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"I abhor benchmarking, which is one of the industry's dumbest practices," according to Prism Group president Michael Whitesage. Said TRX Travel Analytics president Scott Gillespie, "It is my strong view that classic benchmarking of [airline] discounts between companies is wrong and it is worthless." But that's not what senior executives at multinational companies think.
Actually, benchmarking is a critical means for travel buyers from Bristol-Myers Squibb, Hewlett-Packard and United Technologies to communicate the value of their travel programs to senior management. Speaking here at The Masters Program earlier this year, the travel management trio couldn't say enough about how important benchmarking is to executive support for both the development and justification of the travel program itself. There is a variety of different benchmarking methods to consider, including internal versus external metrics, cost-based or process-based standards and intra-departmental measurements as opposed to companywide comparisons, they said.
"I do not put a number on a slide that goes to anyone in H-P without getting questions about how it compares to benchmarks," said Hewlett-Packard global travel and meetings services director Lea McLeod. "Our question is not only how to be ahead of the benchmark, but really how do we become the benchmark? How do we become the best-in-class performer and create competitive advantage?"
H-P compares its major business units against each other on total cost, cost by category, cost per head, T&E expense as percentage of revenue, total demand, policy compliance performance and the cost of non-compliance.
Regarding total demand, McLeod said the key query relative to other units and unit profitability is, "How much are we consuming and is it the right number for the business?" Unit managers are given monthly scorecards showing where they stand--even including spend categories that are difficult to consolidate, such as meals and entertainment.
"We also capture trip reason codes to track how much spending is not in front of the customer," she said. "What's the right number? Our overall average is 52 percent of the time, traveling is for internal business. Demand management [would] shrink it down, but [after] first finding out what is the right number."
External benchmarks at H-P include corporate peers of each major division and are broken into "how much it costs and how we do that," McLeod said. In terms of spending, key metrics are:
McLeod said it's "tough to find" such information and has asked service providers to "please help us get better data sets around your key benchmarking issues, particularly if you use headcount and a percentage of revenue [or] operating margin." However, she added, "In procurement, we look at it around all categories and we tend to have better information for benchmarking in travel than most other categories."
As for "benchmarking ourselves against the 'hows,' " she listed:
McLeod said the company also tries to account for the identity of benchmarking peers' agency and payment suppliers, how global their programs are and how policies are structured--whether regionally or globally.
Describing her company's recent global travel policy review, United Technologies Corp. global travel manager Laura McAndrewsaid it's "critical, especially if you're going to design the policy on a global basis, that you understand what other corporations are doing out there and you can incorporate things you haven't thought about or that may further benefit the organization."
Bristol-Myers Squibb corporate travel services director Lisa Jacobsen agreed, noting that for airline negotiations, "Not only is senior management looking at our program and our airline deals in terms of what they do for the travel spend, but also they want to see what other companies are doing to help during negotiations. Are airlines asking us to give them too much relative to other companies?" Third-party providers and travel management companies can provide tips, Jacobsen said, as well information on typical discounts.
Management Alternatives president Carol Ann Salcito said air procurement is "one of the hardest areas within the travel management program to talk about with regards to benchmarking."
BMS generally relies on external benchmarks with like companies, but adds caveats where necessary because it is geographically disbursed, with travel operations in 57 nations. Jacobsen's presentation cited a "need to understand your company's unique qualifications versus other companies" in terms of size, industry, travel patterns (locations, destinations, purchasing behavior) and travel policy.
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