Corporate travel and expense policy compliance is a constant theme in the business travel industry. Although using the corporate expense policy manual as a stick to beat your travelers may be a short-term solution to enforce compliance, it doesn’t address the underlying issues of why employees don’t adhere to the policy, and could also alienate travelers by imposing regulations that reduce productivity and create frustration.
The first thing to understand is why do employees sometimes deviate from corporate policies? At the two extremes, there are those who simply don’t know about the organization’s policy, and those who are flagrantly – and sometimes fraudulently – abusing corporate expenses for their own benefit. Although business expense fraud is estimated to cost about $2.8bn per year in the U.S. alone, almost 95% of employees are honest with their expenses. Therefore, in the middle of these two extremes is a majority for whom the policy is simply too restrictive.
In order to minimize out-of-policy spend, companies need to find the middle ground between enforcing an overly restrictive policy that alienates staff, and one that the team loves, but which doesn’t adequately do its job. One of the biggest challenges is that policy compliance and traveler happiness aren’t the most obvious of bedfellows. On the one side, a prescriptive set of rules that dictates which vendors they use, on the other hand, business travelers who may not wish to be bound to using a particular hotel chain, airline.
Further reading: Expense best practices to delight your employees AND your CFO
Here are five ways that organizations are minimizing expense leakage while keeping the workforce engaged:
- Help them to help themselves
Most people are inherently honest, and violations are more an oversight than deliberate. Educate them on the policy and give them the tools to guide them and stay within the guidelines. There are even expense management solutions which remind business travelers of your corporate policy while they are building their trip pre-approvals.
- Learn the who and why of policy violations
Analyze your team’s travel bookings and expense reports to see who the biggest culprits are. Before you try to force them to adhere to your policy, find out why they bend it. There could be a very good reason. There is expense management software with audit filter capabilities built in so you can generalize about the type of traveler to target and hone in on the types of expenses to audit.
- Make a policy that works
Work with your team – even those who violate your existing policy – to create a solution that works for every party. If needed, build in tolerances for specific traveler groups, to ensure that policies don’t negatively impact team productivity or business success. If you need a good starting point, please use this Expense Policy Template which you can fine-tune for your organization.
- Offer a carrot…
Although sticking to policy should be everyone’s goal, providing financial incentives to adhere to policy could increase compliance. Done right, it could save your organization much more than it costs. For more on weaving in employee perks to your expense policy, please download the whitepaper 10 Expense Management Best Practices.
- …and a stick
Obviously it’s better for staff to voluntarily comply with your travel and expense policies. However, you can use technology solutions to both track policy violations, as well locking down employees’ ability to purchase and submit out-of-policy expenses for reimbursement.
If you want some more information on how to keep your travelers happy while keeping a close eye on the company pocketbook download our latest white paper, Charting the Course Between Compliance and Contentment: Managing Cost Control While Maintaining Employee Happiness.
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