In an effort to control ever-escalating costs,
corporations regularly mandate and consolidate insurance, health care, benefits, office supplies and fleet vehicles. Yet, according to John L. Sturm, executive director of
sales and marketing at Professional Travel,
they commonly overlook their second- or
third-largest controllable expense — travel.
“In the wake of rising fuel prices, Sarbanes-Oxley (SOX) and the lingering effects of
Sept. 11, corporations need to look at travel
as they would any other controllable
expense,” Sturm says. “The vast majority of
Fortune 1,000 companies have a managed
travel program but many mid- to large-market companies do not.”
Sturm adds that many companies don’t
know how much their total travel spend is,
because of multisource bookings, lack of
controls and no consolidated reporting. It’s
the old “you don’t know what you don’t
know, and you can’t properly manage what
you can’t effectively measure,” he says.
Smart Business spoke to Sturm about how
your company can create and implement a
comprehensive travel policy.
What benefits can companies expect to see
from a travel policy?
A well-formulated, well-implemented travel
policy has three significant benefits: savings,
scrutiny and security. Savings are immediate
in terms of leveraging preferred suppliers.
Once a travel management company aggregates your data, you can approach car rental
companies, individual hotels and airlines for
negotiated discounts. A consolidated policy
ensures all tickets and transactions are managed against the suppliers and policies you
establish. Scrutiny is examining both the
aggregated data as well as trends within the
industry to identify gaps or employee non-compliance. This enables corporations to
refine the policy, identify employees not following the policy and address lost savings.
Essentially, the data becomes an invaluable
management analysis tool.
Finally, security is a major concern for most
companies. From the international unrest following Sept. 11 to natural disasters, corporations need to know where their travelers are
and exactly how they’re getting there. Should
an emergency arise, you need to be able to immediately access all of your traveling
employees. This is tough to do when you
haven’t thoroughly defined a policy. You need
to be prepared at all times.
How can a company approach updating a
travel policy?
The travel industry is constantly changing.
Travel today is vastly different from what it
was three months ago and will be vastly different in three months from where it is
today. So you constantly have to focus on
what you allow to be spent in the new climate. Rising fuel prices have added fuel surcharges, baggage fees, increases in change
fees, fees for snacks and meals and so on. As
a result, your travel policy must be adaptable
and examined regularly. To that end, you
should perform annual travel policy reviews
to evaluate what needs a full overhaul or just
minor adjustments.
What are the cons of instituting pretrip
authorization?
Pretrip authorizations are typically structured to be managed through your travel
management company and require the collection of travel requests to be forwarded to
a central contact for approval. Two problems with this are: the quoted fare and availability are frequently not the same by the
time the approval is given and, overwhelmingly, the trip requests are approved anyway.
Therefore, travelers should provide trip justification directly to their supervisor for
approval prior to booking their travel.
What can companies do to assure compliance from employees?
A structured managed travel program
enables you to monitor compliance nearly
automatically. A travel management company sets up all the information in employee
profiles. So if you’re flying from departure
city A to destination city B, you use airline X,
you use preferred hotel chain Y, and if you’re
renting a car, you use preferred rental car
company Z. Typically, it’s followed 99 percent
of the time once travelers know they are on
the radar screen. When you implement a
travel policy, make sure employees know
that if they don’t use your travel management
company and preferred vendors, they won’t
be reimbursed. It only takes one time with
one individual for the entire organization to
understand the consequences.
What risks do companies expose themselves
to by not adopting a travel policy?
Notwithstanding the loss of financial controls and savings, you have SOX and security
issues to consider. While you trust all employees have the company’s best interests at
heart, without mandated policies and procedures in place, you haven’t communicated
the proper controls to your travelers. And
from a purely humanistic side, we all want to
know where our employees and loved ones
are in the event of a natural disaster or global terror threat. With one travel management
company and policies in place, a single call
provides you with all your answers.
JOHN L. STURM is the executive director of sales and marketing at Professional Travel. Reach him at (440) 734-8800 x4089 or
[email protected].
