Maybe revolutions are called that because after 360 degrees they are back where they started. Pardon the geometry, but hot trends are not always harbingers of the future. Sometimes new ideas grab a lot of quick traction and are projected to be the next global change, yet ultimately fall by the wayside as experience and empirical evidence reveal their flaws. The Stanley Steamer car, CB radios, IBM Selectric typewriters and the Sony Betamax come to mind.
That’s what we’re seeing in the mobility services industry as the threat of its dominance by HRO companies continues to fade away. A decade ago, the explosive growth of Human Resources Outsourcing firms (HROs) appeared to be heading toward controlling—if not owning outright—most of the transaction volume in relocation services.
Their sales pitch for HR in general has been that they can improve efficiency and overhead costs of HR functions through process re-engineering, systems automation, standardization, self-service elements, and reduction of exceptions. For some HR functions, especially those with large workforce constituencies and high volumes of replicable transactions, this has been true and HROs have earned their keep.
However, their successes with large employee populations on simpler functions seduced HROs into taking on some clients’ mobility programs, too. The high spend and visibility of mobility was an irresistible opportunity for generating more savings and, therefore, profits. They marched into the relocation services realm with all the hubris of Napoleon’s Russian invasion, only to find that their accustomed strategies were ineffective in the vast complexity and sensitivity of mobility programs. We are now witnessing their broken campaign and wintry retreat.
What happened to all that momentum? Why are HROs struggling with mobility? We think they saw the metrics but missed the cultural significance of relocation. As a mobility professional, you know that numbers are important but don’t entirely define successes. The essence of service excellence in relocation is not to reduce employees to a simplistic common denominator for streamlined processes.
Instead, top performers determine and act on individual customer needs and characteristics, personalizing services, and sourcing information and assets for expert and responsive move management. As you know, each move is a unique intersection of determining factors: employee/family demographics and values, location differences, and business needs and practices. This makes moves highly variable in their requirements and costs. Unlike other HR functions that may affect an entire workforce (e.g., Payroll, EAP, Pension, Medical, etc.), mobility touches a small hand-picked minority of the employee population, with a strong bias toward the best and brightest, for whom service expectations and company performance standards are high. A relocation is intended to be a supportive and elite experience.
The one-size-fits-all convention of HROs does not play well in this setting. Standardized and automated processes cannot anticipate and respond very well to the myriad one-off circumstances and exceptional needs that result every day from relocations. The hard work of mobility experts on such issues is not very compressible economically. It takes time to do it right and that is what employers want.
That is where the labor savings mantra of HROs breaks down, and as they realize this they are reducing their mobility involvement and exiting RMC ownership. A prominent example of this is AON Hewitt, which had acquired a thriving independent California RMC, ReloAction, as a downstream complement to its HR consulting and HRO practices. Hewitt seemed to struggle for years with the identity of its relocation unit, though, tending to limit its marketing only to its downstream clients rather than as a standalone business, and the company stagnated until Hewitt eventually spun it off, reportedly at a hefty discount from its original purchase price. We may be seeing this repeated at Xerox, which acquired its Xerox RAS relocation company as part of its ACS merger. Xerox has not realized the anticipated synergies with its HR consulting and HRO practices and now appears to be preparing to exit the RMC business altogether.
For the real estate broker/owner and relocation director, this is a positive trend. Foremost, it means that more often, relocations will be managed by companies specializing in this industry, not distant HR generalists, so you will have more knowledgeable partners for your services. Secondly, in our industry where client relationships still matter, you will less often be insulated away from your corporate client by another layer of intermediary management. We think that the retrenching of the HROs is an indication that, as we’ve always believed, relocation is still fundamentally a business of people, one where expertise and local knowledge are invaluable and a personal service ethic matters more than any robotic system. Every day you have the chance to prove this to be true and to weatherproof your firm against the next hot trend of false promise, whatever it may be.
John B. Sculley, SCRP, is vice president – managing director, RIS Consulting Group. Please email him your comments and questions.
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