What We Learn From The Movie Up In The Air

[EDIT: Some small spoilers contained herein.]
I highly recommend watching the new movie Up in the Air, especially if you have any role in managing travel expenses. It is a movie about how important it is to travel, to meet people in person, and that no matter how advanced our technology gets, you cannot shift everything to the Internet in lieu of travel.
It also shows the life of your most important customers–the road warriors–and how they function when they travel for living. For this movie, some of the actual travelers were interviewed in order to capture their lives and make the movie authentic.
Here are some of the points, without giving up the plot of the movie:
- They truly care about their frequent flyer/guest points and their preferred VIP status. Why? Not only because of better treatment, but also their status allows them to travel efficiently, minimizing the time they spend checking in/out.
- Don’t check bags. Why? In the movie, the title character Ryan Bingham, whose job is to conduct layoffs on behalf of his customers, traveling 322 days/year. He tells his fellow traveler (to whom he is teaching the ropes of traveling) that if you check bags, you would spend extra 35 minutes a flight, which translates to 157 hours, equaling 7 days a year for him.
- Some things should not be done via web conference and other electronic means. Why? Firing people over the Internet is like breaking up with someone via text messaging. Travel is necessary to meet with the people you are dealing with (firing people in the movie, shaking your prospective/current customer’s hands, running a seminar).
So before you think about changing suppliers purely for cost reduction or implementing huge budget cuts for travel expenses, do a thorough cost benefit analysis that involves your frequent travelers and travel arrangers.
Understand the nature of trips, talk to key organizations that travel frequently. Create a discussion board, meet with people, understand how many travelers will be affected by the change and try to negotiate as many perks (status match, upgrades, etc.) as possible for them. And … travel often yourself. Understand what your travelers go through.

Transforming Travel Management For The New World

This chatter around outsourcing the travel manager job to the travel management company is annoying, but I also accept that many travel managers are bogged down with too many administrative tasks and the management may perceive that the position can be eliminated. After all, if a T&E budget is drastically slashed, you don’t need great discounts with suppliers, right?
This is simply wrong. All of us managing travel should not be managing “travel,” but rather managing the travel program with emphasis on strategic program management. In my recent presentation titled “Strategic Program Management of Travel” that I’ve done at Oregon Business Travel Association, I talked about earning a seat at the table of key internal stakeholders, such as Internal Audit Committee, Budget Committee, Executive Committee. This is done by knowing absolutely everything about your company’s T&E spend, offering trends and forecast, future industry intelligence
Here are some of the key program components that can only be managed from inside the company:
a. Understanding all internal trends that affect company’s T&E spend in the near future and in the long run. If you have a seat at the table when M&A activities are discussed, you can reach out proactively to your suppliers to negotiate new deals, etc. Also, if you are a part of the meeting for your PSO (Professional Service Organization), as soon as you obtain information such as new billable consulting clients, you can take action proactively.
b. Demonstrating to key stakeholders on “rightsizing” T&E spend.
c. Using the future/leading industry indicators to monitor/adjust T&E budgets.
d. Creating a continuous learning environment (blog/ discussion board, intranet/email newsletter, actionable analytics, forecasting trends) and providing information on how to obtain the proper $ for budget, changes in key travel markets (example: the company’s third-largest city pair is losing xxx airlines, which is forecasted to increase the segment airfare by xxx percent (due to reduced competition), which would translate to $xxx for each quarter per xxx department. Be prepared to either reduce the number of trips in the market, or incur x percent more in T&E).
Tell me if any of the above points can be managed by anyone outside of your company? I ask all of us to elevate our role from being “travel managers” and transform it to a new title: Strategic Program Manager-Travel.
All of us–travel management companies, other travel suppliers and buyers, must work to create more strategic travel program management jobs, rather than sitting around watching our jobs disappear. We must create better awareness of what managing travel program is all about.

