Part 1: THE INFORMATION: The Dumbing Down of the Industry.
April 3, 2014
There have been significant developments in the relationship between the moving and relocation components of our industry recently, about which anyone involved in relocation should understand.
This is a three part blog series, and the third part will discuss this moving industry development and how it affects us all. Having said that, it cannot be overstated how big a change this is. In this blog, I want to focus on the fact that so few of us in our industry are likely to understand its significance without greater explanation, and that is a shame.
So, I wanted to start this blog series with a view of our industry’s history, since we have to understand where we have been to know where we are going.
I will look at the industry through two specific lenses: a) its structure; b) INFORMATION.
At heart, I am a structuralist. I believe that large structures (such as that of our industry) are important to understand if one wants to make choices as a business or employer within that structure. This knowledge allows you to understand your limitations and opportunities and where you should put your resources. But be aware that unless you are one of the largest players you cannot budge the industry structure – it is a big, complex system.
So, let’s first define who is too small to move this industry structure. Well, for starters, smaller and mid-sized Canadian relocation companies as well as many of the suppliers of support services. And…unfortunately if you are a Canadian corporation with mobility, you too are not large enough. Not since globalization. While I think you are the most important player, nonetheless Canadian Human Resources do not drive the industry as significantly as they should. Any student of Canadian history understands that we are a small country in a big world and more times than not we are the buffeted rather than the buffeters.
This brings me to THE INFORMATION: The Dumbing Down of the Industry. What I am about to write does not pertain to all relocation companies (certainly not All Points – whoever has asked a question of an AllPointsian quickly learns that we rarely answer in 5 words when 500 are better). In fact we work with many great relocation companies that know it is in their clients’ best interest to be well informed. But, in general, the relocation super-structure has not educated corporations as to how the industry operates. While we do a good job on policies and practices, we do not take the time to help our clients understand how our industry ticks, why it ticks, and why it matters.
Before coming to All Points in 2000, I was at the largest Canadian relocation company (for many this is not a huge mystery to solve, but I will still feign anonymity on behalf of that company), who in relatively short order acquired the 3rd and 2nd largest Canadian relocation companies in the late 1990s. This tells us something interesting about our industry’s size. IT IS TINY! If that happened in the banking or telecom industries, the acquisitions would have been blocked for being anti-competitive. Secondly, it tells us something very important about how industry INFORMATION would have been dispersed at that time. Ask yourself, how many voices were there at the time educating people about relocation? Even though there were other relocation companies, with an 80+% market share, the size of this company’s voice was so large it did not matter. By analogy, what would it be like to only get your news from one channel for more than half a decade? Seriously – think about that. That is a huge period of time to change the flow of Canadian relocation information.
After both acquisitions this company’s leader gave the Orwellian announcement that we only had one competitor left: the industry association – the CERC. Why? Because it educated corporations about relocation. In the war to provide information, he was not wrong. “Who knows more about relocation?” “Nobody!” During this time, I was writing for the CERC editorial board and my knuckles were bloodied more than once over my involvement with the “enemy.”
What this company’s leader did not also note, however, was that we were also an interested party as to WHAT would be communicated. We had a bias.
By this time, the moving companies had already been watching a steady decline of their direct-to-corporate-relationships. It was not that relocation company sales reps were better than their moving company peers. After all, you always need a mover.
So, why did their control of relationships decline? One word: INFORMATION. The Canadian movers could not inform corporations as well as could relocation companies. (Interestingly, not long after this time, European moving companies began providing relocation services, thereby continuing to grow their direct relationships with corporations). In the face of another supplier providing corporations with lots of information, the move became more commoditized than previously and corporate Canada more divorced from understanding how that service was provided in the first place.
INFORMATION IS KEY. Don’t take it from me. The market says it is more important. Here is an exercise for Canadian movers: Do you know what happened in 1998? If you are a mover aged 40 – 50+ in Canada and you need to look it up, you have proven my point, because just about every Canadian relo professional between the same ages knows exactly what happened in 1998: the government changed the rules around the taxability of relocation benefits. Canadian corporations needed a stream of education like never before and relocation companies were ready to provide it. BTW: the development of AVO and BVO programs in the US drove a similar movement there.
