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Managed Cap Program Managers: Yay or Nay?

Like corporations, employee relocation service providers have had to adapt to shrinking program budgets, less company gatekeepers, and ongoing pressure to simplify the process. Some companies, in response to budgetary constraints, and just not having the personnel to administer multi-benefit programs have switched (especially with Managed Cap Programstheir lower level and rental programs) to a lump sum or managed cap program. Both these programs offer the companies more budget certainty and uniformity. Noting this, some relocation providers have entered the market with a stripped down, limited scope approach. Whereas the traditional service provider had previously geared their approach toward homeowners, with modifications scaling back benefit levels for the renters, and college recruits, these new companies focus on the growing population of less defined relocations.

The appeal is straight forward: Offer the employer a solution that minimizes the work for them, gets the transferee connected and settled at the new location, all, while keeping costs to a minimum.

However, employers considering moving to one of these managed cap specific vendors should weigh their options carefully. Here are some deciding factors:

• As noted earlier, full service providers have a whole host of programs, intended to cover a myriad of challenges. Even if you are not offering some of these benefits, the challenges to your transferees are the same. Having experienced counselors with practical experience can make a big difference in the overall experience.

• There will always be the “one off”. Eventually, you will need that high touch, white glove treatment for that sought after senior executive. Even if 99 out of 100 moves would be fine under that managed budget solution, it is that one, which could make your life a living nightmare.

• Today, this might be the best type program for your company, given the current objectives and mindset. But, as your company grows and the economy recovers, making the market for talent more competitive, will your provider be able to adapt to the expanding service needs?

• So much of this decision making is based on the budget, when it should be focused on the actual cost. A managed lump sum provides a straight forward budget. However, the reality is that every relocation has some unique challenges. If your program is primarily a budgeting tool, supplemented with some guidance, rather than the other way around, the efficiency that a counseling coordinator provides might go out the window. Ultimately, your program might cost more in time lost, exceptions granted and general transferee hardship.

• Don’t be afraid to negotiate the fees. In the past, many service providers broke down their initiation fees by homeowner and renter. However, in today’s market many have realized new solutions must be devised to address this growing segment of initiations, where the services provided must be flexible and within a capped budget. Whether you sign with a full service provider, or a stripped down capped program manager, be sure of what to expect for your money.

• Sub-vendors can derail your program. The appeal and selection of a relocation service partner, often boils down to their fees, even though this often represents a small fraction of the program cost. For this reason, some will offset much of their service fee with fees from sub vendors for business directed their way. Ultimately, arrangements like this can limit the options and impact the fees they charge. Be wary of these arrangements and make sure they are completely disclosed. Also, clarify if the transferee is able to utilize vendors of their or the employer’s choosing.

In conclusion, for companies with infrequent and limited benefit moves, utilizing a strictly managed sum move vendor might make more sense. But, for a more active program with any variety in needs, it is easier to deal with a company that has the capabilities at your disposal, than to add them where they do not already exist.

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VP, Client Services

VP of Business Development Northeast Region


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