Why do we manage the corporate travel category?
Sadly, the most common answer I hear is to save money. The second-most common answer is to protect and serve travelers. Not much else comes to most travel managers' minds.
So it should be no surprise that travel managers place such a high priority on capturing savings. After all, savings are the currency of finance and procurement. They're easy to measure, with clear visibility and accountability-in short, the mark of a well-run shop.
But using old-school savings as the main indicator of a travel program's success is shortsighted. So says research sponsored by ARC, American Express Global Business Travel and my firm, tClara.
We asked over 700 U.S. road warriors to indicate the type of travel policy they operate under: a) travel policies that emphasize cost savings over traveler productivity and convenience; b) policies that emphasize traveler productivity and convenience over cost savings, or c) polices that were fairly well balanced.
Travelers operating under cost-focused policies:
- Admitted to an average 13 percent lower rate of compliance with their travel policies
- Had twice as much evidence of traveler friction across each of nine symptoms
- Indicated a 15 percent higher rate of being or nearly being burned out on travel
- Were significantly less willing to travel now and in two years' time
- Estimated a scrap rate-trips that in hindsight weren't worth the time or cost-that was 12 percentage points higher
- Reported trip outcomes that were 22 percent less effective
Would any management team ever design a travel program that inflicts these bad outcomes on its road warriors? Of course not. It makes no sense to focus on maximizing traditional savings when it creates such clear and significant costs to our travelers' ability to do their jobs.
That's why it so often makes sense to send Sally to Sydney in business class, have her stay in a five-star hotel and come back with a six- or seven-figure contract. It's all about delivering a positive business outcome. This is the only reason companies spend millions of dollars on travel.
So shouldn't that be the main goal, the core test, of a well-managed travel program? Does the travel program do a really good job of creating positive business outcomes or not? Of course it needs to be judged in context of the traditional cost; that's the balancing act expected of good managers.
New Mission, New KPIs
Once you define your travel program's core mission as enabling positive business outcomes, then you have to think about a new set of metrics for managing this new mission. In my keynote speech at The Beat Live conference this fall, I called for four new key performance indicators. You can measure each practically, and each passes the test of being relevant to senior management.
1. Travel Risk Rating-Use an objective framework to assess the maturity of the company's travel risk management program. Adjust the score to reflect both the risk level of the key travel markets and the recent levels of traveler friction among road warriors traveling to these markets.
2. Road Warrior Attrition Rate-This small group, typically 10 percent to 15 percent of a company's travelers, is a high-value, hard-to-replace subset of most any firm's workforce. Travel managers should identify these folks and have HR track their attrition rate each month.
3. Trip Scrap Rate-Survey road warriors to see how many trips they view in hindsight as not worth the time or cost of travel. Invest in learning how to reduce this number.
4. Trip Quality-Score the quality of each road warrior's travel based on simple, available dimensions: cabin, number of stops and on-time performance for each flight and star or tier rating for each hotel. Combine across all road warrior trips for a vital leading indicator of the other three metrics.
Our industry should manage the travel category with a much broader and more strategic goal in mind, namely to enable positive business outcomes. Let's measure and manage what really matters.