Most companies set their corporate travel budgets higher than they need to. Why?
For one, there must be enough room in the annual budget to anticipate changes in the economy throughout the year, as well as fluctuations in the costs of airline tickets, hotel rooms, and other travel accommodations. Anyone who has ever booked travel of any kind is familiar with this madness.
Secondly, though, budgets are set like this because business owners want to ensure that their employees are comfortable. Travel policies could be designed such that business travelers can afford no more than a cheap motel and fast food meals on the company — but they’re not. Employers tend to understand that business travel is not all fun and games, and that if they’re asking you to go to Chicago in January, you’ll think they’re a little nicer if they can make it at least bearable for you with the money to put you up in a well-heated hotel and to rent a car or take a cab between locations.
But what if booking a trip from SFO to ORD could be like a game? What if saving company money earned you money, and the more you saved, the more you earned?
Sound like a dream come true? Let’s peruse the instruction manual to such a game and see how your company could score — and even win.
Incentivize saving, increase policy compliance
This high cap on spending too often translates to employees tacking expendable luxuries onto their business trips — both within and out of corporate policy — and thinking it’s okay. If business travelers aren’t spending their own money, why should they spend their valuable time hunting for deals? If the company theoretically grants them x amount of dollars to travel, why shouldn’t they milk each and every dollar for all that it’s worth? Unless an employer has somehow stumbled upon a full staff of philanthropists and do-gooders, they are going to have to make working to stay under budget worth their team’s while.
Since saving on travel expenses is especially important for small and medium-sized businesses that don’t just have money to blow, a handful of SMEs are playing on some very basic elements of human psychology in order to incentivize saving for travelers. They are making a game out of booking corporate travel in order to make something fun out of a typically not-so-fun task.
A well-played game could result in:
- Increased savings in corporate travel budgets
- Increased use of policy-compliant corporate booking tools
- Increased employee happiness and company satisfaction
- Improved employer-employee relationships and office environment
- Decreased out-of-policy spending, including expense report fraud
Sounds great, right? So how does it work?
Incentivization and psychology play well together
When looking to cut back on corporate travel costs, there are really two roads that employers and strategists can take. Though both relate to incentives, and either can theoretically bring success, each warrant very different responses from team members due to some fairly intuitive psychology describing what motivates human beings to act.
Positive incentives generally pertain to people doing things because they want to. However, this “want” can stem from any number of intrinsic (internal) or extrinsic (external) motivating factors.
Typically, humans only act based on internal desire when the results of those actions induce pleasure of some sort (i.e., staff attend the holiday party because they genuinely enjoy socialization and the company of their co-workers). Such desire is out of the hands of businesses, and relates more to individuals’ preferences, likes, and dislikes. Saving company money on business travel does not usually fall into this category.
Other desires to act tend to derive from an individual expecting a reward (i.e., staff attend the holiday party because that’s when end-of-the-year bonuses are distributed). Rewards could include money, prizes, or esteem from others — all of which can be provided by a company or within a team. In this sense, most of the time we are really just a bunch of dogs who eat when we’re hungry, play when we want to, and do tricks when asked — so long as we get to eat, play, or get our heads scratched in return.
Other theories suggest that humans will consider avoiding punishment or other undesirable consequences as an incentive (i.e., “Come to the holiday party or you’re fired!!”). Rather than acting to gain something good in return, one can be motivated by the desire to stay out of trouble. Instead of providing rewards for savings, companies could enforce a strict new policy and promise punishment to those who book outside of it. While this may be a surefire way to lay down the law, and could theoretically work to bring about the results wanted, company morale is more likely to take a hit from implementation of a such a technique that is, well, just not fun.
Finding the happy medium
The trick, then, really, is to find a way to suggest that the company is looking to tighten up on policy, while also making employees feel like doing so is good for them rather than a punishment. Being wishy-washy about a plan to provide positive incentives could very well get companies nowhere, and demanding participation might take all the fun out of the game.
Google’s Global Lead for travel, expense, and credit cards, Michael Tangney, suggests that “on a very fundamental level, people like being told what they can and can’t do. They want flexibility, choice and to be able to do what they want to do, but they also want to know what’s reasonable and what’s acceptable in [the] company.” Since people like a balance of flexibility and rules, a booking game must be easy and enjoyable, but also have rules which, when broken, result in penalties. Making incentivization a challenge rather than a chore will achieve this, making losing an undesirable possibility, and winning a true feat.
Playbook for success
Though further specifications will be made below on an incentive-type basis, the general guidelines for incentive programs are fairly simple.
First of all, there are no spectators in this game. Executives must not only participate, but lead the charge. Saving money ought to be a company-wide endeavor. If higher-ups are excluded from the program, the true value of the rewards or benefits may become suspicious to employees.
Second, design a program that is simple enough to both be easily understood and easily communicated. Think tic-tac-toe, not chess. People are busy, and much more likely to start participating in a program that doesn’t take much time to learn. Plus, this way, the program does not take time out of their schedule that would otherwise be devoted to work. It should fit smoothly into a team, rather than being a distraction.
