Globalizing Corporate Travel

<B> Globalizing Corporate Travel</B>

By Mike Kabo

<i>Mike Kabo is president of Solutions Inc., a travel and meeting management consulting firm with offices in New York and San Francisco.</i>

Globalization is on the minds of many travel management professionals these days. ACTE has just concluded its annual global conference in Paris, and NBTA will be holding their "Going Global" conference in Washington this week. Yet with all the educational venues and information disseminated about "globalization," many experienced U.S. travel managers continue to report disappointing results.

Why? The answer lies in the fundamental difference between how U.S. organizations are managed within the United States versus their overseas operations.

When we speak about globalizing a corporation's travel management program, most travel management practitioners endorse the development of a strong centralized policy, backed by senior management. The vision also includes a single global travel agency, a comprehensive T&E payment and reimbursement system, and long term supplier relationships that are designed to reduce costs, increase market share and minimize the number of vendors used by the company.

Through trial and error, education, persuasion, management directive and good luck, U.S. travel managers using this model generally have been able to implement a cohesive and cost-effective program domestically that meet the expressed needs of their corporations. Regardless of the size of the company, the number of subsidiaries or management restructuring, the travel management process works effectively in the United States.

Yet these same experienced travel professionals, attempting to bring what they see as reason and cost effectiveness to travel management in other parts of the world, are quickly frustrated and yield a dismal success rate.

Why the disconnect? Do corporations buy or use travel so differently in Asia, Europe and Latin America? No. But when we cross the Atlantic, Pacific or head south, there's a big difference in corporate accountability and management structure.

In the United States, a corporation's operating units or departments are large and generally diverse. Most are held accountable through their approved annual operating budgets. Few departments, if any, are really charged with increasing a corporation's revenue (and it is these groups who generally have the most travel policy exceptions). Budgets often start with last year's actual and then are massaged up or down, or modified by specific mandated efficiencies. Travel budgets, like all other large ticket items (labor, information systems, etc.) move up and down from year to year due to external budgetary forces, not actual travel forecasts.

Travel management has become necessary and important in the United States because travel expenditures generated within the United States are significant for most multinational corporations. When we enter the global arena, however, senior managers with a strong centralized travel program in the United States are hesitant to articulate the same rules to overseas operating units. Why? My experience as a global travel manager at Avon Products and consulting with a number of clients indicates that successful multinational organizations outside of the United States work best when left alone from centralized corporate programs and mandates.

General managers outside of the United States usually have responsibility and accountability for the profit and loss statement for their country or region. This is how they are measured. Unlike their U.S. peers, they run an entire business. They are in effect the corporate COO/CEO combined into one.

When a manager is given that level of responsibility, senior corporate management generally maintains the attitude that the role of headquarters is to help, but only when asked. Otherwise, they should stay out of the way and let the general manager run his or her business. The bottom line profit is the measuring stick. When it comes to travel, on a dollars and cents basis, a "local" general manager may not see travel as a high priority because it is not a big expense within their P/L. While in the United States, the travel manager may see air travel originating overseas totaling millions of dollars, each country that makes up that amount may only be responsible for a small portion of that total.

So what should travel managers do when trying to globalize? They must go back to basics, be realistic about their expectations and settle for small victories. Travel managers need to remember the early days when trying to convince U.S. senior management that paying attention to travel really could make a difference to the bottom line.

Travel managers also must clearly articulate the benefits of a travel management program. Today's global corporate business culture dictates that the only thing that really matters to the general manager is how a travel management program will improve their bottom line, and by how much? Travel managers must be prepared to answer this question.

Travel managers also need to understand the fundamental differences between the level of accountability and responsibility that department heads in the United States have and the higher level held by general managers overseas.

The faster these lessons are learned, the greater the global success rate will be.