September 27, 2022
Procurement: Sharing the Right Information Gets Better RFP Results
If a procurement leader wants thoughtful, customized solutions to deliver the company’s mobility program goals, the first step is partnering with HR and the global mobility function to define them – and then to ensure that the company’s goals, values, and priorities are shared clearly.
Without context, the relocation management companies (RMCs) responding to an RFP from an organization miss out on discovery and real understanding. Too often this leads to providing a generic showcase of their company, rather than offering a solution that fits the client’s values. Because relocation management is a service-oriented industry, client engagements should be customized to the budget, mobility objectives, relocation policy, company culture and many other factors that make each potential client unique.
Providing sufficient information up front to all respondents will allow them to provide a meaningful response and address pricing accordingly. Here are some helpful tips on what information would be helpful to RMC respondents.
Why you are doing an RFP and what is the desired goal to be achieved, need to be met, or problem(s) to be solved? For example, if you have had problems with inaccurate payroll reporting, or lack of visibility and transparency into cost drivers, or household goods service issues, specific examples will help your respondents explain how they can best solve these issues on your behalf as your partner.
Providing specific details on the following will also help an RMC better understand what solutions the program requires.
- Relocation policies
- Demographics of relocating population
- Total program spend
- Homeowner population
- Supplier network
- How the monies outlaid by the RMC on the client’s behalf will be funded
Additionally, this information will help the sourcing team differentiate the RMCs they are evaluating.
How to Evaluate Pricing
Addressable spend is an important topic when choosing an RMC. For example, if you have a $1 million program spend and your goal is to save 5%, the first step is to understand how much of the $1 million spend is policy driven and how much of it is an addressable spend that can be negotiated.
When considering the global mobility program spend that is driven by relocation policy, there is typically no differentiation in savings from one RMC to another. For example, real estate costs are governed by the agents’ fees and closing costs which are market driven and led by the client’s policy. Other policy-driven costs would include gross-up methodology, cash allowances, lease cancellation costs, hotel, car rental and airfare costs, among others.
When a global mobility leader forms a great collaborative partnership with the right RMC, they can help find policy savings by advising on best industry policy practices. They can also help with a policy refresh, which can make an organization more competitive, while considering how to curb overly generous, outdated or inefficient policy provisions.
Addressing this part of program spend, however, is not typically done during the RFP period as this kind of program advice is provided at no cost to clients but charged as a consulting service to non-clients.
The addressable spend in a relocation program that can and should be explored in an RFP includes:
- Service fees
- Household Goods (HHG)
- Temporary Housing
- Real Estate Home Sale Program costs
- Funding options and fees
Intangibles That Matter
Often HR and procurement feel all the RFP respondents seemed pretty much the same at the end of the RFP process. There are a few reasons for this:
- RMCs do provide essentially the same services
- Fee structures are usually very similar; and more importantly, the fees a client pays are typically only 2% of the entire mobility program spend
- The costs for direct services performed by downstream suppliers do not differ very much from one RMC to another
The real savings in a mobility program is the alignment of RMC and client, the efficiency of the partnership, the satisfaction of both transferee and stakeholders, and the value of the guidance the RMC brings to the client’s program with fresh policies that optimize competitive advantages.
How do you know who is the right RMC to handle your program?
It pays to take the time to allow the RMCs to schedule discovery calls with key stakeholders and to learn the company’s program and culture. It’s equally important for the client to get to know the RMC’s leadership as well as consultants who will interact with relocating employees.
Achieving a great partnership is a function of culture match and choosing an RMC that is right-sized and capable of checking all the must-have boxes. As you take the time to get to know the teams at the RMCs you are considering, you will find that while the services offered don’t differ very much, how the RMC delivers these services can be dramatically different. You could consider:
- Is this RMC somewhere people like to work?
- Does this RMC treat its supply chain like partners? Do their suppliers like doing business with them? (Ask for supplier references.)
- What is the decision process like? Are consultants and account managers enabled to make decisions or does every decision go up a chain of command that takes time?
- What is the flexibility of this RMC? Can they adapt and act fast?
- Does their DEI and sustainability culture match well with yours?
- Does the RMC have a unique idea, solution or perspective that solves a need in your program?
- What is the experience level of the team? And does the RMC have experience with companies like yours?
This list is incomplete, but hopefully it helps identify the intangibles that ultimately make or break a great partnership. Fundamentally, the mutual discovery process should help identify a partner to understand your company, one that will fit well with your team and stakeholders.
Sterling Lexicon’s team of experts average more than 20 years of experience in policy consulting. We will work with your team to create the right solutions for your program goals.
Marsha Wiggins is Sterling Lexicon’s Content Marketing Manager. She has created thought leadership content in a variety of industries for many years. She is a trusted contributor who provides insights on industry topics and trends.