses as temporary mailing addresses. Three months after the move, employees should request a copy of their credit report to check for any irregularities such as active accounts linked to the old address. Individuals are allowed one free credit report per
138 MOBILITY/MAY 2010
If there any irregularities, the employee should immediately get in contact with both the creditor that produced the report as well as all three credit bureaus.
year from each of the three credit bureaus. If there any irregularities, the employee should immediately get in contact with both the creditor that produced the report as well as all three credit bureaus. If he believes he may be a victim of identity theft, the employee can call and place a fraud alert with one of the three credit bureaus, which in turn will be addressed by the Federal Trade Commission and the two remaining credit bureaus also will be required to place a fraud alert on the credit report. Glen Maykish is vice president of sales and marketing for Europ Assistance USA, Bethesda, MD. He can be reached at +1 240 330 1020 or e-mail email@example.com.
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ADVERTISERS’ RESOURCE Company
a la mode...........................................................................................................................................................................................................1 Air Animal Pet Movers.....................................................................................................................................................................................27 AIReS...............................................................................................................................................................................................................16 Allied Van Lines..................................................................................................................................................................................back cover Altair Global Relocation...........................................................................................................................................................inside back cover Appraisal Institute...........................................................................................................................................................................................77 Bank of America Home Loans..........................................................................................................................................................................75 Bedel Relocation Service..................................................................................................................................................................................76 Berger Transfer................................................................................................................................................................................................86 Brookfield Global Relocation Services.............................................................................................................................................................53 Capital Relocation Services..............................................................................................................................................................................55 Cartus/Primacy................................................................................................................................................................................................13 Celebrity International Movers S.A..................................................................................................................................................................74 Chase.................................................................................................................................................................................................................5 CitiMortgage...................................................................................................................................................................................................57 Corporate Housing Providers Association (CHPA)..........................................................................................................................................138 CORT.................................................................................................................................................................................................................7 Cosmopolitan Canine Carriers, Inc...................................................................................................................................................................43 Crown Relocations.........................................................................................................................................................................................113 Daniel Gale Sotheby’s International Realty....................................................................................................................................................142 Delsuites Executive Class Accommodations....................................................................................................................................................91 Dwellworks, LLC..............................................................................................................................................................................................39 Equus Software................................................................................................................................................................................................98 Fidelity Residential Solutions....................................................................................................................................................inside front cover FIDI................................................................................................................................................................................................................141 Fragomen, Del Rey, Bernsen & Loewy, LLP........................................................................................................................................................8 Global Mobility Solutions..............................................................................................................................................................................130 Graebel Companies, Inc.............................................................................................................................................................................32, 33 The Halstead Properties...................................................................................................................................................................................40 Hilldrup Companies.......................................................................................................................................................................................107 Manilow Suites..............................................................................................................................................................................................142 Mayflower Transit............................................................................................................................................................................................45 TheMIGroup....................................................................................................................................................................................................19 Movers Specialty Service.................................................................................................................................................................................38 Paxton International........................................................................................................................................................................................89 PC Housing......................................................................................................................................................................................................31 PMI Expatriate Mail Services.........................................................................................................................................................................123 Pro-Link GLOBAL Visa & Immigration Services................................................................................................................................................21 Prudential Fox & Roach Realtors.....................................................................................................................................................................93 