Managing Meetings At: Taro Pharmaceuticals--Co. Redefines Spend Mgmt. Methods

Taro Pharmaceuticals Industries Ltd. earlier this year mandated all meeting sponsors to broaden the range of spending categories and base budgets on a cost-per-attendee metric. In doing so, the midmarket firm's finance and executive committees have received better information on which to base forecasts of meetings spending and decisions on meetings requests.

The new methods of meetings spending budgeting also have given Taro, an Israeli pharmaceutical company with U.S. headquarters in New York, an internal set of benchmarks that enable better cost forecasting by meeting category, particularly training meetings, said corporate travel manager Robin Buzzeo.

Taro neither purchased nor developed technology or software to shift its budgeting technique. All budgets and data are maintained on Microsoft Excel spreadsheets, to which the approving committees and internal meeting sponsors have access.

Taro officially implemented the mandate in the second quarter of 2004 after a short trial period. That mandate complements a longstanding meetings-approval policy that requires the firm's operational, finance and executive committees to sanction a proposed meeting before planning or spending activity takes place.

"We created a spreadsheet with budgeted, forecasted and actual meeting expenses and broke it down to cost per attendee, instead of a whole number," Buzzeo said. "Nothing can go forward without that. It's an easier tool to estimate costs and it saves labor."

The new spreadsheet far exceeds the scope of Taro's previous budgeting methods. Though prior budgets included most aspects of meeting spending, including air and hotel expenses, other categories of spending were left out. "We've included line items for ground transportation, expense reports for meals, promotional materials, speaker fees and giveaways," Buzzeo said. "We're not trying to be hard-nosed about it. This is a tool to move forward."

The resulting spreadsheet, Buzzeo said, offers the firm a more complete picture of all the costs associated with a given event, not just travel costs. As a pharmaceutical firm that holds events, including external attendees, promotional materials and speakers, those fees quickly can escalate.

Taro requires all meeting sponsors to complete each line item for every meeting request form, and to update spending figures as events warrant. Now, in addition to budgeted and actual spending figures, the company requires a post-approval but pre-event addition of a "forecasted" line-item, to determine if figures have escalated in the interim.

"Making them complete the full form and put all their needs in and develop an attendee list allows the committees to have all the information pre-approval," Buzzeo said. After the approval, she added, the requirement to include forecasted spending encourages sponsors to keep a tight rein on spending increases and overruns.

A major benefit to the new system, Buzzeo said, is the reduction of time and labor required to create an initial budget. "Before, people would call me and ask if I could price a meeting to be held in France or Canada, or the United States," Buzzeo said. "It would take an awful lot of time, and would often not come to fruition, so it would be a waste of time. Then, they would ask where I thought it should be held, for a given amount of money."

The cost-per-attendee metric, instead, allows sponsors to develop a general outline for the proposed cost of a meeting and allows Buzzeo to assist in site determination, based not on nebulous cost forecasts, but on the most comprehensive information available. "Pre-approval helps me and helps the travel department, and puts the onus of fiscal responsibility onto the department holding the meeting," she said.

That, in turn, frees Buzzeo's department to further delve into site-selection analysis. "We're piggybacking on our airline and hotel agreements," she said. "We feel strongly that our air arrangements should dovetail with meetings, and we look for places that are easy to get to, cost-efficient and meet the criteria of the budget." The company saved about $15,000 on one recent meeting, she said, by shifting the proposed site from Chicago to Atlanta and using nonrefundable fares. Taro also has delved into multiple-meeting contracts, she said, including those with conference center chains.

Following an event, Taro now can better assess the actual amount spent and how effective that spending was in meeting the firm's objectives for the meeting. "We can look at each column as a learning tool," Buzzeo said. "Did we come under or close to the budget? Did we get the bang for our buck? Was the meeting worth it?"

The initiative not only was approved by senior management, Buzzeo said, but Taro executives pushed for a new way of calculating and categorizing meeting spending. "The CFO previously would get a handle on meetings spending in general, but he would see a lot of auxiliary costs that were not appropriately charged to the right department and cost center," she said. "Plus, he wanted to know the return on investment for each meeting. Now, we can see all the numbers."

While the cost-per-attendee metric works well for Taro, due to the frequency with which it repeats similar types of meetings, Buzzeo said it would not necessarily be as applicable for other corporations. "I don't know another way for us to do it, because for us, cost is the common denominator that unites all parties," she said. "It may not be for everyone, though, due to corporate cultures. "

Taro Pharmaceuticals typically holds between 15 and 20 meetings per year, Buzzeo said, and will spend about $2 million on all 2004 U.S.-booked domestic air travel.