Sponsors
'How to Guides'
Sponsored by:
The Business Travel Show is the leading event for anyone who buys or manages company travel, or books business trips and sources meeting venues over the internet, the phone or through an agent.
The exhibition is held annually across three days, in Earls Court, London, showcases hundreds of the finest business travel products and services from the world’s leading suppliers together with over 30 hours of education in the expert led Conference.
Why a travel policy is essential
No organisation can manage its travel programme and keep travel expenses under control unless it has a well-planned travel policy. A policy lays out how much employees can spend, who they spend it with and how they book, pay for and account for their trip.
The main benefits of a travel policy are:
- Setting limits to prevent excessive spending by travellers
- Ensuring travellers direct their spending towards preferred suppliers
- Demonstrating to preferred suppliers that you are serious about directing spend towards them
- Ensuring comprehensive data collection by prescribing booking and payment through approved channels
- Establishing compliance and accountability as well as demonstrating duty of care
Problems
Yet in spite of the importance of travel policies, compliance with them is extremely variable from organisation to organisation, department to department and even individual to individual.
Many of the factors driving non-compliance can be avoided by planning a careful policy strategy in the first place. Writing a clear, workable policy is the first barrier to overcome but the mistake many travel buyers make is to think their work is done once the writing is finished. In fact, it is just the beginning. The policy must be actively communicated and then monitored and enforced. All these issues are dealt with below.
Writing the policy
Any travel programme must strike a balance between minimising cost to the organisation and maximising comfort and convenience to the traveller. A travel policy is the mechanism which sets that balance.
The main areas of content are:
Is your journey really necessary?
The first question the best policies pose is whether an employee should be travelling at all, given the cost, time and environmental consequences of making a trip. The policy should invite the traveller to consider alternatives, such as using telephone, Web or video conferencing.
Booking channel
Usually, this specifies that travel must be booked through the organisation’s approved travel management company (or companies). Even if other parts of the policy are only recommended, the choice of TMC is almost always mandated, along with the method of payment (see below), to ensure the organisation can capture all its booking information. Without comprehensive management information, it is almost impossible to persuade suppliers to negotiate substantial corporate discounts.
If your organisation uses a self-booking tool, define when the tool should be used and when it is acceptable to call the TMC instead.
Supplier choice
Make it clear that travellers should always choose preferred suppliers, and list (if your policy is online) who those preferred suppliers are. Define also the circumstances under which it is permissible to use non-preferred suppliers.
Money-saving tips for creating rules on flight booking:
- Advance purchase. Explicitly encourage advance purchase of air tickets. The earlier a traveller books, the cheaper the fare.
- Time of day. Air fares can vary according to the time of day at which departure is scheduled. Encourage travellers to fly outside the early morning and late afternoon rush hours if possible.
- Time windows. Some companies instruct their TMC to book the cheapest flight within two hours of a traveller’s preferred time of departure.
- Preferred carrier bias. Some companies allow travellers to use a non-preferred carrier if it is cheaper than the preferred airline. However, directing spending away from the preferred airline runs the risk of missing its minimum volume targets. Compromise by only allowing use of a non-preferred carrier if it is a minimum amount (say £100) cheaper than a preferred one.
Standard of travel
For air travel, this is usually defined in terms of which class a traveller can fly (see below). For hotels, it can be according to the star grading of the property but as both pricing and quality within star gradings vary enormously, it is more usual to set a financial limit.
Who flies in business class?
This is often the most difficult decision to be made in a travel policy. Flying business class is more comfortable, more conducive to work and boosts morale. On the other hand, it can easily cost ten times more than economy. Some organisations inisist all travel is in economy but most allow some flying in business class. Deciding who should fly at the front can be based on several criteria:
1. Length of flight – travellers are allowed to travel business class on flights over a certain duration.
Example: set minimum flying time at six hours, allowing business class for long-haul trips but economy for short-haul.
