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Is your travel policy up to scratch?

With travel consistently ranking as a top expense area, it’s little wonder that most procurement managers understand the need for a sound travel policy. Despite their best efforts, though, runaway costs persist, leaving many scratching their heads.


December 20, 2011
by Jacob Stoller

Travel Management Canada: Premier Issue – November/December 2011

With travel consistently ranking as a top expense area, it’s little wonder that most procurement managers understand the need for a sound travel policy. Despite their best efforts, though, runaway costs persist, leaving many scratching their heads.

The main culprit for most is employee non-compliance, leading to symptoms such as over-priced hotel bookings, missed discounts with preferred carriers, or costly flight cancellations.

Most travel managers recognize this; a recent survey by Carlson Wagonlit Travel (CWT) found that 68 percent of respondents identified improving traveler compliance as their top priority for 2011. Unfortunately, many either aren’t sure how to go about this, or rely on outdated methods to solve their problems.

While employee compliance is a timeless issue, the current travel environment presents new challenges that require new ways of thinking. Technology, for one, is transforming both external processes—how we book everything from flights to hotels—and the internal communication processes we use to communicate with employees.

Fortunately, technology can also be a powerful ally when it comes to getting a better handle on travel expenses. By following a few simple principles, purchasing managers can ensure that employees stick to the rules when they travel on business.

Emphasize proactive communication
Given the ubiquity of e-mail, smartphones, and laptops, there’s no excuse for travel policies sitting on a shelf—procurement managers should tap into the wireless channel to ensure timely communication on travel policy issues. All travelling employees should be consistently reminded of the policies and the need to comply. Access to policy information should be immediate and straightforward.

Policy documents should be posted online on an accessible, easy-to-find webpage, so that travelers can reference it no matter where they are. Furthermore, don’t take it for granted that employees will be aware of all the latest policy changes; make sure you notify them through e-mail, or other reliable methods.

These messages should not only communicate the specific changes that have been made, but also why—studies have shown that compliance improves when employees understand the reasoning. “It’s very important that you clearly walk them through the changes,” says Stefan Fallert, director of CWT Solutions Group’s policy and compliance consulting practice. “If you’ve done some good things, tell them, but if you haven’t, at least explain why.”

Keep your policy lean and mean
It’s up to travel managers to ensure those documents are as clear and easy to read as possible. Make no mistake: if there are ambiguities in the writing, the policy will be misinterpreted somewhere down the road. Obviously, the larger the organization is, the more likely this is to happen.

While non-compliance is often the result of outright negligence, procurement managers can mitigate risk by sticking to some tried and true methods when formatting a travel policy. “The document has to be well organized, and it needs to be clearly structured,” says Fallert. “There should be absolutely no redundancies or inconsistencies.”

For documents longer than three pages, a table of contents always helps. Bullet points and multiple paragraph breaks can help make a document more digestible. Fallert suggests a quick summary is also an effective way to inform people. “You might call it ‘Top Ten Business Travel Rules,’ for example, where you emphasize things like advanced bookings and restricted fares.”

Fallert also advises against making a travel policy too long; a 50-page document is likely to be ignored. Remember: anyone should be able to treat it like a quick reference guide. If they can’t find what they’re looking for in an instant, it may be time to do some tinkering.

Don’t underestimate the psychological power of words when making a point. CWT found that replacing the word “should” with “must” has improved compliance for several of their clients.
Standardization of policies across the entire organization is also key. The days of different rules and regulations for different ranks and regions of an organization should be long over, as this only creates confusion for managers and travelers alike.

“Standardization of policies across the entire organization
is key. The days of different rules for different ranks
and regions of an organization should be long over.”

Bring in the big guns
Thanks to powerful information tools, a senior manager these days can make a snap decision on an issue halfway around the world without missing a beat. Technology can keep them in the loop regarding travel policies, and also convey their endorsement of such policies.

CWT has found that reinforcement from senior management is another key to compliance. Something as simple as the CFO’s signature on a policy, for example, conveys the seriousness of that policy. “Engaging management has become extremely important,” says Fallert. “The higher the endorsement, the easier it is to say, ‘That’s our policy, and look who signed. Do you need any other explanations?’”

The more management is engaged, the better. Having a senior manager communicate policy changes, or letting employees know that the higher-ups will be informed about policy violations is helpful. Having senior managers personally follow up with violators will quickly get the message out.

Leverage your data
Using travel data to analyze costs and trends is another key to a sound travel policy. For starters, a report can quickly show whether employees are complying, and what non-compliance is costing the organization.
“You need to be in control of your data,” says Fallert, “because only then can you understand, ‘Where am I with my compliance? Am I increasing compliance? If not, what’s the reason why?’”

Data can also help assess the potential costs of various policy decisions. If, for example, a company is considering requiring employees to fly coach instead of business class for the remainder of the calendar year, managers could quickly assess the savings from such a move.

The key to analyzing data is being able to collect it and consolidate it into a single database or program. Online booking creates a wealth of accessible data, however, the key to making it usable is having as few data sources as possible. Reducing the number of suppliers, and keeping all expenses on company credit cards, are essential to keeping the chore manageable.

Travel management organizations often provide single-point online booking systems which automatically collect all travel data and make it accessible for analysis. Some, including CWT, go a step further by providing benchmarking data on air and hotel rates, putting a procurement manager in the driver’s seat when it comes to negotiating the best rates. As well, they can have compliance provisions built into their online booking tools which might, for example, prevent an employee from booking on an unauthorized airline.

“This is a powerful driver for policy compliance,” says Fallert. “These tools have become very smart.” They can provide real-time reporting and analytics, pre-approvals for flights, and other services that allow tight monitoring and control of travel expenses.

Don’t stop improving
Casting policies and processes in stone is not the way in an era of real-time communication. A truly effective travel policy has to be able to evolve in an ever-changing landscape molded by technology. As opportunities arise to track costs, open up new avenues of communication, and enforce proper behaviour, procurement managers should be ready to jump on them in order to get a leg up.              TMC