Spring 2008 Issue > The Evolution of the Relocation Industry
The Evolution of the Relocation Industry
As this is the first of a new column in The Crown Voice, it was decided to begin at the beginning…
Years ago, corporations tended to have rather large “Personnel” departments which then became known as “Human Resource” departments, which were staffed internally by employees who managed all the aspects of staff management. Some of these functions included payroll, benefits (such as medical/dental/life insurance and employee relocation benefits), compensation, performance reviews, hiring, terminations, pension, salary reviews and other administration. These departments were support departments, not involved with the specific corporate business and were staffed by specialists.
As corporations began to concentrate more on their core competencies, these functions began to be outsourced to specialized companies. Payroll administration was one of the first to be outsourced and hence most companies today utilize such firms as ADP and Ceridian, to name a couple, for this purpose.
The cost of staffing specialists for HR functions became too costly and coupled with the growing multiple corporate office openings both domestically in each country, corporations began to expand globally. These expansions required corporations to relocate employees from one office to another in order to grow their business. The administration of employee relocations became more and more complex as companies realized that policies had to be created to ensure that both appropriate benefits were provided and the costs were managed.
This situation did not evolve without difficulty since HR staff, with their jobs threatened, found ways to hold onto certain aspects of the relocation policy administration, creatively trying to convince their senior management that their positions were necessary. However, the evolution would not be stopped and soon more and more policy matters were outsourced. The companies which began to service HR departments grew and as they did, so did their ability to take advantage of the economies of scale – catering not to just one company, but to many.
The Household Goods Industry already existed for private individuals who had to move from time to time and with the onset of the highly sought after corporate business grew. Companies such as Crown began to differentiate themselves as quality service providers. Other relocation benefits were also slowly outsourced. This was particularly accelerated in the USA when the IRS saw an opportunity to tax these benefits just as if they were direct compensation. Corporations banned together to lobby the government for tax breaks and in the USA, the organization which is now known as the Worldwide ERC® was created to support this advocacy.
From that time in the mid to late 1960’s, the trend to outsource more and more relocation benefit functions has grown. Corporations have steadily continued to outsource more and more of their non-core business functions and in future articles we will discuss this growth and how it has encouraged such service leaders as Crown to also grow.
Your comments and suggestions for future articles are welcomed and encouraged by the editors and we hope that you will find this column to be both educational and interesting.
Written by:
Donna G. Bergles
National Director, Global Mobility Services, GMS, CRP
Crown Canada
Based in: Toronto, Canada
Email: dbergles@crownrelo.com