Reference no: EM133106211

You are Vern Robinson, newly appointed President of Relocation Success Incorporated (RSI). You have been with the company for 17 years, starting as an entry-level Relocation Administrator right out of college. Over the years, the company has grown to one of the very few truly global relocation companies in the world. Most global relocation companies specialize in one, two or sometimes three continents. Very few have actual experience on five continents, like RSI.

Your promotion to President is fairly recent and you have faced your share of surprises and challenges over these last few months. The global pandemic of COVID-19 in 2020 really shook the company to the core, with demand for relocation services shrinking dramatically almost overnight. In addition, each country (and sometimes each state and province) instituted restrictions and guidelines that significantly complicated the relocation process, forcing your employees to spend much more time researching what services you could and could not offer to the clients that were moving ahead with relocations.

All this took a huge toll on your workforce. With the sudden drop in commissions, you lost six of your best business development (sales) people. Now you are taking on business development responsibilities (for bigger potential clients) to help out. Two key software engineers were recruited away to Zoom. Ten Relocation Administrators and three Relocation Managers had to be laid off-there simply wasn't enough work to keep paying them and keep the company afloat.

To add salt to the wound, there are two more key employees departures. Just last week, you had to fire Alejandra Hernandez, Chief Financial Officer, for embezzlement. You are hoping to keep that out of the papers as it would create bad press for RSI. And in two weeks, your longtime Director of Human Resources, Brenda Adams, will be leaving the company in order to care for her ailing wife, who is sick with multiple sclerosis.

As you take a look at the workforce analysis, you realize that your employee demographics have really been skewed by all these changes. Out of the remaining 65 employees, two thirds are men, and all but eight employees are white. Of those eight, seven work as Relocation Administrators and one is an Accounts Payable clerk. As President, you'll need to find a new HR Director who can institute a solid diversity, equity, and inclusion (DEI) plan to steer the company back on course.

But right now, the most pressing priority is new sales. With so few organizations active in relocating their employees, you were delighted to hear from the HRVP of Noles Brothers, Cade Jackson, who wants to meet with you this week.

You know that Noles Brothers is 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.

In doing some research on Noles Brothers, you learn that their big priority is cost control of suppliers. In fact, Noles' aggressive negotiations with several silicon suppliers recently made news in several U.S. newspapers and on cable news, making Noles sound downright cutthroat.

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. Companies of a similar size to Noles tend to provide a lump sum of $40,000 to $100,000 for domestic moves, and a lump sum of $80,000 to $160,000 for international moves. You would receive a percentage of the lump sum given to the employee, called a license fee. Based on hours of calculations, you decide on a reservation point of a license fee of 2.8% per domestic relocation and 3.1% for international relocation, with a guaranteed minimum of $20,000 in fees per year (which works out to be about four relocations per year). Ideally, you'd like to negotiate a license fee of around 4% for domestic relocations and 5% for international relocations with a guaranteed minimum of $30,000 in fees per year.

Although you have plenty of experience negotiating these contracts, you are a bit unnerved by the news and know that preparation and a cool head will be key. Given how important new business is to the survival of RSI, you really hope this meeting with Cade Jackson goes well.

Questions- Your role (circle one): Cade Jackson / Vern Robinson

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?