BUSINESS TRAVEL IS A COST, so it should sit firmly under procurement. This is a line of thinking for many businesses – but with the evolving role of the buyer now focusing on increasingly prevalent issues such as traveller tracking, security, corporate culture and the perennial matter of compliance, could we be seeing the travel department shift away from the finance side of business?
According to Deloitte’s Global Human Capital Trends research, published earlier this year, it found 79 per cent of the 2,532 business and HR leaders surveyed rated employee retention and engagement as one of the most “urgent” issues for them to address in 2014. So should buyers be focusing more on key HR issues to help with their own goals, and is HR having a bigger say in the world of corporate travel?
Michelle De Costa, global travel director at consultancy firm Sapient, believes the move away from procurement has already started. “I feel travel has always had strong ties with HR because of the shared elements, such as security and relocation. But because some issues, such as duty-of-care and traveller security, are becoming more important, HR has taken on a bigger role within the travel department of companies like Sapient.”
The move away from procurement is something Wings Travel Management CEO Paul East has also seen, but feels it may not affect large “FTSE-based companies”. He says that, in many global organisations, travel will operate in its own separate department, with both HR and procurement feeding into it. However, East says the benefits of operating more under HR could be felt in the small- and medium-sized enterprise (SME) market.
“In some SMEs, booking travel will be just one facet of the job for the buyer and so they may not fully understand all of the obligations involved, and I think this is where HR is picking up now,” he says. “I wouldn’t say HR is taking over, but there is a lot more involvement with the functionality, and it’s the job of a travel manager to act as a linchpin between departments.”
Lisa Johnson, practice leader at relocation specialist Crown Worldwide, says that at smaller firms the travel policy can be too rigid if set by finance, and this can create “conflict” and an increase in “non-compliant employees”. She adds: “I think in smaller firms there is a danger of a ‘policy says no’ attitude to many traveller requests, whereas HR can look at cases on a more individual basis.”
It’s no secret that traveller compliance to a company’s preferred supplier policy is an ongoing issue for many buyers. The equation that better compliance equals better savings lends another reason as to why the travel budget should sit under procurement. But should buyers be moving away from traditional strategies and focusing on areas more intrinsically linked to the ‘human-side’ of business?
De Costa explains: “At Sapient we have extremely high levels of compliance within our policy and one of the main reasons for this is company culture. This culture plays a huge part in our organisation, and every travel programme we put in place has this at the heart of it. Improving that culture can boost compliance within some companies by significant amounts – and this can be done by focusing on key HR issues, such as measuring employee engagement and putting the right learning and development initiatives in place.”
She adds: “It’s about listening to individual needs and creating a policy that allows for times when a traveller can travel first class over economy, or stay at the more expensive hotel.”
De Costa says that at Sapient, travel operates outside of procurement because it “simply makes everything easier for our travellers”. This is a view shared by Jackie Bornor, global head of HR at financial derivatives trading firm IG, who says travel within a company should never be just about the numbers. “Putting that human aspect in place in a travel policy can boost compliance, as you’re improving company culture – which every HR director will tell you is fundamental to a successful business,” she says. “And I think this is why, post-2008, travel is shifting towards the people-side of the company. This thought-process may not be as important for well-established multinational companies, who will probably have dedicated travel departments, and relocation and security teams. But for growing companies, you’re looking to have business development, so there will be more and more travel involved, which is more of a reason to get policies right from the start.”
According to professional services firm PWC’s Next Gen survey published last year, the current Generation Y (aka ‘millennials’ – those aged 18-35) will make up more than 50 per cent of the British workforce by 2020. It looks at how companies should adapt to fit the demands of both millennial and non-millennial employees. This shifting demographic is an area of business buyers could be focusing on with their HR department?
“It’s clear younger travellers act differently, and have different requirements to some of the older workers, and want to change certain aspects of travel that have become the norm for most companies over the years,” says Lisa Johnson.
