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3 Unexpected (and Easy) Ways to Cut Travel Costs

Most travel managers expect travel costs to rise in 2014, according to a recent survey from AirPlus International. Here's what you can do about it.
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If you're a CEO, you know how pricey traveling can be. As useful as business trips are, the costs can accumulate quickly, tying up your cash and racking up the red tape of reimbursements. 

To make matters worse, most travel managers expect travel costs to rise in 2014, according to a recent survey from AirPlus International. It polled 958 employees who handle travel for their organizations. A whopping 42 percent of them said they expect an increase--the highest percentage to say so in the last five years of the survey.

Good news: There's a lot you can do to cut travel costs.

And much of it goes beyond the basic steps you've probably already considered (i.e. minimizing hotel stays and direct flights), important though those basics are. In fact, if you consider the topic of travel from three larger perspectives--human resources policy, analytics/benchmarking, and leadership--you're likely to cut your travel costs even further, because the tactics will resonate throughout the organization. 

1. HR policy. Patty McCord, founder of Patty McCord Consulting and the former chief talent officer at Netflix, attributes much of the company's early success to the simplicity of its overarching travel-and-expense policy. How simple is the policy? So simple, it's only five words long: "Act in Netflix's best interests." She explains in the Harvard Business Review

In talking that through with employees, we said we expected them to spend company money frugally, as if it were their own. Eliminating a formal policy and forgoing expense account police shifted responsibility to frontline managers, where it belongs.  

You might ask: Did this five-word policy really work? Weren't there some employees who acted in their own best interests, rather than Netflix's? Yes. McCord admits that she had to occasionally admonish staffers who splurged on fancy restaurants or high-tech gadgets. "But overall," she writes, "we found that expense accounts are another area where if you create a clear expectation of responsible behavior, most employees will comply."

2. Analytics and benchmarking. If you're going on a diet, sometimes it helps to target an ideal weight. Likewise, in trimming travel excesses, it can help to set spending targets. One way to do that is to benchmark your organization's spending against others of comparable size and function. 

You might find out that you're spending way more than comparable organizations. In which case, there are a few "quick hit" changes you can make to reduce spending. "Review the traveler pattern by division, department and top travelers to determine if there is a specific area in which more spend happens," suggests Lea Cahill, COO of Atlas Travel, a 170-employee travel agency based in Milford, Mass. "In 30-90 days, a company could see a dramatic spend decrease by volume shift, a policy change, or by identifying an abuse within a specific area of the business."

On a more advanced level, you can use analytics to see which airlines fly the same routes--and how much might be saved by consolidating all your travel with one of them. Likewise, you can gauge how much you'd save if you always booked your flights at least 21 days in advance, instead of whenever you feel like it. Cahill suggests creating a reward/recognition program for employees to emphasize and incentivize all cost-cutting behaviors. 

3. Leadership. What kind of message does it send if you, the CEO, always fly directly to your destinations and stay in corner suites, while urging your employees to fly at discount rates and share hotel rooms?

You know what type of message it sends. "Although it might be even more intimidating to take a look at senior management's purchases for fear of bringing an executive's practices to light, establishing the tone from the top is the most effective way to let everyone know that all T&E expense claims are monitored, even when it comes to the C-suite," writes Chris Stewart-Smith, manager of the global solutions group at ACL, a global technology solutions and consulting firm, in CFO magazine. "This approach serves as a deterrent for non-compliant behavior."

One other way to demonstrate your leadership is to assess just how necessary your traveling really is. Brad Feld, a serial entrepreneur and VC, recently wrote about how happy he has been since eliminating travel altogether--and using videoconferencing, instead, to monitor his worldwide interests. "I'm no longer shredded from the exhausting and dehumanizing process of trying to get from one place to another by air travel," he writes. "Walking my dog every morning is a special joy, and going to bed each night with my wife is magnificent."




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