2. Personnel – travellers of a certain level of seniority in the company can fly business class.
Example: restrict business class to board level only.
3. Reason – travellers fly business class according to their reason for travel.
Example: restrict business class to employees flying with customers or those working on day of arrival.
4. Duration of trip – travellers fly business class if their trip is shorter than a specified minimum duration.
Example: allow business class only for trips shorter than 72 hours.
5. Overnight flights – business class allowed on overnight flights.
Example: flights to US are in premium economy; flights from US are in business class.
6. Preferred carrier – travellers fly business class on preferred carriers.
Example: add restrictions listed above for flights on non-preferred carriers only.
7. Payment method
Like the booking channel, the payment method is usually mandated because it is essential for obtaining spending data. Recognised best practice is to issue travellers with a corporate card
to be used for all transactions other than small out-of-pocket expenses. Generally, cardholders are made individually liable and are individually billed as well.
Other areas of policy content include:
- Ground transportation
- Meals and entertainment (TIP: when colleagues dine together, ensure the most senior person present pays so they have to file expenses to someone not present).
- Health, safety, security and emergency procedures (TIP: limit the number of senior executives allowed on the same flight in case of a fatal accident).
Communication
There is no point in writing a brilliant travel policy if no one in your organisation knows it exists. A survey published by Carlson Wagonlit Travel in July 2006 found that although 60 per cent of travellers said they were ‘very familiar’ with their organisation’s policy, 20 per cent said they were only ‘somewhat familiar’, while nine per cent said they were ‘not familiar’ and 11 per cent thought their organisation didn’t even have a policy.
These days, organisations normally publish their policy on their corporate intranet. However, it is important to communicate its existence and significant changes in a more active fashion so that it remains in travellers’ minds.
Endorsement
The most effective way to ensure travellers take the trouble to read and understand the policy is to have it endorsed by senior management. Compliance will be much higher if it carries a covering note from the chief executive or finance director.
You should also seek the endorsement of representative voices within the company. Many companies put together a travel advisory board, typically including travellers, bookers, budget-holders and colleagues from different locations and business units. Consult them before writing the policy and let them review it before publication. If the policy has been passed by them, that will make it harder for others to complain.
Explanation
Don’t just communicate what is in the policy, explain why it is there too. If you can convince travellers the rules are created for sound reasons, their buy-in will be much greater. Usually, the main principles to convey are:
- It is necessary to use the selected TMC and corporate card to capture comprehensive spending data
- By using a limited number of suppliers, the organisation can negotiate better discounts (spell out how large these discounts are)
- There are many other benefits to using the selected TMC. These included gaining access to negotiated fares and rates, and the ability to be traced and assisted in an emergency.
Monitoring
Monitoring compliance
Almost all organisations battle with non-compliance. According to the Carlson Wagonlit survey, 56 per cent of travellers admit to breaching policy, 24 per cent of them doing it five times or more per year.
One way to prevent non-compliance is for all travellers to seek pre-trip approval from their line manager. This can be effective but is bureaucratically cumbersome. Another increasingly popular option is pre-trip exception reporting. The TMC provides its client with a list of all bookings that breach policy. A reason code can be added to help assess whether the instance of non-compliance is acceptable.
Monitoring policy
If travellers are regularly breaching the same aspect of policy, this could be a sign that there is something wrong with the policy itself. In any case, a policy is a living document that must respond to changes both within the travel market and the organisation. It should be reviewed and revised regularly.
Enforcement
An organisation’s culture normally dictates how rigidly its travel policy is enforced. Some mandate; others ‘strongly recommend’. Often both will be found in the same policy for different aspects of it.
Even if a policy is only recommended, that doesn’t give travellers carte blanche to ignore it. Using exception reports, travel managers contact regular policy-breakers to discuss their behaviour. Even better is to persuade a board-level director to call a policy-breaker. Word soon gets around.
