Challenged to cut Nokia's travel spend by 15 percent, beyond reductions related to a faltering economy, global sourcing director Paul Perry sought to alter traveler behavior, create a new mindset focused on work-life balance and educate senior leaders. The company by year-end 2009 specifically attributed €30 million in travel cost savings to this approach, part of an overall travel spend reduction of €200 million--about half of the total 2008 travel budget.
When the economy soured in 2008, Nokia "was losing market share; there is no secret about that," Perry explained during an Association of Corporate Travel Executives meeting held here last week. "There were new competitors on the scene and it was very challenging. Our operating expenses were very tight and we were looking for ways to conserve cash. When you start looking at discretionary spend, things like training and travel float to the top very quickly. Travel is one of those mental things [perceived as] people flying around wasting money."
Nokia's CFO asked Perry to do more with less, not just by cutting travel spending, but also to "challenge demand." As a result, Perry created an awareness campaign promoting the company's virtual teleconferencing technologies furnished by Hewlett-Packard and Tandenberg. By advocating not only an improved employee work-life balance but also the environmental benefit of cutting down on carbon emissions, Perry motivated employees through more than just the cost-cutting argument.
"A trained monkey can go out and try to choke 3 percent out of a hotel, but that is not going to save you a lot of money," he said. "When you start looking at the supply side and the demand side, and you start looking at how the products and services are consumed within your company, that is when you start running into some serious savings.
"Changing hearts and minds is like marketing; you have to influence the way people feel, influence the way they believe," Perry continued. "Other companies that had a travel ban, the minute they lifted the travel ban their travel doubled the next month. It didn't change behavior long-term, it only put a Band-Aid on a problem."
Coining the term "travelogic," Perry pushed Nokia's nearly 40,000 travelers to think about business travel in a new way, in which "your ideas and work product must travel, but not necessarily your body." Business travel "affects your work mood, your individual productivity, your work-life balance and it also affects the environment," he said. "We save the money-saving part for last because most people aren't driven so much" by the savings perspective versus the aspects that impact them individually.
To push forward these strategies, Nokia "travel consultants" worked with business groups "to identify needed behavioral change, track progress and report results," according to Perry's presentation. The consultants had about a half-dozen "engagements" during the second half of 2009 and more than a dozen more this year, including "six of the CEO's nine direct reporting organizations," ultimately accounting for 50 percent of Nokia's worldwide employees.
Perry's marketing campaign on the personal benefits of traveling less and the financial benefits to Nokia highlighted managers who set examples and included blogs and other informational avenues. Perry estimated that Nokia would save another €10 million if the message reaches the other 50 percent of employees.
"This [campaign] is not something that we intend to have for a year and then have everyone forget about it," Perry continued. "We plan to have this into the mindset of the managers, the controllers and the employees so that they will think this way about business travel. Policy has the least effect."
Policy Changes
Perry also changed the company travel policy by making business class air travel the exception rather than the norm, and encouraging use of restricted airfares. Proving that restricted airfares achieve savings versus flexible fares was a challenge, but armed with data gathered through TRX’s Traveltrax data consolidation tool, Perry said the evidence was virtually irrefutable. "You're never going to get 100 percent of your people; there is going to be that 5 percent that is going to say, 'I have to be flexible,' " Perry admitted. However, "if you cover 80 percent or 90 percent of the people in your organization with this thinking, you made headway." Meanwhile, in some cases, pre-trip approval is needed.
By effecting such changes, a company "can save 15 percent to 25 percent of your air spend without ever calling" the airline, Perry claimed. "We went from having thousands of employees qualifying for business [class] travel down to less than 200 globally. The rest of us, we are back in economy."
Though the company still had plenty of clout after slashing travel expenses, Perry found that "when you start cutting your spend in half ... [suppliers] who were your friends before no longer want to be friends with you. That was part of the challenge, we were losing negotiation leverage."