Expert Q&A: Business travel bans – do they ever work?


In tough times, companies may be tempted to consider implementing company-wide business travel freezes, preventing employees from embarking on any business trips in a bid to curb spending. But what are the real costs of this controversial practice? We spoke to Philip de Vroe, the Finance Storyteller, to find out.

Q: Why do you think companies may be tempted to consider implementing a corporate travel ban or freeze?

A: Travel freezes are often implemented when there is pressure on the financial results: revenue and margin are coming in below the plan, and management decides to take cost action. In the transition from the offline to the online world, a travel freeze may also be a way for management to ‘force’ employees to use online collaboration tools more often instead of meeting face to face.

Q: What are some of the potential consequences of a travel freeze?

A: In the short term, a travel freeze might save a bit of money on the line item in the income statement called ‘travel and living expenses’, but doesn’t mean you will hit your overall profitability target as there are both short-term and long-term side effects that might be bigger than you think. Human connection is key in building a successful business. Building up a relationship with customers, suppliers and colleagues doesn’t just happen on the phone or in online meetings. Face-to-face meetings can be important to build that connection. And, in order to have that meeting, travel might be necessary. Putting in a travel freeze may be penny-wise but pound-foolish!

Q: What kind of message does it send to employees?

A: I think the message of travel freeze or ban is two-fold. Firstly, the business is struggling and we need to scrutinise every penny of spending, and secondly, management doesn’t trust you to make your own decisions regarding your expense budget. I think neither of these are very helpful in growing and retaining talent in your organisation. To me, it feels suffocating to work in that kind of environment.

Q: Are there any less-drastic short-term options a company could consider instead?

A: Yes, companies could adopt exception policies, as long as there is a clear workflow and fast turnaround on approvals and rejections, and there are somewhat objective approval criteria. Be careful with the politics and bureaucracy you might introduce!

Q: What are some of the long-term alternatives to travel freezes?

A: It is important to build an organisational culture where people know how to use online collaboration tools, are trying to reduce environmental footprint, and share cost-consciousness. If the ‘big picture’ (vision, mission and strategy) is clear to everyone, and shared among the employees, companies focus on the business priorities that have both importance and urgency.

 

For more on this topic, watch Philip de Vroe’s YouTube video below.

 



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