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Is a Three-Bid Procurement Strategy for Employee Relocations Wasting Time and Money?
Collecting three competitive bids for purchases is a logical, sensible way to find the best price for goods and services. Today, many companies regularly employ a three-bid procurement strategy for a variety of purchases in order to find the best value for their dollar. Three-bid procurement works well in specific contexts like purchasing computers, machinery, and other capital equipment, but not as well when employed for services like moving and relocation. Employing a three-bid procurement strategy for purchasing employee moving and relocation services can have unexpected negative consequences on financial and human resource departments, while creating less than positive experiences for relocating employees.
Companies utilizing a three-bid procurement strategy for employee relocations may not be considering how this approach may overtax their financial and human resources departments while also creating conditions for less than stellar relocation experiences for their employees. Performing a three-bid procurement strategy for each employee relocation means that the company is likely working with different moving providers for each move. Doing this prevents companies from building relationships with a trusted, high-performing provider who knows the company’s preferences, processes, and specific relocation policies. Not only does this mean that each employee may be receiving various levels of service quality, but it also sets the stage for a loss in efficiency for the company who must spell out their specifications and policies anew each time, with no way of knowing how well they will be adhered to until after the fact. According to our past studies and surveys, three-bid procurement strategies for relocation services cost an average of 8-15 hours of additional work spread across the relocating employee, human resources, procurement, and accounts payable teams for a single relocation. By comparison, companies who were contracted with a professional relocation provider, on average, spent less than one hour working on a given employee’s relocation.
Not surprisingly, using a three-bid procurement strategy for employee relocation doesn't just waste time, it can also waste money. In most cases, companies utilizing a three-bid strategy offer a lump sum or reimbursement program for employee relocations. This puts the employee in the difficult position of being treated like a consumer in the purchase of moving services. On the other hand, companies that operate under a corporate relocation contract are able to offer their employees a number of benefits that result in cost and time savings. These savings are due to certain guarantees, benefits and preferential treatment extended to employees moving under a corporate relocation contract that are not available to consumer customers. Here's what you can expect to learn from this guide:
- Benefits of a contracted corporate relocation and moving program for the company and employees;
- Contracted programs result in greater savings, on average, than three-bid programs
- Top employee relocation challenges facing HR and procurement professionals and how the three bid process exacerbates those challenges
- Additional stress and burdens placed on relocating employees under a three-bid system
And much more.
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