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How to create an effective corporate travel policy to increase compliance

Expense Management| 8 mins read

Are your employees unsure which booking tools and vendors they should use for travel? Do they often get confused about claimable and non-claimable expenses?

If your answer to either of these questions is “yes,” it shows that your employees are having trouble understanding and complying with your travel policy. Low compliance rates can lead to unnecessarily high travel costs and affect your business’ cashflow.

Travel Policy

Your travel manager could get the travel team to put in extra work to draft a terrific corporate travel policy for your firm. But is there any point in doing that if your employees fail to comply with the policy or even acknowledge its existence?

Your travel policy lays the foundation for your travel system. It’s time to adopt an effective travel policy to cut overspending at the source. This article will walk you through the best practices to formulate, communicate, and enforce a travel policy that will encourage your employees to adhere to the rules while ensuring their productivity and satisfaction.

Formulating the policy

Analyze your existing travel policy

Studying your current travel policy is a good start. To cut overspending at the source, you need to map out your current travel practices and understand what you should fix in the next version of your policy.

To map out your current travel practices, here are some sample questions you can answer:

You will have to answer questions like these before you can get an overview of your firm’s travel expenses. Once you have your answers, you can identify trends and get an idea of what has been working for your firm and what has not. You can also get an idea of what your employees are finding difficult, like re-booking flights, changing accommodations, or claiming and categorizing expenses. Using these insights, you can come up with a list of necessary changes to fix any loopholes and retain the good practices.

Involve relevant stakeholders while drafting the travel policy

Having a cross-functional team of employees who play a part in the process can help in identifying the gaps in your travel policy. You can also use the stakeholders’ expertise to come up with solutions to fill the gaps. For example, your finance team would know about restructuring your T&E budget, your travel team would know how to enforce and implement the policy, and your HR team would know how to communicate it to employees efficiently. If you skip the other teams and decide to make your finance team responsible for everything about the policy, you will probably end up with a travel policy that is too rigid and limiting.

Define your business objectives

Before you start drafting a travel policy, take some time to list your firm’s objectives and the goals you intend to meet with this policy. Different firms have different priorities—for instance, while some travel managers need to draft policies to bring down their travel costs, others need to do so to improve employee satisfaction.

Here are some questions that can help you come up with your objectives:

Once you’ve answered these questions, you will have a clear idea of your business’ top priorities. Now you can breeze through the process of structuring a travel policy that will help you achieve your goals.

Keep your employee satisfaction in mind

Don’t be one of those firms that prioritize cost savings over employee safety and satisfaction. Obviously, you want to keep travel costs down, but sometimes you will have to make exceptions. For instance, you may instruct your employees to book accommodations with a partner hotel chain—but what if that’s two hours away from their business destination? Is it really worth it if it causes a significant dip in their productivity and they turn up to the event already frustrated and tired?

By creating a travel program that balances your employees’ satisfaction and safety with your firm’s goals, you can create an environment where policy compliance is easy.

Drafting a clear and concise policy

Keep it simple

Imagine your travel manager has come up with an amazingly detailed travel policy. It covers every possible situation, and if implemented it would be really effective in cutting costs. However, you can’t read it without getting distracted or bored. The travel policy looks like one of those sets of terms and conditions that you would just scroll past and click ‘Accept’ on.

It’s time to break with the convention of writing travel policies in complex language. Use simple language along with pictures, charts, and flowcharts wherever needed. If your travel policy has complex terms, try including a glossary section.

Answer employees’ questions

Business trips involve a lot of questions and your travel policy should answer all of them. Make sure your travel policy is comprehensive and doesn’t leave any grey areas.

Here are some common questions your employees may have:

To increase employee compliance, don’t limit your travel policy to just dos and don’ts. Instead, explain why these particular rules have been laid down and how they align with your firm’s objectives. If your policy just lists rules without any corresponding reasoning, it may be flying right over your employees’ heads.

Communicating the policy

Educate your employees

So you’ve created an effective travel policy. However, your job doesn’t end there. The key to increased compliance is to communicate, communicate, and communicate. Your travel manager could just mail a copy of the travel policy to your employees and call it a day. But how would you know if the policy has been read? How could you be confident that it will be adhered to?

Here’s where travel managers need to be proactive. You can use multiple channels to educate your employees—for instance, set up workshops before business trips, or give one-on-one training sessions where your travel team can explain gist of the policy to each traveller. Meetings like these also provide a platform for your employees to raise questions about your travel policy and ask for clarification.

Tip: Make your travel policy easily accessible. Emailing it to your employee, including it in the booking tool or expense management system, putting it out on the intranet, and even creating an individual app for it are some ways you can make it easy for your employees to access the policy.

Encourage and incorporate employee feedback

Your employees should have a say in your travel policy. After all, they have first-hand experience of the trips that the policy affects. To gather feedback, you can use online survey tools and have employees fill out feedback forms about their travel experience. While some firms stick to survey tools, others use ad-hoc methods like emails and meetings with the travellers to get an idea of their preferences. From the feedback you obtain, you can incorporate the most valid points in your policy.

Enforcing the policy

Delegate authority

A good practice to increase compliance is getting your senior management to strictly mandate the travel policy instead of simply recommending it.

To reduce non-compliance, decide who will be in charge of enforcing the policy—if you have an internal travel team, they can take up this responsibility. If you’ve partnered with a Travel Management Company (TMC), then let them know the policy as well as the steps to be taken in case of non-compliance. Apart from these enforcement options, many firms are moving towards online tools like expense management systems to automate policy enforcement.

Implement an online expense management system

As your business scales, good technology helps improve your compliance rates while simultaneously reducing manual work. Having your travel team memorize the travel policy to catch non-compliance is not a practical approach!

You can step up the enforcement of your travel policy by automating it with the help of an expense management system. According to a study by Levvel Research, expense management systems improve the ability to enforce travel policies by 59% and improve employee satisfaction by 37%.

Once you pick an online expense management system, make sure you take advantage of its features. Customize the system based on your travel policies (an in-built travel policy helps reduce employee confusion), set up approval workflows, and use the built-in expense reporting system to weed out non-compliant expenses automatically.

One last thing!

The corporate world evolves every day and takes business travel along with it. The corporate travel trends keep changing—employees now want to exercise greater freedom, and they prefer the ability to personalize their experience and choose from multiple options. To keep up, aim for a dynamic travel policy by scheduling a review annually. Once you’ve reviewed your policy, don’t forget to communicate the changes to your employees.

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