Prudential Real Estate and Relocation Services...............................................................................................................................................11 Reindeer Auto Relocation..........................................................................................................................................................................72, 73 Relinco.............................................................................................................................................................................................................83 Relocation Directors Council, Inc.....................................................................................................................................................................42 RELONAT Inc...................................................................................................................................................................................................37 S.I.T. Transportes Internacionales....................................................................................................................................................................52 Sally White & Associates...............................................................................................................................................................................122 SIRVA Relocation..............................................................................................................................................................insert between 80, 81 Staybridge Suites...........................................................................................................................................................................................125 Stewart Relocation Services...........................................................................................................................................................................2, 3 The Suites at Silver Towers............................................................................................................................................................................142 Transcontainer Group......................................................................................................................................................................................97 United Van Lines.............................................................................................................................................................................................41 USA Executive Housing....................................................................................................................................................................................71 Weichert Relocation Resources Inc....................................................................................................................................insert between 48, 49 Wells Fargo Home Mortgage...........................................................................................................................................................................69 WHR Group....................................................................................................................................................................................................15 WorldCare Pet Transport.................................................................................................................................................................................60 Worldwide ERC®........................................................26, 70, 82, 87, 92, 96, 103, 110, 111, 112, 116, 117, 119, 124, 128, 129, 131, 132, 133
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Regional Market Summary: Metro Atlanta, GA
he metro Atlanta, GA, area is identified by the U.S. Census Bureau as the Atlanta-Sandy Springs-Marietta metropolitan statistical area (MSA) and consists of 31 counties, 144 cities, an area of 8,376 square miles, and a population of more than 5.7 million. Atlanta real estate cannot be painted with a broad brush. For the most part, the closer-in northern suburbs of the metro area have fared the storm much better than the more remote suburban areas of the southern metro area. General area studies and statistics have limited applicability and need to be localized. The price-point sensitive nature of the trends need to be taken into account, too. The old adage of location, location, location truly applies to the Atlanta market. The factors that affect values probably are the same in most areas, including vibrancy of the local economy (employment changes); adequacy of schools (private and public); efficiency of local government (property taxes); employment factors (vacancy and absorption rates); transportation (convenience of employment and shopping); and availability of land for new construction. The latter is a blessing in good economic times and a curse in bad. There has been much said about absorption rates recently. While there is certainly some merit to this analysis, it has been overplayed. As real estate value is “local,” it is important that the competitive market area, price point, and features be properly identified when performing such an analysis. The resulting sample needs to be further studied to determine what portion of the supply or inventory is priced properly. Past trends or performance may not be indicative of the future. According to SmartNumbers, home inventory peaked around the middle of CY 2007 with approximately 140 MOBILITY/MAY 2010
60,000 detached units and 12,000 attached units. Detached units have fallen 40 percent to around 36,000 units, and attached units have fallen 33 percent to approximately 8,000 units. In CY 2009, there were approximately 45,000 homes sold (single-family, detached), suggesting a 9.6 month inventory. There was approximately 47,000 sales in CY 2008 and 57,000 in CY 2007. There are several questions or unknowns that pose risks in the extension of this trend of the declining supply. In many markets, the “run up” was exaggerated by the influx of investors. The same can be said of the “run down.” Of the 45,000 homes sold in CY 2009, 33 percent—14,650 homes—were listed as bank-owned, foreclosures, short sales, or potential short sales. In CY 2008, there were 11,780 (25 percent) such properties sold, and only 6,419 (11 percent) in CY 2007. Several major lending institutions are preparing to release their “shadow inventory” in the near future. These are the properties in which “work outs” were attempted but have been unsuccessful. The combination of higher interest rates and an increased inventory will have the double whammy (technical term) of reducing the affordability of homes, which reduces the number of buyers, and/or changes the purchase price point and places downward pressure on prices. There are many factors that precede a return to normal or the “new normal.” At present, 4,800 active listings are foreclosure-type properties representing less than 11 percent of the total inventory, or a four-month inventory at current REO absorption rates. Frequently, it is becoming difficult to find the really competitively priced listings. As inventories come down, prices have begun to stabilize in some areas. As the economy slowly increases momentum, employment will increase, as will homesales, result-
Has declined, expected to go up soon
High but down 25%
Down in the southern areas and outer perimeter–lateral closer in except for condos
Poor but improving
ing in market stabilization. There is a symbiotic relationship between the economy and real estate. If you cannot paint Atlanta with a broad brush, where are the best places to buy? Where should you steer clear? If you think that the best area is the one with the lowest months of inventory (given the absorption rate as determined during the past 12 months), you will be buying in the areas that have had the greatest number of foreclosure sales as a percentage of total sales. If you enjoy living in a community with a high number of investment properties, where values have been beaten down to low levels, then the south metro area is the place to be. If you think that it is more important to be in communities that have the lowest number of foreclosures as represented by the percentage of active listings and sales during the past 12 months, but has the largest number of months of inventory, then buy in the closer-in north metro area. The more suburban areas on the north side of Atlanta had more land for development and, as a result, have a greater percentage of foreclosures that sold during the past 12 months and remaining in inventory than the closer in areas. Note the relationship between foreclosures and price change. Is it circumstantial? Dillon H. Fries, CRP, of Dillon H. Fries & Associates, Roswell, GA, can be reached at +1 770 992 5171 or e-mail firstname.lastname@example.org.
