In his new book, Unpacking Employee Relocation, Chris Kline, of Orion Mobility, argues that the future of mobility will be defined by transparency. This is challenging the RMC sector to rethink its business model – and creating opportunities for movers and DSPs. Dominic Weaver reports.
After more than 30 years in the relocation management industry, Chris Kline has seen the mobility market evolve beyond recognition. However, he says, the RMC model has not kept pace – and needs to change.
Now with Orion Mobility, a business that provides relocation and expense-management services for corporations, Kline has written a book – Unpacking Employee Relocation – about the sector, the product of a career’s worth of sales presentations, training sessions and his own experience. The aim, says Kline, was to set out an overview of the issues mobility operators face so they can understand them and adapt.
‘Everybody talks about these things at the bar at industry events, but they don’t take action. The idea was to put it in a single book that can be used by corporates, suppliers – anyone involved in relocation – to help them understand what’s happening in this complex industry,’ he says.
Kline stresses that the book is a constructive critique of the prevailing model of relocation management, not an attack on it. He spent 30 years in RMCs himself – part of the team when Graebel made the switch from van line to relocation management company, for example – and understands the value, but also the vulnerabilities, of the sector.
The fundamental issue is the mismatch between how the market was and how it is now. ‘The industry was built on relocation experience for executive employees,’ he says. ‘At that level, it made a lot of sense. It was also very lucrative through referral fees, management fees, and rebates on all the services.’
While the world has changed significantly since then, however, the model and economics have not, says Kline.
‘You’re now moving engineers, developers, marketing people – highly compensated, yes, but not always C-suite, often not homeowners, and not going on traditional long-term international assignments. The industry has tried to take a model that was built for executive relocation and deploy it across the board – and the numbers just don’t work. You’re an RMC that’s used to thousands of dollars in retained revenue on an executive relocation, and now you’re talking about US$500–700. So not only are suppliers feeling squeezed, but the RMCs are feeling squeezed, too.’
Savvy RMCs have begun to think hard about their business mix, says Kline. ‘You’re starting to see some RMCs walking away from [certain] business. They’ll do lump sum if it’s tied to better business, where executives get a platinum package and everybody else gets a lump sum, for example. You’re starting to see some RMCs saying if it doesn’t have that executive component, they’re going to walk away from it.
‘It’s important for the RMCs to realise what they’re ultimately looking for in their ideal customer profile and focus on that.’
At the same time, Kline says a new generation of RMCs will move at least partly away from mark-ups and commissions towards transparent transaction-based pricing.
‘One of the reasons the RMC model does work is the client doesn’t want a bunch of contracts,’ he says. ‘They want to go to a single provider, negotiate one contract and have them work with the suppliers. Imagine when an RMC comes along and says, “we’ll do that – and, by the way, we just charge a set transaction fee, not a referral mark-up or rebate.” Technology is going to allow a new type of RMC to do that very soon.’
‘There is a day of reckoning coming’ with old models, adds Kline. ‘If you’re running your business by overcharging when it comes to air freight, surface freight, drayage and the other components… I don’t believe that is sustainable.’
‘Models are going to enter the market that are fully transparent. At Orion, we work with some very large global programmes that are with very large RMCs. This wasn’t a matter of “we think we’re being taken advantage of by the RMC”, it was more, from an internal audit perspective, we’re not going to engage with a single company that negotiates all the supply chain costs, pays all the suppliers, pays themselves, and then reports the performance and the financial costs back.
‘The idea is not the lowest price; it’s the best value – and that’s where some of these models don’t work. They are not the best value and certainly not the lowest cost.’
Looking a decade ahead, Kline says he expects significant change in the relocation industry. ‘I think some of the bigger players will be split up and sold – the assets by themselves may be more valuable than what the whole is worth. Technology is going to advance to the point where it’s going to become easier to introduce competition.’
An opportunity for movers and DSPs
With the traditional model under pressure and RMCs apparently moving out of the parts of the market they find less lucrative, there is ‘an unbelievable opportunity’ to fill the gap, says Kline, who believes movers and DSPs are best placed to do this.
‘If you think about what it takes to be an RMC, you need the global footprint, the locations – and a lot of moving companies do. You have to be able to deal with global currencies, which many of them do,’ he says. ‘I think you’re going to see some of those players get back into the market and AI is going to make it easier to put the pieces together.’
