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MOBILITY
Magazine of Worldwide ERC 速
December 2010
Inside This Month:
European VAT Update Long-distance Commuting Balancing Talent Management and Productivity
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WR R I N E XT P R A CTI CE
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There are satisfied customers. And then there are Raving Fans! The quality of service your relocating employees receive impacts more than just their moves. It affects their engagement and productivity, and can color their entire perception of your company. That’s why at Weichert Relocation Resources, we’re committed to turning your employees into Raving Fans®—so impressed with the level of service they’ve received, they feel as good about their moves as they do about the company that relocated them.
Weichert Relocation Resources Ranks #1 in Quality of Service Source: HRO Today Magazine’s 2010 Relocation Baker’s Dozen Customer Satisfaction Survey
...and Earns the Highest Percentage of “Top Block” Scores from Relocating Employees Source: Trippel Survey & Research’s Nationwide Relocating Employee Survey*
Raving Fans has set the standard for customer service programs within our industry, and, as you can see, it’s helped us earn some impressive accolades. If you’d like to discover how we can turn your mobile employees into Raving Fans, just give us a call.
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Calendar
MARCH 2011 Global Mobility Specialist (GMS™) Training March 4, 5, and 7 Shanghai, China
MOBILITY • Vol. 31 No. 12 • December 2010
EXECUTIVE COMMITTEE President MICHAEL (MIKE) C. WASHBOURN, SCRP, GMS, Pfizer Inc., Peapack, NJ Vice President SUSAN SCHNEIDER, SCRP, GMS, Plus Relocation Services, Inc., Minneapolis, MN Secretary/Treasurer
Global Workforce Summit: Focus on Asia-Pacific March 8-9 Shanghai, China
MAY 2011 National Relocation Conference May 18-20 Las Vegas, NV
PAMELA (PAM) J. O’CONNOR, SCRP, Leading Real Estate Companies of the World®, Chicago, IL Chairman, Board of Directors AL BLUMENBERG, SCRP, NEI Global Relocation, Omaha, NE
BOARD OF DIRECTORS CORI L. BEAUDET, SCRP, SGMS, SC Johnson—A Family Company, Racine, WI LISA CARAVELLA, CRP, Bank of America, Plano, TX JAY K. DELICH, SCRP, SRA, IFA, Arizona Appraisal Team, LLC, Scottsdale, AZ MARIO FERRARO, Deloitte Consulting Pty Ltd., SINGAPORE MARK GIORGINI, GMS, China Vanke Co. Ltd., Shenzhen, CHINA
OCTOBER 2011 Global Workforce Symposium October 12-14 Denver, CO
MAY 2012 National Relocation Conference May 9-11 San Antonio, TX
OCTOBER 2012 Global Workforce Symposium October 3-5 Washington, DC
WILLIAM (BILL) GRAEBEL, SGMS, Graebel Relocation Services Worldwide, Aurora, CO JOHNNY H. HAINES, SCRP, SGMS, Deloitte, Hermitage, TN LARS LYKKE IVERSEN, Santa Fe Relocation Services, Hong Kong, CHINA CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ JO LAY, SCRP, SGMS, Coldwell Banker Central Region Relocation, Chicago, IL EARL LEE, Prudential Real Estate and Relocation Services, Scottsdale, AZ STEPHEN C. MCGARRY, SCRP, WPP, New York, NY SANTRUPT MISRA, PH.D., Aditya Birla Management Corporation Ltd., Mumbai, INDIA JOY MORRISON, SCRP, SGMS, PepsiCo, Inc., Purchase, NY STEVEN A. NORD, Alpharetta, GA JOHN PFEIFFER, GMS, Mustang Engineering, L.P., Houston, TX PANDRA RICHIE, SCRP, SGMS, Long & Foster Corporate Real Estate Services Division, Chantilly, VA C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN
EX-OFFICIO Chairman, U.S. Advisory Council AL BLUMENBERG, SCRP, NEI Global Relocation, Omaha, NE
MAY 2013 National Relocation Conference May 15-17 San Diego, CA
Chairman, Foundation for Workforce Mobility KEVIN E. RUSSELL, SCRP, PHH Mortgage, Mt. Laurel, NJ Chairman, Global Advisory Council SANTRUPT MISRA, PH.D., Aditya Birla Management Corporation Ltd., Mumbai, INDIA Chairman, Government Relations Council C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN
Correction In the October 2010 Executive Spotlight column, the location for Jolyce Ledvina was incorrectly listed. It should read San Jose, CA. MOBILITY regrets this error
CHIEF EXECUTIVE OFFICER PEGGY SMITH, SCRP, SGMS, Worldwide ERC®, Arlington, VA
MOBILITY (ISSN 0195-8194) is published monthly by Worldwide ERC®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195, +1 703 842 3400. MOBILITY examines key issues affecting the global mobility workforce for the benefit of employers and firms or individuals providing specific services to relocated employees and their families. The opinions expressed in MOBILITY are those of the authors and do not necessarily reflect the opinions of Worldwide ERC®. MOBILITY is printed in the United States of America. Periodical postage paid at Arlington, VA, and additional mailing offices. Worldwide ERC® members receive one annual subscription with their membership dues. Subscriptions are available to both members and non-members at $48 each per year. Copyright © by Worldwide ERC®. All rights reserved. Neither all nor part of the contents published herein may be reproduced in any form without written permission of Worldwide ERC®. POSTMASTER: send address changes to M OBILITY , Worldwide ERC ®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195
2 MOBILITY/DECEMBER 2010
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Perceptions
The Perfect Marriage: Talent Management and Mobility
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sychologist and author Robert C. Dodd once said, “the goal in marriage is not to think alike, but to think together.” And as more companies see the value of joining their talent management function with their mobility strategy in “wholly” matrimony, we will see the power of these two significant processes thinking together.
Even before the natural link between talent management and mobility began to emerge, companies had begun integrating their talent functions within the organization. Talent research firm Bersin & Associates reports that consolidating talent management activities under a single position is growing, from 21 percent in 2008 to 30 percent today. About 70 percent of those are still in the early phases of integrating talent management with other processes and systems used to make business decisions. Recently I shared the presenter’s platform with Mike Piker, senior human capital international consultant for Mercer, and his presentation “Next-gen Mobility: New Challenges, New Solutions” spoke volumes. Mike showed how HR has been moving up the organizational value chain from “operational executor” to “talent manager” to the ultimate platform: “strategy architect.” He painted a picture of next generation global mobility that incorporates information products, peer-to-peer networks, and analytic tools to shape and guide a globally mobile workforce that delivers peak performance with consistency. Analytics are a hot topic these days. In the Harvard Business Review article, “Competing on Talent Analytics,” by Thomas H. Davenport, Jeanne Harris, and Jeremy Shapiro, the authors make the case for collecting and analyzing six kinds of data ranging from “Human-Capital Facts”—the key indicators of an organization’s overall health—to the “Talent Supply Chain”—how workforce needs should adapt to changes
4 MOBILITY/DECEMBER 2010
in the business environment. The authors report companies that have seen the remarkable competitive advantages possible by studying such information—such as Starbucks, Limited Brands, and Best Buy—“can precisely identify the value of a 0.1 percent increase in engagement among employees at a particular store. And at Best Buy, for example, that value is more than $100,000 in the store’s annual operating income.” But they issue a caution, too, not to get so caught up in the data that unnecessary metrics are collected, that data used should also monitor changes in organizational priorities, and that companies should guard against losing the human side of talent management in the process. In its report “Talent Mobility 2020: The Next Generation of International Assignments,” PricewaterhouseCoopers (PwC) predicts that the mobile assignee population will have grown almost 50 percent since the year 2000. The PwC report also reflected the growing prominence and importance of global talent mobility: “the World Economic Forum put this topic high on the agenda of its Annual Meeting 2010 in Davos, Switzerland. The world’s business, political, and aca-
demic leaders united in agreeing on the importance of encouraging talent mobility to stimulate economies in both developed and developing countries.” To set the stage for the predicted “upcoming massive talent shortages,” the Forum is encouraging government, business, and academia to collaborate on solutions to the challenges that exist today. The mobile population is increasing, and globalization drives integration. At our recent Global Workforce Symposium, the session “Leveraging Workforce Mobility to Support Talent Management Business Strategies” focused on the benefits of partnering mobility programs with talent management. One of the takeaways: within the next 10 years, a company’s ability to develop global talent will dictate the success of that company in the future. Global mobility professionals can play a key role in bridging the gap between mobility and talent management by educating the company on how to be strategic with their assignment policies. It’s clear that we have an ambitious agenda in our industry. Our journey has taken us from point-topoint relocations to more complex variations of in-country and countryto-country assignments, with all the intricacies that entails. Talent management and mobility. Like any marriage, this one will rely on good communication, room for growth, and a commitment to partnership in any environment. —Peggy Smith, SCRP, SGMS Chief Executive Officer Worldwide ERC®
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MOBILITY Magazine of Worldwide ERC速
Features
24 38 44 48
Moving Into the Future By Eric Reed, CRP, GMS
Commoditized Services: Balance Between Quality and Cost
38
44
By Boris Populoh
Balancing Talent Mobility with Talent Productivity By Jill Heineck, CRP
European VAT Charges on Mobility Services By Johannes Laxafoss, Peggy Smith, SCRP, SGMS, and Joseph Morabito, SCRP
58 68 74
Reality in the Workplace: Long-distance Commuting By David Barlow, SCRP, SGMS
Are You Practicing Responsible Employee Mobility?
48
By Jennifer Harvey
Can You Afford International Assignment Success? A Business Case for Investment in Cultural Assessment and Training By Michael F. Tucker, PH.D., CMC
68
NDSPOT-
74 MOBILITY/DECEMBER 2010 7
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MOBILITY Magazine of Worldwide ERC®
DEPARTMENTS
MOBILITY
2 CALENDAR
STAFF
Vice President & Publisher
4 PERCEPTIONS
Jerry Holloman
jholloman@WorldwideERC.org
The Perfect Marriage: Talent Management and Mobility By Peggy Smith, SCRP, SGMS
10 AROUND THE WORLDWIDE ERC
Managing Editor Frank Mauck
fmauck@WorldwideERC.org ®
12 EXECUTIVE SPOTLIGHT
EDITORIAL ADVISORY COMMITTEE
Chairman Jo Lay, SCRP, SGMS, Coldwell Banker Central Region Relocation, Northbrook, IL Alex Alpert, Wheaton World Wide Moving, Tucson, AZ
15 INDUSTRY SPOTLIGHT
Michele Bar-Pereg, Bar-Pereg Group, Amsterdam, THE NETHERLANDS Tamara Bianchi, CRP, Capital Relocation Services, Denver, CO
15 WORLDWIDE ERC® TRENDSPOTTING 18 QUICK TAKES 20 RAC REPORT
Robert F. Burch, SCRP, Alexander’s Mobility Services, Baltimore, MD Christopher R. Chalk, CRP, GMS, Dependable Auto Shippers, Inc., Smyrna, GA Alex Chua, Newport Real Estate Limited, Shanghai, CHINA Brenda Darrow-Fuhs, Bank of America, Longmont, CO Terry Baxter Davis, SCRP, SGMS, Ernst & Young LLP, Cleveland, OH
79 GLOBILITY®
Anne Dean, GMS, Living Abroad, LLC, Norwalk, CT Tim Denney, Stirling Henry Global Migration, Sydney, AUSTRALIA
80 LAST PAGE
Marge A. Dillon, CRP, GMS, Little Elm, TX Sean Dubberke, RW3 LLC, New York, NY Deborah A. Dull, CRP, GMS, Crown Relocations, Houston, TX Kari Hamilton, ABODA, Inc., Redmond, WA Nancy F. Harmann, CRP, GMS, Latter & Blum, Inc., Realtors, New Orleans, LA Gustavo Higuera, CRP, GMS, Prudential Real Estate and Relocation Services, Scottsdale, AZ Christine E. Holland, GMS, Massachusetts Institute of Technology, Cambridge, MA Ronald Huiskamp, GMS, Dwellworks, LLC, Kirkland, WA Rob Johnson, SCRP, SGMS, Altair Global Relocation, Plano, TX Jeff Knapton, SIRVA Relocation, Westmont, IL Anne-Claude Lambelet, SGMS, ACL Consulting, Geneva, SWITZERLAND Tacita Lewars, GMS, Globaforce Incorporated, Calgery, Alberta, CANADA Cindy Madden, CRP, Cartus, Danbury, CT Tim McCarney, GMS, Weichert Relocation Resources Inc., Norwell, MA Nino Nelissen, SGMS, Executive Mobility Group, Schlipol Airport, THE NETHERLANDS Constance Pegushin, Berry Appleman & Leiden LLP, San Francisco, CA
Design/Production: Ideas, Communicated, LLC, Vienna, VA, www.ideascommunicated.com Printing: CADMUS Specialty Publications, Richmond, VA Reprints: Katina Moaney, CADMUS Reprint Services, ercreprints@cadmus.com; +1 866 487 5625 ext. 3736 Advertising Sales: Glen Cox, National Sales Manager, The Townsend Group, Bethesda, MD +1 301 215 6710; ext. 109; gcox@townsend-group.com
Elizabeth Perelstein, School Choice International, White Plains, NY Patricia Pollard, CRP, GMS, Coldwell Banker United Realtors, Houston, TX Maureen Bridget Rabotin, GMS, Effective Global Leadership, Paris, FRANCE Michelle Sandlin, CRP, John Daugherty Realtors, Inc., Houston, TX Stefanie R. Schreck, CRP, GMS, American International Group, New York, NY Scott T. Sullivan, Brookfield Global Relocation Services, Woodridge, IL Mara Terrace, Siemens Corporation, Global Shared Services NA, Orlando, FL Sherrie Tessier, CVS, Woonsocket, RI Jody Walstrom, Plus Relocation Services Inc., Minneapolis, MN Allie Williamson, CRP, OneWorld Relocation Services, Naples, FL Nick Woodhams, SGMS, Woodhams Relocation Centre, Sydney, AUSTRALIA
8 MOBILITY/DECEMBER 2010
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Prudential Real Estate and Relocation Services
THANK YOU FOR TRUSTING US WITH YOUR MOST VALUABLE ASSETS.
Relocating can be a stressful time for transferees and their families—not to mention their employers. Prudential Relocation is committed to making the experience a positive one for all involved. Our team of relocation experts works closely with top-quality supply-chain partners who are just as dedicated to providing the best care and service in the business. Which is why we’re confident we can deliver on the trust you place in us. And why we’re proud to be the #1 choice of relocated employees and relocation managers alike.
1cd/
Job No Job Na
RELO TR AWARDS Pub: Mo
Issue D Prod: b Live siz Trim siz Bleed s
______
______
______
______
______
______
______
______
1 1 st
st
by Relocated Employees
by Relocation Managers
Trippel Survey & Research, LLC*
Trippel Survey & Research, LLC
How can we make relocation easier for you?