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Kabul Nightlife: Thriving in Between Bombs Time (04/13/10) McGirk, Tim Despite regular suicide bomb threats, expatriates living in Kabul manage to enjoy a thriving nightlife—albeit behind a 20-foot blast wall surrounded by armed Afghan security guards. “It’s like dancing at the edge of a volcano,” says German architect Anne Seidel. After a suicide attack they are cloistered in their fort-like compounds, but once the dust clears they venture out again to have some fun. There are plenty of war-zone businesses that have cropped up to serve the expats, and Kabul now has a wider variety of restaurants than Delhi or Tehran, which are 10 times its size. There are Chinese, Turkish, Balkan, Italian, French, and Persian restaurants, steakhouses, a martini bar, and a Mexican cantina. These entrepreneurs are a special breed, many of which came to Kabul from other war-torn areas such as the Balkans or East Timor, saying they missed the war-time camaraderie—and profits. Still, the fact of war is never far from their minds—one Thai restaurant owner even supplies wait staff with daggers to scare off kidnappers. (http://www.time.com /time/world/article/0,8599,1981465,00.html) Population Expected to Surge as Australia Debates Record Levels of Immigration Voice of America News (04/07/10) Mercer, Phil Australia is experiencing unprecedented levels of immigration, with 300,000 new people arriving in the country last year, and the government has appointed its first minister of population to deal with the influx. Tony Burke will be in charge of the country’s response to population growth, which businesses say is a good thing because they need more skilled foreign workers, while conservative groups want to limit immigration so that it is not a burden on infrastructure and the environment. The country now has 22 million residents and the government projects it could reach 36 million by 2050, giving it the fastest population growth in Asia. Immigration will be a hot topic in federal elections this year, with business leaders saying a shortage of workers would slow the country’s recent economic growth, while conservative politicians vow to cut immigration out of concern about whether housing, water, healthcare, and education can be provided for all of the newcomers. (http://www1. voanews.com/english/ news/asia/-PopulationExpected-to-Surge-as-Australia-Debates-RecordLevels-of-Immigration-90077072.html)
Belarus: Capitalism’s Unlikely Frontier BusinessWeek (04/19/10) No. 4174, P. 58; Matlack, Carol The former Soviet republic of Belarus is proving attractive to international investors, partly thanks to the fact that the global recession has had less negative effect on the nation than on its neighbors. Among the companies setting up shop in Belarus is Invention Machine, which runs a lab in Minsk. Invention Machine is one of nearly 80 tenants in a high-tech park the Belarus government set up in Minsk five years ago. All tenants enjoy incentives that include exemption from the country’s 24 percent corporate income tax, and a provision that allows expatriate managers to work without having to acquire work permits. “No other country in the region has done this much” to draw IT investment, according to EPAM Systems CEO Arkady Dobkin. EPAM Systems has more than 2,000 employees based in Minsk. (http://www.businessweek.com/magazine/content/10_16/b4174058701385.htm) Nursing a Grievance Economist (04/16/10) Vol. 395, No. 8677, P. 40 The Caribbean has an aging population of 6 million, but only 7,800 nurses to contend with it. A March World Bank Report found that nearly 75 percent of the nurses who train in the English-speaking Caribbean leave to work in the United States, Britain, or Canada. Training more nurses is one solution suggested by the World Bank, while countries that recruit applicants might assist by contributing to the costs of nursing education in the Caribbean. Another solution is to raise wages and improve working conditions, staving off disenchantment that persuades migration not just to other countries, but to other careers. The rule that nurses are not permitted to leave before paying off their student loans is a source of frustration, and is rendered ineffective by the fact that some recruitment agencies lend Caribbean nurses the money to repay their loans. Currently under development by the World Health Organization is a code of practice regarding the international recruitment of health care staff, to be debated at its general assembly in May. (http://www.economist. com/world/americas/displaystory.cfm?story_id =15868387)
April 21, 2010 This issue is sponsored by:
Read the full issue and subscribe for free at: www.WorldwideERC.org/Newsroom/ GLOBILITY Visit our online Career Center jobs.worldwideerc.org
GLOBILITY® is an exclusive news service of the Worldwide ERC® offered free of charge for the asking and comes to you twice a month. To subscribe, visit: www.WorldwideERC.org/ Newsroom/GLOBILITY. GLOBILITY® sweeps nearly 7,000 sources including major newspapers, business magazines, web sites, wire services and industry publications to find the most noteworthy news focusing on global workforce mobility issues. The editorial staff reviews over 15,000 stories per day and prepares an executive summary of the most significant articles to be delivered to your e-mail inbox.
