{"id":1665,"date":"2022-04-20T18:25:09","date_gmt":"2022-04-20T18:25:09","guid":{"rendered":"https:\/\/militarymovers.co\/?p=1665"},"modified":"2022-04-20T18:26:26","modified_gmt":"2022-04-20T18:26:26","slug":"transforming-itself-from-a-traditional-moving-company-sirva-assembled-a-range-of-services-and-expertise","status":"publish","type":"post","link":"https:\/\/militarymovers.co\/transforming-itself-from-a-traditional-moving-company-sirva-assembled-a-range-of-services-and-expertise\/","title":{"rendered":"Transforming Itself From A Traditional Moving Company, Sirva Assembled A Range Of Services And Expertise."},"content":{"rendered":"
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Brian Kelley, president and CEO of SIRVA Inc. (SIR), explains that SIRVA (from the Latin servire, to serve \u2014 a name coined in 2002 for a company under construction only since 1998) started out as a traditional moving company. By rapidly assembling product offerings ranging from immigration management to mortgage services, the company, he says, is \u201credefining relocation for our customers.\u201dNotes Bradley Safalow,* an analyst at JPMorgan Chase & Co. (JPM), \u201cSIRVA has transformed itself from a pure-play moving-services provider to a leading provider of relocation services. We think the company now has the platform in place to gain market share in the $50 billion global relocation-services industry\u201d\u2014 a market he describes as encompassing an array of relocation services beyond simply the shipping of household goods: home purchase and sale, mortgage, appraisal and title services; visa and immigration management; tax assistance, and expense management and records management. With reported 2003 revenues of $2.3 billion, which the company says gives it claim to third place in this market behind comprehensive third-party relocation advisors Cendant Corp. (CD) and Prudential Relocation, a subsidiary of Prudential Financial Inc. (PRU) \u2014 SIRVA\u2019s strategy is bold, says Kelley: to become the world\u2019s best relocation solutions company for its customers.<\/p>\n

The van lines would become the foundation for a full-service relocation provider. That strategy, he says, called for assembling assets. With Rogers anxious to move on to new CD&R projects, it was time to bring in a full-time CEO, says Rogers, who adds he reacted enthusiastically when Kelley\u2019s name came up. The two had been colleagues at General Electric Co. (GE), says Rogers, a 26-year GE veteran whose last positions before joining CD&R as a principal in 1998 were as senior vice president and as a member of GE\u2019s corporate executive council. Kelley, meanwhile, notes he had worked at GE from 1994 to 1998, including a stint as vice president in the major-appliances division, before he joined Ford Motor Co. (F) as vice president of global consumer services, eventually becoming president of Lincoln Mercury. \u201cThe roots of SIRVA\u2019s culture come from GE,\u201d says Rogers<\/p>\n

FLEET OF FOOT<\/h2>\n

Transforming the relocation business wasn\u2019t the objective when private-equity firm Clayton, Dubilier & Rice (CD&R) acquired North American Van Lines in 1998 and merged it with Allied Van Lines in 1999, explains SIRVA chairman and former CEO, and CD&R partner, Jim Rogers. He says the initial, more modest strategy was simply to gain a foothold in the $7 billion global moving space, which, he says, was fragmented among numerous small, often independent or franchised competitors. By 2002, SIRVA says, it reasoned that the $1 billion in annual revenues it garnered between North American and Allied gave it enough scale to justify investment in technology infrastructure and to institute cost control measures. As it became more efficient, says Rogers, SIRVA instituted a growth culture.<\/p>\n

The strategy was viable at the time, says Rogers. But \u201cwe spent all of 2000 integrating equal-size companies that had been archenemies for a long time.\u201d By the time SIRVA merged the companies, ramped up technology and cut costs, he says, the environment had changed radically. During the information-technology boom of the late 1990s, says Kelley, corporate coffers were overflowing, and SIRVA\u2019s clients took the position that \u201ctalent infusion was key, and they\u2019d put talent where they needed it.\u201d As a result, says Kelley, \u201crelocations boomed.\u201d But when the economy cooled in 2000 and 2001, so did relocations, he points out. Even as total volume diminished, he says, clients searched for cost savings. Instead of moving employees by hiring independent movers, he says, companies were contracting with such comprehensive third-party relocation advisers as Cendant and Prudential Relocation. The strategy was meant as a way to reduce per-move relocation costs, says Rogers, who adds: \u201cWe woke up and realized the market space was still terrific; it was just that buying habits had changed.\u201d<\/p>\n