Adding Control By Subtracting Processes

Many people believe that having a systematic travel approval system increases control. For example: Software is used for the travelers to submit a request to travel; the request is routed to the manager, cost center manager, etc. Another: Your online booking tool that requires formal approval before the reservation is queued for ticketing. While above examples do monitor the approval process, they are not the best practice way for many reasons. There are many instances of missed ticketing, as some airfares must be ticketed at time of booking. At one company, when I asked how often the travel approval requests get denied, the answer was, “Never.” At another company, all International travel approval had to be routed to the CFO, after it was routed to the manager, cost center manager and finance analyst. Imagine someone (your CFO) whose signing authority exceeded $millions approving an expenditure for $5,000. What a waste of his time! Instead of adding more processes that drive everyone nuts, let me explain how you can add control by subtracting processes. Subtract systematic approval systems and add control by requiring travelers to obtain some type of approval prior to planning the trips. Increase control by switching to “passive approval.” When the reservation is being arranged, the online/offline messaging to the traveler is, “You did already obtain approval, right?” Subtract the need for documentation (e.g. print out of the email approval, etc.). Work to subtract processing time for arranging trips and submitting expense reports. Subtract use of individual credit card (personal responsibility) for airfares and add control by implementing a central billing card or company-paid T&E card. This allows for better forecasting of expenses, including better accrual processes, and also minimizes fraud associated with the use of personal credit card. Add control by implementing an end-to-end trip submission to expense reimbursement mechanism, which subtracts processing time of expense reports and headcounts, subtracting the need for 100 percent expense audit and only reviewing exceptions. When I surveyed the travelers and arrangers at one company and asked, “Do you have any suggestion/feedback?,” here was one answer that really resonated with me: “I want the freedom to make informed decisions (e.g. whether to take a connecting flight or not, whether an expensive meal is appropriate for a specific location) with the responsibility to spend (company)’s money as if it were my own (look for bargains, use suppliers I trust, plan and execute responsibly).” BINGO! My belief, which is supported by numerous studies and research, is that if you provide your travelers/arrangers the right infrastructure (booking methods, information availability, policy, ease of expense submission to reimbursement, best customer service from every support staff of travel management, including you, the travel program manager), most (perhaps 90%+?) will try to do the right thing. You of course “trust and verify” from time to time by conducting audits to identify any control “soft spots,” but you will find that only a minority of your traveler/arranger population requires true attention/corrective action.

Travel Management Company RFP

I’ve consulted for few clients on travel agency selection process, and I must tell you…there are many agencies out there who would inflate their claims of how wonderful their agency is. It is really difficult to differentiate true claims to false ones.

For example, if you ever ask this question: “can you always promise us that you will book trips at the absolute lowest cost possible?” If anyone answers “Yes,” they are faking it. The most common and accepted answer that is truthful (of course this will also drive you crazy) is, “it depends.” Because of the pricing models used by the travel industry (no fixed pricing, if there are too many available spaces (air, car, hotel), let’s cut the price to sell more space, but not 4 days before departure/check-in date).

there are too many hidden questions/answers…if your company does not have a Subject Matter Expert, please hire one to ensure everything is evaluated and all the “fluffs” are exposed!

Importance of “Right Sizing” Your Travel Expenses

Folks, I’ve seen many of my clients and also hear from my esteemed corporate travel executives that so many companies are doing this knee-jerk reaction and just indiscriminately hacking every department’s travel budget. Stop! Do you even realize how disruptive this is to your organization? I know the stupid saying, “cash is king.” but by saving up your precious cash and didn’t treat that ugly sore on your behind and you rot to death? OK- that’s a bit too weird of an analogy.

Think of the following two scenarios:

1. Budget is set and for the most part, if you are going over travel budget, just make sure you don’t exceed it overall.

2. We have a target budget figure, but we don’t hold budget owners accountable.

OK, both example are just silly, but is common in too many companies. I think one of the reasons for #1 is that no one may know how to set the budget for travel and entertainment. There is a process I can show you that I call “right sizing your T&E spend”- I’m sure your HR folks use this term when your company has to lay off people, right? It’s not down sizing, it’s “right sizing.” Tell that to the guy who just got laid off to see if being “right sized” makes him feel better.

What you also need is having someone (whether within your organization as a travel manager (if you have at least $2-3M in spend, you should have a subject-matter expert) or a consultant (I am one) to understand the nature of your spend, trends, provide forward-looking and actionable analytics, and most of all, someone who can assist your financial analysts on how to right size your travel budget when your company has to adjust your overall budget because your revenue target is going to be missed. Many companies go: “holy crap! STOP TRAVELING NOW OR Travel now requires a CEO approval!” When your CEO’s spend authorization limit is in the $millions, why would you want him/her to have to approve a trip expense for say $900? What a waste of your precious resource’s time. Assume your CEO takes 30 minutes from the time (s)he sees the email thread (or if you have an automated travel authorization system, having a special routing now to send ALL trips to your CEO!?) to approving it, how much would that translate to your infrastructure costs? You see my point? You will need a system to monitor your travel spend and adjust it accordingly to your company revenue growth (or reduction) or you end up laying people off if you cannot reduce your costs of operation, right?

