December 2008 - It makes sense that there would be a correlation, for better or worse, between a company's travel policy and its placement on the annual
Fortune list of "100 Best Companies To Work For" in the United States. But are "best" places to work and "best" travel policies, as measured by a prevailing standard of what seems to constitute an effective policy, mutually exclusive or subtly interconnected?
"Being a best place to work and having the best travel policy seem almost contradictory," said John Caldwell, president of travel management consulting firm Caldwell Associates. "Frankly, stricter monitoring of policy observance is better for the company but may not be better for the employee, so there has to be a reasonable balance."
Such a balance is not easy to define because of the subjective nature of the topic. Based on how well it leverages the underlying culture of the company, a well-executed policy that is dubbed "voluntary" can match or even exceed compliance with a "mandatory" policy, according to practitioners.
Travel policy is not among the human resource policies and practices considered by the Great Place to Work Institute as it evaluates more than 500 companies nominated each year for a spot on the
Fortune ranking. The institute asks each nominated company to invite 400 employees to complete a survey on 57 issues. Results are used to produce the rankings. In addition to the obvious public relations and recruiting benefits, the institute contends that the "cumulative return" of companies selected for the list during the past 10 years has outperformed both the Standard & Poor's 500 and Russell 3000 indexes. To explore the link between a company's travel policy and
Fortune ranking,
Procurement.travel asked travel executives within some ranked companies, as well as veteran travel management consultants, to weigh in.
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"Companies that have no formal travel policy, or those that have a very loose policy, often end up with endlessly escalating travel expenses."
— John Caldwell, Caldwell Associates president
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For example, W.L. Gore & Associates, a manufacturer of everything from weather gear to coaxial cable, has no formal travel policy; neither does Umpqua Bank, the fast-growing operator of 148 branches in the Pacific Northwest. While the two companies share a common trait that might alarm many corporate travel buyers--voluntary compliance with loosely defined travel "guidelines," rather than well-established, formal policies--they also share the unique and prestigious distinction of being ranked on
Fortune's 2008 "100 Best Companies To Work For" list. Then again, financial services firm American Century Investments, which has a mandated travel policy first implemented in April 2005, also is ranked this year on
Fortune. Compliance is strictly monitored by American Century's accounting department, which audits every expense report.
Despite what appear to be irreconcilable differences between their policies, the three companies share a principle lost on many of the enterprises still struggling to create a travel policy that actually works when it comes to managing costs. Their initiatives are rooted in corporate cultures that put the larger interests of employees and the company ahead of mere cost cutting.
"Gore associates have the freedom to make their own commitments," said Jayme Smith, who functions as W.L. Gore's travel manager, although the company uses no formal titles. "And that kind of freedom is intrinsic to our culture. Our culture is the engine that drives our innovation, and innovation is the engine that drives our success."
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Company:
W.L. Gore & Associates |
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Headquarters:
Newark, Del. |
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Type of business:
Manufacturing |
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Total number of employees:
8,293 |
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Percentage who travel:
40 percent |
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Rank on Fortune "100 Best companies To Work for" 2008:
15 |
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Travel policy mandated or voluntary:
No formal policy |
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Date current policy implemented:
"Guidelines" updated two years ago |
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Key travel technologies/services deployed:
Rearden Commerce; global relationship with Carlson Wagonlit Travel |
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The integrity of Gore's "voluntary" travel policy is reinforced by the symbolic fact that CEO Terri Kelly and Robert Gore, son of the company's founder, both fly coach. More important, Smith said, is the reality that Gore "doesn't view travel as an expense. We view it as an investment in our future." Unlike most companies, Gore does not look at travel as an isolated function that needs to be monitored and controlled. It sees travel as one of many elements that make up the culture that has propelled the company to its success, Smith said.
Similarly, at American Century Investments, a pillar of the company's travel policy is management's concern for the work-life balance and general well-being of its employees. Becky Hoy, who oversees American Century's travel policy in her role as accounting manager, explained that employees use corporate cards to pay for travel so they can avoid charging expenses to their personal cards. While this is standard practice at many corporations, in order to aggressively track expenditures, American Century's policy is presented--and perceived--as a benefit to employees.
The company also has made expense reporting as painless as possible by adopting a PeopleSoft system that automates the process and does not require employees to keep track of receipts. All expenses are captured and coded from the original merchant transactions. The result? Employees believe American Century has their best interests at heart. The company, therefore, is able to enhance compliance with its policy.
