Procurement Practices 2010: Reining In Disciplinary Measures

Armed with newfound support to curb travel costs within every level of the organization, procurement professionals this year are relying less on punitive mechanisms to control traveler behavior and instead are turning to the fundamentals of communication and data availability to empower division leaders, mid-level managers and corporate travelers to regulate errant spend.

Travel procurement professionals have found fewer reasons to pull certain levers to manage travel behavior, according to comparisons between this year's Procurement Practices survey and the 2009 edition, which Business Travel News editors fielded during the downturn's deepest valley. Red flags in bookings have gone down, the number of companies deploying mandates has decreased, verbal warnings are heard less often around the office and comparative report cards are on the wane, the survey shows.

Though those shifts could be attributed to different survey samples in 2009 and 2010, something else could be in play, said former Association of Corporate Travel Executives president and Bank of America travel buyer Greeley Koch, now director of strategic development at management consulting firm Acquis Consulting Group.

"In a way, the travel manager's job, and this may sound counterintuitive, was made easier in this past year when it comes to compliance," Koch said. "When you have that top-down support, things happen immediately. When you compare that to the past, the old way was the travel manager had senior management support and a broad policy, but then they had to drive that compliance. They had to make visits, cajole people, provide reports, sit down with senior leaders of all sorts of various divisions, plead and finesse in order to get compliance. I think this past year or so, this was completely different."

The past year has brought travel department goals more closely in line with the chief financial officer's agenda, as both sought to curb costs. When emboldened by that level of senior management support, travel managers and procurement professionals found themselves playing the role of police officer less and less, as every budget-holder, mid-level manager and division head adopted that role, all in support of the CFO's vision of cost containment, Koch said.

"When I looked at these results, at first they might surprise some people. Why are mandates down to only 51 percent? Why are travel counsel warnings only 44 percent?" asked Koch, citing mechanisms respondents' companies use to manage traveler behavior. Last year, 60 percent of respondents' companies deployed mandates and 56 percent issued verbal warnings from travel counselors.

"If you went back a year or two ago, those comparatively could have been flipped, where those mechanisms were used much more," Koch said. "What I saw in the last year, year-and-a-half and two years is what this recession brought on and how the travel management program has been supported from the top down in ways never seen."

Koch agreed that the mission of compliance has been supported from the bottom up as well, as travelers more than ever feared red flags, altered rogue behavior and in some cases self-selected into more cost-conscious modes of transport and lodging. No one wanted to stick out as a maverick.

"You didn't want to stick your head too far out of the foxhole, because if you did need to travel in your business, because you're producing revenue or you have a client issue or whatever, you traveled smarter," Koch said. "I saw this all the time where folks said, I'm not going to stay at that hotel because it's a few dollars more, or I'll stay at this one because the Internet is free."

Still, declining compliance enforcement hasn't been the case all around: Formal warnings ticked up a percentage point, line manager reprimands also went up a bit and management reporting usage was adopted by 83 percent of respondents this year, up from 81 percent in 2009.

Taking the largest leap in the Procurement Practices survey, from 75 percent of respondents in 2009 to 83 percent this year, a greater number of companies reported they are more regularly communicating policy, whether via e-mail, corporate intranet or other ways.

That's been the case at Becton, Dickinson and Co. "The big part for me is communication," according to vice president of global procurement Chris Shanahan. "Our view is, we give you the data within the guidelines of the policy that's set, and it's up to you to manage it. We're not here to police or enforce it. That's a business decision."

VeriSign global manager of employee services sourcing and procurement Yasuo Sonoda agreed that communication, not red flags and reprimands, serves as the linchpin to compliance.

"It isn't about managing behavior but creating an infrastructure that says, here is the speed limit, here are some stop signs, here is where to go, the road is paved as smooth as possible, and we'll give you tools to do the right thing," Sonoda said. "For example, we put in end-to-end solutions, so when you're making a reservation online, if you're not picking the lower hotel room, then it's going to make the traveler aware and ask for a reason."

Mechanisms like red flags, verbal warnings and D-minus scorecards convey "a projection of negativity," said Sonoda, who instead embraces dashboards as a way to communicate compliance metrics to company executives.

"The higher up in the company you are, the less time you have to look at things, so I follow the 15-second rule. If you as an executive have 15 seconds to look at one dashboard, then that's all I ask," Sonoda said. "On that dashboard, I would have things like how many people under you have expense reports that are delinquent by 30, 60 or 90 days. If they look at their column and see that everything is green, then they don't have to do anything. If they have one red box, they click on the dashboard and it takes them deeper into the reporting with just one click of the button. It's not a report card, and the goal for that 15 seconds of time is the executive telling their direct reports, 'Whatever you do, make sure I don't have anything red the next month.' That's the communication part of it."

Still in the glow of compliant travelers, division manager enforcers and senior management cheerleaders, the question remains as to whether old behaviors will return with each additional trip taken and as the depth of the downturn makes way for yet another up-cycle and higher travel volumes.

Koch, for one, is optimistic that the cost-conscious traveler behavior and executive discipline that marked the recession will outlast the gradual recovery expected this year and next. "I think they're still sticking," he said, "and I think they'll continue to stick."