Call 1-877-418-0617 and find out more or visit www.prudential.com/relocation
*Measured by Net Satisfaction. Sixteenth annual Nationwide Relocating Employee Survey, 2010 © Trippel Survey & Research, LLC. Sixth Annual Relocation Manager’s Survey © - International Policy and Service Providers’ Performance, 2010 © Trippel Survey & Research, LLC. ©2010 Prudential Financial, Inc., and its related entities. All rights reserved.
Prepared 213 Was (973) 802
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Around the Worldwide ERC®
The ‘New’ Relocation Appraisal Training Program he Worldwide ERC® Summary Appraisal Report underwent major revisions this summer, and now includes a logical step-by-step methodology for analyzing market trends and making market change and forecasting adjustments. Training on this new form is now available online. The training is organized into three pre-recorded modules, each of which lasts approximately an hour: • Module 1: Concepts in Relocation Appraising • Module 2: The Worldwide ERC® Summary Appraisal Report: an Overview • Module 3: Developing the Market Change and Forecasting Adjustments in the Relocation Appraisal Members who complete this training will be identified with the “Worldwide ERC® Appraisal Trained 2010” notation in our Directory. Please note that the deadline
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to make it into the printed version of the 2011 Directory is December 31, 2010—less than a month away. The training costs $125 for Worldwide ERC® members and $195 for non-members (To members who earned the “Worldwide ERC® Appraisal Trained” notation for the previous, 2003 edition of the form, we are offering you the training at a discounted price of $99, between now and the end of the month.). After December 31, 2010, Worldwide ERC® will no longer support the 2003 form, and the notation earned for completing that training will be retired at the end of 2011. More details are available on our website at www.WorldwideERC.org/pages/RATP.aspx. If you have any questions, please do not hesitate to e-mail Research@WorldwideERC.org or call +1 703 842 3430.
Kevin Rich, SCRP, CMC, Receives H. Cris Collie Legacy Award
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Board of Directors, was a charter trustee of he Worldwide ERC® Foundation for the Worldwide ERC® Foundation for Workforce Mobility recently named Kevin Rich, SCRP, vice president, Workforce Mobility and subsequently, global business for New World Van Lines, Foundation Chairman, and holds the Inc., as the third recipient of its H. Cris Certified Moving Consultant (CMC) and Collie Legacy Award. Senior Certified Relocation Professional Former Worldwide ERC® CEO Cris (SCRP) designations. He also is a member Collie’s retirement in 2008 after a 36-year of the Worldwide ERC® Hall of Leaders. tenure brought deep recognition and appreIn accepting the award, Rich said, “for ciation of his personal and professional me to be compared with Cris Collie, Kevin Rich and wife, impact on the workforce mobility indussomeone I have known, loved, and Susan try. To pay tribute to Collie’s legacy of admired for so long, is indescribable and excellence, an award was created in his name by the more than a little humbling. Like Cris, there are so many Worldwide ERC® Foundation for Workforce Mobility. of you who do so much for this industry, for Worldwide Former Foundation Chairman Jill Silvas, SCRP, Pacific ERC®, for your companies, families, communities, and Union International, and 2009 recipient of the honor, churches… and much of what you do is without fanfare delivered the H. Cris Collie Legacy Award to Rich, noting or recognition. Some of us are blessed with the opportuthat, “I am most pleased to be the one to confer this nities and good fortune to serve and to be publicly recogaward this year to an individual who exhibits deep personal nized like this. and professional integrity, a commitment to our industry “I want to thank those who nominated and selected and to other Worldwide ERC® members, and compassion me for the Cris Collie Legacy Award; Worldwide ERC® for others. Those who know him have been touched by his for the opportunities I have had to serve; my employer, positive, outgoing, selfless spirit over the years.” New World Van Lines, and the Marx family for encourRich’s history with Worldwide ERC® includes a range aging and supporting my active ERC® involvement; my of significant committee assignments, authorship of former employer, Clark & Reid Company for doing the MOBILITY magazine articles, and participation as a speaksame; my wife Susan, for her unwavering support er, moderator, and panelist at numerous Worldwide throughout my career and our 40 years of marriage, and ERC® meetings. He was the first service industry repreGod, for blessing me so richly with family, friends, health sentative to be elected President of the association’s and opportunity. Thank you for the gift of my surprise.” 10 MOBILITY/DECEMBER 2010
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Executive Spotlight
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aragon Relocation, Irving, TX, has named Scott Williamson manager, global business development covering the southern United States region. Anna Waters has been named director, global business development covering the north central United States and much of Canada. CottinghamChalkHayes, Charlotte, NC, has named Monique Balint relocation coordinator. Stefan Keller has joined Arpin International Group as sales manager at the company’s Wiesbaden, Germany, customer service center. Coldwell Banker United, Realtors®, Columbia, SC, has added several new sales associates to its offices. Anne Kirkland and Cheryl Trueblood joined the Irmo office.
Join Us Online for Announcements Executive Spotlight highlights the job changes and achievements of employee mobility professionals. E-mail your hiring and promotion announcements, as well as your regional group communications, to mobility@WorldwideERC.org. Not only will the releases appear in Executive Spotlight, but also will show up in Names in the News on the Worldwide ERC® website, www.WorldwideERC.org. Please visit: http://www.worldwideerc.org/Pages/NIN-MOBILITY.aspx for regular updates on mobility industry professionals. Does Worldwide ERC® have your most up-to-date contact information? If not, let us know at www.worldwideerc.org/_layouts/FormServer.aspx?XsnLocation=/ members%20only%20form/member%20information%20change.xsn?open in=browser
Cathy Boozer has joined the joined the Midtown office. Brandon Northeast office. Lauren Gilstrap has Trivette has joined the Lexington office. Marriott ExecuStay, Bethesda, MD, has named Michelle Gobrecht, CRP, GMS, director of national sales for the Eastern region. PODS Enterprises, Inc., Clearwater, FL, has named Clive Burton vice president of sales. RealtySouth, Birmingham, AL, has added several new agents to its offices. Tiffany McCall has joined the First Realty office. Clint Hayes, Wilsie Hayes, and Lynn Lang have joined the Inverness office. Dawn Mead has joined the Mountain Brook Crestline office. Betty Gowins has joined the Oneonta office. Tiffany Ballard has joined the Over the Mountain Alford office. Bernard Gunn has joined the Shelby office. Saunders 1865, London, United Kingdom, recently honored Ann Dinsdale, GMS, senior vice president—client services, at a special evening celebrating her 25th anniversary with the firm. Now is the time to strengthen your team with the Joan M. Erni, CRP, GMS, direcbest players. The Worldwide ERC® Career Center is tor of relocation and referral services the premier niche job board for the global workforce for Michael Saunders & Company, mobility industry, providing you with professional, Sarasota, FL, has been appointed to quality candidates with experience and expertise. the national board of the Relocation © 2010, Worldwide ERC Directors Council.
The strength of a team is in the quality of people it recruits.
The Career Center
Jobs.WorldwideERC.org
®
12 MOBILITY/DECEMBER 2010
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Industry Spotlight
Restructuring Rewards Can Boost European Employees’ Pay
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axand, a global organization of tax advisory firms to multinational businesses, recently took the position that multinational organizations can boost the effective takehome pay of European employees by as much as 12 percent by restructuring reward packages. According to the release, global compensation, equity, and employment tax experts convened in Madrid, Spain, during the last week of October to explore global compensation trends, finding that multinational organizations are implementing compensation packages on a country-by-country basis as opposed to a global or pan-European basis. By doing so, they fail to take advantage of cost efficiencies that then can be passed on to staff. In addition, according to Taxand, middle managers often are overlooked when it concerns pay and benefits design in favor of senior executives. According to the release, by not taking advantage of the benefits of centralized benefit buying power, combined with local tax efficient compensation arrangements, multinationals and their employees are missing out on pay increases. Taxand says that by focusing on maximizing take-home pay and “more meaningful benefits-in-kind,” employers could allow employees to take home up to 12 percent in additional aftertax pay and buying power at little or no cost. “The case for creative remuneration has never been stronger,” said Sarah Pickering, global compensation, equity, and employment tax service line leader for Taxand. “As the job market picks up companies need to hold onto their talented employees. Yet in the current environment of low bonuses, static annual pay, underwater or unvested
stock plan awards, headcount reduction, and potential increases in personal tax rates, incentivizing staff is a real challenge. In today’s global employment marketplace a national remuneration strategy is no longer sufficient. “Multinationals need to revisit tax efficient pay structures, for example salary sacrifice plans that give social security savings as well as providing benefits with reduced income tax. Secondly, purchasing employee benefits on a regional or global basis for example pan-European or global medical insurance policies, allows
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improved benefits or cost savings to be negotiated. Thirdly, providing employees with more benefit choices means that take-home pay goes further leaving employees’ more ‘spare’ cash for other things. “Middle managers or the ‘marzipan layer’ can be the ‘lifeblood’ of an organization. They include the leaders of tomorrow. They can make or break change and growth initiatives on the ground and are often the employee group with the most technical experience and employer investment. They implement strategy on behalf of executives yet they
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PEACE OF MIND. WORLDWIDESM MOBILITY/DECEMBER 2010 15
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Industry Spotlight
don’t get the recognition and perks. Increasingly they are heavily taxed— they may just fall into a country’s highest tax threshold—and are the group where reduced or removed state benefits hurt most. Consequently, they are the group who are the most likely to move jobs for the benefit of a few thousand euros in salary increase. “The direct and indirect costs to the employer of replacement far outweigh the salary increase gained by the employee. However, new reward plans are only effective if the value
they can deliver to employees is recognized. “This goes beyond communication of how the plan works to actually educating employees on wider financial matters. Focusing on middle manager reward policies is a smart forward move for all companies.” According to the release, the top five areas for multinationals to consider when reviewing compensation structures are tax and social security free or reduced rate remuneration choices such as child care vouchers,
bicycles, gym membership, and welfare assistance; purchasing benefits in kind “in bulk” and on a panEuropean or global basis; offering employees increased choice to design a benefit package that suits their individual circumstances; use of external providers who have technology-based administration tools that offer more cost efficient operation; and improved communication of benefits combined with financial education so employees know the true value of an offer and can make informed decisions.
FYI UniGroup Worldwide UTS, St. Louis, MO, has announced that its Singapore and Hong Kong offices are now FIDI/FAIM accredited international movers. Berlitz International, Inc., Princeton, NJ, in conjuction with its parent company, Benesse Corporation, Okayama, Japan, announced the launch of its global Berlitz Kids® English program in more than 550 locations in more than 70 countries. CORT’s, Fairfax, VA, Global Furniture Network has announced its expansion into more than 60 countries. Fry-Wagner Moving and Storage, St. Louis, MO, has announced it has been accepted as a member of the MoveSeniors.com online resource database. EXIT Realty Corp. International, Orlando, FL, has selected VScreen, Inc. as its preferred video provider for corporate online marketing. GO Furnished Housing Providers, New York, NY, a national partnership of furnished housing providers, has announced its launch as a provider in the corporate apartments industry following 11 corporate apartment providers joining together in an operational and marketing partnership.The partnership includes Blvd Suites Corporate Housing, ExecNet Properties; Furnished Quarters; Minto Group Inc.; Murphy’s Corporate Lodging; The Pidgeon Company; Prestige Accommodations; Suite Accommodations; Suite Solutions; Synergy Corporate Housing; and TP Corporate Housing. Arpin Group, East Warwick, RI, has announced a partnership with 1-800-GOT-JUNK? to provide its customers with the company’s services. Edina Realty, Edina, MN, has announced searchable rental properties in Minnesota, western Wisconsin, and Fargo, ND, on its website, www.edinarealty.com. Meyer Real Estate, Gulf Shores, AL, has announced an affiliation with Century 21 Real Esate LLC. The brokerage will now be known as CENTURY 21 Meyer Real Estate. ERA Franchise Systems LLC, Parsippany, NJ, has announced the launch of ERA TopRecruiterSM, a recruiting system for its franchisees. NRT LLC, Parspippany, NJ, has announced that its Coldwell Banker Residential Brokerage company in the San Francisco Bay Area has acquired the assets of Cashin Company, Realtors. The firm will now operate under the banner of Coldwell Banker Residential Brokerage.
16 MOBILITY/DECEMBER 2010
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Bridging Continents & Cultures Chicago Calgary
Houston Montreal
Los Angeles Toronto
New York Vancouver
Philadelphia London, UK
San Francisco Hong Kong
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Quick Takes
Number of Virtual Workers Expected to Increase
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ccording to a new online poll conducted by Right Management, Philadelphia, PA, in September 2010, the number of employees working remotely is expected to increase during the next 12 months. According to the poll, which queried 330 U.S. employers on the changes they anticipate in the number of virtual workers in their organizations, three out of four respondents already had employees who work remotely, and of those, almost half expect their number to increase or significantly increase during the year ahead. “It is no surprise that the number of virtual employees will continue to increase given the widespread nature of this trend, the cost pressures organizations face, increased
sophistication of technology, and the growing number of employees who have come to expect this kind of flexible work arrangement,” said Michael Haid, senior vice president of global solutions for Right Management. “But the very rapid rise in their numbers suggested by the survey means companies may be challenged if they don’t have the right people in these roles.” “Virtual isn’t a good fit for everyone and management needs to take that into account,” said Haid. “In order to be effective, virtual employees need to have certain traits… adaptability, autonomy, decisiveness, dependability, tolerance for stress, and resourcefulness. A virtual team won’t work effectively if some members aren’t able to self-manage and contribute responsibly.”
