September 2007 - Recent research shows that as supplier prices continue their upward march, corporations are seeking greater compliance to ever-tighter travel policies in an effort to improve travel management program adoption and savings. But while tweaking policies certainly is one way to help get a handle on travel spending, simply improving the communication to employees about company travel policies can have a dramatic impact on compliance.
Most corporations have evolved past the annual printing and delivery of paper-based policy manuals--those tree-killing pamphlets that so often found themselves on top of one another in the drawers or cabinets that served as each employee's version of deep storage. In recent years, firms have turned to posting travel policies on company intranets. According to a 2006 Aberdeen Group study of travel and entertainment management practices at 296 firms, 56 percent
of corporations now use their intranet pages to communicate travel policies, versus 15 percent still using paper handbooks.
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Company:
Chevron Corporation, energy firm with 56,000 employees in 180 countries, worldwide revenue of $205 billion in 2006 and U.S. headquarters in
San Ramon, Calif. |
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Volume:
Approximately 200,000 annual expense reports from about 26,000 T&E cardholders |
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Challenge:
Ensure that all travelers are informed of company travel policies to
strengthen Sarbanes-Oxley compliance, preferred supplier use and the effectiveness of purchasing data for negotiating and security purposes |
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Approach:
Collaboration across purchasing, travel and finance departments to
share best practices |
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Solution:
Adopt lessons and processes from purchasing card training for travel program, including mandatory compliance-training quiz for all cardholders |
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But while travel-purchasing departments can send emails to employees alerting them to the location and existence of the policy, there's no assurance that travelers receive, read or act upon those emails.
Attempting to rectify that uncertainty, Chevron Corporation is about to embark on a novel approach to confirming that travelers at least see--if not also understand--their firm's travel policies without lowering onto them too heavy a corporate hammer. By mandating that travel cardholders participate in an online quiz about corporate travel policies, the energy company, starting next year, will ensure that every cardholder is exposed to travel policies in a way that is impossible with traditional communication methods.
The idea is being co-opted from a similar quiz applied several years ago to the company's purchasing card program and exemplifies one way procurement, global travel and finance can work together to achieve corporate goals.
Chevron's purchasing cardholders are required to complete a 26-question, 15 to 20-minute compliance training quiz every two years using the company's computer-based learning system. "All employees issued a purchasing card have to go through and answer these questions correctly. The responses are reviewed and stored by our purchasing card administration group, satisfying them that these employees have reviewed and have some understanding of purchasing card compliance requirements," said George Psefteas, Chevron Services Company finance shared services oversight manager. "It's a self-marking quiz, so if you get a question wrong, you can go back and re-answer it. At the end of the day, everyone basically scores perfectly on the quiz. It's not the score that we look at; it's whether they have gone in and completed it."
The quiz helps Chevron ensure that its 8,000 purchasing cardholders have seen guidelines about when and where to use the card and details about the roles and responsibilities of both cardholders and approvers.
Although travel purchasing is more complex, Chevron intends next year to bring a similar online quiz to users of its T&E card, provided by JPMorgan Chase and MasterCard.
In travel, Chevron offers a variety of one-way communications about policy, from
online postings of preferred airline and hotel lists to periodic reminders and regular comments by travel agents about class of service eligibility and preferred suppliers. Every couple years, executive memos go out.
Technology has helped, according to Chevron Business and Real Estate Services global travel manager Nancy Godfrey. She noted that the expense management system "over the years has definitely improved compliance and made travelers more accountable. In addition, the online booking tool helped us communicate preferred suppliers and improve compliance. The evolving global travel Web page has also given us another tool to communicate policy and preferred suppliers to a large travel population."
But while "no one can claim ignorance on the policy and the preferred vendor lists," said Psefteas, that's a far cry from the development of what JPMorgan Chase vice president of commercial card solutions Frank Dombroski called an "auditable record of those who took the course and passed the quiz."
According to Psefteas, "One makes the assumption employees have read the material to take the quiz, which is going to be more true of people who are new. People who have been around know much of it, so they might not actually read all the details. However, if they take the quiz and get all the answers right, that means they pretty well know the material. That tells us they have done something--either they know it and didn't need to read all the material, or they read the material and got it right. In either case, they have demonstrated that they have taken some training."
All this may sound like a lot of communications, but Chevron is taking the approach that there is no such thing as enough. "The experts say you need to repeat the message six times before people remember it," according to Godfrey. "The company is being very visible about its expectations."
Communicating a lot does not necessarily mean pestering employees. To complete the p-card training quiz, Psefteas said, employees are given "a very large window" by Chevron's Manila-based purchasing card administration group. Among other things, procurement and T&E card administration team lead Hyacinth Pacifico's group runs a tracing process that will make a handful of attempts to contact cardholders who are overdue in completing their quizzes. Her team works with the IT department and compliance coordinators to track employee participation, and Pacifico characterized the employee reception as "very positive."
"If they do not do it within a two-year period, it's constantly followed up on,"
said Psefteas. "It has never got to a chronic point. To the best of my knowledge, we have never had a situation where someone refused, but if they did, their purchasing card and access to the system would be revoked.
"Everyone basically scores perfectly on the quiz. It's not the score that we look at; it's whether they have gone in and
completed it."
