As a consultant I prepared a job description (see The Job: What It Was) some years ago that I felt reflected both functions and corporate priorities. Surely, some travel managers will be reacting to this lengthy job description by saying: “You’ve got to be kidding!”
By Rolf Shellenberger
As a consultant I prepared a job description (see The Job: What It Was) some years ago that I felt reflected both functions and corporate priorities. Surely, some travel managers will be reacting to this lengthy job description by saying: “You’ve got to be kidding!” They may — justifiably — contend that following this job description would be a path to oblivion and would also deprive them of time to deal with a hundred other issues that crop up every day.
In hindsight, my approach was wrong at that time, even though it catalogued various duties performed to some extent by all travel managers today. It failed to identify, in my opinion, one seriously important factor: that travel management is a restrictive title for a complex and broadened responsibility. Changes in common corporate structure have also changed the game.
It’s time to try again. Let’s use that job description as a dartboard for revision of travel management’s proper scope and emphasis for today’s world.
The Way It Was Around 1955, most large corporations had traffic managers whose chief responsibility was to negotiate rates with surface transportation companies. Then, as business trips increased, traffic manager responsibilities expanded to include travel, with various duties, most designed to put airline tickets in hands of travelers on a timely basis.
During the early 60s, many companies reorganized their “traffic” departments and converted traffic managers into “managers of physical distribution.” Broadened responsibilities included not only transportation and travel, but also warehousing and significant coordination with customers.
Later, when Japan introduced concepts like just-in-time (JIT) parts delivery and warehousing in-transit, distribution cost was reduced and “logistics management” became a part of business lexicon. Tom Friedman’s book, “The World Is Flat,” published first in 2005, describes in great detail how UPS altered its business model to become intimately involved in all aspects of customer distribution for its clients, including customer relations and services.
In 2001, the National Association of Purchasing Management changed its name to Institute of Supply Management. “Purchasing” had already given way to “procurement.” In progressive companies, supply management, had become an accepted professional discipline, involving not only education and accreditation, but operations, for its corporate base. Travel procurement was quickly included as a critical focus of supply management.
Of course, “data processing” was an orphan in many companies when first introduced in the1960s. DP is now IT (Information Technology) and CIO (Chief Information Officer) is a common executive title, usually reporting to the CEO. Credit cards became standard purchase vehicles as banks expanded their VISA and MasterCard data recovery services, while American Express and Diners Club had already begun wooing corporate clients worldwide.
Automation through airline-owned computerized reservations services (CRSs) made it easy for travel agencies to look up schedules and book trips, then deliver tickets to their corporate travelers.
Meanwhile, some corporations were also issuing tickets through their own UATP accounts.
By 1990 most large US corporations — with travel expense over $1 million annually — had signed up with mega-agencies like American Express, Carlson Wagonlit, Rosenbluth, Thomas Cook, IVI Travel and Lifeco. Compensation for travel agency services was typically provided by commissions from airlines, hotels and car rental firms. Airline commissions had become deregulated and, in some geographic areas, airlines paid as much as 20 percent for every ticket issued by a few agencies. For example, an agency based in San Diego was receiving 18 percent for all travel ticketed on Eastern Airlines, mainly because Eastern had limited flight schedules out of San Diego and Los Angeles. A former American Airlines sales representative employed by that agency solicited company meeting travel from corporations throughout the country. Even when San Diego was not a top destination, all those group travelers were ticketed mainly on Eastern Airlines, because of high commissions. A company in New York City might want to take a group of incentive winners to the Caribbean or South America. Eastern had good schedules to those destinations from many US cities.
Revenue-sharing between corporations and their travel agencies arrived in the late 1980s. With high commissions going from airlines to agencies, corporations negotiated with their agencies for a share of commission revenue. Some corporations were unaware of how much money their travel activity was generating for their agencies. When revenue-sharing was widely exposed in the media, those corporations demanded that their agencies rebate them 5 percent or more of their airline purchase costs.
Airlines responded by offering their large corporate customers net fares, while at the same time reducing commissions to agencies. These practices eventually resulted in Delta Airlines’ announcement that they would eliminate all agency commissions. Agencies, now called travel management companies (TMCs), had to start charging fees on air travel.
Markers For A New Course But how do these events relate to current and future changes in business travel? We have already witnessed over a few decades major operations changes in corporate acquisition of travel services. When they were receiving generous commissions from airlines particularly, travel agencies began to offer comprehensive services to corporate accounts. They sold their prospects with significant cost reduction through improved product value searches and lower costs of reservations and ticketing functions for those companies performing do-it-yourself travel arranging.
