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Article Excerpt
Establishing, communicating and reviewing corporate travel policy remains essential to creating a successful travel program, but a tougher negotiating environment and continued security concerns have been driving compliance to top the list of travel management priorities. Whether forceful or gentle, effective travel policy should clearly guide travelers toward use of preferred suppliers and classes of service, instruct and detail approved booking practices, thoroughly discuss policy exemptions, and explain the motivations for corporate adoption of such procedures: to ensure that negotiated supplier agreements are met, excess spending is minimized, and traveler security always is maintained.
While overall travel spending rose in 2004, so did the trend toward tightening and more strictly enforcing travel policy. Constant changes in the industry drove buyers to review travel policy annually to update it and to clarify gray areas.
The advent of technologies that allow travel managers to drive and monitor compliance through their online booking tools has enabled companies small and large, lightly and heavily managed alike, to reemphasize the importance of travel policy to travelers and travel arrangers engaged in self-booking. Even companies establishing a travel program from the ground up can build policy directly into the booking system, enabling instant, direct communication with travelers and enhanced exception reporting.
More mature travel programs are continuing to target new or previously untapped areas for cost control through revisions to corporate travel policy. Driving online adoption always has been a primary focus of cost-cutting initiatives. Today many travel managers are seeking innovative ways to push online self-booking. Mandating or strongly encouraging online booking of specific, frequently traveled city pairs has helped some companies reduce transaction costs and increase compliance. Where no online booking tool is in place, or online adoption has reached its ceiling, stringent enforcement of advance booking procedures has become a popular policy target.
While it may be too soon to understand whether it will impact internal travel policies, airlines' recent attempts to reform the airfare structure have eliminated Saturday night stay requirements and lowered the cost of premium class travel.
As the hotel industry rebounds and room rates continue to rise, with increases well into double-digit percentages in some cities, many travel managers are revisiting policy to ensure travelers book hotel segments within their corporate guidelines.
Meetings travel also has come under the travel management microscope of late, and some corporations have instituted or tightened the section in their travel and entertainment expense policy that addresses this category of travel spend. As meeting and transient travel continues to converge, policy revision can help travel managers address everything from approval requests through final implementation.
Often, travel managers trying to combine meeting room nights and transient traveler nights can, by strictly managing and monitoring group spend, gain some negotiating leverage in this area.
Rising fuel prices also have made car rental an area of recent focus by policy makers. Some travel managers have attempted to manage ground transportation expenses by negotiating for, and outlining in corporate travel policy, the advance payment of gasoline.
Discouraging rogue or noncompliant traveler behavior is a priority for all travel programs regardless of size, spend or sophistication. While senior management-imposed mandates often are considered more aggressive than absolutely necessary, they seem to have come back into fashion. Nonreimbursement of noncompliant expenses seems to have gained prominence again in the corporate travel space. Beyond realizing cost savings, companies that drive compliance with a strong, measurable policy also may see benefits in proving their ability to move market share, gaining negotiating leverage with suppliers, helping travelers to save time and effort in carrying out their work for the company, and maintaining the appropriate levels of comfort and security during travel.
Having recently completed the first Sarbanes-Oxley filing since the Act took effect in 2001, travel professionals are just now able to start assessing the real, tangible impact Sarbanes-Oxley has had on managing a travel program. Though it is always recommended to pursue an annual policy review and, if necessary, revision, the pending analysis of this year's Sarbanes-Oxley filing will enable travel managers of companies subject to Sarbanes-Oxley regulations to look more closely at how travel policy can respond to the new restrictions.
A policy development process that addresses many or all of the elements outlined below should provide a solid foundation for travel policies that fit your company:
I. QUESTIONS TO ANSWER
A. Who should write and update the travel policy?
1. One person, such as a travel manager, who has extensive knowledge of the travel industry or world regions should draft the document. Although this individual should be the sole publisher of the document, collaboration from various entities in the company will guarantee buy-in and support of its usage. The travel manager should use all avenues of benchmarking, i.e., peer groups, travel management companies and industry-related consultants, which can provide perspective on accepted industry standard.
2. A committee of people from various departments within the company: accounting, administration, finance, HR, strategic sourcing, sales and marketing, and any department with a high frequency of travel. The committee should make recommendations to a policy writer for implementation. The travel committee should seek input from travelers, who can help interpret the impact of policy decisions.
3. A high-ranking executive: a key department head, the CFO or CEO, it always is helpful to include a letter of support from the CFO/CEO when you communicate policy.
4. Different people at different sites or divisions: For global policies, having representatives from all of the countries involved often helps win support and improves compliance.
5. A combination of the above: At many companies, the travel manager writes the policy for approval by a committee and senior management.
B. Who should be subject to the policy?
1. Employees at headquarters or whichever location is issuing the policy only. This is easiest to administer, but differentiating travelers based on location can prove difficult for companies subject to Sarbanes-Oxley regulations.
2. Employees at any domestic location, division or branch: This offers greater cost control, but could interfere with autonomy for individual units and locations.
3. All employees, including those overseas: This choice should take into consideration that travel expenses are more difficult to track overseas, and differences in international laws and cultures could make it impractical or inadvisable to mandate adherence to various policies. It may not be feasible to get every country into the policy parameters.
4. The policy should stipulate that individual travelers, as well as groups, are subject to identical policies. Some companies, however, may want to cover groups, conferences and meetings in a separate policy or department.
5. The policy should include consultants, job candidates, customers and subcontractors as well.
6. Institute an umbrella policy for all employees that divisions individually can restrict, if necessary, but not relax.
C. Should policy apply equally to all levels of employees?
1. Yes: This sends a message to employees that management is serious about controlling costs, and no one is above pitching in to help.
2. No: It might not be in a company's best interests, for example, for its president to waste time changing planes to save on the cost of a ticket rather than applying his expertise to achieving company goals. Special consideration should be considered for high-ranking executives and others whose time is most valuable from a financial perspective.
Some companies also may allow special handling of frequent flyers, usually defined as those traveling over a certain mileage threshold over a 12-month period. It can be good for morale to recognize "road warriors," but such programs require more administration and some risk that travelers may take unnecessary trips. Still, all travelers are a valuable asset to an organization and should...
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