OP-ED: Demystify Price, Policy Process

<B> OP-ED: Demystify Price, Policy Process</B>

By Jim Peterson

<i>Jim Peterson, formerly director of travel and expense for Tempe, Ariz.-based Allied Signal Business Services, has spent the past year in the new post of director, travel & expense for Kansas City-based Yellow Services Inc.</i>

For those establishing a travel policy, I would like to offer the following observations:

From the perspective of economics, travel policy procedures and guidelines tend to be better complemented by a clear understanding of the "hard dollar" facts. Anecdotes concerning the relative cost of policy direction (for example, direct versus connecting flights, "full service" versus "flea bag" hotels, etc.) are plentiful and usually one-sided.

Travel managers may fare better if they are able to establish an accurate price-to-cost model. Such a model should be able to demystify the value of a given policy direction.

Take for example a West to East Coast flight: We know that the flight takes a certain amount of time. We also know that you lose two or three hours due to time zones. By establishing the typical arrival time for a non-stop and arrival time for a connecting flight you can determine the remaining business hours for the travel day. Odds for either case are that the trip will consume all business hours for the travel day--with no productive working day left. By comparing fare savings, you will probably find that the connecting flight is far less expensive, and you have really lost no productivity.

On the other hand, an East to West Coast trip may resolve itself in an opposite way. The traveler "picks up" two to three hours, and may be able to provide productive work at the destination. In this case, the travel manager may want to weigh the average hourly wage of a traveler, count the time as "productivity" and compare that to the non-stop premium.

I suggest a strong closed loop process that keeps travelers' opinions and perceptions in the forefront. Again, our understanding of the mood of travelers tends to be anecdotal rather than factual. Travelers may be driven by motivations that the travel manager does not understand. For example, we may hear that travelers are more productive if they stay in full service hotels. We actually can find that the class of hotel is meaningless, and ironing boards or other amenities are far more important.

Using tools such as surveys, travel managers can assess the effectiveness of the travel program. Once fully understood, actions could be established to revise travel programs or communicate issues where gaps exist between reality and perception.

I have received delightful surprises from travelers in surveys. When I changed to this company, I was told that one of our agreements was horrible, the cost was too low--service was poor. After conducting a survey, I found that the overall population was pleased with the program. We had only a vocal few who did not truly understand the reason for change. Rather than forcing a massive change, I was able to execute a minor program upgrade--with huge success!

Accountability for the travel program should include the traveler, the supervisor, the agency and the travel manager. It is easy for travel managers to suggest that we have no real power over the success of the travel program. I suggest that we are the most important part of program design and success.

Travel managers should ensure that policies are fulfilled and workable. We should be sure that the policies not only reflect the mood of our leadership, but our travelers as well. In cases where there is a gap, communication and correction should be our specialty. Travel managers are the key to keeping the loop closed and policies on a continuous upgrade.

Mandates sometimes bring pushback. If properly marketed (that is, reasoned, announced and progressively enforced), mandates will cause fewer issues. Success of a travel policy mandate naturally assumes that the economics, traveler input and accountability are all soundly in place.

Any travel managers who live in an environment where economics, mood and accountability are not important should thank their lucky stars.