Perhaps their most significant added value came from report generation that summarized corporate travel for each corporate client, organized by origin-destination, mode of travel, department, airline used, hotel, car rental and other transportation services like air charters, limo and black car services, even dining in some cases, with costs for each item. This management information was a key factor in corporate negotiations with travel providers. For example, if a company had large volumes of travelers going from NYC to LAX and across the Atlantic, they would offer a disproportionate share to either Continental Airlines or American Airlines in exchange for fare reductions. Travel agencies are expected to meet those share goals and performance is monitored by PRISM.
Travel, as opposed to traffic, involves human distribution. Thus, scope of travel management is both operational and it must include such issues as employee productivity and creature comforts; it also involves many unmonitored interactions between suppliers and individual travelers.
Online booking arrived very quickly after Internet purchasing became possible and popular. At first, it was somewhat primitive and took too much time for travelers and their administrative assistants. In fact, online booking still takes longer for a traveler to use in getting an itinerary/ticket than, for instance, making a phone call, or sending an email, to a competent travel agent. What corporate business has done, simply, is to transform travelers into travel agents who must use specific suppliers and search for their services on the Internet. In this respect, overall corporate travel costs have increased with automation.
Despite rosy reports of improved online adoption rates in corporate travel procurement, currently popular systems fall short of delivering itineraries on a timely basis. Furthermore, travel management falls short in process planning and efficiency, as well as ensuring traveler compliance with corporate contracts and standards. An example of this is where a preferred supplier airline is used because it offers a discount for all travel on its route system. Nobody includes measurement of productivity lost when a connection is used. Interestingly, in many cases, best airline discounts are offered on connecting schedules where virtually all airlines compete on major origin and destination traffic.
Only Partly Managed If we review and evaluate some of these issues, we may be persuaded to emulate other evolving disciplines like supply management and information technology. A higher place on corporate organization charts would surely galvanize creation of practices in travel management that are currently only partly “managed.”
Areas where this applies: budgeting, or cost planning; geographical presence (organizing); and changing travelers’ bad habits (directing).
Travel budgets are widely defined in terms of overall cost increases, say 5 percent. They rarely take into account existing cost differences among different supplier groups and companies’ own user groups that can, with management attention, yield better numbers.
Travel departments often are ignored as marketing plumbs new geographical territory. For example, a company’s chief marketing executive wanted to move his base of operations to Phoenix from a small Illinois city. His CEO accused him of only wanting a more appealing lifestyle. He asked for consulting assistance that would compare his travel activity’s cost in either location. The marketing executive was able to prove travel cost savings of 50 percent directly from moving his office to a low-cost airline hub city.
Travel managers often deplore their inability to cause behavior changes, even when their advocacy has been sought. They lack leverage with authority and typically must depend on travelers’ supervisors to communicate value messages that could derive from changes of habit. Like Rodney Dangerfield, they often claim, “We don’t get no (sic) respect.”
Refocused & Respected Rather than writing a new sample job description or advocating policy changes, let’s explore areas where travel management could be more comfortably situated and could interact with supply management, information technology and finance on a parallel basis. Consider two possible titles — “corporate geography management” and “human mobility management” — and the areas of responsibility that might be covered with this kind of corporate organizational change. As we see various features of corporate operations become more focused on measurement and reporting, travel management is still an orphan — as traffic management and procurement were when they were specialties in corporate organization — because focus has been restricted unnecessarily on price negotiation, less on process simplification and analysis. Perhaps some variation of these suggested titles will become an executive division within corporations. However, travel management specialists must expand their horizons so that their functions are not distributed between other specialties.