But this brand new information exchange in Canada was fundamentally flawed. We already know the first flaw: there was only one biased voice. The second flaw: it was only information about policies and practices. It was not about the industry structure itself. Ask a corporate HR to explain to you how the van line system works and most won’t have a strong understanding. There are tonnes of structural topics that should be of interest to Canadian corporations, but the problem with having one “news voice” is that while it educates you, it chooses what and what not to educate you about.
The third flaw: this education was a loss leader. It was given away for free. The relocation companies were not trying to be a “Mercer” or a “McKinsey” in terms of billable, consultative education. Subsidized by real estate referral fees (a reasonably logical business choice that I won’t question here) relocation companies provided corporate Canada with tonnes of free information. However, over time for the most mobile Canadian corporations, this information would eventually go the way anything goes when the market is flooded: its value deflates/becomes commoditized.
There was another thing that happened to information at this time and again predominately for the most mobile Canadian companies: procurement. Those with lower mobility procured less, so they were less affected, as were the relocation companies that pursued them as clients.
I will briefly pause for an apology to procurement people everywhere: this is a broad historical sweep, and procurement processes can be great, especially when there is a loud and proud HR voice at the table. But, at a macro-level it is undeniable that procurement largely led to the reduction of complex information to numbers and scores.
Oh boy did my then-relocation company bemoan procurement’s involvement in buying relocation services! “They don’t understand our industry.” “They think they are buying widgets!”
However, at the exact same time, the self-same (ironically challenged) Canadian relocation company/ies converted the complex value of the van line system into “You need to reduce the price of your widget.” (Hey, price reduction likely was in order, but the relocation companies did have a responsibility to explain to their clients why it was more complex than that). In short, by choosing what information was important to relay (policy but not industry structure), the relocation companies had commoditized the move and no longer even had the skills to argue why it should not be.
This lack of education of the actual industry workings is more detrimental than it might seem. Because, as you are selecting the information to relay to your prospects and clients you are also selecting the information to relay to your staff. Once relocation staff becomes divorced from the workings of the industry then they can’t help but devalue it as well, leading to further commoditization and a less nuanced approach to partnership.
So, here is a quick summary of INFORMATION over this time period: a) Movers were the first required vendors but; b) they lost many corporate relationships because relocation companies provided the information that corporations desired; c) a monopolization of information dispersal and the conscious choice as to what to educate about created large gaps of knowledge amongst corporations about how the industry operates, and how a sub-vendor actually provides their service; d) the flooding of the market with information devalued consultative education for the most mobile Canadian corporations, which dovetailed very nicely with e) procurement’s reduction of information’s complexity to fields in a spreadsheet.
We are left with an industry that is, at one and the same time, more informed than ever about policies and practices and less informed than ever about the workings of the industry itself. More importantly, in a way, is that the industry is less informed than ever about WHAT TO KNOW ABOUT. Yes, it is important to know all of those policy items. But it is also important to know that the information you are getting should always be tested in the marketplace (Information is not uniform. For example, most relocation professionals would now admit that for a long time Guaranteed Home Sale was incredibly oversold in this business without solid analysis as to whether it was appropriate for each client or not. It still goes on today: I recently met a prospect which had been wasting tens of thousands of dollars per year because of information they were NOT told about by their relocation provider). So, again it is not just about how much you are educated, it is what you are and are NOT educated about.
Final word: the movers must share some of the responsibility. While they did fight for those relationships, they fought the wrong fight. They did not see that the fight was about information over actions. And it was the movers who devalued information about their industry’s complexity in the first place. Each agent sold their special knowledge of getting the best drivers on the job as if it was Colonel Sanders’ secret recipe. This is a result of the van line network structure, with each agent vying to book more moves than their agent-fraternal partner-cum-competitor. “Yes, my van line is the best, but within that van line, I have the secret recipe to work within it better than others.” Since the relationships that movers had with their corporate clients were about service / actions and not education, the movers were ripe to be buffeted by a tidal wave of information.
In my next blog, I will go onto other services that are supplied to relocation companies, and why THE INFORMATION’s current and next target is big relocation, and what it is forcing big relocation to do as a result.
Final note: I am not judging (well maybe a little bit) in this blog. Judging a super-structure within which you operate is like judging a tornado in which you stand. It is far better to assess it and watch where it is going. That is what I am hoping to do with this blog series.