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Company:
American Century Investments |
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Headquarters:
Kansas City, Mo. |
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Type of business:
Financial services |
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Total number of employees:
1,600 |
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Percentage who travel:
40 percent |
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Rank on Fortune "100 Best companies To Work for" 2008:
22 |
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Travel policy mandated or voluntary:
Mandatory |
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Date current policy implemented:
April 2005 |
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Key travel technologies/services deployed:
Concur Cliqbook; PeopleSoft; onsite travel management services from
All About Travel |
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"[Employees] want and like to do the right thing for the company," Hoy said. "By having a travel and expense policy that is monitored for policy adherence, it keeps them in compliance and it controls costs. This helps them focus on growth initiatives that make our customers successful. Also, employees understand that in order for us to have a strong employee benefit program, we have to manage our costs."
Doing The Right Thing
Data storage provider Network Appliance is another company that ranked on the 2008
Fortune list and views travel policy through a different prism than simply as a way to cut costs. "The foundational goal of our travel policy is also the foundation of our company," said Susan Dupart, director of global travel services. "We are very focused on 'doing the right thing.' That is a thread you can see throughout the company, in all areas of our business." In the case of travel, part of doing the right thing is being frugal with the company's money.
"We put the responsibility on the travelers to make decisions that best support their need to travel with what is the best thing for the company," Dupart told
Procurement.travel. "Knowing that part of the success of the company is based on their fiscal decisions helps make them part of the solution."
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Company:
Umpqua Bank |
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Headquarters:
Portland, Ore. |
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Type of business:
Retail and commercial banking |
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Total number of employees:
1,750 |
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Percentage who travel:
50 percent |
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Rank on Fortune "100 Best companies To Work for" 2008:
13 |
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Travel policy mandated or voluntary:
Voluntary |
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Date current policy implemented:
"Guidelines" not changed in at least six years
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Key travel technologies/services deployed:
None |
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Despite the arguments mounted by such companies as W.L. Gore and Umpqua Bank that their actual results benchmark well against other enterprises with mandated travel policies, the broader trend in the industry is toward mandated policies, said Carol Ann Salcito, president of travel management consulting firm Management Alternatives. Moreover, those companies that do have formal policies are making them tougher; 42 percent of 1,000 travel managers were expecting to tighten policies this year, according to the 2008 AirPlus International Travel Management Study, released in February. Respondents represented 10 countries, including the United States.
Those trends exist because "major companies have started to realize the power of data when it comes to analyzing and understanding travel policy," said Salcito. "And that data is not going to be accurate unless people are adhering to a mandatory policy that can be measured and assessed properly."
Caldwell agreed that "companies that have no formal travel policy, or those that have a very loose policy, often end up with endlessly escalating travel expenses."
But mandates aren't necessary at NetApp, which reported "68 percent compliance with our booking tool--without a mandated program," Dupart said. "We have clearly identified that this is the best way to make a reservation."
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Company:
Network Appliance |
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Headquarters:
Sunnyvale, Calif. |
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Type of business:
Data storage devices |
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Total number of employees:
8,000 |
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Percentage who travel:
40 percent |
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Rank on Fortune "100 Best companies To Work for" 2008:
14 |
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Travel policy mandated or voluntary:
Voluntary |
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Date current policy implemented:
Last year; policy is reviewed and updated annually
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Key travel technologies/services deployed:
Concur Cliqbook as U.S. online booking tool and Amadeus e-Travel in EMEA; iExpense; International SOS for emergency assistance; global relationship with Carlson Wagonlit Travel
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And don't tell Umpqua Bank that mandates are the only way to control travel costs. The company is quite happy with how its travel policy is integrated into the broader and much-ballyhooed culture of the organization. In fact, there have been no changes to the company's guidelines in the six years executive vice president Barbara Baker has been there.
Nevertheless, such a lack of basic policy is anathema to Salcito. By definition, she said, because every employee books his or her own travel, Umpqua's aggregated purchasing is inherently inefficient. The inescapable fact that its employees will often fail to get the best available deal on an airline ticket or hotel room means that, amortized over thousands of transactions a year, the company is needlessly foregoing savings, Salcito argued. But Umpqua does so without compromising the relative freedom or quality of the employee's travel experience.
In particular, Salcito takes umbrage with the fact that Umpqua has not updated its guidelines for more than six years. "That is a cardinal sin," she said, "because the industry and best practices have changed so much."
Caldwell also has fundamental concerns about a policy as liberal as Umpqua's or W.L. Gore's. "That kind of policy is the best-liked policy by employees, which is one of the reasons you see these companies on the list of best places to work," he said. "But it is not the best policy from a financial point of view."
Despite the reality that, on paper, the loosely defined guidelines of some best places to work are clearly contrary to what is generally considered a solidly crafted travel policy, there does appear to be a subtle connection between the exemplary culture of a best place to work and effective travel management, said Andrew Menkes, CEO of Partnership Travel Consulting. During the past eight years, Menkes has worked with at least 10 companies on the
Fortune list and said those that deliver exceptional working environments tend to do better in the struggle that all companies face: monitoring and controlling travel costs.