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Happy Birthday, China Blog! ccording to ancient Chinese tradition, on a child’s first birthday, you can tell his or her fortune by seeing which object he or she picks up when placed in the center of a group of objects (such as coins, a doll, a book, and the like.). If the baby first picks up a coin, he or she may be rich; if the baby reaches for a book, he or she may become a teacher; if the baby reaches for the doll, he or she may have many children, and so forth. Congratulations to Mark Giorgini, GMS, author of the Worldwide ERC® China Blog, which turned 1 year old this April. Giorgini—who currently calls Shenzhen, in mainland China, “home,” but grew up in St. Paul, MN— moves between these two vastly different cultures with an ease that illustrates what it means to be a “global” executive. If you haven’t “picked up” on the China Blog yet, the archives include more than 60 posts with timely, practical information for anyone with an interest in the dynamic Chinese marketplace. And, Giorgini keeps adding new interesting content weekly.
Highlights in the China Blog archive include the May 11, 2009, post, “Culture Training I,” which details that “70 percent of joint ventures in China fail to achieve their intended goals within 10 years of formation.” In the November 10, 2009, post, “Go East, Young Person!” Giorgini shares insights gained after attending China’s largest-ever Conference on International Exchange of Professionals, and explains what he said was “an interesting juxtaposition of global employment events as unemployment hit a 26-year high in the U.S.” And, the February 8, 2010, “Now THAT’S Mobility!” post, which reveals some astonishing statistics about travel volumes throughout China during the Chinese New Year holiday. To read the recent posts, suggest a topic for future posts, and/or to send happy birthday wishes, visit the China Blog at www.WorldwideERC.org/Blogs/China/ default.aspx. You also can get there by clicking on the “Communities” text hyperlink at the top of the screen from any page on the Worldwide ERC® website.
nd speaking of the Worldwide ERC® website, members are exchanging questions, answers, and ideas in our online discussion Forums. Under discussion right now:
Global Workforce Mobility All Member Forum “Recently, Finland (yes, little Finland!) has scored… once again… as one of the world’s top three leading nations in innovation. Once again, Japan, one of the world’s top five economies, doesn’t even come close. And the U.S. is, well, somewhere in between.” What are the cultural roots of innovation? Why does Finland flower and Japan, well....doesn't? The Green Forum Many electrical appliances use energy and cost you money even when they are off. A big screen TV can draw as much as 40 percent of the energy used when it is on even when it is off. Your charger for your mobile phone does the same thing even if your phone is not charging. Did you know that SmartHome USA now makes what they call a “Smart Strip Power Strip,” which keeps track of current flowing to the appliance? When it senses that the appliance is no longer being used, it stops all power flow. eDiscussions—Corporate HR Only Forum “We are sending a U.S. employee on a two-year assignment to the UK. He will be paid on the local payroll. Are we required to extend our UK holiday/vacation benefits to this employee, or can we maintain him on the U.S. plan?” Be part of the conversation. Log in and add your comments and questions today. Visit www.WorldwideERC.org/Pages/Web2.0.aspx or click on the white “Communities” text hyperlink at the top of every page of www.WorldwideERC.org. Note that access to the forums is an exclusive benefit of Worldwide ERC® membership.
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