Ericsson Pushes Travelers to Book Early, Fly Coach

<B> Ericsson Pushes Travelers to Book Early, Fly Coach</B>

By Amon Cohen

<I>Stockholm</I> - In 1990, Swedish-based global telecommunications giant Ericsson achieved savings of 4.2 percent on its air spend against full-fare tariffs, while most of its travelers flew in business class. This year, it will save around 40 percent against full fare, and most travelers will have flown in economy. Worldwide spend is an estimated $370 million across 130 countries, of which $105 million originates in Sweden.

It is an impressive achievement, and the progress made by Ericsson Group Sweden corporate travel manager Brigitte Ringdahl is a classic example of how forward-thinking European companies are delivering enormous business value by bringing travel budgets under control.

This success has been matched by increasing recognition of travel management within the group. Six years ago, Ringdahl was the only travel manager at Ericsson, working part-time for just one of its businesses. She liaised on an ad hoc basis with a shifting assortment of personnel from finance, purchasing and human resources in other Ericsson companies. Today, she is full-time in travel across the group in Sweden, working with another full-time and two part-time travel managers. There is also that crucial link to Ericsson employees through a steering committee of four, drawn from throughout the group.

But her hard-earned progress is only half of this snapshot of travel management in Europe. Ringdahl is convinced she coulddo more, but several factors are conspiring to frustrate her--difficulties which are shared by many other travel managers this side of the Atlantic.

In essence her dilemma is this: Assuming a trip is necessary, the best way to save money on travel is to fly in economy. In the United States, that is relatively easy to achieve because companies find it easier to mandate travel policy. In Europe--and particularly in Scandinavia, where business is done by consensus, not compulsion--mandating is rarely an option because it is far more likely to encourage resentment and rebellion than compliance.

Ringdahl therefore finds that much of her job involves the art of public relations: persuading employees to accept Ericsson's simple, two-part global policy--book in advance and fly economy. Each country and business has built a more detailed policy around these two basic recommendations.

The essential Ericsson philosophy is that travelers should fly economy unless they have a good business reason to trade up. "If they are going to the Far East for important negotiations, for instance, we are anxious they should reach the destination in good condition, so they can go in business class," said Ringdahl. "If it is to a seminar, they should not go outside policy. The purpose of the trip is what is important."

Ultimately, the yea or nay lies with the traveler's line manager, not with Ringdahl and her team. However, she has found ways to work within these constraints to keep employees at the back of the bus. Attempts to book outside policy are brought pre-trip to the attention of the traveler's managers, who must give specific consent for the exception to be allowed.

When management information shows that individuals are departing frequently from policy, their conduct is again brought to the attention of their manager.

Finally, Ringdahl benchmarks each Ericsson company and business unit for the percentage of tickets booked outside policy. Allowances have to be made to ensure comparisons are valid. Some divisions, for instance, have large numbers of sales executives visiting regions such as the Far East where they would lose face if they arrived in economy. But others have engineers working on long-term projects who can save money by buying tickets with Saturday night restrictions.

Nevertheless, Ringdahl is still able to assess whether a business should be performing better. "When we see we have a 'communications problem,' we often call the manager or the managing director and ask them if they want us to come in and offer advice," she said. "However, we cannot mandate. Each manager has his or her own responsibility for their budget and as long as they are in the black, we cannot force them. We have to act as consultants."

Despite the success of this method, she would like to achieve greater compliance. "Eighty percent of our travelers are doing very well; instead of finding problems, they try to find opportunities," she said. "But I would like to find a way of getting to the other 20 percent, because I spend so much time struggling with them. A change of just two percent would bring us big savings."

Ericsson also differs from standard U.S. multinational practice in that it has not greatly consolidated its travel agencies. Ringdahl principally uses both American Express and Bennett BTI, but also retains Carlson Wagonlit Travel for one business unit.

Ringdahl is not concerned about the lack of consolidated management information from the different agencies. She relies more for her data on the Amex card, which is given to company staff in 30 countries, and also sees benefits in having two agencies. "When you have as large a spend as we do, you can only negotiate your price down with a single agency to a certain extent," she said. "Also, we can carry out day-to-day benchmarking between the two."

In addition, the competition engenders more of a "can do" attitude among the agencies. "If one says it cannot do something, we tell them that their colleagues across the street can do it and usually they come back a few weeks later with an even better suggestion," she said.

Ringdahl, however, would like to be driving better consolidated deals with preferred suppliers, especially across borders. Negotiations for a single Nordic deal with SAS and its Star Alliance partner Lufthansa are proving tough, though. "Amex provided us with good MIS showing our top 60 city pairs," she said. "We told SAS and Lufthansa that this was what they had today and what they could have tomorrow--but it is hard to leave Sweden without using SAS or Lufthansa. The only thing we can do if we don't succeed with them is to shift our volume to other airlines, but then we will always have to fight against the attraction of the SAS frequent flyer program." The solution, she has decided, is to negotiate traveler perks with alternative airlines, such as use of business-class checkin and airport lounges even when flying economy. Talks are proceeding at the moment.

Ringdahl also is starting to discuss global possibilities with her U.S.-based colleagues, but it will not be easy to agree on consistent worldwide standards. Ericsson is a good example of how European and U.S. business cultures--each effective in their own way--can be very different indeed.