Recent Tweets

Follow Me on Twitter

Powered by Twitter Tools

Four Rules for C-Suite and Senior Executive Relocations

So, you have built your relocation program with multiple relocation policy tiers, addressing the various elements of your organization.  Although there are always the typical exceptions (additional temporary living, home finding trips, storage, etc.), for the most part your program is running smoothly. That is, of course, until you receive a call or meeting request to discuss a senior level executive who is relocating. 

The call or discussion goes something like this.  “This is the new Vice President of Awesome Expectations.  We will be moving them from Los Angeles to New York.  We need them up and running A.S.A.P.  Give him/her everything they Four Rules for Managing C-Suite and Senior Executive Relocationsneed.”  Right then and there, you know you are in for a ride. Here are some helpful rules for managing a high level relocation:

Rule #1: Document everything. You will want to be sure that everything is notated, especially the conversation with the HR or relocation manager initiating the move and the transferee.  This will be a high profile move, possibly with many unexpected twists and turns.  Although you probably have an executive policy, moves like these rarely follow the script.  With every deviation, get the approval in writing.  If the written response does not cover the entirety of the item, spell it out as diplomatically as possible and get a comprehensive response.

Rule #2: Track any enhancements or exceptions. It’s important to make sure that you and/or your relocation manager is aware of the true impact (financial and precedence) of each program exception.  For example, if a transferee is to be granted additional home or destination travel, provide the anticipate cost and tax implications upfront so that there are no surprises. Even better, loop in your CFO as they don’t like surprises.

Rule #3: Be prepared for multiple appraisals. The biggest ticket item in a C-suite relocation usually involves the home sale.  In most cases, you will be dealing with a high end, unique home that will only appeal to a small group of buyers.  Do your best to stand your ground when it comes to the relocation appraisal process.  If your program calls for a third appraisal in the event that the first two are outside the acceptable variance limit, then automatically order three at the beginning.  Appraising a home without a buyer in place is challenging.  Determining the value with limited comparable properties becomes more of an educated guess.  The valuations will vary. Count on it.

Rule #4. Hold your ground on the price. Nobody ever wants to tell an executive officer “no”, or “that’s not how it works.”  You, as the relocation manager, want to do a good job. You relocation partner also wants to do a good job. It’s our business to make everything work, no matter how difficult or wild the request. But, sometimes doing a good job is saying no. Even if you are overruled, it will help your defense down the road when others are questioning decisions made.

I have seen some crazy real estate decisions happen. We once had an employer agree to use a year-old refinance appraisal. We have also had situations where the CEO of the company asked the transferee, “what’s your house worth?” to determine price. Unfortunately, these conversations never take place with you in the room and the decisions are often made before the reality comes into focus.

When it comes to home price, however, you have to be proactive and hold your ground. If you need to call a meeting with the CEO, CFO, Treasurer, etc., do it. The home buyout price is not an area where you should bend. Here’s why:

It’s easy for executives who have a lot on their minds in their own positions to forget all the nuances that you must deal with.  As you know, in addition to the directed offer taxability concerns, you have to you are responsible for managing your company’s inventory expenses and loss on sale exposure.  An overpriced, unique and aspirational home will sit on the market. And, as the home sits on the market, at or very near the buyout price, it is deteriorating, sitting vacant and racking up maintenance, cosmetic, and various other carrying costs.  All of a sudden, one property is eating your entire budget.

It will be some time before the decision maker will be willing to acknowledge costly poor pricing. When you are finally permitted to cut the losses and get the home sold, you may be facing multiple drastic price cuts,  and several months of bargain hunting buyers with ridiculous offers, before you will sell the home.  To add insult to injury, since you were unable to follow the proper procedures in determining the buy-out price, you now need to treat the disparity as taxable income for the transferee and, naturally, the transferee wants to be made whole, further compounding  the company’s loss.  At this point, you are sitting at your desk with the lights turned off and a cold towel on your head.  On your phone, two lines are blinking.  The Treasurer wants to know why you bought a home for $1.1 million that was worth $750,000, and the CFO wants to know how one employee, earning $125,000 a year, cost the company a half million dollars to move!

The more proactive you are about pricing, the better of you will be. Last week we released a whitepaper on how to talk to your CFO about relocation that you might find helpful.

C-Suite relocations can certainly be an adventure. High expectations can certainly push us to our limits and allow us to do things we haven’t tried before, to the betterment of service and program. Other times, unrealistic expectations can drain budgets and talent. Decide up front where there is flexibility and where you need to remain firm – and then communicate with the powers that be along the way.

Comments are closed.

Search

MIKE CANNING
VP, Client Services

RICK CALANNI
VP of Business Development Northeast Region

 

Site Tags

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |