How well do your employees follow company guidelines for business travel? Are there areas in your travel program where improved compliance could save you more?
As demand for air travel and accommodation increases and market conditions continue to change, traveler compliance will become even more important for corporates keen to maintain control of their travel spend. Compliance however, has a broader focus than just being about whether or not your employees are following policy guidelines. Compliance also relates to metric and culture, both of which can help to generate travel cost savings in different ways. If you can’t measure how compliant your travelers are, or you’re unsure how to enhance your corporate culture, improving your company’s overall travel performance and ultimately your bottom line could be a challenge.
What’s the value of compliance?
FCm research shows that by optimizing your travel policy design and improving traveler compliance via a travel management company (TMC) provided online booking tool, corporates can save more than 30 percent on their travel spend. A lack of compliance among your traveling employees can result in significant ‘missed savings’ through unauthorized and/or non-compliant bookings for air, hotel and ground travel, which over the course of a year, or even a few months, can significantly erode potential savings.
When it comes to improving traveler compliance corporates need to know what areas of their travel policy are capable of delivering maximum return for best practice traveler behavior. While the drivers will be different for every company, there are a few common policy items that can be used to measure how compliance impacts travel spend including: advance bookings. An FCm study showed that companies could save on average up to 72 percent on the cost of their tickets by booking 21 days or more in advance of their departure date. Although these savings are dependent on the time of travel and which airline you fly with, significant savings can be made by encouraging your travelers to book as far in advance as their business travel allows.Restricted airfaresMake sure your policy has clear recommendations or a mandate around restricted airfares. If your travelers know their plans aren’t going to change, encourage the use of restricted airfares for both the inbound and outbound flights or if they have to make flight changes in the afternoon, they should be booking a restricted fare for the outbound leg and flexible ticket for the inbound leg. High levels of compliance and understanding of this policy item can save companies around 10 percent of their air spend.Preferred suppliersProperly educate your travelers on what is expected of them when it comes to booking through preferred suppliers and your business will have a greater chance of converting negotiated discounts and preferred supplier pricing into actual savings. Your supplier preferences need to be clearly articulated and reiterated on a regular basis to your employees.Travel class/categoryHow well do your employees follow your policies for class of air travel for domestic, short-haul and long-haul travel? And what does your policy recommend if your preferred hotel or room category is unavailable? Corporates need to have clear policies for travel class, category and preferred suppliers in the event that preferences are unavailable or there are issues with delayed approval processes.Booking channelsMandate that all of your bookings go through the one TMC and you can actively improve compliance by increasing the monitoring, tracking, visibility and accountability that comes from the expertise of having one travel manager to oversee your activity.
There is a range of strategies that corporates can use to boost company-wide compliance. These range from policy consulting, traveler training and education, incentive based rewards for compliant behavior, TMC provided online booking tools and data analysis designed to identify opportunities for missed savings (e.g. exception reporting).FCm’s online booking tool has a robust best fare of day capability, which captures missed savings and traveler details when non-compliant fares are booked. Best practice booking behavior and travel times can also deliver savings.
If non-compliance is an ongoing issue, corporates can adopt any number of strategies from up-front traveler education, information sessions or for repeat offenders written warnings, the circulation of repeat offender lists and or individual accountability for repeated policy offenses. If there is no redress for out-of-policy bookings, your policy has no impact and no authority. FCm can help you establish a strategy for policy enforcement that is tailored to suit your corporate culture.
The balancing act
To generate additional savings through improved levels of compliance, corporates should try to achieve a good balance between enforcement and traveler needs.If there is an area where you are having serious compliance issues it may be due to more emotive circumstances e.g. one of your preferred hotels may not be conveniently located or does not meet traveler standards for safety, cleanliness and amenities. While aggressive compliance enforcement may help to achieve your financial objectives, it may limit your company’s ability to attract and retain top performers that are used to a more flexible approach to travel policies. FCm suggests working with your travel manager to determine how policy enforcement is best approached for your organization.
- Define your travel policy.
- Make your policy manageable and measurable.
- Communicate and educate.
- Promote compliance through booking processes.
- Leverage TMC intelligence.
Originally published on Tuesday February 17, 2015
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