Communities
R
ight now Worldwide ERC® members are exchanging questions, answers, and ideas in our online discussion forums and blogs, such as:
U.S. Domestic Relocation Member Forum: “Have you had special situations where a plant needed to recruit beyond the local area and provided relocation benefits for production positions? If so, what benefits did you provide?” “Has your corporate policy been amended to exclude properties that fall into any one of the following categories: short sale, foreclosure, trust, and/or divorce? With the very recent news regarding the larger banks halting foreclosures for a period of time, do you see this impacting your departure side moves or only your destination program (employee is purchasing a foreclosure)?” Global Workforce Mobility Member Forum: “Does anyone currently have a no-fee business model for Global Mobility? Perhaps someone can provide the pros and cons of such a model.” Mobility LawBlog™ In his November 9 post, Worldwide ERC® General Counsel Dick Mansfield analyzes a federal court decision just handed down that illustrates the complexity of the “new normal” property law, and points out some important real world lessons relevant to anyone involved in domestic homesale programs. He says, “lien priorities may not always be what they seem, and this applies to short sales, foreclosure sale/ purchases, and should be pointed out in predecision counseling. The IRS, or indeed other secondary lien holder, is now more likely to challenge foreclosures and short sales, especially where there is a large interest at stake. By throwing the foreclosure into something other than a slam dunk through a challenge to the documentation, secondary lien holders now have garnered an important tactical advantage they did not have in the past. This is an effect that needs to be considered in making risk assessments of any distressed property sale or purchase.” China Blog™: In a November post, Mark Giorgini, GMS, global HR expert living and working in Guangdong, China, shares his plans to attend the final competition for the first local expatriate talent show— what he says is “the Chinese version of The Gong Show.” “The purpose of the performance,” Giorgini writes, “is to test the foreigner’s Chinese language ability, knowledge of China, and most importantly, provide the Chinese staff with opportunity for riotous laughter.” To read the blogs and join the discussions, go to www.WorldwideERC.org/pages/web2.0.aspx. Please note that while the Worldwide ERC® blogs are public, access to discussion forums is available only to Worldwide ERC® members. 18 MOBILITY/DECEMBER 2010
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RAC Report
Regional Market Summary: Omaha, NE Metro Area
O
maha, NE, is located on Nebraska’s eastern boundary. Flanking the Missouri River, Omaha boasts a population of 454,000 making it the 60th-largest city in the United States. The Greater Omaha MSA is comprised of eight counties and has a population of 838,855 making it the 40th-largest MSA in the country. Home to the headquarters of five Fortune 500 companies, the population in the Greater Omaha area has grown by 9.6 percent since 2000. Most recently BestPlaces.net ranked Omaha third in Best Cities to relocate in America. Omaha has enjoyed slow and steady growth. It has avoided the boom and bust cycle the coastal areas and some of the other large cities in the country has experienced. Through 2007, sellers could reasonably expect to sell their homes at a price that was equal to or higher than what they paid for it. Market growth was uninterrupted from 1989, when Con-Agra and Union Pacific Railroad respectively announced that their corporate headquarters would not only remain in Omaha but also build new corporate facilities and expand employment through 2006. Omaha’s employment peaked at 469,000 in 2008. The market in Omaha peaked in 2004, which marked the consummation of a large inbound corporate move. Homebuilders, who anticipated that Omaha would see more large inbound moves, began to flood the market with new speculation construction. By the end of 2005, speculative new construction inventories had grown four-fold and market
price appreciation began to slow. Through 2007, only the newly developing neighborhoods seemed to be affected by excess inventory issues. Slower sales and falling prices were two hallmarks of the 2008 market. Those two trends were exacerbated by the financial crisis that took place in the fall of that year. Market conditions in most neighborhoods priced below $250,000 were enjoying flat to slightly appreciating price trending through April 2010. Following the expiration of the tax credit program, sales of homes priced below $250,000 fell by some 60 percent. Prices in many of these markets peaked during the March and April. Sales in this price category continue to occur at a depressed rate. Markets in neighborhoods priced above $250,000 had been experiencing slow but a steady decline in prices from early 2007 through April of 2010. Slower sales activity and excess inventories were the prime contributors to this condition. Sales activity in most of these markets did not decline after April 2010 as they were already occurring at a depressed rate. Median market prices in Omaha have risen during 2010. Much of this is a result of the sales activity generated during the tax credit period. Contracts were negotiated in March and April while closings took place during the follow months. Happily, most of the new construction inventory that marked the beginning of this down market has been absorbed. 2010 will be remembered as a year in which, despite stimulus, real estate
STATISTICAL SNAPSHOT TIME PERIOD
TODAY
1 YEAR AGO
CHANGE
Unemployment 5% Months of Supply 8.5 Annualized Sales Volume 9,637 Annualized Avg. Sale Price $170,776 Average DOM 70
5.2% 4.9 9,876 $159,768 66.7
-0.2% +74.1% -2.4% +6.9 % +4.9%
20 MOBILITY/DECEMBER 2010
Economic Climate New Construction REO Activity Supply Demand Market Direction Market Mood
sales declined. Its victims included builders, developers, and homeowners. It also will be remembered as a year in which economic indicators troughed and began to improve. Omaha’s unemployment rate fell to 5.0 percent in September. Sales activity in the Omaha metro area is expected to remain at relatively low levels through the remainder of 2010. Inventories rose during 2010. After seeing inventories fall to five-year lows in 2009, many sellers placed their homes onto the market, anticipating that the tax credit program would help generate a sale. Those inventories have continued to rise through 2010 to date and are up by some 40 percent over 2009 inventories at this time. Mortgage interest rates continue to be very low. Loan qualification standards, however, continue to be high. These low-interest rates should incentivize buyers to enter the market. Mortgage lending standards will tend to dampen that somewhat. We do anticipate an improved, non-stimulated, spring market in 2011. The 2011 market should be noted as one that starts well as a result of improving business conditions, pent-up demand, and continued record low interest rates. Dampening factors will be high inventories, mortgage qualification standards, and uncertain tax policies. 2011 should be a year in which market conditions slowly improve as sales should rise while inventories start to fall. R. Gregg Mitchell, SRA, is with Mitchell & Associates, Inc., Omaha, NE. He can be reached at +1 402 330 4500 ext 115 or e-mail greggmitchell@rac.net.
MARKET AT A GLANCE Slowly improving Low Low Oversupply. Inventories are up by 40% since late 2009 Peaked in 1st & 2nd quarters. Will be down through 2010 Flat Hopeful. Buyers waiting for direction in tax law.
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24 MOBILITY/DECEMBER 2010
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BY ERIC REED, CRP, GMS Having tackled the past and present of the moving and storage industry (The first article, “Crossroads in the Moving and Storage Industry” was published in the May 2010 issue of M OBILITY ; “Analyzing the Perfect Storm,” was published in the June 2010 issue), Reed turns his focus to the future of household goods movement, eliciting from industry leaders their predictions for what looms on the horizon.
“I foresee (between 1995 and 2020) a computerized tube-type transport system. These tubes will be connected between all large cities, with connecting branches to outlying areas. The goods will be placed in these tubes and push button computerized controls will dispatch goods to the final destination without delay.” This was one industry professional’s fanciful prediction 40 years ago on the future of the moving and storage industry.
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Some of the predictions were pretty wild, while others amazingly accurate. These predictions appeared in the last chapter of Stanley “G” Alexander’s 1970 book, “History of the Moving & Storage Industry in the United States.” Even then, Alexander prefaced the chapter by writing, “only time will tell which individual is a prophet and which individual is a miscalculator.” The “individuals” he was referring to included leaders of van lines that no longer exist, military traffic man-
the moving process, his statement also holds true when applied to the many changes that have taken place in the industry as a whole. Consider the industry changes in pricing, governmental regulations, service providers, consumer expectations, and even the relationship between moving companies and their corporate clients (from a direct to an indirect relationship). It often is said that “past is prologue.” Our past serves as the introduction to our future. So with that in
A
s the world continues to embrace the “green revolution,” the moving and storage industry continues looking for ways of reducing carbon emissions and unnecessary plastic waste. agers of military bases long since closed, and corporate transportation managers employed by companies who have either been acquired or simply disappeared over time. Other individuals interviewed represented companies and organizations that are still thriving today. Each industry professional provided their personal opinion on how the future would look. Of course, their future would eventually become our past and our present. Knowing how things eventually turned out not only allows us to evaluate past predictions, but also enables us to see how much has changed during the past 40 years. One indisputable truth in business (as in life) is that nothing ever stays the same. One of my early mentors once told me that, “the only thing consistent about this business is its inconsistency.” While he was referring to the many variables involved in 26 MOBILITY/DECEMBER 2010
mind, let us begin the risky business of predicting the future of the moving and storage industry.
Technology There is no question that technology will play an important role in the future of the moving and storage industry. We have seen and will continue to witness many technological advancements in the areas of surveying, invoicing, move management, and communication. This article will focus on future technological advancements in trucking, inventory control, and warehousing. Admittedly, technology is one area where many futurists of the past have let their imaginations overcome practicality. However, one such forecaster, Lance Winslow, has conducted extensive research on the topic resulting in some interesting and practical predictions.
Winslow is part of “The Online Think Tank.” He credits the T5 Group (The Think Tank Trucking Team), The American Trucking Association, The Department of Homeland Security, and transportation research divisions of the government for assisting him with his research and predictions. In his 2007 book, “Truck Technologies of the Future,” Winslow writes that trucking communication of the future will improve transportation efficiencies and reduce transportation costs with truck transponders, GPS-3G technology, and real-time virtual dashboards. Drivers with truck transponders will pass through roadside truck scale inspections more quickly with preloaded, transmitted data to assist governmental inspectors. GPS-3G technology not only provides the most efficient routes, it also prevents accidents by audibly warning drivers of sharp turns and hazardous road conditions ahead. Realtime virtual dashboards would allow a driver’s dispatcher sitting hundreds or even thousands of miles away to see what the driver sees on his dashboard instrumentation panel. Winslow writes, “the driver does not need to alert his dispatcher that he needs a fuel stop or that he has a flat tire or is stuck on the side of the road or even that he is going 10 mph in traffic. The dispatcher already knows all that and has re-adjusted the route accordingly and estimated the time of arrival.” What about the future of inventory control? Many other industries have adopted the technology of radiofrequency identification (RFID). The technology stores information about a product or item in a special tag affixed to the item. The tag contains
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both an integrated circuit board with data describing the item and an antenna that sends and receives a signal. This allows a driver, warehouseman, or even a customer to quickly identify and confirm all the items contained in a shipment by using a special hand-held device. This technology has revolutionized inventory tracking and asset management for several different industries. The technology needs further development prior to widespread use in the moving and storage industry. Manufacturers easily can affix pre-made/preprogrammed RFID tags to thousands of identical products (like boxed flatscreen televisions); however, household goods shipments have hundreds of unique items for each shipment. RFID tags for each item would have to be programmed by the driver at origin. Currently, this process is not technologically feasible and in-home programming by the driver is not practical. In the future, new ideas and technology may overcome these challenges and revolutionize the indus-
try’s inventory control with some form of RFID tag system. Addressing the future of warehousing, Winslow writes, “not long in the future a truck driver will be instructed as to what loading bay to back up to at a robotic warehouse. Once he is docked the door will automatically open and robotic forklifts will open the truck trailer door and load the truck. Each piece of cargo or palette will be weighed and added to the total. Each piece of cargo will be recorded having left the warehouse by reading the RFID tags on the containers. All this information will be uploaded in real-time during the process in case it is interrupted.” Winslow states that in the event of a power outage these robotic forklifts could have back-up power systems and continue to work uninterrupted. These unmanned forklifts also could operate in complete darkness, on rails, and with sensors, thus eliminating the expense of warehouse lighting. In the words of Winslow, a fully automated warehouse would result
in, “no people, no employee pilferage, no workmen’s compensation costs, and as the evolution process continued, no mistakes causing loss of goods.”
Green Initiatives As the world continues to embrace the “green revolution,” the moving and storage industry continues looking for ways of reducing carbon emissions and unnecessary packing waste. As a result, one green initiative that is growing in popularity (and might even become commonplace in the future) is plastic reusable crates. Today, most moving companies use only new cardboard packing materials when packing for a corporate move. Once the move is completed and the items unpacked, these cartons are either thrown away, recycled as cardboard, or in some cases reused by customers who are packing themselves. Most environmentalists will say it is far better to reuse a product than manufacture a new one. With that thought in mind, and based on growing consumer demand,
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reusable plastic crate companies are growing in popularity. While renting reusable plastic crates is a common practice in the commercial office moving business, it rarely has been used for residential moves. For residential moves, the reusable crate company delivers the cartons to the
customer’s home prior to packing and then picks them up at destination after the items have been unpacked. Unfortunately, this process currently appears to be practical only with local moves because there still is the issue of returning the reusable
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crates back to the crate company. Perhaps in the future there will be a nationwide company who can make this process feasible for interstate moving. Alternatively, moving companies could issue reusable plastic crates as standard equipment on each moving van just like wooden dish barrels and wooden wardrobe crates were standard equipment on moving vans of the past. Not only are environmentally conscious consumers contributing to the growing popularity of reusable plastic crates, but so is the rising cost of cardboard—which actually makes it cheaper to rent a crate then to buy a cardboard carton. How will the industry reduce carbon emissions created by moving vans in the future? Winslow notes that many trucks are currently running on “diesel and biodiesel blends, but in the future we might see the propulsion system where the motor is electric and running off a fuel cell. This would solve all the issues and concerns about pollution, which appears to be a pre-occupation of our national direction and goal to eliminate it.” Biodegradable products also are being developed as an alternative to foam packing materials and plastic bubble wrap. In the future, many of these environmentally focused initiatives may have an impact on how the industry conducts its day-to-day business.
Predictions from Industry Leaders What are current industry leaders saying about the future of the industry? While there are no wild predictions of “computerized tube-type transport systems,” there are some very reasoned and insightful prognostications. The following excerpts are taken from a series of interviews 28 MOBILITY/DECEMBER 2010
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conducted this year with selected industry leaders. Donald Hill is president and COO of Alexander’s Mobility Services based in Tustin, CA. Alexander’s is a multi-location agent with Atlas Van Lines. Hill sees the industry’s workforce of the future changing in two important areas: first, in the quality of the labor sent into customers’ homes; and, second, in the reduction of qualified drivers in the industry’s labor pool. He predicts there will be stricter industrywide background checks and drug screening requirements for packers, drivers, and movers, noting that “if someone did something when they were younger they can never get over that in our business anymore. This (initiative) is being driven by corporations and I think that is a good thing,” said Hill. He also sees the shrinking driver pool as one of the “biggest challenges” facing the industry. Hill states that there are “not many kids who are coming out of school who want to be over the road, household goods truck drivers. We’ll all have to develop some type of sophisticated recruiting system working with colleges and other institutions so we can get people who want to be in this business.” In the future, Hill anticipates that, “the traditional model of a driver and crew traveling the country and providing moving services is much less viable than ever before. Especially when you consider the changes in the cost of doing business, our customer expectations, and the way we price our services.” He sees greater diversification in the industry’s delivery model with tiered-service programs including options for intermodal transporta-
tion, small container moving, and expedited executive-level service. “Overall, our clients are demanding that we do things differently and we need to address those needs.” Mike Wolfe is president of Allied Van Lines based in Westmont, IL, and North American Van Lines based
in Ft. Wayne, IN. Like Hill, Wolfe believes that the industry needs to adapt to the customer’s changing buying habits. He states that, “corporate customers are making significant changes as they understand that the cost of employee relocation is more then just the service fees on top
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On the Web
T
o view the first two articles in Eric Reed’s moving and storage series, please visit:
“Crossroads in the Moving and Storage Industry” www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0510Reed.aspx Analyzing the Perfect Storm www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0610Reed.aspx
of a series of pass-through costs. They are requiring a greater degree of transparency illustrating that the vendor has more control over the entire chain of services.” When asked about other future trends affecting the industry, Wolfe says that, “the industry data continues to indicate that our society is becoming less mobile, thus shrinking the overall market. Time will tell if this trend will continue, but I hope that the stabilization of home prices will stem the decline.” Glen E. Dunkerson is chairman and CEO of Atlas Worldwide and Atlas Van Lines based in Evansville,
30 MOBILITY/DECEMBER 2010
IN. In considering future challenges of the industry, Dunkerson is concerned about the potential of expanded government taxation. He states that, “most of our industry is made up of small, individually-owned companies. If tax laws change dramatically, how will that impact them? As government gets more involved in taking more revenue to run the ‘machine,’ I think that drains all businesses.” Dunkerson went on to say, “…everyone is concerned about the industry’s reduced (profit) margins. Margins are needed to reinvest in capital purchases. When your mar-
gins are what they are in this dayand-age, a lot of business people can’t re-invest in tractors, trailers, buildings, and equipment. These are all things that are needed to keep up with the needs of our customers.” Regarding the future growth of the industry, Dunkerson says that, “in the next five years we will likely see another recession, but hopefully that will be short-lived. In 10 years, as generation ‘Y,’ which is a large portion of the population, starts to have more buying power, and as the older generation retires, the industry has a good prognosis with improved capabilities and increased opportunities. One more point on that; I believe that as the older generation retires they will be searching for reputable movers they can trust. I think one of the best things that AMSA [American Moving & Storage Association] had done is develop the ProMover designation to help identify professional movers. This will help consumers easily identify the professionals from the disreputable companies.”