Rather than hunker down and protect what market share it had, SIRVA embraced an aggressive, acquisition-based offense, says Rogers: \u201cIt\u2019s a high-integrity meritocracy, passionate about customers, having a belief in the magic of people, high differentiation in compensation, recognition and reward and honest talk and no hierarchy or cronyism.\u201d<\/p>\n

Enter Brian Kelley in July 2002.\u201dLiterally a month before I got here,\u201d says Kelly, now 43, \u201cSIRVA bought Corporate Relocation Services [(CRS), a third-party relocation firm based in Cleveland], handing me a nice acquisition that had tremendous potential for future growth.\u201d<\/p>\n

Acquiring CRS, however, would not allow the still relatively small SIRVA to go head-to-head with the much larger competitors, notes Kelley, who has a degree in economics from Holy Cross College. So, he says, the company redefined the market space in a way that played more to SIRVA\u2019s core strength: the combination of relocation and moving services. Most relocation services solicit bids among movers when relocating a client, explains Rogers, who notes, \u201cWe owned the moving brands. We could go to customers as the one company in the world that could guarantee trucks and drivers in the peak summer moving season. We had cost advantages because we did not have to mark up the moving. And we offered risk abatement in terms of buying and selling houses (offering a pre-agreed price if a relocated employee\u2019s house remained unsold after a specified period of time).We came up with a very, very strong value proposition, and it\u2019s worked spectacularly.\u201d To market its new full-service offerings, the company first targeted its long-term moving clients, says Rogers, and added new customers as experience built.<\/p>\n

LOCATING ASSETS<\/h3>\n

Other acquisitions, made possible by CD&R equity, bolstered SIRVA\u2019s ability to provide complementary services to clients, explains Kelley. He reels off in quick succession a string of companies SIRVA bought between 2000 and 2004: In the relocation business, he says, the company purchased PRS Europe in Belgium, France and the Netherlands; Rettenmayer in Germany; and Prime International of Australia \u2014 now SIRVA Relocation \u2014 in the Asia\/Pacific region. He says international moving-company acquisitions included France\u2019s Maison Huet and Allied Pickfords in the Asia Pacific region.He adds that SIRVA moved into providing vehicle and liability insurance by buying TransGuard and the National Association of Independent Truckers (NAIT). From 2000 through June 2004, SIRVA reports, the company spent more than $154 million on acquisitions meant to gain advantage over competitors by building out its global footprint. SIRVA now has more than 8,000 employees in over 40 countries, says Kelley. About 20 percent of the company\u2019s gross revenues come from European and Asian relocation services, he adds.<\/p>\n

By November 2003, SIRVA executives say, the company was large enough to go public. The initial public offering on the New York Stock Exchange, along with a secondary offering completed in June, raised approximately $800 million. The proceeds were used to pay down debt, reduce the ownership stake of existing private investors and position SIRVA for additional strategic acquisitions, says Kelley, who notes CD&R retains about a 30 percent stake in the company.<\/p>\n

Kelley insists that SIRVA\u2019s methodology is simple: It uses every asset to leverage its way into profitable markets, a tactic he illustrates with scribbled diagrams and matrices. An early example: \u201cWhen we acquired Allied, we also got TransGuard, which provided insurance to moving companies. So we asked,Why can\u2019t we insure companies that aren\u2019t moving companies but have fleets, trucks and drivers? That drove the National Association of Independent Truckers acquisition.NAIT at the time represented 11,000 drivers, and we\u2019ve grown that to about 30,000. There\u2019s still a 200,000-driver growth opportunity in the U.S.\u201d<\/p>\n

Kelley explains that SIRVA continuously cross-references its products and services (moving, relocation, insurance, business services) with customer channels (corporations, consumers, government, fleets, and drivers) and geography, looking for opportunity. A country in which one customer channel or product\/service category is strong may present possibilities for growth in another arena. \u201cThe growth game,\u201d says Kelley, \u201cis all about taking current products to new channels and exploring new channels with current products.\u201d<\/p>\n

To simplify its business model, SIRVA says, it is disposing of underperforming logistics businesses, asset-intensive operations that move heavy or specialized loads and do not meet the company\u2019s growth demands. SIRVA reports it sold its North American specialized transportation business in October and expects to complete the sale of its European counterpart shortly; Transportation Solutions is also for sale.<\/p>\n