You will need someone to create a series of processes to understand how to scale your travel spend (it takes more $ to make more $, right? Sales folks may travel more if the rate of return is high enough, you may need to increase your server size to accommodate more space for your SaaS business, you scale everything else for your company, so you’ll also need to scale travel expenses as well. Wouldn’t it be nice if someone can tell you all the trip cost forecast for all the top destinations for your company (other than the ad hoc sales trips, most of your travel spend is for travel between your offices, your Professional Service folks visiting their recurring client sites, etc.)? If the forecast says per trip cost between your company location X to Y will increase by $XX, either you reduce your trip frequency or request more $ in your budget, or there is no way to meet your budget if you just stay status quo. You’ll need the pro to give you the business intelligence to fully manage travel.

Contact me to have me review your travel infrastructure, and in exchange for sheduling a call/meeting with me, I will share with you how to “right size” your T&E budget.

Is Resistance Futile, when it comes to someone implemeting a new travel program?

When I meet with my prospective clients (companies, of 300-3,000 employees), I often get folks who become very defensive, especially frequent travelers. This is actually a good sign because these folks will help you design a truly managed travel program by giving you unfiltered feedback of what they want, what they don’t want and also what they can accept in terms of changes to what theyr are used to (like changing airlines for good reasons.)

People who travel for living may have changed jobs often and dealt with so many different ways companies believe they manage travel. There are no standard templates for travel related policies, and even if there are examples available, your unique corporate culture must be incorporated. I am often amused by comments like, “don’t you come in and fix stuff that ain’t broken. Don’t make me stay at Motel 6 to cut costs.

I offer fixed cost assessment that includes current infrastructure baseline analysis to determine if anything (policy, travel agency, online booking tool, expense reimbursement software/process) need to be changed. It is the cheapest I can align business partnership with the existing service providers than just dumping them and putting new ones in, in the name of cost reduction. Many times as your company grows, the service provider did not offer scalable solutions as to align their service platform, if we are talking about travel agencies.

There is more disruption in changing where people stay that cannot be quantified – lost of comfort, extra time required to get to know how to get there, with new restaurants to try out within their expense budget, safety around the area of the new hotel your company forces you to stay at, etc.etc. But, by doing the survey, you will find out if people are happy with the current suppliers or not. If high number of folks hate the current provider, it is much easier to explore other options than if everyone is happy (how do you quantify people’s happiness, as opposed to cost reduction of $20/night?)

Let me conduct the assessment and come up with the best design of your travel infrastructure- it maynot necessarily mean everything will be changed just to save you money.

Does your company care about you, the end-user of travel services?

As part of my travel infrastructure assessment review, I conduct brainstorming sessions with key stakeholers (finance, HR, legal, accounting folks, travelers and travel arrangers.) I am often surprised by one or two topics that people come up with, outside of more common topics such as: travel agency, online booking tool, expense submission process/software, policies and compliance, travel analytics.

Fortunately for me, there is no standard or cookie-cutter way to manage travel. You know when your company try to apply too much control, your employees will either bolt out the door, or create more subtle resistance.

I’ve traveled quite often, and I can tell you- your company travelers are not out to make money from your company; they are trying to recover as much travel expense as possible.

So therefore, when your company is evaluating any changes within your company, be sure to include you the end-user for feedback, comments and suggestions. As I always preach:  given the right information and infrastructure delivery, 90% of the population (travelers, assistants, arrangers) will try to “do the right thing.” I do not design travel program to just reduce costs- your well being and safety must also be taken into consideration. Some hotels are cheap for a reason such as cheaper real estate = bad neighborhood.

If you arrive at this conclusion (through your due diligence) that you can be trusted in general, then it is easier to create control process for the 10% of your traveling population. Many companies try the wrong approach of controlling 100%, which means you are disservicing 90% of them.

I will write more on this 10-90 rule on my next post.

Why do companies write “Travel Policies”…?

Good question. As I have written many travel policies, I can answer it from many angles: Simple answer: Policies must be written as to outline what the company travelers will need to know, in order to comply with the IRS tax laws. All travel related expenses must be reasonable and also has :bona fide: business reasons for the expense. Longer answers: I agree with you that your company should trust you more in not having a “strict” travel policies. My belief is that given the right infrastructure, education and well-written policy that outlines in general terms what you can or cannot do, 90% of the traveling population will do the right thing. More strict policies may indicate that A) you may have the good infrastructure (e.g. not having a well-experienced and full time travel manager in house) B) Past audit indicated that more than 10% of the traveling population has abused the expense submission and required tighter control. Best practice is to have the policy include some guidelines and use it as a general speed limit. On occasion, you will spend few bucks more than the allowable amount, which should always be justified and approved by higher ups. The limits are set, such as for meal, hotels, so that the eppenses are more predictable. Imagine if you don’t set the limit and people go nuts in spending whatever (this happened during the tech boom in the mid-90′s). So, in summary, yes, if you are one of those responsible corporate citizens, you will feel the policies maybe too controlling and strict. For those who just do not know how much one is allowed to spend, policies are there to guide them. Good travel policy contains the following: How to book travel Who is responsible and who enforces it What the scope is Who to contact if you have questions Which suppliers to use (preferred suppliers including ther designated travel agencies) Sections addressing each spend category: Air, Car, Hotel, Meals, entertainment, meetings Sections outlining the type of expenses that should not be reimbursed (no First Class airfare, etc.)”

