Splitting travel savings with employees may be the best way to encourage travellers to treat every dollar of company money as their own.
A New-York based consultant, Geoff, has to visit a client in Seattle. He logs onto his organisation’s travel management system to book his flight and hotels.
The app recommends a flight that’s within budget and suits his timeframe. However, Geoff ignores this, scrolls through a list of other options, and selects a flight leaving later for a cheaper price.
Similarly, he chooses not to go with the 4-star hotel recommended by the system. He instead chooses a slightly cheaper hotel that’s still convenient to his destination.
Upon arrival in Seattle, Geoff walks past the cab rank to the bus stop. He’s thinking about where he can get a cheap but healthy meal to avoid ordering room service.
As he makes each travel-related purchase, he’s scanning receipts into his travel app, which subtracts the costs from his total travel budget.
Geoff is behaving like he’s spending his own money rather than his organisation’s travel budget. Why? Because in essence, it is his own money. His company has an arrangement in place where employees are allocated 50 per cent of the savings if they come in under their allocated travel budget.
It’s entirely automated. At the end of his trip, the travel management system takes the difference between the budget and Geoff’s actual costs, splits the savings, and adds half to Geoff’s next pay check.
Sharing travel savings encourages a cost-conscious culture
Why aren’t more organisations sharing travel savings? Possibly, it’s due to a myopic attitude where travel managers are reluctant to part with any savings whatsoever, preferring to allocate every dollar straight back to the bottom line.
However, there’s a much bigger prize at stake. Building a cost-conscious culture and creating that critical mind-shift where employees start treating company money as their own.
Shared travel savings might also fix the multi-billion dollar “open booking” problem. In the US, for example, 50 per cent of hotel bookings and 24 per cent of airline bookings occur outside corporate travel programs. This presents a significant compliance challenge and visibility problem.
Creating a policy wherein shared savings can only be claimed when bookings are made through the approved system would provide a major incentive for employees to comply.
Where can employees save on travel costs?
Here are a few ideas for frugal travel across transport, meals and accommodation:
Even if your organisation allows you to fly business class, do you really need to? What about flying at a different time of day to get a cheaper fare? A common reason employees go outside approved travel management systems is a belief they can find a better deal themselves.
The TripScanner start-up (acquired last year by Coupa) provides a clever way around this issue. Employees can book travel options via any website they like, so long as they sync their purchases with TripScanner. The software then automatically checks each booking against the company’s travel policy.
Can you take the train or a bus rather than a taxi? How about Uber? There’s always going to be a trade-off between the convenience of being taken directly to your destination and having to walk from the bus stop. However, with the prospect of an extra $25 in your pocket, employees might just choose the bus.
Consider grabbing a cheap meal rather than paying inflated prices for room service. Keep in mind that “cheap” doesn’t necessarily have to mean “unhealthy”. Eating well and affordably takes planning, as room service is most often ordered when busy travellers run out of time.
This is where your company’s travel policy need to be absolutely clear, because accommodation (and to a lesser extent, transport) involves a safety factor.
Having an approved list of hotels will stop truly frugal employees from trying to save drastically by booking hotels in undesirable parts of town. Or even (in extreme cases) going for an unconventional option such as Couchsurfing.
Setting it up
There are some things to bear in mind when setting up a system such as this.
- Better planning: Saving money when travelling takes planning, because needlessly expensive flights, taxis and meals are usually chosen due to tight schedules.
- Get the budget right: Travel managers need to do their research to get the travel budget right for their organisation, as setting it too high will mean losing money unnecessarily. Fortunately, there’s software available to help with this task. A sophisticated travel management system will allocate a unique budget to each trip, rather than a blanket dollar figure for all travel.
- Make sure your travel policy suits your risk appetite: Travel policies can vary wildly, from tightly-controlled lists of accommodation options, to a free system where employees can do as they like. Again, encouraging frugality may cause some employees to select unsafe options, which is why couchsurfing or ridesharing may need to be excluded from the system.
- Frugal travelling isn’t for everyone: For some, saving money when travelling might not be a priority. Having a comfortable flight or good night’s sleep in a nice hotel might be much more important than winning back a few hundred dollars extra per month, and that’s fine. Again, it’s important to set the budget as accurately as possible, and be clear in your travel policy about what happens if employees go over budget.
Does your company share travel savings? What are your tips for beating the travel budget?