How To Create, Implement And Enforce An Organic Corporate Travel Policy - Business Travel News

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How To Create, Implement And Enforce An Organic Corporate Travel Policy

October 29, 2010 - 01:00 PM ET

By Tom Wilkinson, president, TRW Travel & Expense Management

When travel policy is well-crafted, effectively communicated and supported by travelers and executives, it becomes organic, that is, a part of the corporate organism. When policy is organic, travel managers have a good chance of achieving the strategic objectives of travel management: savings, service and safety.

On the other hand, if the travel policy is out of date, out of synch or out of order, managers lack the tools needed to succeed. They will never be able to strike the right balance between corporate needs for cost and control and traveler desires for comfort and convenience.

Unfortunately, based on "Corporate Travel Policy: Benchmarking and Insight, An Industry-Wide Research Study," a July 2010 large-scale study of travel policy sponsored by Egencia and the NBTA Foundation and administered by my firm, many North American companies fall short in terms of giving travel managers the policy tools and institutional support they need to manage travel effectively.

In fact, almost two-thirds of the respondents describe their policies as guidelines rather than enforced rules. Further, more than three-quarters of the respondents stated there are either no consequences for policy violations or that repercussions are limited to a slap-on-the-wrist talking-to by direct managers. It seems that for most North American companies, travel policy is honored more in the breach than in the observance.

That is unfortunate because the same study also showed that an effective, enforced travel policy yields airfare savings of up to 62 percent on domestic and 58 percent on international airfares. That's a big opportunity to ignore.

What's really ironic is that the most serious problems are not with the travel issues with which most readers are familiar. The most important savings drivers—advance purchase and nonrefundables—are well-known and addressed to varying degrees in most policies.

Most policies also include at least some of the parameters included in the concept of lowest logical fares, which means the lowest fare excluding the low fares travelers don't have to take. Common lowest logical fare exclusions are built around variable policies defining arrival and departure windows, connections and alternate airports.

Most policies also require travelers to use preferred vendors, which are suppliers that offer contractual discounts. Required use of preferred vendors is most common for car rental suppliers, followed by airlines and hotels. The differences are driven by the relative ease—or difficulty—of standardizing services in each of those categories. For example, it's much easier to standardize, and therefore mandate, use of a midsize sedan at O'Hare International Airport than a three-star hotel in the Chicago metro area.

The study presents a lot of specific data—there were almost 700 responses from companies in the United States and Canada—about the range of policies used by companies of different sizes and cultural profiles. If you want information on the percentages of companies that include specific provisions in their policy and data on how much money specific policies can save, please check out the report on the NBTA website.

When is a policy not a policy? When it's ignored or not enforced. Let's consider how to avoid such an ignominious fate for your policy.

Culture

If your policy is out of synch with your culture, travelers won't follow it and managers won't enforce it. On the other hand, policy is successful when travelers use preferred vendors and follow lowest logical fare rules, simply because it's the right thing to do and "the way we do things here."

Synching policy with culture is easier said than done. Most people think that they understand their own company's culture, but we really only see it from our own point of view. Really understanding and defining culture requires careful listening to various constituents in your company. Cultures change constantly; they also vary from place to place and from business unit to business unit.

To build a successful policy, travel managers need to begin by defining how travel is purchased now. After they understand the present reality, then they can identify the behavioral changes they want to make and look for support.

You earn support for policy changes by communicating not only the what, but also the why. For example, not just, "we need to fly ABC Airlines between HQ and Chicago," but also, "in order to save $75,000 this fiscal year." The same rule applies to process changes: "we are required to book online" almost begs for opposition unless you explain that it's "because we will save time and money while protecting travelers on the road."

Communication

Communication about policy takes many forms and is never done. The first step is to have a written travel policy, which most large companies have, but nearly one-third of smaller companies have not written yet.

It's also important the policy be clear and concise. This seemingly obvious point often gets lost through years of committee edits and additions. If the policy is too long, nobody will read it. If there are too many caveats, exceptions and details, nobody will absorb them. Make sure the important rules are clear and up-front.

Clarity tends to be the biggest problem when companies tack on a zillion rules about allowable expenses or try literally to create a single, global policy. Don't get me wrong: I strongly support the idea of a global umbrella policy. Too often, though, global policies get bogged down with local exceptions.

When it comes to communications, and with apologies to James Bond, once is never enough. Keep the what-and-why messaging coming in every medium and forum: electronic, hard-copy and face to face.

Enforcement

Once you have a policy that every one knows about and is comfortable with, then it is time for you to ensure that you have executive endorsement, which is critical for you to effectively enable enforcement. Getting a written note from the CEO or CFO is important, but its impact when it comes to securing employee buy-in fades over time.

Policy enforcement needs to be as automatic for approvers as it is for travelers. On an ongoing basis, managers need to see how much the organization gains or loses based on policy compliance. They also need assurance, like through management reports, that all the other managers in the organization are following the rules as well.

What you want to avoid are situations where managers make personal judgments about specific trips. You don't want them thinking "well, so-and-so has been putting in a lot of hours lately, so I should probably approve business class." They need to think, "wow, this guy wants business class to Chicago! I'll look like a complete wimp if that gets through."

Good policy doesn't need to be restrictive but you do need to ensure that managers and travelers are strictly adhering to it.

The bottom line is that your message to managers needs to be: "We've all agreed on the policy, and we all understand how much we save if we all follow the policy. If you don't like the policy, then let's talk about changing the policy. In the meantime, you need to enforce it."

While this might be harder for you to do than for me to say, hopefully, as you read this, you're thinking about how to make your travel policy more of a logical outgrowth of the corporate DNA.

This report appeared in the Oct. 25 issue of Business Travel News.

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