— GEORGE PSEFTEAS, CHEVRON SERVICES COMPANY FINANCE SHARED SERVICES OVERSIGHT MANAGER
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"On the travel card side, you have a great deal of material," continued Psefteas. "There is much more in terms of documentation, frequently asked questions and computer-based learning that is available to our employees, but we have no way of knowing they looked at it. We don't require compliance training of them today, but I would argue that because in the United States we have approximately 25,000 employees and roughly 85 percent have been issued a travel card, our exposure is much larger from a compliance perspective. We feel pretty good about it overall, because we have built a number of controls, via business rules, within our internal, Web-based expense reporting system. For the most part, that's the only way you can reimburse yourself in the U.S., and it's working very well for us as employee users of the system and as a corporation. But there are errors that are made, primarily because people don't understand how they should be doing and reporting certain things. T&E guidelines, policies, proper accounting and reporting are all outlined in the material. When they're initially put in place, with a grand rollout, people are very aware. Years later, with turnover and focusing on the day-to-day business of an energy company, people aren't always necessarily aware of their responsibilities and the specifics around expense reporting."
JPMorgan Chase sees the program as a best practice. "Education and compliance are critical to any T&E card program," according to Dombroski. "Once an application is received and processed, companies should consider having card applicants participate in some form of training before they receive their card. While training in-person or via conference call could be offered, companies like Chevron are streamlining the education process by offering online quizzes that are easily accessible for employees. This initiative helps Chevron support their Sarbanes-Oxley initiatives."
Also expected to be mandatory and completed every two years, the new travel card and expense reporting compliance quiz will address more than just plastic use. Chevron's high-level travel policy summary is about a half-page long, but also contains 12 pages of guidelines accompanied by a number of frequently asked questions and other documents on procedures found on the company's relevant intranet Web sites. The company is taking the opportunity of a pending upgrade to its expense management software to rewrite and update those guidelines and general documentation.
"The starting point is our global travel policy and related procedures/guidelines that are jointly owned by the global travel group and finance," Psefteas said. "Within that policy there are a number of sections around preferred air, hotel and car vendors, the booking tool--that's Nancy Godfrey's group. What is under our purview in finance are the sections around how to account for those expenses. We talk about receipt requirements, filling out expense reports on a timely basis, the responsibilities of both employees and approvers--so it is all jointly owned."
While noting that every business group in Chevron is a stakeholder in these processes--since they all travel and make purchases--the three primary ones are Psefteas' finance shared services oversight group, Godfrey's global travel department and the firm's global procurement group.
"The way this relates to procurement is that if our travelers are educated as to what is required of them by finance and global travel, then they will make greater use of our global travel booking tool and our preferred vendor list," said Psefteas. "Travel is difficult to completely dictate because it's very personal to the traveler. I may be traveling on behalf of the company, but I'm the one that has to charge to the airport, get in the plane, fly six hours and stay away from my family. So I want to be comfortable and minimize personal disruption. We don't expect people to share rooms, and we have made accommodations on the available choice of airlines and hotels by having not one, but two or more preferred vendors on our airline and hotel lists.
"Even with the accommodations, not everyone understands the reasons behind the preferred vendors, nor do they understand that there arepreferred vendors," Psefteas added. "Frequent travelers know this, but the individual traveling twice a year may not be aware. By putting the compliance quiz in place, our intent is to beef up people's knowledge that there is material out there so
they can then select the appropriate vendor and use the appropriate tools to
make their bookings, which results in better and more robust information coming back to our global travel and procurement organizations. Ultimately, that leads to better negotiations when it comes time to review our supplier relationships and offerings."
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"The experts say you need to repeat the message six times before people remember
it. The company is being very visible about its expectations."
— NANCY GODFREY, CHEVRON BUSINESS AND REAL ESTATE SERVICES GLOBAL TRAVEL MANAGER
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He credited reporting from both the expense management system and the MasterCard Smart Data Online tool for revealing category-based global spending data that helps purchasing. "The more the exposure and the more employees know about procedures, policies and preferred vendors--and the better tools we have to be able to report out to the global travel and procurement groups--the better information they have to make strategic sourcing decisions down the road," Psefteas said.
"We monitor travel policy compliance through quarterly compliance reports at the operating company level," added Godfrey. "We also get monthly spend reports from George's team to compare with our booked data. We are now working to get the level 3/4 e-folio data for hotels to better understand where we are spending our hotel dollars."
Meanwhile, because "compliance is huge," as Psefteas put it, Chevron does
not rely only on employee knowledge of and allegiance to corporate policies.
"We all care about compliance and, when you talk to finance folks, we're very
passionate about compliance," he said. "We live in a Sarbanes-Oxley world. Internally, we want to make sure we are protecting personal information, to make sure our business rules and code of ethics are not violated. We have approximately 56,000 employees worldwide and pride ourselves on being an ethical organization, but when you have a large workforce, there can be one or more bad apples where people look for loopholes and try to take personal advantage of systems."
As a result, finance, procurement, global travel, global security and the corporate internal audit group have collaborated to create controls for Chevron's purchasing and travel cards, as well as in the travel expense reporting system. It is within policies and procedures built into the reimbursement process, Psefteas said, where the primary compliance mechanisms lie.
In addition to compliance, Psefteas said, the three departments each have different but intertwined needs when it comes to payment and expense systems: "Global travel wants to make sure there's adequate acceptability because Chevron operates in 180 countries and has people traveling all over the world. So global travel asks, 'Is the travel card accepted? Is there insurance offered through the card? Is there emergency medical available to the cardholder?' They really care about robust reporting. Procurement comes out and says, 'How can we measure our global spend as an organization? How can we better negotiate with our suppliers and select the right suppliers for these services?' And on the finance side, we care about all those things too, but we also care about maximizing the
rebates available to us through the card issuer by centralizing and consolidating all our spend under a corporate umbrella travel and purchasing card."
Although the primary goals may differ, lessons learned in any one area can translate to the others. Just as T&E administration is ready to start next
year to leverage the purchasing card program's compliance quiz, Psefteas
said, the purchasing card program is ready to take a page from travel by implementing heretofore nonexistent corporate-sanctioned user procedures and
guidelines.