“Gen Ys want to book their own travel with the technology they use to book at home and extend trips over weekends, and are more likely to stay in accommodation out of policy. This poses a risk to the buyer in terms of duty-of-care and traveller tracking, so the buyer needs to better explain how the policy works. This is where HR can play a more effective role than procurement.”
CEOs and HR directors are now fully aware of the bottom-line effect on retaining quality employees, with the conversation around talent one of the more regular in boardrooms: how do I attract the best people and the brightest graduates, and retain my most ambitious employees? And as companies deal with ‘talent shortages’ in sectors such as oil and gas, and engineering, could a company’s travel programme become a key component for HR teams when setting out their talent strategy?
East says: “What’s emerging in certain areas of business is people are becoming a rare commodity. So to ensure some of these companies retain and attract the best staff in the industry, HR is working with the buyer to review their travel policies and to make them flexible, which allows for things such as first class travel.
“Some of the employees we deal with [in the oil and gas sector] are doing 28 days on and 28 days off, so they are now expecting business class travel. So it also becomes an incentive, and is another remit to fall under both procurement and HR.”
However, East explains there has to be cost control when setting the travel policy. “HR doesn’t always appreciate the total costs involved in certain areas of the business. I’m sure the dream for every HR director is to have a 100 per cent happy workforce, and if you flew everyone first class, that would certainly help. So that’s why the reality is you need to have both [the HR and finance] departments working together and working across the business, and not stuck in silos.”
Bornor controls the travel budget at IG and despite “procurement feeding in”, everything will be signed off by HR. She says that when setting the company’s travel policy there is finance involvement but, ultimately, it falls with HR, something she says is “sadly not commonplace yet”.
“I think one of the elements that needs to have a seat with HR is how you deal with people individually, because this doesn’t happen so much on the procurement side: I get them saying: ‘Why do we have to pay for this? Why can’t we cut the cost on that?’ But it’s a cultural thing in a lot of businesses.
“Whether we’re asking people to travel for a week away or six months away, it’s still a big ask – when you are travelling on business you’re 24/7, whether it’s working in your hotel at night or jumping from taxi- to-meeting-to-airport-to-taxi, then back to another meeting, or entertaining local clients. So what I’d say to anyone who is running a travel policy – whether travel sits with HR, procurement or its own team – is to think about the people side of it.”
In its recent report, Talent Mobility – 2020 and Beyond, PWC notes that assignee levels have increased by 25 per cent over the past decade and predicts a further 50 per cent growth in mobile employees by 2020.
As this figure grows and more emerging markets appear, the scope for the buyer and HR team to work closer together increases. Johnson explains that this shift has happened more over the past few years as companies continue to expand into new markets.
“Global mobility has evolved from a point-A-to-point-B operation, to much more sophistication around why companies send people abroad. Many of the issues that emerge make up a lot of those which buyers are now having: ‘How do we track our travellers? How do we track cost? How do we make sure people are secure?’,” says Johnson.
“There are many parallels, so it makes sense that there are some shared opportunities for the global mobility team to work with travel, or under the same umbrella.”
Johnson adds that some of the strongest and most sustainable supply of talent is now appearing in the east rather than the west.
“Economic transformation and demographic changes have already had an impact on talent supply and demand, and with more employees heading east, this places greater responsibility on HR and travel departments,” she suggests.
Bornor says, at IG, HR will work closely with the buyer to help with relocation issues, such as language barriers. “We encouraged and funded language lessons, for example, when we opened our office in Tokyo – we organised Japanese lessons for the several employees who knew they were going, four months before they flew off.”
She adds that with every business trip there are many HR issues to think about, and urges companies to understand the importance of the ‘people factor’.
“I know travel is a cost, but it’s also about people getting on a plane,” she says. “It’s people that deal with missed flights that impact on personal issues, such as missed family arrangements, and this is because they’re working for your company, trying to make it bigger and more successful. I know travel is a cost, but so are people.”