Embarking on business travels, especially to foreign destinations, can be an intimidating prospect. The unfamiliarity of the surroundings, the need to navigate cultural nuances, and the absence of familiar faces can be overwhelming, even for seasoned travelers. While these challenges might add excitement to a leisure trip, they are far from ideal for a business traveler, especially when facing an early start the next morning.
The start of a new year provides an excellent opportunity to reassess and realign travel policies, setting the stage for a more streamlined and efficient approach.
A well-crafted corporate travel policy serves as a guiding framework, offering protection and motivation to the traveler while also enabling effective cost management for the company. By clearly outlining rules and processes associated with business travel and related expenses, organizations can empower their employees to navigate the complexities of international travel with confidence.
Now, how to start?
Understanding the travel and expense problem
Travel and expense (T&E) can be a contentious topic. Multiple parties, like the Treasury and travel managers, will be vying to have their say in how much is allocated to the budget and how it is used.
Whatever the outcome, the result is a travel policy to help ensure the rules are followed. Simple, right?
So why did 40% of business travelers admit to making bookings outside their companies’ travel policy? The majority did so to either stay closer to their meeting or event venue, stay in a location that’s safer or more convenient, be in the same hotel as their client, or to save their company money. [1]
The bottom line is, if your company requires workers to travel for business purposes, you need to have some sort of travel policy in place. This is true for SMEs just as much as it is for MNCs. Not just any policy will do, though.
Putting in the time to ensure your travel policy is effective can make substantial improvements to the motivation of the traveler and can potentially impact relations with partners and clients. And let’s not forget the need to consider the environmental impact of your business.
Based on a survey carried out by AirPlus with 743 board members and managing directors, we know that 41% see sustainability topics as relevant for their business in the next few years.
The number is higher for travel managers, with 70.7% saying they are concerned about their company's carbon footprint for travel. Adapting their travel policy around this will be a giant step towards that. [2]
The question remains though: What goes into making an effective travel policy?
What exactly is a travel policy?
A travel policy is the set of rules, outlines and procedures related to business travel-related expenses.
Its purpose? To provide structure and order throughout every stage of the journey, from the initial pre-approval, to booking and payment, all the way to the debrief once they return home.
It should also make things more convenient for those involved, especially the travel manager or finance team who will ultimately be overseeing things. Otherwise, there are some elements regarding safety and legal considerations that they help to govern.
In terms of content, corporate travel policies can differ quite a lot.
What is covered in a corporate travel policy?
The policy should cover pretty much everything related to organizing, undertaking, and following up on corporate travel. Exactly how extensive it is in these areas differs a lot.
They usually cover what can be paid for, as well as how incurred expenses are to be paid. Some travel policies also outline which services can be used, especially when the business is partnered with a specific airline or hotel chain.
As you can imagine, the length and content of a policy can vary widely, not only between industries but also individual companies. Some take a more hands-off approach while others have pages and pages of stipulations, rules and more. There is no real right or wrong solution – it entirely depends on the individual business.
Netflix famously offered a short and concise travel policy: “Act in Netflix’s best interests.” [3]
When introduced to this policy, Netflix employees were told that they should see their travel expenses as if it were their own money, and so act accordingly. This approach shows a level of trust in the employees, while providing them with autonomy and empowerment.
That's all well and good for a corporation like Netflix, but it's probably not possible for other companies. Is it simple? Sure, but it does leave a lot up to interpretation. This is why most companies have something a bit more extensive.
Some key areas that are often included in a business travel policy are:
- The expense budget: So-called per diem costs may be specified, with allowances for things such as food and lodging.
- A list of approved platforms for booking: For security or compatibility reasons, companies may limit the platforms that can be used for booking services such as hotels.
- Travel insurance coverage: Insurance is important for the safety of the traveler, but also the company wallet. Everyone should know the travel insurance carrier, the relevant contact information and the details of the coverage.
- Preferred suppliers to be used: Just as there may be a selection of approved booking platforms, certain suppliers may also be preferred, whether due to partnerships, discounts or even safety/hygiene standards.
- Procurement for ad-hoc travel costs: Hotel Wi-Fi, company phone, computer mouse – there are a number of small expenses here and there that are needed to prepare a traveler for their trip. An effective business travel policy should make arrangements for these travel-related procurement costs.
