European Compliance Rises

<B>European Compliance Rises</B>

By Amon Cohen

"The past 12 months have seen a major swing toward policy compliance," Hogg Robinson sales and marketing director Chris Fry told a BTI UK client conference in London last month. "We have seen a fundamental shift."

Compliance does indeed appear to be improving in Europe. In a poll of more than 100 travel managers at the BTI UK conference, 60 percent said they were achieving levels of more than 75 percent. BTI actually disputes the optimism of these figures, especially in the area of hotel expenditure, where many bookings continue to be made direct and data quality is poor.

However, two banks that are BTI clients, HSBC and Barclays, have told BTN of successes in pushing up compliance over the past year, and Cathrine Wickerts, travel buyer for Skansa and chair of the Swedish Business Travel Association, confirmed that companies in Sweden also have achieved better adherence to travel policy.

Techniques for improving compliance have included a combination of the carrot and the stick. On the one hand, travel managers have worked harder to draft policies that suit the needs of their travelers. On the other hand, there is growing intolerance of policy exceptions. Above all, the key lesson that has been learned is that good communications are essential.

"It is all about communications," said Alan Gooderham, head of travel at Barclays Bank. "We need to win the hearts and minds of our stakeholders."

Over the past 18 months, compliance at Barclays has shot up to 89 percent from below 70 percent. Gooderham attributed this success largely to his communications program. "We have done it in partnership with BTI," he said, "but you cannot pass all the responsibility to the agent and let it be done at the point of sale. You have to send the travel team out on their bikes."

According to Gooderham, the issuing of a few terse edicts and communicating through such traditional channels as general in-house publications is not sufficient. "Sending tablets of stone down from the mountaintop does not work any more," he said. His solution was to form user groups and to stage traveler clinics at which he would explain the business case for the bank's travel policy, illustrated with simple financial models.

It took a great deal of work, and not all travelers who said they would attend seminars did turn up. They had to be picked off one by one in follow-ups. However, Gooderham found it easier than one might think to command the time of travelers to hear him out. "It is a subject close to their hearts and it was not too difficult to capture their interest," he said. "We explained why policy was good for the group and good for their cost centers."

Communications also is one of the four C-words in the credo of Tony Pilcher, senior group travel manager for HSBC. Travel managers, he believes, must communicate compliance to travelers. This leads to consistency and in turn that achieves cost-effectiveness through the honoring of supplier deals.

Communicating for Pilcher is very much a two-way process. "To achieve compliance, you have to understand why people don't want to comply," he said. "Your policy document should be continually reviewed to take in the views of travelers."

Both BTI UK director of account management Andrew Perolls and Cathrine Wickerts confirmed that travel managers are getting better at listening. "We are participating in a lot more travel-user groups in conjunction with our clients," Perolls said.

The policy Pilcher has designed is highly flexible. If, for instance, employees travel with a client, they are allowed to fly with the client's preferred carrier. Another example is flying within Europe. This should normally be done on a Eurobudget economy fare but if, for instance, the traveler needs greater flexibility and the business class fare is only marginally more expensive, the traveler can take the dearer ticket at the discretion of their budgetholders.

In return for this liberality, HSBC cracks down hard on anyone who does not play by the rules. Only 12 executives in the whole of the United Kingdom are authorized to sign off on policy exceptions. They also are scared off of breaking the rules by senior management endorsement: The HSBC travel policy carries a foreword from the bank's chief executive officer.

Obtaining the CEO's endorsement was not difficult for Pilcher. There is only one layer of management between him and the top man, the head of human resources. "It was easy to make the CEO understand because one of our core strategies is strict expense discipline," he said.

Not everyone finds it so simple to bend the boss's ear, however, and this political aspect of internal communications is something Pilcher regards as extremely important. Travel managers, he believes, have to campaign for their status. "Where the travel manager sits is fundamental to the success of travel management," he said. "It is vital for the travel manager to ensure travel management is at the center of the agenda."

According to Wickerts, travel is moving up the order in Sweden. "Travelers are understanding how important it is to use our agreements, and senior managers have a growing appreciation of how much money is involved and how much can be saved," she said.

Growth in the membership of the SBTA by 25 percent this year is a reflection of the increasing importance of travel, she believes. Improving compliance also is strengthening relationships with suppliers leading, in a virtuous circle, to still better deals. However, the expectation of good compliance also is leading to suppliers introducing penalties for failure to meet volume or market share commitments. "There are sometimes clauses in contracts giving the supplier the right to negotiate if, for instance, the client has not met one-third of its commitment in the first six months of the deal," Wickerts said.

BTI's Perolls noted companies going to greater lengths to explain the virtuous circle of negotiation, policy and compliance. In certain instances, travel managers are making it clear to travelers that if they follow policy closely enough, they will be able to negotiate a deal that allows flying in business class rather than economy. Good compliance also facilitates the negotiation of extras, such as lounge access for economy passengers.

Another breakthrough Perolls has observed is in the speeding up of the trip approval processes. "Companies are spending a lot of time looking at the authorization process," Perolls said. "This has traditionally been very laborious--sometimes travelers have been required to obtain so many signatures that they have gone ahead and traveled anyway. We are spending more time process-mapping with clients."

In many cases, the solution has been the introduction of pre-trip reporting to weed out exceptions rather than forcing all travelers to seek prior approval. The gradual adoption of online reservation tools, which sometimes do not even give travelers the option to book nonpreferred carriers, also is helping to put an end to trip approval.