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Linda Bauer Darr is president and CEO of the American Moving & Storage Association (AMSA), based in Alexandria, VA. AMSA is the national trade association for the professional moving industry. When asked her opinion about future challenges in the industry, Bauer Darr listed “simplification” and “more choice.” By “simplification,” she means simplifying the current price structure. “Consumers just don’t have the time, patience, or desire to read 75 pages of rates and charges. They really just want to ‘bottomline’ it. So we as an industry need to figure out how to ‘bottom-line’ it and still remain competitive.” By “more choice,” she means providing more service options to future consumers. “The challenge for movers of the future will be to remain nimble, stay on top of their game, simplify, and offer more choices. You never know which one of these choices is going to be the solution moving forward. We need to be prepared to shift in the ‘dance’ that we will be doing over the next few years.”
When asked about future AMSA initiatives, Bauer Darr states that “advocacy” is a strong suit for AMSA. “We are able to get out there
certification program. Bauer Darr states that, “the ProMover program is not just about giving a mover the logo and the brand and telling them
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nowing how things eventually turned out not only allows us to evaluate past predictions, but also enables us to see how much has changed during the past 40 years.
and press the message about the good work that we do, the essentiality and the economic impact of our industry, and how significant it is. We are out their ‘pounding the pavement’ and telling members of Congress and individual State Houses the things that we can do to make our industry more successful, more productive, and find solutions for their constituency. So we are going to be doing a lot more on the advocacy side.” Another major initiative is further expansion of the AMSA “ProMover”
to put it on their letterhead. It’s continuing to evolve that program. We’re developing a lot of education and certification programs. We’re also looking at how we can apply the program not only to interstate movers but to international, intrastate, office, and containerized movers as well as for individuals like industry surveyors, salespeople, packers, movers, and drivers. This won’t happen over night, but it is already in process. It is important to communicate what the ProMover designation means to industry professionals, the
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media, corporations, REALTORS®, and anyone else involved with or utilizing moving services.” William (Bill) Graebel, SGMS, is president and CEO of The Graebel Companies based in Aurora, CO. When asked his opinion about industry challenges of the future, he believes there will be a “prolonged period of suppressed demand in [this] very commoditized industry with a regulatory environment and consumer base that is expecting significant performance improvements, technology innovation, and fiscal accountability.” Graebel also said that there will be a glut of housing during the next five years causing a “natural suppression in home values,” which will “to some degree, keep homeowners tethered to their current homes.” He went on to state that, “until there is stability in the real estate markets, comparatively few people will be motivated, or in a position, to initiate a move.” So what will the service and pricing model of the future look like? In Graebel’s opinion, “as the industry evolves there will be different service models from the most basic price point segmentation to the most sophisticated to align with an array of consumer needs. In the future the industry will do a better job than it’s currently doing in providing tiered levels of service.” In terms of pricing methodology, he said we will see more flat-rate, door-to-door rates based on consumer-selected options. He also states, “there will be a demand-side equation that will stimulate the industry to price its services more on the consumer’s terms going forward as opposed to the regulatory and industry terms that have dictated the 34 MOBILITY/DECEMBER 2010
design of tariffs and pricing formats in the past.” Graebel has an optimistic outlook on the industry’s future: “it’s a great time to be in the moving and relocation industries. Granted it is certainly challenging, but it is a great time to be at the center of all the dynamic changes we’re seeing in the global economic interdependence and human mobility patterns.” In his closing comments Graebel shared that, “figuring out how to resonate best with the customers of the future and building a sustainable organization that is ‘right for today and ready for tomorrow,’ is really exciting to me, especially when placed in the context of an ever-emerging, digital world. I think we will all be exposed to a great new era of “consumerism” that reshapes our industry. Those companies who understand their consumers better than the competition will have an opportunity to flourish and exceed what they once thought was impossible!”
The Resolution I’ve heard it said that life imitates art (and vice-versa). It’s interesting to note the parallel between the traditional three-act play and the threepart structure of the universal time continuum (i.e., our past, present, and future). This article is the final in a threepart series focusing on the past, present, and future of the moving and storage industry (The first, “Crossroads in the Moving and Storage Industry” was published in the May 2010 issue of MOBILITY, and focuses on the industry’s past. The second, “Analyzing the Perfect Storm,” was published in the June 2010 issue of MOBILITY, and focuses on the present state of the industry).
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Continuing with our “three-act play” analogy, the industry’s past (Act 1) is the “setup” for what is to come. The industry’s present (Act 2) is the “confrontation” that the industry is currently facing with its many economic, competitive, and pricing challenges. And, finally, the industry’s future (Act 3) is the “resolution” when we eventually see how the story turns out. Regardless of how optimistic or pessimistic you may be about the industry’s future, few can doubt that the final plot should be a compelling one. As we move into Act 3, I choose to remain optimistic in the knowledge that the final script will be written by talented industry professionals with ingenuity, persistence, hope,
36 MOBILITY/DECEMBER 2010
Visit MOBILITY Online for More From Bill Graebel, SGMS
A
uthor Eric Reed sat down with William (Bill) Graebel, SGMS, CEO of Graebel Companies, Inc., Aurora, CO, and a member of the Worldwide ERC® Board of Directors to discuss the future of the moving and storage industry. Visit www.WorldwideERC.org/Resources/MOBILITYarticles/ Pages/1210-Reed-Graebel.aspx to read a transcript of their conversation, including discussions of the U.S. housing market, commoditization of services, and the future of household goods movement.
and sheer determination. Those industry leaders with the “right stuff” will lead the pack and create the industry’s future while creating their own. “When it comes to the future, there are three kinds of people: those who let it happen, those who
make it happen, and those who wonder what happened.” –John M. Richardson Jr. Eric Reed, CRP, GMS, is director of corporate business for Berger Allied, Fullerton, CA. He can be reached at +1 714 420 4268 or e-mail ericr411@cox.net. Full interviews with industry leaders can be viewed at www.ericreed-online.com.
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Commoditized Services:
Balance Between Quality and Cost BY BORIS POPULOH
38 MOBILITY/DECEMBER 2010
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Few topics elicit such strong reaction from service providers as when they are asked to what extent their services have been commoditized. Populoh writes that suggesting the service they provide can be broken down into a mere commodity is the ultimate heresy for many, and when it concerns an international move, the expenses associated with an overseas relocation extend well beyond the costs directly connected to the physical move and periphery services provided to a transferee.
W
ould you say that a Ferrari is the same as a Fiat, just because they are both cars made in Italy? Even though we all know that there is a world of difference between a Ferrari and a Fiat, it does not stop the apparent enthusiasm for reducing the skills required for international mobility and moving services to mere commodities. What lies behind this trend of commoditization and from where did it emanate? As we all know, cost often is a significant, if not the most significant, factor in the decision-making process when it comes to what product or service to purchase. It should not be a surprise to service providers that the customer is always pushing to commoditize their service in the apparent belief that it reduces cost. The thinking is that it makes the decisionmaking process less complex and cumbersome for the customer if it can assume that all services in a market segment such as global mobility are more or less identical and that cost is the only real distinction among providers. Service providers hardly can blame the customer for wanting to simplify the decision-making process. In a mature market, there often seems to be just a paper’s width of difference between many service providers, leaving customers thinking the only way to make the final choice is to adopt a mass market mentality where pricing alone determines buying decisions.
MOBILITY/DECEMBER 2010 39
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Quality and Cost Where it concerns an international move, however, the expenses associated with an overseas relocation can go far beyond the direct monetary costs connected to the physical move and associated services provided to a transferee. The services of skilled and knowledgeable service providers can go a long way toward the success or failure of an assignment (already at a very high failure rate). The fact of the matter is that the packing, loading, and international shipping of personal effects and household goods is a highly specialized service involving the contribution of a number of skilled specialists. Their job is to find a path through an extremely complex and highly regulated process—try shipping a non-approved car from Paris, France, to New York, NY, or innocently bringing a “girly-style� magazine to some parts of the world, and you will learn some salutary lessons in global culturalism. Or, maybe not appreciating the importance of shifting your container off
the dockside, through Customs, and out again in quick time—failing to do so can incur costs that will make some of the original moving quotes seem like the bargain of the year. There are many sharks circling in the somewhat murky waters of international shipping, and continuing to push for the commoditization of services that sail in these waters only will have a negative effect on the service level provided to the transferee. Look at it this way—take the fictional example of two families moving from Washington, DC, to
Brussels, Belgium. Each family is moving 10,000 pounds of personal effects and household goods. At face value, it may appear that these two moves are very similar and, therefore, the cost of the two moves should be the about the same. However, once you look at the details you realize that the only similarity between the two shipments is that they are going to Brussels. Family A is moving out of a highrise, three-bedroom apartment to a farmhouse just outside Brussels. Family B is moving from a fourbedroom, single-family home to a 19th century four-story townhouse in downtown Brussels with a lift that can accommodate four people at a squeeze and cannot be booked out to the mover. Additionally, both spouses of Family A are professional photographers and have 15 filing cabinets full of their work to take with them, while Family B has a considerable quantity of wine to bring. In addition to the specific service requirements for the move, the level
Global Mobility Solutions From Pre-Decision to Settling-In, our name says it all. SIMPLE. WORLDWIDE. RELOCATION. 40 MOBILITY/DECEMBER 2010
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On the Web To learn more about service and quality in the household goods moving and employee mobility industries, visit www.WorldwideERC.org: Responding to Change in the Business World Through Industry-specific Quality Standards www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0610-Populoh.aspx The Mobility Supply Chain—Opportunities for Greater Collaboration www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0707mackenzie.aspx When ‘Arrange It Yourself’ Is the Relocation Guidance www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1209-darr.aspx of knowledge and quality of the company and its employees behind delivering that particular service also must be considered. Questions of personal security of the transferee and his/her family should be part of that equation—having strangers in a transferee’s home can be daunting and they are entitled to have properly uniformed, security-badged, trained personnel from a bona fide company in their home. In the simple example above, it is obvious that the service needs for these two clients will be very different and cannot be standardized. The types of materials and services needed to pack the shipments are completely different, Customs requirements vary, and the delivery parameters are so far apart that trying to commoditize pricing is not just ineffectual but potentially risky when used as the primary selection criterion.
best option and that pricing alone should not be the determining factor in selecting a service provider. Ultimately, it is the transferee and his/her family who either will benefit from or pay the price for the selection of the service provider and the level of quality that comes with the selection. That selection will have a
far greater effect on the assignment than just the physical move. It can set the tone for the duration of the assignment and its overall success or failure. Boris Populoh is the managing director of the FIDI Global Alliance, Brussels, Belgium. He can be reached at +32 2 426 51 60 or email boris.populoh@fidi.com.
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The Differentiation Factor There are immense differences in the type and quality of service available from vendors in the marketplace. It is the role and responsibility of the service provider to develop and clearly articulate the differentiation of their service from that of a less-qualified competitor. On the other hand, the customer must be open to the possibility that commoditization is not always the
Contact Eric Reed, Director of Corporate Business EricR@bergerallied.com www.bergerallied.com
MOBILITY/DECEMBER 2010 41
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take the CHALLENGE ELEVATE your knowledge REACH new career GOALS
Registration for the 2011 CRP® Exam is NOW OPEN!
Exam sites for the May 18, 2011 exam will be: • • • • •
Las Vegas, NV (site of the 2011 National Relocation Conference) Atlanta, GA Chicago, IL Dallas, TX Stamford, CT
For information about hosting an exam at a location other than the ones listed above if your company or regional group has a number of candidates registered to take the exam, please contact Allison Peña at +1 (703) 842-3430, ext. 1, or CRP@WorldwideERC.org.
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Earlier this year, 201 individuals from the companies below* successfully earned the Worldwide ERC® Certified Relocation Professional (CRP)® designation, bringing the current number of CRP®s to more than 4,200. Now in its twentieth year, the CRP® program formally recognizes relocation professionals’ knowledge of the U.S. domestic relocation industry and workforce mobility practices. Successful candidates complete a rigorous exam covering such subjects as relocation appraising, relocation-related real estate, corporate relocation policies and issues, relocation tax and legal issues, family relocation issues and mobility strategies.
Eligibility requirements, an exam application, and full details about the 2011 CRP® exam opportunities are available now at www.WorldwideERC.org, Education & Training.
