Buyers Work With Agency, Consultant To Benchmark

<B>Buyers Work With Agency, Consultant To Benchmark</B>

By Megan Hjermstad


<B>Innovation:</B> Benchmarking travel management programs in small to midsize companies

<B>Sponsors:</B> Travel and Transport, R.D. Brown Co.

<B>Participants: </B>ConAgra Foods, Cyborg Systems Inc., DST Systems, RIMS, RW Baird & Co., Principal Financial Group and eight others.

Omaha, Neb.-based Travel and Transport, in conjunction with Chicago-based consultancy R.D. Brown Co., has developed a travel management benchmarking project that 14 of its corporate clients participated in to help improve their travel programs.

"We try to put ourselves in the place of the corporate travel managers we do business with," said Larry Cook, Travel and Transport senior vice president of sales, marketing and client service. "One thing that would be very important to me is comparing my travel program with other like companies. Travel managers are constantly inundated with questions and requests: How does our travel program compare? How do we know we've got the best program? If I was a travel manager, I would want some study showing how we ranked and scored."

After a number of clients expressed an interest in benchmarking, Travel and Transport explored existing opportunities and selected Ralph Brown's benchmarking program, Best Practices in Travel Management, an interactive program that he has been offering to his own clients and travel management companies since 1994.

"When we went and looked at what was out there, there weren't too many options on best practices," said Cook. "We weren't in it just for the numbers, we wanted to get a feeling for where our clients fit into the industry. Ralph's project had an extensive database with not just clients of T&T, but companies with best practices in the industry."

Brown over time has compared 400 clients against each other and has more than 230 companies in the database with information less than two years old. Unlike other benchmarking applications, Brown's program focuses on travel management practices instead of numbers and numerical data. "If you have the most efficient travel practices, you're going to have the best stats," said Brown. "Warehousing information on travel data is something that changes so much month over month."

Melinda DuBay, travel manager for Omaha, Neb.-based ConAgra Foods, who participated in the benchmarking survey, agreed that measuring programs by numbers alone can be misleading. "Without getting into the detail of why a program is performing at a particular level, one may be missing many important factors that influence traveler behavior," said DuBay.

T&T solicited its largest clients, such as ConAgra, and some with smaller volumes that would add valuable input to the benchmarking study.

Julz Albin, travel/contract administrator at Kansas City, Mo.-based DST Systems Inc., with roughly $10 million U.S. booked air, said she was thrilled that T&T sponsored the project. "Travel is not a big focal point in the company," said Albin, who is responsible for office equipment and maintenance contracts in addition to travel. "What we really were hoping to do is identify areas where we could make a change and save money."

Sean Blair, CFO of Chicago-based Cyborg Systems Inc., which last year moved its more than $1 million travel spend from Tower Travel Management to T&T, said, "I really wanted to see how we stacked up. I think we do things well, but we always can do things better. The exercise gave me a good chance to critique T&E policy, negotiations and communication."

Rick Schnoes, associate director at Des Moines, Iowa-based Principal Financial, which has a $8 million travel spend, said the benchmarking exercise made him feel confident about its switch from Carlson Wagonlit Travel to T&T in July. "We thought with that change, in addition to a tighter travel policy, it would be good just to see if we were heading in the right direction," said Schnoes. "The results indicated we were heading in the right direction and confirmed we are on the right track."

Participants were given the benchmarking survey on a set of disks in which they graded travel programs in eight major components: travel policy, travel agency, MIS, supplier negotiations, communication and training, payment and expense reporting, group travel and meetings, and travel management strategy. Those eight major components, were divided into 65 subcomponents, with an average of five questions per subcategory, for a total of 300 questions. "Literally everything you do in travel hits into one of those categories," said Brown. "It forces the travel manager to break down the travel system into very small pieces. If you find 10 areas you are weak in, it gives direction to improve in almost every case. Instead of using experience and gut feelings, it gives a sound methodology."

Companies were compared with companies with similar travel spend, so travel managers could see where they ranked within a peer group. Two T&T clients fell into the spending range below $1 million, five clients fell in the $1 million to $5 million range, two clients in the $6 million to $10 million range, one client in the $11 million to $20 million range and four clients in the over $20 million range.

Carole Barnum, vice president of travel and special events at RW Baird & Co., said it was very important to compare her company, which has a $4 million air spend, against companies in the same range. "I have sat in a number of industry meetings, and there is no question there is a big difference depending on spend," said Barnum. "Look at Seagram; it wouldn't be realistic to compare us to someone like that."

Travel managers compared against their section of the database received a numerical grade on a 10-point grading scale overall and for each component. Among T&T clients, seven companies rated from 6.15 to 9.0, and the other seven rated from 3.94 to 5.83.

Albin was pleasantly surprised by her company's overall score of 6. "I thought we were a lot worse off," said Albin. "We were not as stringent as we could have been, but we ended up being right at the norm. Given scores in black and white, we have been able to identify target areas where we could gain the most benefit." Albin was less interested in the overall score than how she fared in the individual components, such as travel policy and meetings, which is not a company focus.

Albin said communications was the company's other big downfall. "We are working diligently in trying to come up with a good solution to send out pertinent info," said Albin, who is challenged by the diversity of the company, which includes road warriors and employees who rarely leave the office.

Principal Financial scored 6.37 overall, which was slightly above average. "My initial reaction was a little disappointed, but as I got into the details some of the areas considered best practices are counter to our culture and given the environment, we wouldn't do anyway," said Schnoes. He said the survey confirmed that the company is heading in the right direction with revisions made to travel policy and renewed focus on communication throughout the corporation.

Participants received an e-mail with a graphical report and an explanation of individual strengths and weaknesses in advance of a meeting in September. Scores were kept anonymous, but participants were ranked 1 to 14 so they could see how they fared in comparison to other T&T clients. Brown in the meeting discussed what the results meant, shared group trends and showed how they as a whole ranked T&T.

T&T from the feedback got a picture of how they are performing as an agency and based on that created a corporate action plan for improvement. T&T client service managers are using the information to help companies develop individual action plans for taking programs to the next level. "It allows us to sit down and communicate with them and gives us a clear vision of the areas where we can help them improve," said Cook.

While T&T possibly will repeat the exercise with a different set of clients, Cook said the company now has a good idea of areas of best practice. "It gives us a sense of how we can help other clients because we now have an idea where they would have scored," said Cook.

Meanwhile, companies have something tangible to take back to senior management. "A number of times I would be in a situation with an executive who would ask, 'how do we compare?' I took this opportunity and jumped on it," said Barnum.

"As you can imagine travel for a senior manager or front line person can be very frustrating given the fact we were going through transition," said Schnoes. "We were getting questions from senior management on how effectively we were managing travel costs." Schnoes already has prepared a memo to senior management, which communicated why they participated, what they expected to achieve, the areas in which the company scored high, a list of action items and where he will focus efforts in the next 12 months.

"One of the things we constantly struggle with is bringing value add to our clients. In this day and age of travel management companies being paid a fee for services rendered, people above the travel manager constantly are asking, 'Why a travel management company?' We have to do a better job of tooting our own horn, demonstrating what we're doing on a daily basis and giving them that ammunition," said Cook.

Companies won't be able to access a new database with added companies, but will be able to benchmark against their original scores to see how they have improved.

"I think it would be very interesting to repeat the benchmark every one to two years to see how our program is progressing as compared to other organizations," said DuBay. "The results will help us to identify areas where we may want to focus in the future.