Hiya folks! There has been a lapse of not writing. All my fault. I’ve been a bit busy with my day job, managing and administering travel and card program. I promise I will start posting shorter and quick notes about travel and card program management soon.
[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.
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.
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.
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!
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.
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.