Make the right strategic move for your career and apply for the 2011 exam today! Congratulations to the following companies with employees who became Certified Relocation ProfessionalsTM in 2010. (Company names are followed by the number of CRP® recipients who passed the 2010 exam) AIReS .............................................3 All Relocation Services ...................1 Altair Global Relocation ..................5 Blue Oak Appraisals .......................1 Burnet Relocation ...........................3 Capital Relocation Services............2 CARTUS .........................................3 CENTURY 21 Scheetz Company, Inc. ............1 Christine Lee Team.........................1 Coldwell Banker Pacific Properties .....................2 Colorado Landmark, Realtors.........1 Columbia University........................1 Conlon A Real Estate Company .....1 Constellation Energy ......................1 CORT .............................................1 Deere & Company ..........................1 Department of Homeland Security .1 Department of the Treasury ............2 Department of Veterans Affairs.......3 Farmers Insurance Group ..............1 Ferguson Enterprises .....................1 Fidelity Residential Solutions..........3 First Preston Relocation and Realty................................1 Focus Relocation, LLC ...................1 Fresenius Medical Care North America ..........................1 Global American Title......................1 Graebel Relocation Services Worldwide ................................16 Graebel Van Lines ..........................1 Harris Corporation ..........................2 Herman Group Real Estate ............1
HRW Appraisal Services ................1 HSBC Bank USA ............................1 Intel Corporation .............................1 IOR Global Services .......................1 Jim Maloof Realtor..........................1 JM Family Enterprises ....................1 JPMorgan Chase Bank, N.A...........1 Keller Williams - The Woodlands & Kingwood..............................1 Keller Williams First Coast Realty ..1 Keller Williams Realty Professional Partners ..............1 LDS Church ....................................1 Lexicon Relocation .........................5 Macy’s, Inc......................................2 MillerCoors .....................................1 Mobility Services International ........3 Morreale Real Estate Services, Inc. ...........................1 Move Management Intl. ..................2 MoveTrek Mobility, LLC ..................3 MSI .................................................1 NRT Coldwell Banker .....................1 Old Republic Diversified Services, Inc. ...........................1 Paragon Relocation ........................1 Passages Relocation Service .........1 PetSmart.........................................1 Prudential CA Realty ......................1 Prudential Financial ........................6 Prudential Lovejoy Realty, Inc. .......1 Prudential Real Estate and Relocation ................................25 Prudential Tropical Realty...............1 Ralcorp Holdings, Inc. ....................1
RE/MAX Preferred Realtors ...........1 RE/MAX Unlimited Northwest.........1 Real Estate One, Inc., DBA/Max Broock/ Johnstone and Johnstone .......2 Schlenker Appraisals & Consulting ................................1 Sealed Air Corporation ...................1 Sibcy Cline Relocation Services, Inc. ...........................3 SIRVA Mortgage .............................1 SIRVA Relocation ...........................27 Starbucks Coffee Company............1 Stephen Bakken .............................1 Stirling Sotheby’s International Realty, Inc ................................1 Summit Realtors .............................1 Terrie O’Connor Realtors ................1 The Walt Disney Company .............2 TheMIGroup ...................................5 Timothy J. Lamson, PLLC ..............1 TRC Global Solutions, Inc. .............1 U.S. Department of Justice, Drug Enforcement Administration .....1 URS Corporation ............................1 Vandover ........................................2 Watson Realty Corp., REALTORS .1 Weichert Realtors Goodchild Homes ....................1 Weichert Relocation Resources Inc. .........................3 Wells Fargo & Company.................2 Wells Fargo Bank N.A. ...................2 Wells Fargo Home Mortgage..........2 Wright Kingdom Real Estate ..........1
*A number of independent consultants and/or appraisers also successfully completed the 2010 exam. © Copyright 2010 Worldwide ERC®
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BALANCING Talent Mobility with Talent Productivity BY JILL HEINECK, CRP In a world where human resource professionals often must “do more with less,” the ability to balance productivity of talent with the cost of a move is a must-have skill. Heineck writes that the household goods move is the most stressful of all mobility processes, and offers guidance for how corporate clients can meet their productivity goals within the limits of their policies.
I
n an age of conscientious cost containment, the noble idea of staying true to set mobility policies seems just that, noble. With the staggering lull in homesales, the rising costs of moves, and the demand for talent to be on the job quicker, move professionals are faced with both keeping to the overall budget while addressing individual situations that may require deviation from that budget. How do we balance longer move times with cost containment and talent productivity? One way to do this is to place heavy emphasis on pre-planning. In addition to getting the full picture of the status of the market in the transferee’s origin city, getting a move contingency plan in place in critical. With the finicky housing market and the delay in moves, companies are best served by preparing for “Plan B.” Shawn Sweeney, CRP, GMS, vice president of business development for the southeast region of Xonex Relocation, New Castle, DE, agrees. “Many clients are asking us to include additional temporary living and storage charges in the premove cost projection so they are aware of the potential added cost.” He adds, “the continued slowed housing market has affected the household goods process. Many transferees have to change pack and load dates multiple times because their [old] home did not sell. This has caused the household goods process to take much longer than it did several years ago. This trend will continue until the housing market improves. Planning is key!”
44 MOBILITY/DECEMBER 2010
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MOBILITY/DECEMBER 2010 45
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On the Web
T
o learn more about talent management and talent productivity, please visit www.WorldwideERC.org
Balancing Talent Management and Costs in a New Economy—New Concepts in U.S. Domestic Relocation www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0909-abbey.aspx Architecture of Strategic Talent Management www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1010-Foster-Herring.aspx The Global Mobility and Talent Management Partnership Opportunity www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1010-Sullivan.aspx
Move-in Services Another way to assuage the stress of the move and get the transferee on the job quicker is to provide move-in services. “Most of our clients are busy with work and family obligations and want to get their homes up and running as quickly as
46 MOBILITY/DECEMBER 2010
possible,” said Kathy Householder, chief executive organizer of On the Move & More in Atlanta, GA, whose company will meet the movers, unpack the boxes, and set up “house.” “When our team comes in and gets the family totally out of boxes and has everything put away
and organized, it makes all the difference in the world for their stress level and productivity.” The benefit to the client is that Householder and her team are in constant communication with the mover during a move. “We work in tandem with the moving company
heineck_MOBILITY 11/11/10 10:07 AM Page 5
and provide our services while the movers are finishing up their responsibilities in the home,� she said. Her team partners with the moving company to make the transferee’s transition as easy as possible while getting the family settled.
Communication Is Key Mover communication is a key ingredient to efficient moves and happier employees. “In our office, we have a dispatch department and a customer service department that handle specific areas of our thirdparty crating services,� said Jennifer Pedde, community manager for Alliance Relocation, Fayetteville, NY. “They work together to make sure that our technicians are fully informed and that our customers know what to expect. We prize communication to make sure the job is done and done well.... We allow our customers to access information online, which provides a daily listing of [move] jobs and the status of those jobs. We call transferees/ employees to confirm that our technicians provided the highest level of service, and ensure that we’re able to meet moving needs. Constant communication is very important.�
Pre-planning Prevents Poor Performance Much like pre-decision, preplanning for multiple setbacks during the moving of household goods can help avoid surprise expenses for the company, as well as the transferee. What may have worked in past markets clearly may not work now, or for every transferee. In some cases, the actual move is not the most stressful part. According to James Kautz, move coordinator QGC Relocation Services, Toronto, Canada, there is
more stress over the sale of the old home and the purchase of a new home than any other element of the relocation. “One family lost $300,000 on the sale of their home because they were leaving a region hit hard by the recession,� said Kautz. “The move itself was a breeze in comparison.� Their case is somewhat unique, but the concept is not, he continues. “We have another half-dozen booked moves that are still pending because the homes haven’t sold and they’ve been on the market for five to six months. This is hard on the employee, the family, and the company because the employee’s time, money, and attention is split between the old home and new home. That is infinitely more stressful than the moving process itself. I suspect in these cases seeing the moving truck arrive is more of a relief than anything.� More often than not, the household goods move is the next most stressful component of relocation. How can the corporate client meet productivity goals while adhering to policy? Creating a team consisting of both HR and relocation, and real estate and moving professionals can open up dialogue that could help to avoid unnecessary costs and stress while increasing satisfaction and productivity. Combining pre-decision with specialized service offerings to transferees will not only help anticipate what might be, but also will help to manage both client and transferee expectations. Quoting Dr. Michael Leboeuf, “A satisfied customer is the best strategy of all.� Jill Heineck, CRP, is the founder and chief [relocation] officer of Focus Relocation LLC, Atlanta, GA. She can be reached at +1 877 550 7356 or e-mail jill@focusrelocationllc.com.
.-,+*)(,'&+%$&,#$"&%*$") '!-**)+%$+ "#%' + #"$!, "# * $&+ !-**)+ "#%' ,)!* ,'+!-%)(#,$+ * +(% ,#',+! )& #,' + #,)% %* '+ ,)%, ' + "$(+" %)%&%,' + ,+!"&,#+ &*+&-,+,( !"&%*$")+$,,('+ * +, "&#%"&,(+"$(+)*!")+ " %)%,'+ #* +"#* $(+&-, *#)( +,( !"&%$ +!-%)(#,$ #* +" ,+ +&*+ + %&-+ "$+ ,#%!"$+! ##%! ) * $(,(+*$+&-,+&#"(%&%*$' * +&-,+ ,)% %* '+ * +&-,+ "!#,(+ ,"#&+ * + "# + ,+"#,+ "#&+ * +&-,+$,& *# +* + '!-**)'+ *#)( %(, "# * $& # + + + + + * +"#,+#,)*!"&%$ + &*+ "#%' + ),"',+!*$&"!&+ "# * $&+ !-**)+ *#+ #&-,#+%$ *# "&%*$+ *#+&*+'!-,( ),+ "+!" '+ %'%&
MOBILITY/DECEMBER 2010 47
VAT_MOBILITY 11/12/10 2:36 PM Page 2
European VAT Charges on Mobility Services BY JOHANNES LAXAFOSS, PEGGY SMITH, SCRP, SGMS, AND JOSEPH MORABITO, SCRP
V
alue added tax (VAT) is a complex cross-border tax discipline and very often you will hear “it depends” as the first answer on any VAT-related question. While the need for the level of complexity can be debated, what is inescapable is that VAT is a matter with which companies need to contend in conducting business in most countries of the world. Companies need to understand the applicable local VAT rules and conduct business in such a manner that is compliant with these rules. Following are discussions centered around what the place of supply rules mean and what the changes are that have been introduced with the 2010 European VAT Package; the contracting options available to the various members of the mobility supply chain and how they affect the VAT treatment of the given transactions; and the practical implications of the changes in the 2010 European VAT Package, as well as an example identifying the cash flow benefits of various contracting options.
Place of Supply Rules The Council Directive 2006/112/EC (hereinafter the “Directive”) establishes the common system of VAT in the EU. To establish the correct VAT treatment of taxable supplies, it is necessary to determine the “place of supply” (i.e., the place where supplies are deemed to be performed). Once the place of supply is established, the VAT treatment of the respective transaction should fol48 MOBILITY/DECEMBER 2010
low the local legislation of the country where the transaction takes place (i.e., if the place of the taxable transaction is in Ireland, the transaction is subject to Irish VAT and the Irish VAT legislation applies). To determine the place where a taxable transaction is affected, it needs to be determined whether the supply relates to goods or services. Depending on the nature of the services, each scenario will be subject to different VAT treatment. The Directive stipulates a set of rules for determining the place of supply. Effective January 1, 2010, the place of supply of services rules significantly changed with the implementation of the 2010 European VAT Package.
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Worldwide ERC® sponsored a VAT Task Force in 2009-10 co-chaired by Peggy Smith, SCRP, SGMS, then Microsoft’s director of global mobility and now Worldwide ERC® CEO, and Joseph Morabito, SCRP, president of Paragon Global Resources. The VAT Task Force also included representatives from Meridian Global Services, GenEquity Mortgage, Interdean International Relocation, Executive Mobility Group, Caterpillar, NEI Global Relocation Services, Microsoft, Deloitte, Frito-Lay, Prudential Real Estate and Relocation Services, Ruder Ware, and Worldwide ERC®. With the assistance and counsel of Meridian Global Services, the task force studied European value added tax (VAT) charges related to various mobility services to determine legal means of reducing or avoiding such taxes. During this time, the European Union issued a new directive effective January 1, 2010, that has a beneficial effect on the mobility industry and clients using mobility services making VAT charges unnecessary if properly administered. This article, through discussions of supply rules, contractual relationships, and onward supply and reverse charging, seeks to clarify important distinctions related to VAT as well as outline the rules in a way that will enable companies to ask the correct questions of their advisors to ensure VAT compliance, and have efficient processes and procedures in place. MOBILITY/DECEMBER 2010 49
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Following are extracts of the relevant parts of the EU legislation valid before January 1, 2010, as well as extracts of the relevant parts of the current EU legislation that became effective as of January 1, 2010. The table below summarizes the place of supply rules in respect to services provided to fully taxable persons, which are then described below:
Before January 1, 2010: Article 45 of the Directive established that the place of supply of services connected with immovable property, including the services of real estate agents and experts, and services for the preparation and coordination of construction work, such as the services of architects and of firms providing onsite supervision, shall be the place where the property is located.
transport is supplied to a VATregistered person (i.e., if a person is VAT registered in a different Member State than the state of the departure of the transport). In that instance, the place of supply shall be deemed to be the place within the Member State that issued the VAT number to the taxable person. As of January 1, 2010: Article 44 of the Directive now stipulates that
Place of Supply Rule
Before January 1, 2010
As of January 1, 2010
General Rule
Where supplier is established
Where customer is established
Immovable Property
Location of property
Location of property
Transport – Non Intra EU
Pro rata of distance covered
Where customer is established
Transport – Intra EU
Where customer is established
Where customer is established
Cultural Services
Location of event
Location of event
Consultancy Services
Location of customer
Location of customer
Provision of Information
Location of customer
Location of customer
Place of Supply of Services— General Rule: Before January 1, 2010: Article 43 of the Directive established that the place of supply of services shall be deemed to be the place where the supplier has established his business or has a fixed establishment from which the service is supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides. As of January 1, 2010: Article 44 of the Directive now stipulates that the place of supply of services supplied to taxable persons acting as such shall be the place where that person has established his business. Place of Supply of Services— Services Connected with Immovable Property: 50 MOBILITY/DECEMBER 2010
As of January 1, 2010: Article 45 of the Directive was not modified as of January 1, 2010, so the place of supply rule does not change in respect to services connected with immovable property and remains to be the place where the property is located. Place of Supply of Services— Transport Services: Before January 1, 2010: Article 46 of the Directive established that the place of supply of transport services other than the intra-Community transport of goods shall be the place where the transport takes place, proportionately in terms of distances covered. Article 47 of the Directive established that, where an intraCommunity transport of goods takes place, the place of supply is the place of departure of the transport. However, exceptions exist where the
the place of supply for transport services is the country where the customer has established his business. Place of Supply of Services— Cultural and Similar Activities: Before January 1, 2010: Article 52 (a) of the Directive established that the place of supply of cultural, artistic, sporting, scientific, educational, entertainment, or similar activities, including the activities of organizers of such activities shall be the place where the activities are physically carried out. As of January 1, 2010: Article 53 of the Directive now stipulates that the place of supply of services and ancillary services relating to cultural, artistic, sporting, scientific, educational, entertainment, or similar activities, such as fairs and exhibitions including the supply of services of
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the organizers of such activities, shall be the place where those activities are physically carried out. Place of Supply of Services— Consultancy Services: Before January 1, 2010: Article 56 (c) of the Directive established that the place of supply of consultancy services to customers established outside of the Community, or taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business. As of January 1, 2010: Article 56 (c) of the Directive was not modified as of January 1, 2010, so consultancy services continue to fall under the general rule whereby the place of supply is the country where the cus-
tomer has established his business. Place of Supply of Services— Provision of Information: Before January 1, 2010: Article 56 (c) of the Directive established that the place of supply of provision of information to customers established outside of the Community, or taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business. As of January 1, 2010: Article 56 (c) of the Directive was not modified as of January 1, 2010, so the provision of information continues to fall under the general rule whereby the place of supply of the service is the country where the customer has established his business.