LOOKING FOR MOVERS AND SHAKERS<\/h4>\n

Rogers says that the businesses are only one facet of SIRVA\u2019s success formula \u2014 the others being culture, people and operational excellence.He particularly points to culture, noting that SIRVA started at a disadvantage: Some initial acquisitions were \u201ccorporate orphans,\u201d or small divisions of larger companies. \u201cIn those environments, they don\u2019t get the money, talent or encouragement to be the best they can be.\u201d Given such drawbacks,Rogers says, they were infected with static, complacent entitlement cultures with promotions and rewards based less on performance than on seniority. \u201cChanges,\u201d he says, \u201chad to be made.\u201d<\/p>\n

Kelley admits that he is passionate about \u201ca culture that sees the possibility of the future, that sees the benefit of change. You have to show people why growth is important and how it\u2019s possible. You have to give people the confidence to grow, and provide businesses with the tools and the investment they need.\u201d He says employees who bought into the growth culture helped provide \u201ca mix of expertise that\u2019s been here quite a while, plus new talent that challenges and learns at the same time.\u201dMorgan\u2019s Safalow lauds Kelley\u2019s efforts to date: \u201cHe has significantly altered the company\u2019s culture, making it more sales-oriented.\u201d<\/p>\n

Kelley ticks off the names of \u201cathletes\u201d who have joined the company and who share his vision of SIRVA\u2019s potential, lured \u2014 as he says he was \u2014 by a sense of opportunity and commensurate reward. He also touts the SIRVA Leadership Program.\u201dWe hire kids right out of college and put them through an 18-month program so they can step up and play a big role for us.\u201d The first crop of nine students \u2014 immersed in sales, marketing, finance and operations, working on cross-functional projects and in the field with customers and agents \u2014 will graduate in January, says Kelley, who notes that five new participants have begun the program and 15 more are slated to join through July.<\/p>\n

METRICS DASHBOARD<\/h4>\n

Once the right people were onboard, SIRVA says, it began upgrading its operations to favor a customer-centered approach embodied in a \u201clean Six Sigma\u201d quality-assurance program. SIRVA develops a \u201cdashboard\u201d of metrics particular to each customer, Kelley explains. \u201cWe go to the customer and say,\u2019 Here\u2019s how we\u2019re performing for you, and here\u2019s how we\u2019re performing for other clients. If we\u2019re not doing as well for you or not meeting your specs, why?\u2019 It\u2019s a unique way of approaching the client because it\u2019s collaborative and you work together to improve your quality based on customer selected metrics.\u201d Kristie Kederis, SIRVA vice president for quality and a certified Six Sigma black belt, notes that SIRVA conducted a series of \u201cVoice of the Customer\u201d roundtables to determine which metrics were critical. In relocation, she says, these include level of transferee satisfaction, total expense by relocated division, number of days a home is on the market, home-sale price compared with its appraised value, and billing accuracy. \u201cA reporting engine that sits on top of our systems allows us to automatically query and populate the graphs,\u201d says Kederis. Reports are tracked internally on a weekly basis and reviewed with clients monthly, she says. \u201cWe monitor and analyze risk points before problems occur, and issues are resolved before reports reach the client. This contributes to our 98 percent retention rate.\u201d SIRVA reports that it completed 20,000 transfers and 365,000 moving shipments in 2003. SIRVA says it was awarded a GSA Federal Supply Service Schedule contract in 2003 and is one of a handful of companies that offers a full range of relocation services to federal agencies. Safalow notes that SIRVA has gained market share at the expense of other market players: \u201cIn 2003\u2019s fourth quarter, approximately 80 percent of SIRVA\u2019s new business was won from a competitor.\u201d Under Kelley\u2019s watch, Rogers says, SIRVA continues to enhance its range of services and expand its global reach. In September 2004, for example, the company reports that it acquired D.J. Knight & Co., a specialty residential brokerage and relocation-services company operating in 32 states as well as several European business centers. Rogers says he expects such aggressive expansion will continue: \u201cWe\u2019ve just started in this, and we have many years ahead of strong growth and operating leverage and the ability to self-fund more acquisitions.\u201d<\/p>\n<\/section>\n<\/article>\n