Controlling risk in group relocations

In September 2011 our client: a privately-held, multinational, commodities trader, underwent a complete company restructure: amalgamating their two main Swiss business entities and relocating employees from a German speaking location to a French speaking central location for the business.

With three months’ notice between planning and implementation, K2 were engaged to design and manage a deposit retrieval and departure services programme at origin.

We assessed the method and approach to be taken to manage this group relocation project, and decided to provide a relocation professional ‘implant’ at origin in order to ensure consistent service delivery, communication with the relocation partners at destination and logistics of physical removal to tie-in with the housing and schooling programmes.

Areas of management focus for company relocations often include:

  1. Planning: Time management and control of project costs

The business case for relocating an employee can only be gained from an accurate initial estimation of costs. The methodology of engaging an external project team, where managed effectively, can ensure significant cost savings in key areas:

  • Flexibility of resources: Shifting timescales, populations and expectations make flexibility key. On-boarding and training new employees can pose numerous problems (not least headcount), outsourcing (or using an implant resource) can ensure flexibility where required. Within 7 days of the proposal, K2 placed an on-site implant in to our client’s mobility team, versed in Swiss property law. The implant was selected on the basis of expertise in Swiss rental contracts, rental property utilities process, relocation DSP and mover vendor expertise, and was thoroughly briefed on client policy and process by both internal HR and K2 Account managers.
  • Flexibility of resources: Shifting timescales, populations and expectations make flexibility key. On-boarding and training new employees can pose numerous problems (not least headcount), outsourcing (or using an implant resource) can ensure flexibility where required. Within 7 days of the proposal, K2 placed an on-site implant in to our client’s mobility team, versed in Swiss property law. The implant was selected on the basis of expertise in Swiss rental contracts, rental property utilities process, relocation DSP and mover vendor expertise, and was thoroughly briefed on client policy and process by both internal HR and K2 Account managers.
  • Cost planning: Requesting a ‘cost matrix’ of estimates prior to engagement of a vendor, and setting associated KPIs can regulate and manage project budgets. By providing our clients with a ‘cost calculator’, holding realistic costs, K2 assist clients to accurately estimate the return on investment of relocating their employee.
  • Buying power and policy accuracy: A robust relocation policy dramatically reduces ‘exceptional’ costs. Setting aside time prior to project engagement to ensure that vendors fully understand the policy, significantly reduces the time spent negotiating this further down the line. With vendors briefed and at hand to provide consistent support and advice to assignees, time spent by HR on exceptions or special requests should reduce reciprocally. Utilising K2 for vendor management and an independent network ensured one point of accountability for costs and quality. K2 track costs per assignee, and as a project, and consolidate invoices to meet the requirements of our clients.
  • Craig Smallbone, global mobility team lead at Trafigura BV

Our decision to engage K2’s management of rental deposit retrieval and moving was based upon both cost and experience. An onsite expert working within Human Resources in Luzern, and supported by the existing K2 client management team in the UK proved to be a significant cost saving when comparing to the equivalent in-house option, expanding our resources and reporting on project timelines and costs.

 

  1. Legal compliance: Property management and deposit retrieval

Tenancy agreements in this case were dictated by idiosyncratic country laws, which did not fall within the same time frame as the relocation programme. In our Swiss case study, K2’s immediate provision of on-the-ground subject specialists ensured that employees complied with local tenancy laws, planning and organising their property checkout and increasing their deposit return rate.

K2’s case study population was a mixture of expats and Swiss locals, the majority of whom were housed in rental properties, with corporate leases secured in our client’s name. The rental deposit liability was high- in Switzerland this is a complex bureaucratic process. Ensuring that all leases were assessed and scrutinised prior to check out enabled us to establish a 95% deposit return rate.

Some of the challenges and solutions around the departure service and the return of deposits on this project were:

  • Having the skill to negotiate in the local language was imperative – many landlords and their representatives, utility providers, local government officials, insurance company representatives and check-out services providers do not speak English.
  • Rental agreements in the location were very specific with 3 months’ notice periods and set dates of end March, June and September as the only times that a rental can  be terminated . This made it particularly challenging to get the ‘ group move’ completed within the schedule set by the business ( November to February).
  • Deposit retrieval is a complex process which involves engaging the Insurance Company that covered the tenancy in agreeing to repair estimates for damages / wear and tear and other defects caused by the tenant during the tenancy - so all deposits could be returned in full.
  • Landlords are entitled to withhold part of the deposit until all outstanding utility bills are settled in full – This assumes that a tenant will not pay the final ‘ nebenkostenabrechnung’ or final reconciliation bill once the meters are read. Considering that fact that this is done on a fixed agreed date once per annum for the previous year, can mean that the final return unless negotiated by a professional can be exceedingly lengthy.

 

  1. Quality assurance and stakeholder buy-in

From relocating employees to local HR, obtaining and retaining stakeholder buy in was key for our client. K2’s proactive communication and weekly status reports ensured that multiple stakeholders in regional offices were 100% aware of the past, current and upcoming key dates for their employees.

Quality and transparency on group projects can be enhanced by:

  • Establishing strong management teams: Regional and International variances, and engagement of multiple vendors make it imperative to establish an overall Management Team to successfully supervise the process. Coping with limited internal resources, our clients ensure that the line of accountability and command is clearly outlined by vendors. Acting as a vendor manager, K2 ensured that for the case study project, both our internal and vendor teams mirrored this structure and clearly allocated roles, responsibilities and process for the project. K2’s process allows one source of management whilst maintaining and engaging the local vendor relationships, guaranteeing a high touch service delivery.
  • Ensuring accountability: Pre-agreeing key performance indicators with tangible parameters provides support for HR teams looking to outsource. K2 proactively suggest measuring, reporting on and implementing the following principles for group projects:
  • Actual costs should show a minimum of 98% accuracy against quotation. Consider leveraging monetary penalties against this indicator.
  • Level of stakeholder (be it assignee or HR) satisfaction should be greater than 95% positive, with a minimum population feedback rate of 90%.
  • Timeframes should be accurate to within a 10% variable. Inaccurate timings domino throughout a relocation- visa inaccuracies can lead to additional costs for housing, expenses and dissatisfaction from relocating partners.
  • Regular reporting- weekly status reports and monthly cost summaries ensure a proactive management approach and communication between all stakeholders.

 

Conclusion

Building our management plan around the aforementioned principles has allowed K2 to complete three group projects for the client in focus, with location specific expertise and on site management in Switzerland- Geneva and Lucerne, and Uruguay. All projects completed with an excess of 97% assignee satisfaction, tangible cost savings and a recommendation for continued service engagement.

 

About the author: K2 Corporate Mobility

‘Controlling Risk in Group Relocations’ is based upon K2’s experience with a leading commodities trader, whose global mobility program covers the USA, Europe and Asia. K2 Corporate Mobility have provided our client with full relocation consultancy services since 2008, working with the mobility teams based in London and Geneva and with reporting lines to HR in Singapore, Houston, and South Africa.