“We’re going to see some movers and DSPs come back into the market – and AI is going to make it easier to put the pieces together.”
Kline says his recent personal move – where he received text check-ins, reminders and prompts about extra services – is a great example of how automation is already transforming the transferee experience and saving companies’ coordinator time. However, technology alone isn’t enough, he stresses – having the right infrastructure and know-how is essential, too.
‘The technology can be great, but if you don’t have a robust supply chain, if your supply chain doesn’t introduce competition, if you’re marking everything up, if you’re taking huge referral fees, if you’re not shopping smart on behalf of the employee, if you don’t really understand the concept and you’re trying to deploy it – then it doesn’t matter how good the technology is,’ he says.
The winners will be those who create the right experience and value for clients – not unlike a modern discount retailer. ‘They deliver value, they have the best prices, the quality is pretty decent – and you get in and get out,’ says Kline. ‘Relocation needs to be similar.’
For movers and DSPs who are willing to move outside of their comfort zone and become ‘complete solutions-orientated providers’, there could be great rewards. This might mean offering services in completely new areas, such as tax gross-ups and payrolls reporting in partnership with specialist providers. ‘With the right partner, you can provide all the services that clients are looking for,’ he says.
Leveraging relationships is key. ‘If I was a DSP, I would be exploiting and growing my relationship with the local buyers and the local HR community. There’s a good possibility the DSP is getting those people before they even get to the relocation company,’ says Kline. ‘I’ve had movers that were ingrained in a 20- or 30-year corporate relationship because they moved some executive years ago, took really good care of that person, and they stayed in contact. Movers and DSPs are the secret weapon, because they are local and have a more intimate relationship with that customer. They can do things on a regular basis that the RMC cannot.’
Brand promise, relocation reality
Creating a truly good transferee experience is something even the largest, most well-respected operators have missed, says Kline. ‘There are some phenomenal brands out there, but when you look at their relocation programmes, it doesn’t match that – they don’t deploy the right policies or benefits for the employees,’ he says.
This isn’t necessarily about spending more, he adds, but about spending smarter and thinking about trade-offs more strategically.
‘My son-in-law recently relocated with a company that just gave him US$5,000 and said: “We’ll see you Monday; get here the best way you can.” Meanwhile, his stock options for joining the company were worth more than US$100,000. But they didn’t give him resources or information on the community he was moving to, or connect him with a mover who could help him – and these things don’t cost a great deal of money.’
The early days of a relocation are critical, too, says Kline. ‘Whatever you’re doing really reflects on your transferee’s first 30 or 90 days with the company. If your employees are separated from their families, maybe trying to sell and buy a house, and there’s no support, it hurts the company brand.’
Not only this, but there is obviously an imperative for business to get employees up and running quickly, too. ‘Some clients say they want to save money, but you need to ask how much that employee is worth per day and what it costs you in revenue a day if they’re distracted by their relocation.’
Having a sense of return on investment (ROI) is essential, Kline adds. This includes fostering awareness of the difference between a well- or poorly executed move, from the leadership executives to the people in regional offices who can pass on lessons from their own relocation experiences.
‘Try to figure out why you are moving people at all. What are you looking to accomplish?’ he asks. ‘If you’re moving somebody for training, what’s the value of that? If you’re moving them because the business is on fire and you need to improve it, that business is losing money every day – that’s a pretty easy ROI calculation. If you’re opening up a new business, what do you expect the revenue to be?’
Calculating ROI should be continuous and feed into regular reviewing of programmes – within the company, with transferees and, often, with outside experts to bring perspective and insights.
What can we do differently?
If Kline could achieve one thing with his book, it would be ending the enduring commission culture. ‘No more referral fees, mark-ups, rebates – everything based on transparent, transaction pricing,’ he says, ‘That’s better for the suppliers and it’s better for the client, because you have complete visibility.
‘The book is for corporate clients, but equally suppliers, who should be able to read this and say: what could we be doing differently as a provider? What services are RMCs providing, that the client needs, that I can do myself?
‘Partners should read the book, focus on what this means for you as a company and where you go as an organisation from there.’
Unpacking Employee Relocation by Chris Kline is available from Amazon in paperback or Kindle edition.