Corporate Travel Policy Best Practices
A corporate travel policy outlines protocols for business trips and provides a set of guidelines for employees to follow. Typically, corporate travel policies will cover employee safety, streamline the booking process, and provide information on expense reporting and reimbursements. However, travel policies aren’t a one-size-fits-all scenario. Your corporate travel policy should be designed to fit the culture of your company, while also keeping business goals in mind.
In this post we’ll highlight what you should focus on when developing your travel policy, the importance of dynamic budgeting, trip approvals, rewards, inventory, advanced booking requirements, and reimbursements.
Developing Your Travel Policy
When it comes to creating your corporate travel policy, it’s essential to bring together key stakeholders from across your business. This should include the finance team, human resources, executives, and of course, employees that represent your business on the road. Bringing the cross-functional team together can help to ensure that the policy not only represents your business goals, budgets, and safety, but also considers the needs of your travelers.
The finance team will bring information on cost controls, expense reporting, and budgets. Human resources can provide expertise on duty of care, employee engagement, and how to leverage the travel policy to attract and retain top talent. Executive team members will provide insight into business goals and company plans. Lastly, your traveling employees can bring their experience on the road as it pertains to the value of convenience, where you should avoid cutting corners to save a few bucks, tips to enhance productivity, and what loyalty programs they prefer.
As a team, review travel norms as a baseline, but then look at travel frequency, budgets, duty of care, and reporting. We also suggest that you review a technology-enabled travel management company that will improve processes and support your corporate culture. From a tech perspective, you want an easy-to-use application that allows you to wrap policies directly into the platform. This functionality will help provide clarity for employees while also ensuring adoption.
Building a corporate travel policy that reduces spend, has great compliance rates, and improves employee satisfaction is totally possible. Keep in mind that travel policies can be revised to meet the needs of your company. If you have a corporate travel policy in place, don’t hesitate to review it annually and make changes.
Static vs. Dynamic Budgeting
All too often we’ve seen travel admins spend hours scouring the internet to find the average hotel cost for the cities frequented the most by their travelers. They then use this price as the baseline for budget allocations. We refer to this as static budgeting and find it to be a very ineffective way to manage hotel spend. Conferences, holidays, and seasonality can all affect hotel rates in each city, making it difficult to baseline an average hotel cost.
Traditionally it’s been challenging to accurately predict what a hotel stay should cost. TravelBank’s budgeting tool provides real-time data based on their exact search dates and destination city so that the traveler has an accurate average of what their hotel stay should cost for the duration of their trip. We refer to this method as dynamic budgeting.
When you utilize dynamic budgeting there is greater opportunity for cost savings. For example, if the traveler is going to a small town for a client visit, the hotel rate may be $140—which is much less than the static $200 cap your company outlines. However, if the traveler is going to San Francisco during peak time and the average cost is $400 a night, our system will give managers visibility into why that traveler is selecting a seemingly expensive hotel. This allows for accountability and realistic budgeting for both the traveler and the company.
Being too strict or too lenient in your approval policy can be costly. Ultimately, you need to find what we like to call “the goldilocks zone” for your corporate travel policy. It’s essential to lean on good data (budgets) and trust your team.
Anyone that has run a travel program or traveled for work is familiar with approval processes and the headaches that can result. If you have a strict approval process, traveler frustration is likely high. Approvals can be costly if they aren’t implemented properly. For instance, while waiting for sign-off, fares can increase or seating options may change. The trip option may become unavailable entirely causing the traveler to book a flight the day before and costing an additional night in the hotel. Conversely, if your approval policy is too loose, overspending can become an issue.
We see many different policy options as far as approvals are concerned, but at the end of the day have found that companies that implement technology-enabled managed travel with built-in approvals have the highest compliance rates, fewer frustrated travelers, and tend to beat their budgets.
TravelBank clients experience better business outcomes for employees, increased cost savings for the company, and a boost in employee morale while traveling (as they were trusted to purchase their preferred flights and hotels).
Rewarding Your Team
Creating a policy that aligns with employees is far easier to adopt. Rewards not only help with employee buy-in, but also save the company money. By incentivizing employees to make better business decisions, overall travel spend is reduced.
TravelBank’s rewards program incentivizes employees to make better spending decisions and maximizes savings by offering them more flexibility and rewarding them when they come in under budget. By rewarding employees with a percentage of the money saved, it creates a mindset of treating company money like their own. Additionally, the rewards are a nice perk that can be used for the services they use everyday, such as Amazon, Uber, or Lyft
TravelBank clients without rewards still experience savings, but not as high or as quickly. If you aren’t incentivizing employees to save, they will stretch the budget all the way to stay within compliance, reducing company savings.
Achieving 100% adoption and buy-in from employees and other stakeholders across the company is crucial to travel policy success. Many companies find that employees being offered rewards are beating their budget almost every single time. They are booking farther in advance and within policy. Travelers are competing to see who can earn the most.
Your road warriors likely have a favorite airline and hotels. Typically, the first objections travel managers will receive about a policy is if their preferred airline or hotel is unavailable. It is essential to ensure that your travel policy isn’t too limited, which can result in a bad traveler experience and dissatisfied employees.
We suggest listening to your travelers and implementing a policy that supports traveler comfort, which in turn will result in happy and productive employees on the road. To open up your inventory, you will need a corporate travel service or booking platform that integrates with the global distribution system (GDS) for a wide variety of inventory.
Once your inventory is expanded, trust that your travelers know best, but also provide a policy guideline so that they are educated on what is allowed and makes sense. Confusion is a huge compliance killer, so guardrails are essential.
We understand that advanced booking isn’t always possible; however, the benefits of reserving flights and hotels at least two weeks in advance can assist with improved availability, preferred seating, and an average savings of $200.
Prices increase significantly at the last minute, but business travel is unpredictable and at times, chaotic. Providing travelers with flexibility while still being cost conscious is one of the most difficult aspects of corporate travel policy to figure out.
To ensure advanced bookings when possible, educate and train your travelers and have a policy in place in the platform.
Large out of pocket costs, manual expense processes, and slow reimbursements can be a source of travel policy friction. Thanks to technology-enabled managed travel, managers and finance departments are able to streamline processes.
By utilizing an all-in-one expense reporting app, travelers are able to pull in receipts and send the report for the trip to the travel managers with a simple tap or click. Upon manager sign-off, the finance team can rapidly audit and approve the reimbursement.
Employees are able to add banking information to their TravelBank profile, which enables expedited direct deposits, cutting the time spent on printing and mailing paper checks.
Adopting a Corporate Travel Policy Where Everyone Wins
With business travel rates on the rise, companies are finding the need to create a set of guidelines for their business travelers to use to be more and more important. A more complicated travel policy isn’t necessarily going to save you more money or increase compliance. Instead, focus on aligning your policy to your employees travel needs, incentivizing better behavior, and keeping employees happy and productive.
Lastly, a flexible travel policy will shift your focus from deciphering a dozen cryptic rules to a single and powerful goal: beat your budget. Ready to learn how to transform your travel policy, step-by-step, in less than an hour? Check out our on-demand webinar. You can access the recording here.