Transparency is a key component in understanding how the third-party supply chain is being compensated for services related to moving your employees.
Transferring human capital is an expensive proposition, especially considering the status level of employees being moved—typically key leaders and future leaders of an organization. Plus, the majority of these employees are going to sell their largest investment: Their home. That’s a lot of dollars riding on the fate of a successful move experience.
Providing a reliable, professional relocation experience is of the utmost importance when transitioning top talent from one city to another. It is only common sense that a relocation provider utilize the absolute best third parties in assisting with moves—such as top-performing real estate brokers, appraisers, home inspectors, and household goods movers.
We recognize that referral fees exist in leveraging these third parties, but to what extent are these suppliers being pushed for higher fees in exchange for business?
Transparency in Relocation
As an example, one large relocation provider just implemented a minimum 40% referral fee on real estate brokers. Implementing high fees can be a short-term win for the relocation provider, but do the best real estate agents even want or desire this business? Not likely, as agents want business that doesn’t continuously erode their margins.
As another example, if your organization provides a Guaranteed Buyout, then you know appraisers are used in determining the value of an employee’s home. A common approach for some relocation providers (that you may not be aware of) is to add service fees on top of the appraiser fee, or pay a fee where the lead appraiser has to leverage a “rookie” to perform the valuation. This often occurs when the fee the relocation provider is willing to pay is simply too low. An employee’s home is likely his or her single largest investment, so wouldn’t you want a lead appraiser to perform the valuation and pay the full fee for his services?
Third-party relationships are critical to get right—not only for transferring employees whose new career positions ride on successful move experiences, but also for the employer in the event properties needs to be sold out of inventory.
These are just some reasons why transparent pricing should matter to your relocation program. There is nothing wrong with referral fees, but having an understanding of what level of professional and satisfactory service you and your top talent receive is, ultimately, reliant upon what is being charged.
You would be well served in knowing the fees being charged and understanding the potential implications of high fees: Low service and potentially failed relocations.