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"The lesson I have learned is that if people understand the policy, they will generally comply with the policy, whether it is mandatory or voluntary. But communication is the key. And you have to make every employee a stakeholder in the company."
— Barbara Baker, Umpqua Bank executive vice president
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"Voluntary changes in behavior tie in many ways to corporate culture, which is obviously one of the things that makes a company a best place to work," Menkes said. "And one of the things that makes a company a best place to work is the lack of a heavy hand and absolute mandates when it comes to policy. That kind of understanding actually encourages employee cooperation, the taking of initiative and doing the right thing for the company."
NetApp's Dupart agreed and said it also helps to seek "traveler feedback" in the development of her company's guidelines and negotiated contracts. She seeks input "on hotels in the preferred hotel program-ensuring that we have the right properties in the right locations" and "airline contracts that best support our traveler patterns."
The critical characteristic that links a best place to work with a correspondingly excellent travel policy, Menkes said, is exceptionally effective communication.
Salcito agreed that superior communication at "best" companies is one of the essential characteristics that sets them apart from other companies, whether the travel policy is mandatory or voluntary.
Salcito and Menkes concurred that a so-called "voluntary" policy can actually outperform a mandatory policy if it is supported by consistently excellent communication, which typically includes better educational initiatives.
It is for precisely that reason that Baker doesn't fret about reactive criticisms by experts of Umpqua's permissive policy. "The lesson I have learned is that if people understand the policy, they will generally comply with the policy, whether it is mandatory or voluntary," Baker said. "But communication is the key. And you have to make every employee a stakeholder in the company."
"Whatever you call your policy--mandatory or voluntary, a requirement or a guideline--the company is better served if the employees buy in and take ownership of the policy than it is if they feel like they're being treated like a bunch of army recruits," Menkes agreed.
Best Practices At 'Best' Companies
Of course, it's one thing to say you put employees first and another thing to actually implement policies reflecting that philosophy. As an example of a travel policy more likely to be found at a best place to work, Caldwell cited the practice of allowing people to travel business class for flights of eight hours or longer.
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"Could we, if we were given the green light, get much more stringent about our policy, negotiate further and make decisions that would drive more cost savings? Yes, we could. But what would be the impact on our travelers? We have worked hard to create policies that truly appeal to our employees, to the extent that people are actually happy with them."
— Hillary Dallas, Booz Allen Hamilton global travel manager
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Another standard practice that Caldwell sees at great places to work is letting employees make personal use of the frequent flyer miles they accumulate traveling on behalf of the company.
Menkes noted two practices that set a company apart by an opposite measure, whereby any organization that pursues them is, almost by definition, the antithesis of a best place to work: One is asking people to stay over a Saturday night in their business destination in order to get a lower roundtrip fare. "That is cutting into a person's personal life," he said. "A best-place to-work company understands the need for balance and treats employees as human beings first." By the same token, he said, a company that asks an employee to change planes in order to save $50 or $100 on the cost of a nonstop, roundtrip ticket clearly demonstrates one reason they are not on the
Fortune list.
Truly progressive companies understand that travel in the congested, post-9/11 world has become a nightmare for their employees. As a result, they act accordingly to make travel as easy and comfortable as possible for employees.
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Company:
Booz Allen Hamilton |
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Headquarters:
McLean, Va. |
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Type of business:
Consulting |
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Total number of employees:
1,700 |
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Percentage who travel:
60 percent |
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Rank on Fortune "100 Best companies To Work for" 2008:
81 |
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Travel policy mandated or voluntary:
Voluntary |
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Date current policy implemented:
Aug. 1, 2008; policy is updated regularly |
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Key travel technologies/services deployed:
Concur |
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"We listen to our travelers," said Hillary Dallas, global travel manager at consulting firm Booz Allen Hamilton, which is repeatedly ranked on the
Fortune list. "And based on that feedback, we try to make the best business decisions we can. Could we, if we were given the green light, get much more stringent about our policy, negotiate further and make decisions that would drive more cost savings? Yes, we could. But what would be the impact on our travelers? That distinction is a priority that is at the top of our list, because of the culture of the company. We have worked hard to create policies that truly appeal to our employees, to the extent that people are actually happy
with them."
As a result, said Dallas, Booz Allen has accomplished a level of compliance and self-imposed travel disciplines that would make many companies with mandated policies envious.
That is a lesson that Dupart has learned during her two years at NetApp, after almost 40 years in the travel industry. "It's difficult to come into a company that really doesn't have a mandated policy," she said. "I had some initial trepidation as to how you manage that. But I have been pleasantly surprised, because I have learned that, in the right environment, people really do want to do the right thing."
