Friday, 20 January 2017

GUEST BLOG: HOW TO MAXIMISE EXPENSE COMPLIANCE



Corporate travel and expense policy compliance is a recurring theme in the business travel industry. Although using the corporate expense policy manual as a stick to beat your travellers may be a short-term solution to enforce compliance, it doesn’t address the underlying issues of why employees don’t adhere to the policy and could also alienate travellers by imposing regulations that reduce productivity and create frustration.

In the long run, the cost of replacing top employees who quit after being disillusioned with the company can far outweigh the cost savings from restrictive expense policies.

The first thing to understand is why employees deviate from corporate policies. At the two extremes, there are those who simply don’t know about the organisation’s policy, and those who are flagrantly – and sometimes fraudulently – abusing corporate expenses for their own benefit.

Although business expense fraud is estimated to cost about $2.8 billion per year in the U.S. alone, almost 95% of employees are honest with their expenses. Therefore, in the middle of these two extremes is a majority for whom the policy is simply too restrictive.

In order to minimise out-of-policy spend, companies need to find the middle ground between enforcing an overly restrictive policy that alienates staff, and one that the team loves, but which doesn’t adequately do its job. One of the biggest challenges is that policy compliance and traveller happiness aren’t the most obvious of bedfellows. On the one side, a prescriptive set of rules that dictates which vendors they use, on the other hand, business travellers who may not wish to be bound to using a particular hotel chain, airline. 


Here are four ways that organisations are minimising expense leakage while keeping the workforce engaged: 

1          Create a sensible policy

It’s essential to start off with a good policy. But what makes a good policy? You need to find the line between eliminating unnecessary costs and having a policy that is unreasonable or unworkable (both for the employees and for those who have to manage the policy). Too lax and your expenses will creep up, too tight and it won’t be workable, and your employees will hate it. Some areas consider when making an expense policy include:

·    Beware of false economies – if cutting costs in certain areas leads to major employee inconvenience, it likely isn’t worth the savings.
·    Allow for different costs of living – even if you don’t use per diem tables, understand that some cities are a lot more expensive than others and plan accordingly.
·    Keep it specific – remove ambiguities and area of potential confusion.
·    Don’t make it too restrictive - don’t be too strict if it will create more issues than it solves.

Tim Wheatcroft, Chrome River

2          Help them to help themselves

The easiest way to bring about travel policy compliance is through self-regulation. Empowering travellers to make the right decisions through the use of well-communicated common sense policies through their TMC and online booking tools helps them to feel they aren’t being treated with a lack of trust, and typically fosters good long-term habits. The majority of travellers will have the best of intentions when booking, and will default to looking for best value options where possible. Therefore, if occasional flights or hotels do need to be booked out of policy, there is usually a good reason for doing so, and it is an exception, not a trend. Travel managers should also consider that while 100% compliance is ideal, in reality, it’s not always practical.

To help foster these good habits from the start, some companies set up travel policy rules within their online booking tools that enforce stricter adherence for newer staff. After an initial “probation” period, tolerances can be increased, so that employees can use their discretion when booking travel. If necessary, frequent policy abusers can be put into a “penalty box” within the system, reducing the allowed variation from lowest logical prices when booking. Learn the who and why of policy violations.

Analyse your team’s travel bookings and expense reports to see who the biggest culprits are. Before you try to force them to adhere to your policy, find out why they bend it. There could be a very good reason.  There is expense management software with audit filter capabilities built in so you can generalise about the type of traveller to target and hone in on the types of expenses to audit.

3          Offer incentives to comply

For many travellers, a personal direct incentive to adhere to travel and expense policies can be the most impactful tool for driving compliance. While some companies have tried gamification (like Foursquare-type “badges”) to drive compliance, for many seasoned business travellers, these don’t provide much incentive. Therefore, companies could look for more creative ways to drive compliance:
·    Be respectful of personal time: if a company’s policy says a Saturday night should be taken to reduce flight costs, ensure that staff are provided with time off to compensate for weekends spent travelling.

·    Share the savings: encourage staff to choose cheaper flight and lodging options than their preferred vendors by sharing cost savings with them, in terms of cash back, “buying” vacation days, etc.

·    Reward 100% compliance: offer end-of year perks or bonuses for travellers whose trips are 100% in compliance with policy.
While it may seem counterintuitive to financially reward staff to adhere to policies that they should stick to regardless, it could far outweigh the long-term impact of minimising costly out-of-policy travel spend.

4          Remove potential conflict around violations

Even though encouraging staff to automatically comply with a policy is the number one goal, there are several ways that technology, in the form of online booking tools and expense management solutions, can track and enforce compliance. The most obvious of these is setting up an expense management system to require pre-approvals before any travel purchase is made. For companies that do not mandate pre-approvals, technology solutions can also be used to provide granular data of travel purchases.

For example, while a ticket booked on a mainstream consumer travel site may not give the company any indication of how its price compares to other similar flights, one booked through a TMC can allow administrators to view a variety of other attributes – how much it compares to a similar ticket booked with a departure a day or hour later; how it compares to indirect flights or other airlines at similar flight times, etc.

Even if the flight is out of policy, some companies allow the flight or hotel to be booked, and then followed up with as appropriate. For example, if on one occasion, a traveller’s ticket is just a few dollars more than allowed with the policy, it may be more beneficial to overlook the transgression rather than raise it with the employee. However, if it becomes a trend, reminding the employee of the policy may be necessary to bring them back into compliance.

This post was written by Tim Wheatcroft of Chrome River who are exhibiting at the Business Travel Show - to register for a free visitor pass please visit www.businesstravelshow.com.  


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