Date posted: 1/12/2016 4 min read

Aligning travel policies with business goals

How can you ensure your travel policy delivers the best outcomes for your business?

In brief

  • A travel policy should match a business’ current goals and be a ‘living’ document
  • Travel management companies measure travel spend against KPIs that are aligned with business goals
  • Duty of care of staff is an important component of a travel policy

By Dave Burgess

Those lucky enough to be travelling for business appear to have it all. Luxurious business class airline seats, priority check-in, airline hospitality lounges and sparkling hotels with lovely restaurants stocked with exotic wines, beers and spirits — corporate beer and skittles, if you like.

While that may be true for the select few, for most businesses the story is really about ensuring the best value for their organisation through their travel policy. Best value, in this context, will fluctuate between businesses but understanding it is key to having a great travel policy.

APX NZ Chief Executive Andrew Dale says a travel policy should match a business’ current goals. Dale, whose APX was awarded the 2014 National Travel Industry Best Brand — Corporate Award, says this may mean spending less overall, spending the same amount but travelling more, hitting environmental targets, or a number of other objectives – and that reporting is essential for measuring the value of travel policy.

“While the focus is often placed on spend, the lowest cost travel options may not meet the objectives in your business plan,” he says.

“An effective travel policy should support your business plan, be easy for employees to understand, be effectively implemented throughout your business, and be measurable against your business goals.”

Living document

Dale says a travel policy provides the best value when it is a “living document” in the organisation as well as being aligned with business goals.

“All too often travel policies are created once and filed away in a dusty folder,” he says.

“In fact, a travel policy should have a maximum shelf life of 12 months. When a travel policy is refreshed each year following business planning and budgeting, it has the potential to be very powerful.”

But Dale says there are pitfalls that are easy to fall into including having an “invisible travel policy” unknown or not accessible to staff, having a policy not reinforced by managers, and when staff book travel out of policy with the intention of saving the business money — when in fact it may have undesired consequences such as breaching a preferred supplier agreement.

“Perhaps the most important pitfall to be aware of is whether or not your senior management team adopt the policy. Too commonly, senior managers make an exception for their own travel — which will not go unnoticed by staff and undermines the travel policy.”

Dale urges travel policy to be a document in your company that is easy for staff to find, is updated in-line with the annual business plan, and that staff are held accountable to — at all levels of the business.

“And I would encourage you to share the big picture with all staff, where you explain the company’s objectives and how the travel policy fits in.”

Monthly reports

FlightCentre NZ General Manager Corporate Simon McKearney says businesses should remember that travel costs are not solely related to airfares and accommodation but also to items such as food and beverage, taxis, and cell phone data which are “all part of the business travel experience and need to be accounted for in business travel”.

The Flight Centre Corporate Travel Group is made up of Corporate Traveller, CI Events and FCm Travel Solutions, which was voted the world’s leading corporate travel and expense management company at the World Travel Awards from 2012 to 2015 inclusive.

“Another pitfall is only using one airline [which] can cost you money in a very competitive marketplace where loyalty status can be matched across airlines and pricing can change by the hour,” McKearney says.

He agrees that cost has a part to play to ensure companies get the best out of their travel needs but says there are other key elements to consider, including how the business is structuring its travel, and investigating productivity gains to be had in both booking travel and while staff are travelling.

“Some questions these companies may like to answer can be: does it see an employee spending hours trying to physically book all their travel needs themselves; what happens if there is a disaster and an employee is stranded; what will be the costs of getting them home and how long will this take; how is travel spend measured and is this reliable and accurate?”

APX’s Dale recommends that if you work with a travel management company, ensure that customisable reporting is one of their key capabilities.

“By regularly measuring your travel spend and activity against KPIs that are aligned with business goals, it will be clear whether or not the travel policy has delivered value for your business.

“In my experience the most powerful reporting is a one-page dashboard report of KPIs … presented to the company’s senior management team on a monthly basis. This outlines where the company is hitting and missing targets, and equips managers to make decisions and follow up with their team.”

When you are sending staff away from their normal place of work you have an obligation to look after their wellbeing to the same standards as when they are in the office.
Andrew Dale APX NZ Chief Executive

Staff wellbeing

Duty of care is also an important component of travel policy, which is about risk control rather than cost control, Dale says.

“When you are sending staff away from their normal place of work you have an obligation to look after their wellbeing to the same standards as when they are in the office.

“Legislative changes [in New Zealand] this year are increasing the focus on duty of care and it is becoming a hot topic of travel policy. If your company requires its staff to stay in low-grade accommodation that negatively impacts their wellbeing, or to regularly fly long-haul in economy class with no time for rest and recuperation, your business may be failing to look after the wellbeing of its employees.

“A good travel policy is one that balances the achievement of financial business goals with staff wellbeing,” he says.

Dave Burgess is a journalist based in Wellington.

This article was first published in the October 2015 issue of Acuity magazine.

Tips for saving on business travel

  • Consolidate your travel spend with preferred suppliers

    By channelling your spend to nominated suppliers for travel services such as flights, accommodation and rental cars, you will be well positioned to negotiate preferential rates.

  • Promote the policy internally

    Key to implementing a travel policy effectively is modelling compliance at a senior management level, making the policy visible (such as featuring it on your intranet), addressing poor travel spend and reinforcing good behaviour.

  • Invest in reporting

    Reports on travel spend and behaviour will highlight both problem areas and successes — which will enable you to take informed action. Measures such as spend by traveller, missed savings opportunities and change costs provide a simple and visual platform to guide improved buying behaviour.

  • Appoint dedicated travel arrangers

    By appointing key administrators to arrange travel on behalf of teams or departments, these travel arrangers can become specialists in travel buying. Having nominated travel arrangers also reduces the risk of excessive spend by staff booking their own travel.

  • Identify high change travellers

    In general, savings will be made when travellers select the lowest cost air fares available; however it is worthwhile empowering travellers with high change schedules to select flexible fare types. This should be applied only when the nature of the traveller’s role merits this need for flexibility, not when a traveller simply plans their schedule poorly. Overall, the higher up-front cost of flexi fares for high change travellers will be easily offset by the savings on lost fares or penalties.

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