Contractual Relationships Another key component in identifying the correct invoicing procedures for European VAT is the contractual relationship between the various parties involved in the transaction. In our discussions with various mobility companies, there were two distinct approaches to contracting and invoicing and the associated treatment of VAT, which are named below. Also spelled out below is a third option that can be used in specific circumstances. The Principal Approach. The Principal Approach is where the contractual relationship is between the Corporate Client (Client) and the Relocation Service Provider (RSP). The Client-RSP contract states that the RSP is responsible for delivery of
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all mobility services (i.e., policy counseling, expense management, removals, destination services, visa, and the like.). The RSP then subcontracts with Sub-Service Providers (SSP) to provide some or all of the mobility services in the particular countries required by the Client. An individual destination service provider, household goods removal firm, or language provider would be examples of SSPs. The key component of the RSP SSP contract is that the RSP is responsible for the payment of SSP invoices irrespective of whether the Client pays the RSP. The VAT implications of the Principal Approach are that the SSPs will be invoicing the RSP and will need to include VAT on the invoice in accordance with the country-
52 MOBILITY/DECEMBER 2010
specific place of supply rules based on the services provided by the SSP. The RSP then in turn will invoice the Client and will charge VAT where applicable based on the nature of service provided and the respective VAT legislation. The SSP would not contract directly with the Client. With the growth of outsourcing, it generally is the intention of the Client to streamline and rationalize their supply chains and this usually means they wish to contract with the RSP directly and have a single point of contact with the RSP. The introduction of the 2010 European VAT Package can be very beneficial to RSPs, as there is a large shift toward the place of supply being where the customer is established and this shift could eliminate the
VAT registration obligations of RSPs provided there are no services related to immovable property rendered by the SSP or RSP for which the place of supply is where the property is located. The Agent Approach. The Agent Approach is where the RSP is acting as an agent for the Client as a coordination point for all services provided by the SSPs. In this instance, the Client is ultimately responsible for the payment of the invoice issued by an SSP. One of the presumptions for the agent approach is that SSPs would invoice the Client directly but the RSP would receive the invoices, settle the payments against the SSP, and recharge or disburse the costs to the Client. To use the Agent Approach,
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it is essential that the RSP acts as an agent for the Client in entering into the contracts between the Client and the SSP and that the actual contracts are between the Client and the SSP. All of the following conditions would need to be cumulatively fulfilled to treat costs as disbursements from a VAT perspective: • the RSP paid the SSP on behalf of the Client and acted as agent for the Client; • the Client received, used, or had the benefit of the goods or services that the RSP paid for on behalf of the Client; • it was the Client’s responsibility to pay for the goods or services, not the responsibility of the RSP; • the RSP had permission from the Client to make the payment to the SSP; • the Client knew that the goods or services were provided by the SSP, not by the RSP; • the RSP shows the relevant costs separately on its invoice to the Client; • the RSP passes on the exact amount of each cost to the Client on its invoice; and • the goods and services paid for are additional to whatever the RSP is billing the Client for services rendered by the RSP. Normally, it is an advantage to treat any costs that did not originally include VAT as disbursements, however, this approach also may be beneficial for the RSP because it allows the RSP to avoid VAT registration obligations in countries where they onward charge for services that have place of supply in the respective Member States. It is crucial to note that costs the RSP incurs in the course of supplying services to its Clients are not disburse-
ments from a VAT perspective. For instance, if the RSP has the mobility contract with the Client, the RSP cannot simply choose to disburse any SSP costs at will, regardless of how those costs appear on the RSP’s invoice to the Client. Theoretically, it should be possible to pass through these costs as disbursements if the actual mobility contracts are drawn up between the Client and the SSP. If the contracts for the services are between the RSP and the SSP, any
Member States. However, as of January 1, 2010, any supply of business-to-business (B2B) intermediary services fall under the general rule (i.e., the place of supply is where the customer is established). With the change in legislation as of January 1, 2010, with regard to intermediary services in respect of B2B transactions, the major drawback of this approach is gone, however, it is still essential that the RSP act as an agent for the Client and
It is crucial to note that costs the RSP incurs in the course of supplying services to its Clients are not disbursements from a VAT perspective. costs from the SSP will be deemed to be part of the RSP’s service. This could lead to a VAT registration liability in the Member States where the RSP onward charges for services with a place of supply in those respective countries where VAT should be charged on the invoice to the Client. If the contracts for the services are between the Client and the SSP and the RSP acts as an agent for the Client in entering into those contracts on behalf of the Client, the RSP may, as a general rule, treat any costs from the SSP as disbursements. Any agent/commission fees would, in most cases, be deemed to be treated as intermediary services, which, before January 1, 2010, would as a general rule have same place of supply as the underlying transaction and thus this could lead to a VAT registration liability in the respective
consequently the contracts must be between the Client and SSP directly in order for this approach to work. We recommend that the relevant contracts be thoroughly reviewed by VAT experts before using this approach. Further, all of the conditions outlined above should be fulfilled to ensure that the disbursements have the correct VAT treatment. One potential limitation with this approach is that it does not provide an opportunity for the RSP to collect referral fees in a net-pay fashion as is currently the practice in the mobility industry. Referral fees need to be invoiced by the RSP to the SSP separately with the associated administration costs. The VAT implications of this practice are that the SSP invoices the Client directly in accordance with the relevant place of supply rules between the SSP and the Client and MOBILITY/DECEMBER 2010 53
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Mobility Service
Place of Supply Rule
Before January 1, 2010 Place of Supply
Local VAT
As of January 1, 2010 Place of Supply
Local VAT
DSP Services
General Rule
Supplier
Yes
Customer
No
Immovable Property
Immovable Property
Location of Property
Yes
Location of Property
Yes
HHG – Non EU
Transport – Non Intra EU
Pro rata covered
Yes
Customer
No
HHG – Intra EU
Transport – Intra EU
Customer
No
Customer
No
Language Training
Educational Services
Where services physically carried out
Yes
Where services physically carried out
Yes
Cultural Training
Cultural Services
Where services physically carried out
Yes
Where services physically carried out
Yes
the VAT is reclaimed by the Client through their corporate recovery process (or local returns where the Client is VAT registered in the respective country). This approach eliminates the requirement for VAT registration for the RSP but is dependent on the proper contractual arrangements being in place. Another potential limitation with this approach is that it would require the RSP to enter into separate contracts with the SSP for each Client. Currently, the RSP may enter into a master contract with the SSP pursuant to which the SSP provides services to the RSP with regard to multiple clients. If the RSP is acting as agent for a particular Client in entering into a contract with the SSP, separate contracts for each Client would appear to be advisable. The Bundled Approach. Taking into account the range of services that RSPs render, it may be possible to establish that the RSP supplies one service consisting of the whole package of the various mobility components rather than multiple supplies of separate services for each of the components. 54 MOBILITY/DECEMBER 2010
The Directive does not define when a transaction should be considered as a single supply or as multiple supplies, however, the European Court of Justice (ECJ) has provided guidelines on the VAT treatment of single or multiple supplies in its decision in the case C-349/96 (Card Protection Plan). In this case, the ECJ decided that every transaction must be regarded normally as distinct and independent. On the other hand, a transaction that comprises a single supply from an economic point of view should not be artificially split. A single supply exists where one or more elements are to be regarded as constituting the principal supply, while one or more elements are to be regarded as ancillary to the principal supply and thus share the same VAT treatment as the principal supply. A service must be regarded as an ancillary service to a principal service if it does not constitute for customers an aim in itself but a means of better enjoying the principal service supplied. For a proper determination of VAT treatment, it is vital to identify the predominant element of the
respective supply. There are many factors and further case law to help determine the predominant element, however, at this stage please note that the invoicing arrangements (i.e., whether separate prices are agreed for individual elements of the supply) are not per se a decisive factor in determining the proper VAT treatment. This issue would need to be investigated on a country-by-country basis, if, based on the country specific VAT legislation and based on the exact services supplied within a particular country, all of the services could fall under the new general place of supply rule where the place of supply is where the customer is established and thus the VAT registration liability of the RSPs would not become an issue. It should be noted that the VAT authorities in the respective countries may each have a different approach with respect to whether the services supplied should be treated as a single or multiple supply and further, whether the services supplied may be services that are in connection with immovable property or whether the
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services fall within the new general place of supply rule.
Onward Supply and Reverse Charging Irrespective of which of the three approaches discussed above is used, the updated VAT invoicing table is valid and lays out the requirements under the Directive for what is required on a VAT compliant invoice. Practically, the VAT changes that were effective as of January 1, 2010, are very significant when looking at services being delivered across national borders. The table at left summarizes the changes as a result of the 2010 European VAT Package where the RSP is established in a different country than the SSP.The only categories where mobility services would
On the Web To learn more about the value added tax (VAT), please visit www.WorldwideERC.org. VAT 101—an Introduction to the Value Added Tax Affecting Relocation Services www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/ 1009-smith.aspx Unraveling Value Added Tax: You Need to Know What You Don’t Know www.WorldwideERC.org/Resources/EventMaterials/Pages/ em-10874.aspx Legal Issues that Impact Cross-border Mobility in Europe www.WorldwideERC.org/Resources/EventMaterials/Pages/ emea10-Legal-Issues-that-Impact-Cross-border-Mobility-in-Europe.aspx have local VAT is where the place of supply of the service is seen as relating to immovable property. Further, language training and cultural training also may have associated local VAT. In those cases, local VAT is chargeable.
If a country deems DSP services to be related to immovable property and deems language training and cultural training to be supplied where physically carried out and not falling under the general rule, Worldwide ERC® may wish to seek a binding
MOBILITY/DECEMBER 2010 55
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Dr Dr Cr Cr
ruling from the respective tax administrations and seek to have the general rule apply to these services. The table also applies to the invoices that the RSP will send to a Client where the Client is established in a different country than the RSP. Where the column titled “Local VAT” indicates “No,” VAT is reverse charged to the recipient of the invoice. Under this reverse charge process, the recipient of the invoice is responsible for accounting for the VAT in its local VAT returns. As an example, a Belgian SSP invoices an Irish RSP for a settling-in service that is valued at €1,000. The Belgian SSP will invoice the Irish RSP for the total €1,000 and will not
SSP Cost EU Rev Charge Inputs EU Rev Charge Outputs Accounts Payable – SSP
(b) if the RSP was unable to register in Belgium for VAT, the RSP would have had to reclaim the VAT through the 8th directive that was very cumbersome and subject to long delays. Now with the adoption of the 2010 European VAT Package, there is no cash flow impact on the RSP in respect to VAT. To regulate the changes brought about through the 2010 European VAT Package, the RSP will have to additionally prepare and submit to the local VAT authorities a European Sales List where the RSP will report the total sales that it has reverse charged to each Client (only in respect to services provide Clients which are EU VAT registered) bro-
RSPs must clearly identify the correct place of supply rule that applies to the services they are providing, both directly and through any SSPs. show any VAT on the invoice. The invoice will state that the service is subject to the reverse charge mechanism. The Irish RSP will then account for the service as follows (see chart at the top of this page): The two lines for 210 EUR are reported on the RSP’s local Irish VAT return. Prior to the 2010 European VAT Package, the invoice from the Belgian SSP would have had Belgian VAT and the RSP either (a) would have had to register in Belgium for VAT and put Belgian VAT on its invoice to the Client or 56 MOBILITY/DECEMBER 2010
ken down by the Client’s VAT numbers.
Conclusion VAT is a complex subject and rules can vary on a country-by-country basis. The changes to European VAT that are effective as of January 1, 2010, under the 2010 European VAT package are an attempt to simplify the rules that may prove beneficial to companies delivering services across national borders. Clearly, the effect of these new rules will take time to settle down and be fully assessed.
1,000 EUR 210 EUR 210 EUR 1,000 EUR
RSPs must clearly identify the correct place of supply rule that applies to the services they are providing, both directly and through any SSPs. The nature of the contractual relationships that the RSPs enter into with their Clients will have a significant direct impact on the VAT obligations of the RSPs. The RSPs should review their existing contracts with both their Clients and their SSPs to identify whether they are (or wish to be) acting as a principal or as an agent for a Client and how that agency status affects the way they process VAT. The RSP should review its systems and processes to ensure that the invoices they generate contain all the information that is required to comply with the Directive and that they are able to produce the necessary European Sales Lists. Finally, RSPs, SSPs, and Clients should always consult their own tax advisors before taking any action. As a sponsor of the VAT Task Force, Worldwide ERC® will continue to monitor developments related to European VAT and provide information to members by advisories and through specific sessions at Worldwide ERC® conferences regarding this important topic. Johannes Laxafoss is senior VAT manager for Meridian Global Services, Dublin, Ireland. He can be reached at +353 1 4000519 or e-mail johannes.laxafoss@meridianglobalservices.com. Peggy Smith, SCRP, SGMS, is CEO of Worldwide ERC®, Arlington, VA. She can be reached at +1 703 842 3400 or e-mail psmith@worldwideerc.org. Joseph Morabito, SCRP, is president of Paragon Global Resources, Rancho Santa Margarita, CA. He can be reached at +1 949 635 6000 or e-mail jmorabito@paragongri.com.
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REALITY IN THE WORKPLACE:
Long-distance Commuting BY DAVID BARLOW, SCRP, SGMS No longer are long-distance commuters considered a rare breed; in fact, almost every large organization has this type of employee among their ranks and their numbers are growing. Barlow examines the phenomenon of long-distance commuting and writes that employers have much to consider regarding when and how long-distance commuter benefits should be applied.