This list is far from exhaustive but does reflect the diversity of items that relate to travel expenses.
Anyway, there are benefits to the many different approaches that you need to weigh out when creating a travel policy for your business. What is important though is that you design your policy well.
The importance of a well-designed corporate travel policy
It is estimated that business travel spending will exceed $1.7 trillion by the end of 2024 [4], despite the pandemic and its effect on travel around the globe.
Knowing this fact, the scale of spending taking place in this market becomes clear. It also just goes to show why having a guide in place to control this spending is necessary.
Thankfully though, ‘travel and entertainment’ represents the second largest controllable expense for a business. What is the best way to control this expense? That’s right: creating a well-designed business travel policy for your business.
The scope of a travel policy is rather wide though, which makes it all the more important to ensure your travel policy is suitable. Here are a few different reasons why a solid business travel policy is so important:
Cost management
Business travel isn’t cheap. Between flights, hotels, car rentals and the many incidental costs, things can really start to add up, leaving a hole in your budget.
Unfortunately, there is often little wiggle room: with cheap hotels, you will lose out on amenities, may not get the best night sleep, and generally won’t end up giving the most professional impression when meeting with other professionals.
It all comes down to efficiency and proper planning. You can increase the efficiency of business travel by making partnerships and identifying potential improvements. Leveraging data in this way is great for managing costs. However, it is the structure provided by the travel policy that will allow for optimal management and overview of spending.
Risk management
There are many risks associated with travel. As a business, it is your responsibility to mitigate and manage these risks as much as possible, not only for your business but the traveler too.
The insurance policy would fall under this category. Let the traveler know what the policy covers, and any other important details related to how the company will help them if there are any issues.
Business travel risk management should also provide a clear overview of what steps they can take to stay safe while out on the road. Information on point of contact for emergencies and other emergency procedures should be covered too. All of this would be incorporated in your travel policy.
The human factor
Having a well-designed policy is not just about managing costs and risks. It should also take into consideration the individual traveling. It is ultimately for their benefit that the travel policy is in place, meaning you need to keep their preferences in mind.
As humans, we can be pretty complex, but there are a few common traits we share. The ability to choose provides us with independence and responsibility, two important qualities in a business traveler.
There may be ethical, comfort or just plain preferential reasoning behind the choices of a traveling employee but accommodating these needs and desires will be beneficial in the long run. An effective business travel policy will enable just that.
Efficiency
The whole point of a business travel policy is to have a set of guidelines in place that increase the efficiency of business travel. It lets people know who they should be talking to and the necessary details needed to plan out a journey.
Having an established approval process will streamline processes significantly, as your employees won’t need to chase up others in order to get permission for a booking. So not only will you be saving money, you’ll also be saving time.
While there is no universal solution when it comes to travel policies, there are some best practices that can be followed.
Travel policy best practices
There are a number of considerations to be made when creating or updating a travel policy for your company. Here are a few of the key areas to think about:
Is your travel policy fit for purpose?
Remember, your travel policy is not for any single individual. There are many stakeholders throughout the business, whether it is the travelers themselves, the finance team or the travel manager. A compromise between the needs and desires of each is needed for a business trip to end up successful.
Little can be achieved by sending someone to meet with a client with a tight budget and loose planning. Having structure can be really beneficial, but you also need to think about flexibility in case something goes wrong or to fit the needs of the specific traveler. Considering how a business travel staple like the MICE industry is reinventing itself, flexibility is a top priority right now.
Is it easy to create or update a business travel policy? Not particularly, but it is necessary. Get it right, and you will have motivated, well-prepared team members out there representing your business at that important event or major client meeting. And that is something you can’t put a price on.
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[1] https://skift.com/wp-content/uploads/2018/08/The-2018-Skift-Global-Business-Traveler-Report-2.pdf
[3] https://jobs.netflix.com/culture
[4] https://www.statista.com/statistics/1093324/business-travel-spending-worldwide-outlook/
[5] https://www.thinkwithgoogle.com/consumer-insights/consumer-journey/consumer-travel-smartphone-usage/
[6] https://www.businesstravelexecutive.com/news/corporate-card-use-expanding-globally-says-acte-survey
[7] https://www.transportenvironment.org/challenges/planes/corporate-travel/