On this point, it might be a good idea to also add a time challenge to the game, or ask employees to book on their own time. While your travel budget would benefit from travelers spending hours on end digging through the Internet for the most incredible deal with insatiable satisfaction, their projects wouldn’t necessarily reap the same rewards.
Crafting an incentive plan for your company’s unique needs
Designing the right program is less about strategy or game theory, and more about knowing one’s company inside and out. What do your employees like? Are you looking to ingrain habits or establish a permanent program? What kinds of rewards fit your company’s technological or financial abilities? Luckily, you have a few options:
One term used to describe incentivization in business is gamification. By leveraging “people’s natural desires for competition and achievement,” writes Michael Strauss, CEO of PASS Consulting Corporation, gamification creates incentives where they do not naturally lie. Strauss recommends furthering employees’ interests in flexibility, and nurturing individual differences by gamifying with a points system. Instead of giving the same rewards to everyone, savings can have varying point-values that employees can shop with. “The company doesn’t necessarily have to use its own budget for the rewards,” he continues, “but can use existing relationships with suppliers, if the campaign will be driving more bookings their way.” These rewards can include gift cards from airlines, hotels, or car services for employees’ leisure travel, but may be more valuable if for places that employees may frequent, like department or grocery stores.
Other businessmen and women suggest monetary rewards to jump-start the establishment of more permanent, long-term habits. “Give employees a percentage of the money they save,” says Rocketrip founder Dan Ruch: “I recommend half. Do this, and you’ll find employees will be eager to make cost-effective choices. You’ll also find that employees will find very creative ways to save. I see people book two one-way tickets for a round trip flight or share rooms with colleagues just to up their rewards.”
Anthony Burke, who has worked with the IRS for almost thirty years, warns, however, of the costs that monetary incentives can incidentally incur. “If the employee receives cash or the equivalent of cash,” he states, “that’s taxable income,” while ramifications for noncash prizes “depend on the facts and circumstances of each case.” The New York Times follows up that payroll taxes also apply to money given to employees in cash rewards.
Incentive Program Packages
There are also growing companies, such as Upside, developed by Jay Walker, founder of Priceline, and Rocketrip, that exist solely to design incentive programs for companies and travelers. Upside establishes and cultivates the relationships with suppliers that you might not necessarily have, and makes offering a variety of rewards more feasible. Walker, in a televised interview with Fox Business this summer, claims that “flexibility is the last frontier in monetization.” Monopolizing on technology, Walker attributes Upside’s genius to big data engines that can now build and offer consumers systems that can instantaneously show them all of their options, and in turn, how much their flexibility is worth. If travelers are willing to stay a little bit further from the conference, at a slightly lower-rated hotel, book a flight with a connection, or one that leaves an hour earlier or later than they first desired, they could potentially save a remarkable amount of cash, which the program rewards them for doing with gift cards from affiliated businesses for anywhere from $50 to $1,000, depending on just how flexible they are willing to be.
Rocketrip, on the other hand, gives travelers a custom “Budget to Beat” based on company policy and returns half the value of money saved in the form of “Rocketrip Points.” These points can be redeemed in a rewards store for cash cards, gift cards, travel perks, charitable donations, “and more.”
Other kinds of incentives to consider on a smaller scale are the immaterial, emotional ones. Though, unfortunately, not as effective as feeding us greedy humans money and toys, emotional incentives like stirring a little office competition for who can save the most, or displaying or e-mailing company-wide updates with accolades for big savers have the potential to go a long way. Plus, employers don’t run into the problem of causing a rift between traveling and non-traveling employees over the ability to gain rewards.
Even short, temporary contests could help keep bargain-hunting in the back of employees’ minds and teach them how to do it easily. In a survey of strategies for ensuring travel policy compliance in 2015, Business Travel News Group found that several companies have made what they call “watch lists” for new employees or travelers that monitor their booking and policy compliance for the first few months of traveling, then reward them with total freedom from auditing if they demonstrate conservative practices.
Plus, if a company is looking to start using a new corporate booking tool, or reinforce ones that travelers are already expected to use, light incentive programs like these can be a good way to get the conversation started and keep teams engaged.
Does gamification work?
Gamification and incentive tactics sound simple, and perhaps obvious, on paper. However, the trend towards these approaches in general business strategy that first came to rise in 2011 reportedly fell by 2014. Failure at the time was attributed by Fortune to the high bars for definitive success set by individual organizations, the lack of “clearly defined business objectives,” or the misplacement of focus on organizational goals rather than “player” (a.k.a. employee) goals.
However, gamification has found new life in the worlds of corporate travel, travel management, and travel tech in 2016, largely in part due to the accessibility and usability of big data and new technologies that can design more precise, company-specific strategies. With these systems growing only more advanced in the coming year, gamification is definitely back in the game, and might be a real asset to your team and your travel management program.
(Featured image provided by Rich Brooks)