O
n any given Monday morning, one of the first flights from the Salt Lake City, UT, airport is a flight to the San Francisco, CA, Bay Area. However, unlike other flights, many of these passengers appear to know each other. Calling their fellow passengers by name and asking about their weekends; any “outsider” on this flight may wonder whether he or she were at the wrong gate and were mistakenly boarding a company charter plane. On further observation, it becomes clear that these passengers do not work for the same company but rather a number of different companies—all with operations in the San Francisco Bay Area. And they are not embarking on business trips or traveling to meetings. 58 MOBILITY/DECEMBER 2010
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MOBILITY/DECEMBER 2010 59
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CHART 1: Reluctance to Relocate Percent of Organizations*
Slowed real estate appreciation/depressed housing market at old location
93% 88%
Old location home is a negative equity situation High housing cost areas
39% 32%
Employee/family resistance to move
30%
High cost-of-living areas
25%
Spouse reluctance to leave his/her job Undesirable areas
11%
Less than adequate relocation policy
6%
Employees satisfaction with current position
2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
* Percentages do not total 100% due to multiple responses. Based on 95 companies that are experiencing problems with employee reluctance to relocate. Source: Worldwide ERC® 2010 Transfer Volume and Cost Survey
No, they are employees who work and are paid in California, but live in Utah. They simply leave their homes and families in the Salt Lake City area during the week to go work in the Golden State. Given the favorable one-hour time difference, these employees will be
60 MOBILITY/DECEMBER 2010
sipping their second cup of coffee at their desk as their business day begins. Meet the growing number of employees who are just like any other commuters—except they choose to fly first and then drive to work. How did this come to be such a common phenomenon and why is
the number of long-distance (sometimes called Xtreme) commuters growing significantly? The answers are likely the very same reasons employees are saying “no” to relocation, as noted in the September 2010 issue of MOBILITY magazine. It is highly likely that the majority of these long-distance commuters initially were offered standard mobility benefits from their companies. And it is equally probable that the reasons they did not accept the traditional relocation are captured in the Worldwide ERC® “Reluctance to Relocate” data. However, at the end of the day, regardless of the mobility package provided, they chose instead to not live where they work. Previously, this phenomenon was seen only with high-level executives or in “commuter marriages.” As a result of this becoming more common at all levels, companies are questioning and evaluating what position they should take on this lifestyle choice, and whether any long-distance commuter benefits should be provided.
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Background As a result of the difficult real estate market, these “Xtreme” commutes are not the only actions we see increasing. They also include: • Temporary domestic assignments (TDA, sometimes called short-term assignments). Used when a U.S.-based assignment is expected to last less than a year with a planned return to the base (origin) location. However, this is not a substitute for a relocation as the vast number of relocations are expected to last longer than one year and/or do not result in a return to the prior location. Companies need to be careful to be in compliance with the tax rules and not consider a TDA an “interim” or a “temporary” relocation. • Change of job location or assignment. This includes allowing the employee to remain in the old location and perform the new job remotely either at the origin office or at home. It also includes the company choosing a secondary candidate who will accept the relocation or even eliminating the relocation altogether and instead hiring a local candidate for the position. • “Rent and rent” versus “sell and buy.” An increased number of employees who accept the relocation, but cannot sell their homes, are now renting their homes in the old location and renting in the new location versus selling their homes and purchasing in the new location. In this case, it is advisable for companies to consider allowing their homesale and home buy relocation benefits to extend beyond one year, as there is not a homesale tax consequence in so doing and in general not an increase in relocation cost for the company.
The Rising Popularity of Long-distance Commuting Long-distance commuters are those U.S.-based employees who do not live within a reasonable driving distance to their office, but are required by their employers to perform their jobs, or a significant part of it, at their actual work location. Ironically, these long-distance commutes have been made easier by the increased flexibility many companies now allow in the work schedules. For example, many companies in California, driven by their desire to be more environmentally friendly, have moved to “compressed” work schedules—either 4-10s (four 10hour workdays per week) or the 980 schedule (nine days of work in a two-week period with every other Friday off). As a result of these compressed work schedules, and employees electing to take vacation days in one-day increments, long-distance 4 – 6 months have three-day commuters generally 14% weekends. As to living arrangements in the work location, the typical pattern is to rent a room from a friend/ relative or rent an apartment with other commuters. And while the success of these arrangements will vary by individual, the anecdotal evidence says it is not a bad lifestyle. As one person remarked, “it is great to make money in high-paying California and spend it in low-cost Utah.”
Precedents and Options In the 2008 “Family Issues” survey published by Worldwide ERC®, one section addressed “commuter marriages.” The definition used for “commuter marriage” is when a transferee accepts a relocation and moves to the new work location but leaves the spouse/domestic partner behind. This is different from a longMOBILITY/DECEMBER 2010 61
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CHART 2: Frequency of Encountering a Commuter Marriage Situation in Past Two Years (Percent of Organizations)
6 or more times
11%
4 – 5 times
14%
0 times
28% Once
2 – 3 times
12%
35%
companies take a laissez-faire approach, others have a history of in loco parentis (Latin for “in the place of a parent” or “instead of a parent,” this phrase refers to the legal responsibility of a person or organization to take on responsibilities similar to a parent’s). Let us call the first Company A and the second Company B. Following are examples of how a company might deal with longdistance commuting rather than a traditional relocation.
Situation One ®
Source: Worldwide ERC Family Issues Survey, 2008 (U.S. Domestic Survey)
CHART 3: Length if Time Assistance Is Provided for Commuter Marriage Arrangements (Percent of Organizations)
Indefinitely
20%
3 months or less
8%
4 – 6 months
14%
More than 2 years
8%
13 months – 2 years
11%
7 – 12 months
39%
Source: Worldwide ERC® Family Issues Survey, 2008 (U.S. Domestic Survey)
distance commuter, as in this case he or she does not accept the traditional relocation. But the two situations are similar enough to give us an idea on how prevalent this “family separation” is. Overall, only 24 percent of organizations provide assistance for “commuter marriages” in addition to what is provided for in the mobility policy—and only 3 percent do so with a formal plan with the other 21 62 MOBILITY/DECEMBER 2010
percent providing assistance on a case-by-case basis. What choices should a company make in dealing with long-distance commuters? Should policies or guidelines be established? As with any policy, the first step is to evaluate how the issue is seen in the context of company culture; specifically, the extent companies have chosen to be involved in the lives of their employees. While some
John’s position has been moved from Indianapolis, IN, to Chicago, IL, and he has elected not to move, but rather to travel to Chicago during the week and then go home to Indianapolis on the weekends. He has been given a full relocation package, but has told his company he will use only a part of it as his family is staying in Indianapolis. • Company A responds that John is free to live in Indianapolis or Chicago, and free to use the appropriate relocation features he needs, but the company will not make changes to its mobility package to accommodate his location choice. The company reiterates that employees are expected to be at the workplace on time and work the hours required to do the job. They see his decision as a lifestyle choice and are amenable to it. • Company B responds that the mobility package is intended to be used for an actual relocation and if the employee chooses to commute and not move, then the relocation package does not apply. Furthermore, they do not believe John’s relocation should move forward as their experience has been that neither employees nor their families will be
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Survey Research at Your Fingertips Visit www.WorldwideERC.org for further information on Worldwide ERC® research: For further information on the 2008 “Family Issues” Survey, please visit: www.WorldwideERC.org/Resources/Research/Pages/family-issues-survey-2008.aspx 2010 “Transfer Volume and Cost Survey” www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0910-Lamech.aspx
happy living apart and this will affect his productivity. As a result, the company wants to withdraw their relocation offer and select another candidate.
Situation Two Mary has unique skill sets and experience and is needed critically in the Denver, CO, office for the next several years. She is currently living and working in Philadelphia, PA, and her company is eager to promote and relocate her. Mary is pleased with the promotion and
relocation offer but informs her company that she cannot leave her extended family who must stay in Philadelphia. She says she will commute to Denver but will not formally relocate. She calculates that if she were to move to Denver and use the full relocation package (sell and buy homes and move household goods), her move would cost the company more than $100,000. Therefore, she proposes that instead of the relocation package offered, the company should provide her a less costly commute allowance or a lump sum and
in so doing the company would be “money ahead.” • Company A responds that Mary is free to live where she chooses, as long as she can do the job in Denver. They find her request for commuting funds instead of a relocation package compelling and, because she is critically needed in Denver, they agree to pay her a monthly commute fee of $500 (not to exceed a total of $20,000, one-fifth the cost of a full relocation). They reject her suggestion of providing it as lump sum as they want to use the commute
MOBILITY/DECEMBER 2010 63
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that Mary is critical to the successful operation of the company and her request should be honored—thereby saving the company more than $80,000 ($100,000 less $20,000) in the process, which is a welcome savings.
Balancing Personal Accommodation and Company Expectations
allowance as a retention tool, as Mary has skills that could make her a candidate for competitors. • Company B is appalled at Mary’s attempt to negotiate the defined company mobility benefits and build her own package, and HR rejects her request. However, the head of the Denver office calls to reiterate to HR
64 MOBILITY/DECEMBER 2010
Long-distance commuters are no longer just a few isolated employees; they can be found in almost every large organization. Therefore, companies need to weigh the pros and cons of long-distance commuting and decide whether their specific business situations call for specific policies, a case-by-case approach, or remaining uninvolved in this particular employee decision. Regardless of
the direction a company chooses, it will need to be framed within the unique reference points of its culture and overall business strategy. Finally, it is worth considering that we live and work today in a world in which San Francisco and Salt Lake City are “closer” than ever, a world where organizations are less formal (e.g., casual dress and work at home) and more accommodating to their human assets. A company’s willingness to recognize new and evolving employee work and family options may at the end of the day increase employee loyalty and overall productivity. David Barlow, SCRP, SGMS, is senior vice president and senior consultant, SIRVA Relocation, San Ramon, CA. He can be reached at +1 925 824 3109 or e-mail david.barlow@sirva.com.
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U O Y E AR G N I C I T C A R P E L B I S N O P S RE E E Y O EMPL TY? I L I B O M
68 MOBILITY/DECEMBER 2010
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Corporate Social Responsibility, whether viewed through an environmental or social lens, is being discussed increasingly in the boardrooms of employers across the globe as a driver of change and an opportunity to improve the lives of employees and customers. Harvey offers an overview of Corporate Social Responsibility and how it relates to the global movement of human capital.
BY JENNIFER HARVEY
I
ncreasingly, companies are paying more attention to something called Corporate Social Responsibility, or CSR. In response to a variety of external and internal pressures (see sidebar “Why CSR?”), organizations are measuring their environmental and social impacts and producing detailed sustainability reports. They are organizing large-scale volunteering efforts and investing in green technologies. It all sounds good and important, but does it relate to employee mobility? The answer is “yes.” Moving staff around the world has both environmental and social impacts. Transportation and travel use fuel and create greenhouse gas emissions. Transferring employees to host cities with much lower average per capita incomes can have social implications. Despite this and increased corporate focus on CSR, mobility departments are not addressing these issues. In a survey of registrants for Crown Relocations’ April 2010 webinar “Leaner, Meaner, & Greener”—other than increased use of teleconferencing to reduce travel—only 9 percent of employee mobility professionals stated they had integrated CSR into mobility program design or delivery. Fortunately, there are many opportunities for a company to integrate CSR into mobility programs.
Mobility Policy The first way a company can improve their impact is through their
mobility policy structure and administration. To explain the following recommendations, it is helpful to clarify that the two greatest sources of emissions during the mobility process are most likely to be electricity and fuel consumption. In an attempt to reduce these, housing-related policy components can be structured as follows. The number of homefinding trips covered can be capped to reduce emissions from excessive travel. An employer also can maintain a roster of real estate agents who specialize in or keep an inventory of energy-efficient homes. Even better, additional benefits or incentives can be offered to transferees who ultimately choose a home with energy-efficient features. This could be in the form of an additional percentage of mortgage costs reimbursed or a higher rental allowance, or even just an additional lump sum. Sometimes, just reiterating the lower ongoing utility costs of green homes during the counseling process will be enough to motivate transferees to consider them. For assignment-type policies, where a company pays a transferee’s utilities, a fixed allowance—as opposed to one without a cap—will help to motivate the transferee to live more efficiently. The employer also can offer additional benefits if the transferee chooses to purchase electricity generated from alternative sources like hydropower, solar, or wind. When it comes to personal vehicles and fuel consumption, in North
America there is a particularly great opportunity to have an impact. About 25 percent of global emissions are thought to come from transportation and about three-quarters of this number is estimated to be from personally owned vehicles. Out of this number, approximately 55 percent is estimated to come from the United States—a strange number considering that the United States only represents about 5 percent of the world’s population. Clearly, employee mobility teams can have a big impact through vehicle and fuel allowances. The first thing that a company can do is offer the employee a way to purchase public transportation cards with pre-tax dollars. Most metropolitan areas offer this kind of program, which is simple to set up. As with utility benefits, a fixed fuel allowance—as opposed to one without a limit—will help motivate efficient vehicle and driving choices by the transferee. A company also can consider offering some additional allowances if the transferee chooses to purchase a vehicle with a specified fuel efficiency. Again, counseling about the fuel cost savings of hybrids or similar vehicles may be enough to motivate the transferee to choose this type of vehicle. Akin to housing, this is a chance for the transferee to start over and make more responsible choices, so the counseling process is a great time for an employer to be a positive influence. Where it concerns home leave or return trip benefits, limiting their MOBILITY/DECEMBER 2010 69
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WHY CSR? The increased focus on CSR by employers around the world is the result of several global factors: • demand for oil rising dangerously, posing business risk in many industries; • rising greenhouse gas emissions, resulting in pollution and climate change; • pressure–and taxes–on employers from some governments to reduce emissions; • HIV/AIDS still spreading with no cure; • 25 percent of the world’s children live in absolute poverty; • governments have not been able to work together to solve these and other issues; • business leaders are stepping up to tackle these issues; • customers seek responsible companies to buy from; and • employees want to work for companies that give them pride and volunteer opportunities. number in the policy—or even job localization—helps reduce the resulting emissions, as well as costs. Companies also can include incentives for transferees to use lower carbon forms of travel—like rail—where possible. For example, if a transferee is moving from New York, NY, to Boston, MA, the employer could allow business class travel by rail and only economy class travel by air, which is a much higher emission form of transport. In addition, a company can consider offsetting travel emission for a few dollars, an option available from most airlines and even car rental companies. Or, they can counsel the transferee to consider doing this at their own cost.
THE SUITES
S I LV E R
T O W E R S
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With household goods moving, on short- and some medium-term assignments, the company could consider specifying that large items should be stored at the home location rather than be shipped—reducing transport emissions. The employer also could require that transferees leave non-essential items behind or encourage that they be left to charity. This will allow the employer to save on shipping, insurance, and disposal fees. Meanwhile the transferee can get a tax deduction from the charitable donation. On this topic of tax incentives, it is worth taking time to research tax benefits and legislation that financially supports green actions. In fact, informing transferees of such personal tax benefits may alleviate the cost of companypaid incentives. Beyond specific policy features, incorporating environmental and other responsible incentives into a mobility policy has recruiting benefits. This is especially true for— though not limited to—Gen Y candidates who are sometimes the most environmental and community conscious. Seeing that a potential employer has integrated such incentives into policy will speak volumes about the values of the company and may be a tipping point in getting the candidate to accept the position or transfer.
