Reference no: EM133164807

Outsourcing Relocation Services - Role of Cade Jackson

You are Cade Jackson, the Human Resources Vice President (HRVP) of Noles Brothers, a medium-size, privately owned, solar engineering company. Noles designs and installs solar energy solutions for a wide variety of companies and municipalities. Enjoying extraordinary growth, it has tripled its workforce over the past 20 years.

Noles operates on five continents, with engineers and designers working in over 80 countries. Up until this point, the company has managed its relocation of employees internally, with two dedicated Relocation professionals in the HR department. One of these professionals is leaving Noles to retire at the end of the year, and the other has let you know that she plans to stop working in order to pursue her dream of acting. Given the projected growth of the company and the need to continue relocation of employees across far flung countries, you are considering outsourcing relocation to an external vendor.

One of the challenges in outsourcing is finding a vendor with expertise in such a variety of locations. Most global relocation companies you have met with specialize in one, two or sometimes three continents. Very few have actual experience on five continents. One such company is Relocation Success Incorporated (RSI). You have asked for a meeting with Vern Robinson, President of RSI, this week.

In order for Noles to achieve its growth projections, the executive leadership has developed a three-year strategy prioritizing the following initiatives:

1) Cost control. Aggressive cost control of suppliers, particularly suppliers of silicon, aluminum and glass. Noles' aggressive negotiations with several silicon suppliers recently made news in the U.S., most of which made Noles out to be the bad guy. Your president is pretty sure that one of the reasons for the bad press is that the CEO of a major silicon supplier is married to an Associated Press journalist.

2) Diversity, Equity, and Inclusion (DEI). Given the international nature of the business, Noles' executive leadership team has been supportive of DEI in the past. However, with the recent events of 2020, the company has decided to prioritize DEI as a key element of the corporate strategy. Some of Noles' clients and suppliers are doing the same. In fact one of Noles' largest clients, G & G, a multinational pharmaceutical company with facilities in 34 countries, has added a DEI reporting requirement to all new project bids. Companies (such as Noles) bidding on new construction projects must report not only the demographics and DEI statement for the company's own employees, but also the demographics and DEI statements for all of the company's vendors/subcontractors/consultants.

You and the company president agree that relocation is a dumb place to skimp. In your experience, a smooth move to another country makes for a productive, happy engineer. On the other hand, a botched relocation can result in an expensive move followed quickly by an engineer who quits, usually resulting in an angry client as well. Your goal is to find a relocation company that understands relocation is worth the money. Of course, you don't want to overspend, but you'd rather spend more for a company that ensures top quality relocation services.

In rethinking how Noles provides relocation support to employees, you've done your homework. Your latest data says that average domestic relocations cost $95,000 and average international relocations cost $148,000. Most companies who outsource relocations have moved to providing employees with a lump sum for relocation. Engineering companies similar to Noles tend to provide a lump sum of $60,000 to $110,000 for domestic moves, and a lump sum of $90,000 to $175,000 for international moves. You would pay a percentage of the lump sum given to the employee, called a license fee, to a relocation company. Based on hours of calculations, you decide on a reservation point of a license fee of 4.6% per domestic relocation and 6.2% for international relocation, with a guaranteed minimum of $50,000 in fees per year (which works out to be about six relocations per year, even though you know you'll have more over over the next two years). Ideally, you'd like to negotiate a license fee of around 3.5% for domestic relocations and 4.5% for international relocations with a guaranteed minimum of $30,000 in fees per year.

In 90 days, Noles will be bidding on a new 10-year, multi-million dollar project for G & G-solar installations at their manufacturing facilities in 12 countries. Bidding is top secret as competition is fierce. In some ways, you are glad to be negotiating much "smaller potatoes," such as the potential contract with a new relocation company.

Keeping in mind the DEI reporting requirements for the upcoming bid, you know that if you decide to outsource relocation, the relocation company must have a diverse workforce and a real commitment to DEI, not just lip service. At a minimum, you'd like to see roughly a quarter of senior manager positions held by women, at least 10% of senior manager positions held by non-white employees, and at least some LGBTQ representation. You've heard great things about Brenda Adams, the HRVP at RSI, through a LinkedIn Group for LGBTQ HR Professionals. So that's at least one sign that the company is serious about DEI.

In auditing the demographics of all your HR-related vendors (employment verification, employee assistance program, etc.), you found that one of your vendors (a compensation survey data provider) had an overwhelmingly white male workforce (95%), and when you met with the company owner, you realized how little the company even understood what DEI was all about. Fortunately, your contract was up for renewal at that time and it was an easy decision to move to a different, much more diverse, vendor.

Now that the G&G bid is only a few weeks away, you want to get this question of outsourcing or keeping relocation in-house squared away. If you can't come to a reasonable agreement with RSI, you'll need to hire at least one (probably two) relocation specialists to fill the vacancies and keep the function in-house. You are really hoping this meeting with Vern Robinson goes well.

Outsourcing Human Resources

Planning Document

Your role:Cade Jackson

What issues are most important to you (from most to least important):

What are your alternatives if an agreement cannot be reached? What are your reservation points / walk-away points?

What are the most important pieces of information you have (this may be about you or the other party)?

What questions will you ask?

What is your overall strategy?