In the first of a new series, industry consultant Scott Gillespie makes the case for a new travel program paradigm, and lays out a path for advancing your career
Frequent travelers are probably among your firm’s most valuable employees. They maintain strong relationships with customers and suppliers, they have knowledge and skills the company needs, and they have the drive to jump through the hoops we call travel.
But all that travel creates wear and tear on road warriors – “travel friction” – and you can quickly see the undesirable result: The burnout of your high-value frequent travelers. This has significant costs for the traveler, such as higher stress and increased risk to health and safety, but also in real dollars to the company through lower productivity and higher attrition and replacement costs.
The Transaction Cost ParadigmFor the past twenty years, corporate travel has been heavily influenced by procurement, which has led travel managers to adopt a transaction cost paradigm. The key goal is to reduce the price paid to travel suppliers. This in turn requires strict compliance to tight travel policies – the kind that may require an extra connecting flight, or an early morning departure, or an inconvenient hotel location.
All this focus on transaction cost gives suppliers little incentive to add value if it means raising prices, and it locks travel managers into a low-value future.
We’ve reached diminishing returns from sourcing the air, hotel, car and travel agency categories. And while consolidating travel agency and credit card programs may yield large one-time results, the on-going benefits are far smaller. So how will travel managers add new and significant value going forward?
The New Total Cost ParadigmThe new challenge for travel managers is to meet the key strategic goal of minimizing the total cost of travel, directly measuring and managing its human costs. Only then can a company claim to have truly optimized its travel program.
This new model does not replace the old model; it expands it. Companies still need procurement expertise to secure high-value contracts with travel suppliers, cost-effective travel policies and senior management support. But in the Total Cost model, firms are explicitly integrating the cost of human capital into total travel costs.
The costs of travel friction must be credible and quantifiable. This information is at hand; Human Resources can provide data on the cost of attrition, the number of days lost to illness, the expense of recruiting and training new employees. As the travel manager, you have traveler itinerary data. Determining quantifiable and credible traveler friction data is doable.
The Travel Manager’s RoleToday, travel managers tackle tactical issues like supplier negotiations, travel policy compliance, and the like. No doubt this role adds value. But is adding tactical value in a world of diminishing returns enough to accelerate anyone’s career?
The key is to add strategic value by tackling strategically important goals. Frame the problem as building your firm’s reputation for being a great place to work – and to travel – and you can see a new role for travel managers.
Moving a company’s culture to embrace the Total Cost of Travel model requires plenty of initiative. It takes collaboration with Human Resources and Finance, and it needs serious support from the travel budget owners – senior management executives who balance their travel budgets against their travelers’ health, productivity and retention.
This collaboration with key stakeholders is the basis for building your career accelerator. Fortunately, travel managers are well positioned to lead this strategic effort.
The Path ForwardIn the coming months we’ll take a closer look at such topics as:
• How road warriors are different and what they really want
• Impact of too much travel, and practical ways to measure the results
• Building a business case for the Total Cost of Travel model
• Working with HR and Finance, and getting senior management’s attention
• Cost effective ways to reduce travel friction, and the role of travel culture
• Advice for travel suppliers keen to sell on value rather than price
As the Total Cost of Travel model comes to life in the pages of BTE, I look forward to your thoughtful contributions and questions.