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One way that many global employers have integrated CSR into their businesses is through responsible service partner selection. A company does this in several ways. First, a company can include CSR-related questions or even a carbon-offset requirement in RFIs, RFPs, or during periodic reviews. There are many types of questions that can be asked—ranging from internal monitoring programs to external accreditations. Most important, the questions should be material to the service provider’s industry, as the impacts in each industry vary. The most meaningful step, however, is that the suppliers ultimately chosen have formally embedded CSR into its processes and corporate values.
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Another way to integrate CSR in service partner selection is to select or just require them to use paperless billing and documentation. This improves efficiency and payment time—a win-win for both parties— on top of the obvious environmental benefits of reduced paper use. Beyond billing, online platforms can be used for various functions like expense management, document sharing, and service tracking and reporting. Specific to employee mobility, there are many applications for technology including paperless homesale closings, web-based appraisal reports, and online tools for language and cultural training.
Using Technology Use of technology should not be
limited to interactions with service partners. Adopting IT solutions on the mobility team—by working paperless, using suitable alternatives to travel and even incorporating this into the global travel policy—is leading by example. One major global manufacturer of consumer products has taken this a step further by not just encouraging alternatives in its global travel policy; the policy language also clearly states the environmental reasons for doing so. It also restated the company’s goal of reducing emissions and improving its environmental impact overall.
Volunteering and Employee Engagement Another way to lead by example is to take the initiative to volunteer together with team members. This is
an effective way to support existing corporate CSR initiatives. Additional benefits of doing this are team building, increased employee satisfaction, and company loyalty. An internal survey conducted of more than 3,000 global employees at Crown Relocations showed that the overwhelming majority across all its regions in the Americas, EMEA, and AsiaPacific wanted to volunteer through company-sponsored initiatives and together with work colleagues. The desire to support underserved communities transcended culture. Volunteering need not be just with co-workers. There also are many opportunities to join forces with clients and service partners. Doing so allows the organization to extend its CSR impact by reaching out to stake-
MOBILITY/DECEMBER 2010 71
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holders. This type of outreach is a cornerstone of CSR.
Transferee Education and Volunteering One unique opportunity in employee mobility is the ability to reach out to and leverage the transferee population. This population is starting fresh and in a new location. But even the greenest, most socially conscious transferee may not know how to make responsible choices in the host city. Therefore, one effective step an employer can take is to provide transferees with information on the local options for things like recycling and volunteering. If transferees and their families engage in these activities, this can help the employer to better achieve its CSR goals. Giving the transferees a way to
72 MOBILITY/DECEMBER 2010
engage in their destination community also provides a cost-effective way to get them settled into their new location more quickly. But how on earth does an employer find out this type of information in all of the locations to which it transfers employees? Destination service partners are a good resource for this information. With on-the-ground employees they should have access to all of this information.
Integrate Generally, the first step to integrating CSR into any company function is making sure you understand your company’s CSR mission. This information is available on most corporate websites and other internal communication. Once this is clear,
look for ways to weave this throughout your work function. Then, keep looking for ways to work cleaner and more responsibly by reducing energy use and helping the community more. Try to collaborate with stakeholders—transferees, clients, and service partners—to extend your positive impact. Last, remember that this is a new frontier for employee mobility. Only 9 percent of companies responding to the aforementioned poll are doing anything innovative to integrate CSR. So you may be the one to create a new best practice. Jennifer Harvey is director of corporate social responsibility for Crown Relocations, New York, NY, and its parent company the Crown Worldwide Group. She can be reached at +1 917 733 6986 or email jharvey@crownrelo.com.
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Can You Afford International Assignment Success? A Business Case for Investment in Cultural Assessment and Training
BY MICHAEL F. TUCKER, PH.D., CMC Why is it that some people assigned to live and work internationally perform very well, are satisfied with their assignments, and are valued by their organizations, and some do not do so well? Are those who adapt well to the local culture the same ones who do their jobs well? Providing cultural assessment and training seems to be a nice thing to do, but is there a way to justify the expense? In this article, Tucker provides some answers to these questions based on large-scale field research and more than 40 years of practice in assessment and training for international assignments. It is written for organizations striving to be the best they can be in their global markets through effective talent management. 74 MOBILITY/DECEMBER 2010
A
study, “The Definition, Measurement, and Prediction of Intercultural Adjustment and Job Performance Among Corporate Expatriates,” which appeared in 2004 in the International Journal of Intercultural Relations, was conducted to investigate the relationship between job performance and intercultural adjustment. The study sample was 100 expatriate employees, working for 17 different organizations and working in 29 countries. Job performance was measured by means of a highly reliable, multiitem scale that included the following areas: • technical and management approach; • development of working relationships; • working well with local nationals; • working at high levels despite unfamiliar constraints; and • knowledge and technology transfer.
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Intercultural adjustment was measured by means of similar highly reliable, multi-item scales. Six factors of adjustment were measured, as follows:
1. 2. 3. 4. 5. 6.
Acceptance of the foreign culture, showing respect, and not criticizing. Knowledge of the culture, its history, traditions, and current events. Affect or feelings about the culture, oneself, and the assignment. Lifestyle adjustment to engage in satisfying, reinforcing activities. Interaction with foreign people and forming relationships. Communication in the language as much as possible, as well as recognizing and using non-verbal signs and gestures. MOBILITY/DECEMBER 2010 75
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The job performance scale was compared to the intercultural adjustment scales. The results showed that some 45 percent of the variance in job performance was accounted for by intercultural adjustment. This finding was beyond a chance occurrence at the level of more than one in 1,000. This meant that those who were adjusting to the 29 foreign cultures successfully also were performing their jobs well, and vice-versa for those not doing well.
1. 2.
Predicting Intercultural Adjustment We have strong evidence for the relationship between adjustment and job performance. How can we predict beforehand who will adjust well and who will not? In the study cited above, the 100 expatriate employees, along with 57 spouses, had completed assessment scales administered by Tucker
ducted during the past 35 years. This predictive relationship is illustrated in the chart below. This field research provides strong evidence that expatriate job performance depends to a significant degree on successful intercultural adjustment; and intercultural adjustment can be predicted beforehand. Therefore, when these predictor scales are used for assessment and development of potential expatriates and their spouses, there is a good chance of successful intercultural adjustment as well as effective job performance on the international assignment.
International before departing on their international assignments. These scales were very successful in predicting the six factors of intercultural adjustment (again beyond chance occurrence of less that one in 1,000). This finding was consistent with a series of similar studies con-
Intercultural Training An important part of this development process is high quality intercultural training. Such training targets
PREDICTION MODEL Expectations
Motivations
Living Conditions Locus of Control/Initiative
Partner Relationship SOCIAL/INTERPERSONAL STYLE Span of Trust Social Adaptability/Interpersonal Interest
INTERCULTURAL ADJUSTMENT WORLD VIEW Open-Mindedness/Respect for Other Beliefs Lifetime Learning
SITUATIONAL APPROACH Flexibility/Risk Taking Patience Disposition (Sense of Humor) Ambiguity Tolerance Humility
76 MOBILITY/DECEMBER 2010
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On the Web To learn more about cultural and language training, please visit www.WorldwideERC.org. Language Acquisition—Living Versus Learning www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1005massoud.aspx Culture and Communication 101 www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0510-Dubberke.aspx More Art Than Science Selection and Preparation for the Global Assignment www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0508stuart.aspx The Commoditization of Intercultural Services www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0303tucker.aspx
the strengths and weaknesses identified in the assessment scales and provides participants with individual “road maps” for successful adjustment and job performance. This type of training is quite different than the “cultural orientation” programs that
are so common today, where one trainer and perhaps one resource person spends a day with the expatriating employee (and sometimes spouse or partner; see the March 2003 MOBILITY article, “The Commoditization of Intercultural Services”). As shown on
page 78, high quality training is customized based on thorough needsassessment, is two to three days in length or longer, is delivered by a senior master trainer supported by several specialized consultants, and is evaluated both short and long term.
MOBILITY/DECEMBER 2010 77
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Customization Through Needs Assessment
Training Goals Directed at Six Factors of Adjustment
Feedback of Scores on Prediction Model “Personal Adaptive Style”
Two or Three Days (Six days or More with Language) Training
Master Trainer and Resource Staff
Immediate and Long-term Evaluation
When delivered for one employee (and family, including youth) on a private basis, these programs are more similar to executive coaching sessions than they are to orientations.
Calculating Return on Investment We now have the elements necessary to calculate return on investment (ROI) in cultural assessment and training. This is illustrated below. Return on Investment (ROI) Assumption: Conservative total cost estimate of a two-year expatriate assignment = $1 million Amount Accounted for: $1 million X .45 = $450,000 of an expatriation cost can be insured by achievement of the six factors of intercultural adjustment and job performance through intercultural assessment, development and training. Investment Cost: International Mobility Assessment (IMA) Intercultural Competency Assessment Tucker Assessment Profile (TAP) Intercultural Training Cost = $10,000 for a family of four Calculation: $1,000,000 expatriation cost $ 10,000 investment $1,010,000 total cost $ 454,500 45 percent of total cost accounted for 78 MOBILITY/DECEMBER 2010
Present value $ 10,000 Future value $454,000 Years Two Results 574.17 percent (author’s note: discount rate calculation available at http://www.moneychimp.com/calculator/discount_rate_ calculator.htm.)
A Strong Business Case This return on investment of nearly 574 percent makes a strong business case for investing in intercultural assessment, development, and training. We now have some answers to the questions posed at the beginning of this article. A major part of the reason why some people do well on their international assignments and why some do not is the quality of the assessment, development, and training that they receive in preparation for the assignment. Those who adapt well to the local culture are indeed the same ones who do their expatriate jobs well. And finally, assessment, development, and training is not only a nice thing to do, but there is a strong business case for the investment. Michael F. Tucker, Ph.D., CMC, is president, Tucker International, Boulder, CO. He can be reached at +1 303 786 7753 or email mft@tuckerintl.com.
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For African Expats, It’s a Tough Road Home CNN (10/27/10) Ridgeway, Eliza As much as they may want to return to their homeland and fight brain drain, it is often difficult for African expatriates to give up the opportunities they find overseas and go back to their much-smaller economies at home. About onethird of students in Botswana, Namibia, and Swaziland study abroad according to UNESCO, compared to one out of 250 North American students. And once they have a taste of opportunity in the United States, Europe, or China, it is difficult to find the same opportunity back home. South Africa has had a dramatic increase in corporate opportunities, but the economy is “just too small to accommodate the kind of jobs they want to do,” said one South African businessman working toward an MBA at Oxford. “This group of people, despite how important they are to the continent, are having the darndest time connecting to opportunities back home,” said Okendo Lewis-Gayle, president of Harambe Endeavor, an alliance of African students and young professionals. His organization is launching entrepreneurship and microfinance programs in various African countries, but there are obstacles—a near-complete lack of venture capital, and a tendency for older people not to take younger people seriously. But things are starting to change, and foreign investors are starting to see potential in Africa. (http://edition.cnn.com/ 2010/BUSINESS/10/27/african.expats.return/) Azerbaijan Toughens Visa Rules; Expats Concerned Assa-Irada Newsfeed (10/18/10) Expatriates in Azerbaijan are concerned after the government announced it would no longer issue visas to foreign nationals at the Baku airport, and the U.S. embassy is advising Americans looking to enter the country to contact the Azerbaijan embassy in Washington. Visas will still be issued to diplomats and officials, but only with a special invitation or an agreement with diplomatic sources and those arriving without visas may be detained. Government officials say the measure is not unusual, noting that one cannot receive a visa at any U.S. airport. CIS country nationals do not fall under the new rule, as they need only to register with the State Migration Service if they stay for longer than 90 days. But Alovsat Aliyev
of the Center for Legal Assistance to Migrants noted Azerbaijan does not have embassies in all countries, so it will be difficult for some to obtain a visa before arriving. (http://www.ft.com)
November 3, 2010 This issue is sponsored by:
China’s Second Tier Cities? The Third and Fourth Tiers are Catching Up China Briefing (10/26/2010) Devonshire-Ellis, Chris Most of the cities considered “second tier” in China, such as Chengdu, Dalian, Nanjing, Qingdo, Shenzhen, Suzhou, and Tianjin are now so well-established with infrastructure, international airports and schools, and modern conveniences that they are fully mainstream, which means they are also now more expensive. Indeed, the average second-tier city now has salaries at 62 percent of first-tier cities, far from the former average of 30 percent, making these cities much less of a bargain. But third-tier cities are not far behind, at about 90 percent of the salary of second-tier cities. It is likely that relocating a factory from a second-tier city to a third-tier city to save money will no longer be worth the effort. Some cities are cheaper than others, though, so a careful evaluation should root out some bargains. (http://www.china-briefing.com/ news/2010/10/26/chinas-second-tier-cities-thethird-and-fourth-tiers-are-catching-up.html) Europeans Are the Biggest Earners in Dubai Emirates Business 24/7 (United Arab Emirates) (10/20/10) A new income survey from Dubai Statistics Center finds that European expatriates are the highest-paid group in Dubai, earning Dh172,000 per year on average compared to Dh11,800 for Emiratis and Dh102,000 for Arabs. Europeans have higher salaries because they tend to work in senior positions and the exchange rate with their home country is also considered in the equation, according to the Center’s CEO, Arif obaid Al Muhairi. Income for Europeans was slightly lower than the previous year, but the decline was mostly nominal rather than real, according to Al Muhairi—many Europeans work as investors and, for example, if they trade automobiles and the price of cars falls, their revenues fall. (http://www.emirates247.com/news/emirates/eur opeans-are-the-biggest-earners-in-dubai-201010-20-1.306497)
Read the full issue and subscribe for free at: www.WorldwideERC.org/Newsroom/ GLOBILITY Visit our online Career Center jobs.worldwideerc.org
GLOBILITY® is an exclusive news service of the Worldwide ERC® offered free of charge for the asking and comes to you twice a month. To subscribe, visit: www.WorldwideERC.org/ Newsroom/GLOBILITY. GLOBILITY® sweeps nearly 7,000 sources including major newspapers, business magazines, web sites, wire services and industry publications to find the most noteworthy news focusing on global workforce mobility issues. The editorial staff reviews over 15,000 stories per day and prepares an executive summary of the most significant articles to be delivered to your e-mail inbox.
MOBILITY/DECEMBER 2010 79
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Last Page
Parting Shots
T
Photo credit: Liz Willis
he Worldwide ERC速 Global Workforce Symposium was convened October 27-31, 2010 in Seattle, WA. Thank you attendees, speakers, moderators, panelists, sponsors, and exhibitors for a most memorable conference.
80 MOBILITY/DECEMBER 2010
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