Analyze what travel contributes to corporate success or failure. Why does corporate travel occur? • To research benefits/drawbacks to geographical expansion. • To sell corporate products to prospects/customers face-to-face. • To improve customer service. • To upgrade facilities and equipment. • To seek suppliers for improving or expanding products and services. • To participate in trade shows and conventions. • To educate employees and suppliers or intermediaries. • To attend sponsored company meetings. • To deal with major internal crises, e.g., obtaining new capital. • To deal with major external crises, e.g., Katrina. Then look at travel super-management in the context of the four pillars of management theory: planning, organizing, directing and controlling. Planning (setting objectives): • Comprehensive evaluation of 50 top locations where corporate business is performed, including costs of access and future expectations for travel demand. • Method for constructing travel budgets that includes productivity costs (time needed for access) and vendor costs. • A streamlined, more rational, system for comparing travel investments with expected financial gain. Organizing (achieving objectives): • Establish a small committee with senior representatives from finance, marketing, information technology, supply management and human resources to define roles and interactions on critical issues. • Create a list of problems and opportunities for improvement of corporate travel activity, including employee satisfaction as well as costs and alternatives. • Use committee input on how best to proceed and what are realistic timelines to accomplish a broader “management logistics” function. • Enlist travel management company (TMC) as major part of task force. • Put together a tentative organization chart for review and approval by CEO. Directing (define action plans and assign responsibilities): • Assemble GPS addresses for every point covered by your organization’s travel. • Research destination volume, using recent activity records from finance and your TMC. Calculate the percent of total activity that is comprised of travel to/from 50 top locations. • Analyze travel history in terms of purpose, financial impact (if available) and frequency, by department and by individual traveler. • Look for ways to consolidate two or more destinations into one trip without undue stress for travelers. An example might be combining business in Philadelphia and New York on one trip. • Identify principal suppliers of travel services and ask them what they might offer your company in exchange for greater volume using their services. Distribute findings to departments and travelers who might be affected by a change. • Begin preparation of trip models for top 50 city-pairs that can be easily booked on the Internet or intranet. Controlling (review and restructure reports), including these metrics: • Distance between origins and destinations in miles of top 50 city-pairs. • Range of supplier costs for travel between those locations. • Total elapsed time for travel between those geographical locations, assuming best-case and worst-case scenarios. • Percent of travel costs that require/permit use of corporate credit cards. • Differences in costs among departments with travel between top 50 city-pairs. Any business activity can be evaluated in terms of its productivity. Currently, travel is probably more complex than other purchased services. In my opinion, until companies embrace trip modeling, their travel process costs will not be successfully harnessed. Furthermore, process improvement using trip models has a capacity to reduce vendor costs significantly and thereby improve budgeting.
Going back to our starting point in this manifesto, job descriptions for travel managers can be improved, but process has a greater need for improvement. Opportunity is at hand. Policy change will do little to improve travel management until process change has been effectuated.
Sidebar: The Interview Derbies Next month: Part 2 — A new way to look at travel policy.
Even in the midst of the worst recession since the Great Depression, companies continue to recognize the need to manage one of their top controllable expenses, and still look to travel managers as the solution. They’re doing it in three scenarios: 1. Finding a replacement for a travel manager who has left a mature travel program. 2. Adding a travel manager position to an existing, underdeveloped travel program. 3. Creating a travel manager position to design and implement a new travel program.
Despite the highest unemployment rate in 26 years, opportunities in the latter two categories will continue to originate. In both cases, the amount spent on travel has hit management’s radar as it strives to reduce costs and maintain revenue.
From management’s perspective, it’s a good time to be looking. Every company with a new travel manager opening can expect a large field of thoroughbred applicants.
In the first quarter of this year, three companies in the San Francisco Bay Area were creating travel manager positions to design and implement their inaugural travel programs. Two had never had a travel manager and were looking to hire an experienced professional to begin analyzing and managing their travel spend. The director responsible for travel at the third company created a travel manager position as a part of his team to help implement a travel program where none had ever previously existed.
Submitting applications for these openings was only the beginning. To be in the running, I needed to differentiate myself from the field. Fortunately, at each company, I was able to advance past the resume and telephone screenings to the short list of in-person interviews with the hiring managers. How did I separate myself from the dozens of other applicants? Obviously, experience and a track record helped, and capitalizing on my personal/professional relationships was also important. At the first company, I knew the hiring manager and mutual respect was already established, so the road to securing an interview was short.
In the other two cases, where I did not know the hiring managers, I presented my vision of what a comprehensive managed travel program would look like at their particular companies.
The recruiter at the second company mentioned that I differentiated myself from the field through my verbal presentation of how I would implement the travel program today based upon the current objectives of the company, and more importantly, my vision of what the program would look like in three years. This future look at the program went beyond fulfilling the posted job requirements on which most candidates concentrated their efforts. They may not have considered that companies with no previous travel managers are unaware of all the facets of corporate travel management beyond bookings and supplier negotiations.
At the third company, the recruiter told me that I was short-listed based on the detailed various ancillary elements of a travel program referenced on my resume. Other candidates only briefly touched on these, or did not mention them at all in their interviews. This same recruiter specifically cited my account of how I previously addressed candidate travel for interviews, including policy, the booking process, approval requirements and documentation for reporting. This topic, to which the recruiter could personally relate, helped me convey my strategic approach to the position by providing a real-life example of one of the many possible ways a travel program can help other functions within a company, many of which were not even contemplated when the travel manager position was created.
In all three cases, I was competing with other experienced travel managers, most of whom could deliver what the position required. I was able to distance myself from the field by conveying ideas beyond the job description, and put myself in the final three with a chance to win the position.
It becomes a numbers game. The more times you make the shortlist, the more chances you have to receive an offer. Unlike the triple crown horse races, there is no prize for finishing second or third. But you only need to win one interview derby to be successful.
Rick Wakida is now global travel manager with Blue Coat Systems Inc., a technology company specializing in WAN-based application delivery. It has more than 1,350 employees in offices around the world to serve more than 15,000 customers.