Originally posted on LinkedIn, June 2007. All answers are written by Yasuo Sonoda.

Per diem versus reimbursement “on actuals”- LinkedIn Best answer

If you are asking which method of expense reimbursement is more preferred, you will get different answers based on who is answering the question. If you ask a finance/accounting/accounts payable person, you are most likely to get “actual expense” answer, unless your local government/tax authority requires “Per Diem,” such as Germany. If you ask a traveler, you will get split answers as well as the amount/method for Per Diem to be managed by your company. In the US, other than the US Government, I don’t know of too many companies (in fact I don’t know any) that would allow for fixed expense reimbursement vs. actual expenses. Your travel policy should state the expense reimbursement methods very clearly, as well as address the issue of not having receipts for certain expenses such as bridge tolls (set the maximum allowable amount to submit the expense when the receipt was not available or missing) Cash advances are difficult to manage, unless you have a good Travel and Expense Card program that allows for cash advance which is managed by the cardholder. Any other methods would involve nighmarish accounting.

Originally posted on LinkedIn, Nov 2007. All answers are written by Yasuo Sonoda.

Strategic Sourcing Consultant to Implement a Corporate Travel Program

Boy..let me tell you, there are many old-school consultants out there, claiming they can save your company xx% or simply throw you a big number. If these people don’t know anything about how you procure travel services and what is your overall spend is, how could they come in and offer you any savings? Where are they picking the numbers? I tell you, out of their a@#.

Not to mention, there are no single template/cookie-cutter approach to implementing a travel management program, not there are such thing as “the best travel agency in the world.” You ask 20 buyers who their favorite travel agency is, you get at least 10 different answers. Why would this be the case?

There are no simple answers, but one thing I can tell you is that most of the “major players” – American Express, Carlson, etc. all have acquired other agencies. Navigant is gone, Rosenbluth is history, Maritz is long gone. Some of these were very famous for their stellar customer service. Hal Rosenbluth, the former owner of Rosenbluth always talked about the importance of taking great care of his employees; the person who makes your travel arrangement is like a hair cutter who’s been cutting your hair for the past twenty years. Of course the name of the game now is to automate all simple transactions by booking your sinple roundtrips online (you must use a company sponsored self-booking tool that is truly configured for your company’s travel policy compliance- more on this on a separate post) as to minimize the transaction fees, but if you are traveling to five countries–not having to repeat anything and have one truly reliable travel agent to arrange everything for you (this person knows I have to have a bath tub in my room, not near the ice machines, higher floors, preferably a Chick Fil-A within the walking distance, etc.etc.) makes you more productive and also enables you to focus on what you need to: make that sale for your company or fix that problem.

Anyway, I got sidetracked…what I was saying is that even if you are talking about American Express or Carlson, what version is it? (is it the one that used to be a Navigant office? Rosenbluth? A wholly owned original agency?) Did you used to have fully dedicated agents (=most expensive, absolutely the best customer service possible if you do it right)? Did you just use a call center in India? You see, there is no such as thing as “This agency sucks.” That’s like saying this Two-buck Chuck sucked. First of all, Two-Buck chuck is always a blend of the left over swills from all over the place-you aren’t going to taste the same wine with the grapes from the same terrior.

Anyway, back to the subject of consultants… I am one, coined a term, “TIC”- I am a TIC (Travel Infrastructure Consultant.” What I am is basically a travel manager in between jobs. I have implemented three consecutive and successful travel infrastructures at three companies (with all three CFOs as my references). I will not guarantee you x% of your spend, I will not charge you x% of the amount I am going to save for you. Instead, what I will do is to give your company a very thorough assessment of where you are, where you can go, and the best infrastructure models I can recommend based on how much resources you can allocate. In other words, plug-and-play components to maximize the return to your organization.

Heck, if along the way of baseline analysis and I identify a big fat cost reduction figure, you bet I will charge you $$ for that. But most importantly, my recommendations will make you, the company executives heroes because your travelers, trip arrangers, accounting folks, managers, procurement folks are all going to work together to accomplish what you want:

Enable business travel that supports Company’s business objectives at a competitive cost while also making the travel service easy, accurate, responsive and making travel satisfaction a contributor to positive employee retention.

So contact me if you are interested in having someone look over your program (or lack of one).  I know I can help you succeed.  Travel is a pain in the you-know-what to truly manage!