The Bureau of Transportation says that today business professionals in America are taking 405 million work-related trips each year. You can well imagine how fast these expenses add up. After all, you’re paying for a variety of things while traveling – hotel stays, airline tickets, and meals included. As a business, you need to keep these expenses to a minimum so that you can run an economical business.
In the past there were only two ways a business could manage travel expenses:
- Simply accept that employees will overspend and that this is the cost of doing business. Unfortunately, this will hurt your bottom line.
- Try to cut costs by tightening spending limits and creating restrictive travel policies. This will cause your employees to grow dissatisfied and find employment elsewhere.
Today this is changing for the better. Instead of punishing employees for overspending, many businesses are now rewarding them for saving instead. To many people, this sounds both attractive and unrealistic. This is because many systems promised this in the past. These were based on gamification – offering points, badges, and other types of recognition act as rewards to influence employees to spend less while traveling more. Although this theory does motivate employees to act in the way you want, there’s also the reality of human nature that must be dealt with. So, while some people will go out of their way to book a cheap flight, most people will act out of self-interest instead of worrying about saving the company money. With this in mind, people will understandably prioritize their own comfort and convenience when booking a trip. This is because gamification’s rewards don’t adequately compensate people here.
Small Biz Trends says that instead of depending on gamification you need to create a realistic budget. By providing guidelines on how much money to spend on things (e.g. airplane tickets, hotel rooms, breakfast, lunch, dinner) you’ll help your employees not grow overwhelmed by the experience. Don’t make a big deal if employees don’t hit those numbers as long as they’re in the ballpark. Ultimately, it’s the numbers at the end of the trip that mean the most.
One area that you really need to be honest about when you’re creating your budget is food and drinks. You don’t want your employees to use travel as an excuse to indulge in really expensive meals and drinks. There’s something about traveling that makes us think we deserve an expensive five-star meal so do your best to steer your employees away from this.
Encouraging Employees to Spend Less
You can’t simply create a budget and expect your employees to follow it though. They need an incentive to do so. Of course, this seems to go against conventional wisdom. However, this is something that Google was the first to question.
Google gives their employees a budget for each trip they take. When the employee arrives home under budget they earn credits that they can redeem for travel upgrades in the future. This motivates them to save today so they can splurge tomorrow.
Inc. says there are several reasons why this system works so well including:
- It’s egalitarian based – employees keep part of what they save for the company
- It’s empowering – Google provides their employees with a lot of options that fit their travel budget
- It’s quantitative – employees have a clear-cut definition of what’s reasonable to spend on travel
The best way to set this type of policy in place is through using a prepaid debit card that’s set to your travel budget and offers a points reward system (e.g. American Express, Chase). Doing so will eliminate any impulse spending and splurging. At the same time, they’ll also amass points that they can use for future travel expenses. Not only will this keep your business’ finances in check, but it will also help cover many travel expenses in the future.
Using Technology to Reward Employees
Travel incentive programs are now readily available, including TripActions, TravelPerk, RocketTrip, and Upside. Many businesses, besides Google, are now using them to incentivize their employees. This works especially well for small to medium-sized businesses that don’t have a formal travel management system in place. These programs offer a lot of different incentives – from gift cards to letting employees keep half of the money they save on their trips.
This niche has grown by leaps and bounds over the past couple of years. It’s not just the small companies that are using these today. Fortune 500 companies who want to save money and monitor their employees’ travel are also using them. There are several reasons why these programs are considered mainstream today, including:
- Technology itself has grown by leaps and bounds over the past couple of years. Thanks to this factor you can now have a huge amount of data about things like prices and historical travel behavior analyzed for you with great ease. Not only this but the information you receive is actually accurate even though it’s conducted in real-time as your employees are planning their trip.
- Travel habits are also changing. People are now much more experienced when it comes to booking plane tickets and hotel rooms online. There are also many more low-cost travel options available today. These make people feel comfortable and fit their needs even though they’re so affordable. As people take notice of them, they’re starting to use them for business travel and not just for leisure travel.
Of course, you can’t just use any old app. You have to use the ones that are right for your company. They start with offering your employees apps that will help them find cheap flights, hotels, and transportation. It’s possible that you may even need more than one tool or app to make this program work for your company. The key here is versatility.
Life on the road is expensive. Cost-effective business travel isn’t yet the norm. However, if you can cut back and manage business calls by making free conference calls you’ll save a lot of money. Otherwise, you’ll need to use some of these tips to do so.