Finding ways to reduce team travel spend is a high priority for travel managers and CFOs. While tighter itineraries, strategic bookings and alternative accommodation arrangements can cut costs, they’ve found the challenge is as much a technical one as it is a cultural one.
An unnecessary upgrade here and there may not seem like a huge problem. However, employee overspending makes up as much as a third of a business’ travel and expense budget.
So how can travel managers minimise employee overspending?Below we discuss possible causes of excessive spending and outline strategies for keeping your road warriors in line.
Why Do Employees Overspend?
The total daily spend for business travellers in San Francisco, USA, totals approximately $547.34 USD.
And that only covers the essentials of food, accommodation and transportation.
In some cases, like when a travel team visits one of the most expensive cities in the world, high employee expenses are difficult to avoid. In cities such as San Francisco, Oslo, Tel Aviv and London, business travellers must navigate exorbitant prices before they even think about entertaining clients.
However, in other cases, efficient team spending is entirely achievable, but falls by the wayside nonetheless.
For example, the Business Travel News Buyer’s Handbook Report 2016 notes that policies which give employees the ability to select their own suppliers lead to increased costs and decreased compliance.
Travel managers taking advantage of effective management software can minimise wasted spending like this. However, the effectiveness of a corporate travel program largely depends on the employees who are expected to follow it. The duties of travel managers and CFOs are as technical as they are cultural. Employees need motivation and incentive to keep responsible spending at front of mind.
As Dan Ruch in Inc. Magazine summarises, “It’s not that employees try to spend a lot on their business trips, just that they don’t have a reason not to. If someone’s going to be reimbursed anyway, it’s unlikely they’ll go out of their way to save a few bucks.”So is it only through laziness that business travellers let their spending get away from them? What can travel managers and CFOs do to keep them in line?
Frustrated Road Warriors and Overspending
We know that positive employees are productive employees, and this is especially true when travelling on business. Being removed from friends and family, handling language barriers and unfamiliar environments, and facing bustling airport queues and high-pressure meetings can drain morale.
Travel managers and CFOs who invest in the comfort of their road warriors also invest in their morale - and their motivation to avoid overspending.
So how can travel managers improve the end to end experience of their travelling employees?
First and foremost, travel managers should alleviate the stress involved in corporate travel as best they can. Allow for rest and recuperation following flights, consider upgrades on long haul journeys and ensure accommodation is up to standard. An effective travel management platform makes it easy to fund these additions without breaking budget.Today’s travel managers recognise how important the wellbeing of travelling staff is to a successful business trip. The popularity of ‘bleisure’ travel, or travel that incorporates both personal and business activities, demonstrates how positivity equates to productivity.
Controlling Spending With Bleisure Travel?
Combining business and recreation while on international corporate travel has its benefits. In fact, 78% of bleisure travellers report that adding leisure days to business travel adds value to work assignments.For travel managers, this can mean improved road warrior happiness, productivity and morale. If one of the key drivers of overspending is dropping motivation, encouraging bleisure travel could be a sound strategy to include in a corporate travel program. The road warriors themselves certainly see the appeal, with 46% of corporate travellers preferring to add personal travel days to business trips.
A survey of bleisure travellers found the most popular activities of bleisure travellers were simply sightseeing, dining, enjoying art and culture, and exploring the outdoors and nightlife. Travel managers who facilitate personal diversions like these, by prioritising accommodation options close to cultural attractions, will offer a more positive experience for their road warriors.
Despite these benefits, the report found just 14% of businesses have formal bleisure policies in place that are explained to employees.While bleisure travel can undoubtedly boost morale, productivity and spending discipline, a travel program that does not define these privileges can leave room for irresponsible spending. Using a travel management program with effective communication tools and full audit trails will keep employee spending in check for the duration of the business trip.
CFOs and Travel Managers - Collaboration to Motivation
CFOs must collaborate closely with travel managers to analyse the strength of their business’ corporate travel program. Doing so, they present a united front in promoting adherence to travel policy.This partnership motivates travel managers to dig for areas of improvement, and motivates employees to action them. However, despite the strategic benefits of travel manager/CFO collaboration, just 27% of CFOs believe this relationship is effective.
How Should Businesses Address Noncompliance?
According to a 2012 study by the Association of Certified Fraud Examiners, expense reimbursement constitutes approximately 15% of all business fraud.
The report cites mischaracterized expenses, overstates expenses, fictitious expenses and multiple reimbursements as the key offenders damaging corporate travel programs.
Employees who consistently fail to meet corporate travel policy expectations have to be managed effectively. According to the Business Travel News Buyer’s Handbook 2016, businesses can demand written explanations when travellers fail to follow policy guidelines. In serious cases of noncompliance, termination or denial of reimbursement are viable disciplinary actions.
However, strict disciplinary action can send the wrong message if corporate travel policies are inconsistent.
For example, policies that excessively favour more senior employees, or CFOs who don’t adhere to the policies they promote, can frustrate other travelling employees.
The Buyer’s Handbook Report 2016 also states that corporate travel policies which apply equally to all levels of employees send the message that management is serious about controlling costs.
While the time of C-suite employees may be more valuable financially than lower-level staff, this does not mean that their comfort is, too. Corporate travel managers and CFOs who strive to demonstrate an equal approach to business travel will drive motivation and productivity.
Controlling the spending habits of travelling employees should be a focus of any corporate travel policy. While travel managers and CFOs should strive to motivate employees by rewarding compliance and demonstrating their own commitment to frugal spending, using a powerful travel management platform remains the best way to gain spending transparency.
Is your business spending too much on corporate travel? Calculate your potential savings using our Travel Savings Calculator below: