“Working from home,” “taking a remote day,” or “telecommuting” are no longer simply euphemisms for taking a personal day. Companies increasingly are hiring new employees on a strictly remote basis. In an era where video conferencing and digital meetings are the norm, is there a point in companies allocating a large chunk of change for business travel purposes, or is the value of a face-to-face meeting even greater, as it happens less frequently?
Why travel when Skype is a click away?
When a business needs to cut back, the business travel budget is a segment heavily affected. Programs like Skype and Google Chat are free and at an employee’s convenience—a clear savings in comparison to the cost of plane tickets and accommodations. In addition to the cost savings related to business travel, allowing employees to work remotely using these technologies also help employees create a better work/life balance during the average workday.
For instance, Polycom/Wainhouse Research’s annual video conferencing survey found that 40 percent of North American companies use a mobile video solution, and 65 percent use virtual conferencing regularly. Corporate respondents of the survey “directly link their fiscal savings [from utilizing video conferencing] to making faster business decisions and improving employee work/life balance.” The number of businesses using video conferencing is sharply increasing, and improvement in internet connections, video/sound quality, and ease of scheduling function makes such conferencing tools viable alternatives to face-to-face meetings.
Founder of Virgin Group, Richard Branson, famously said in wake of Yahoo closing its remote program in 2013, “I have always worked from home…In 30 years time, as technology moves forward even further, people are going to look back and wonder why offices ever existed.” If the leader of a £5.5 billion company can grow his company remotely, there’s a good chance it’s an effective strategy for day-to-day work. Yet, using technologies to replace important meetings, particularly when your company is looking to convert prospects, is a slightly different issue. Some argue that sending someone (whether a remote worker or someone who typically works in-house) on a flight for a meeting that could be conducted remotely is a waste of money.
Nothing quite like shaking an associate’s hand
Yet, business travel still has many champions who adamantly believe going the extra mile (literally) forms closer professional connections and ultimately leads to higher net profit.
A 2013 study conducted by Oxford Economics USA found that for every dollar in business travel spending, companies realize $12.50 in incremental revenue. Further, the study calculated that “the average business in the U.S. would forfeit 17% of its profits in the first year of eliminating business travel. It would take more than three years for profits to recover.” Obviously, these profit/loss margins vary greatly from company to company, but there is formidable numerical data to back the revenue gained from travel claim.
Business travelers list keeping customers, converting prospects, relational networking, and investing in people as top motivations for making an in-person meeting happen. Some customers specifically request face-to-face meetings— a particularly motivating factor when trying to close a deal. Anthony Gioeli, a technology industry business executive tells one such story. In 2009, his company was in a bidding war to gain a lucrative contract with a Taiwanese company. He thought they had the deal in the bag, but they ultimately lost the contract to another bidder who chose to meet with the Taiwanese company face-to-face. He explained in a New York Times sponsored article, “They made the effort to go there and meet them face-to-face,” he says. “We saved $2,000 by not going, but we could have made several hundreds of thousands more.”
Truth is, no one can predict the digital shift and its impact on travel
A Bloomberg Businessweek analysis thoughtfully notes, “As information shifts from analog to digital, physical things can become virtual—changing the metabolism of the economy, the types of institutions and relationships possible, and the nature of economic activity itself.” Advances happen so quickly in the digital era that the debate on the pros and cons of business travel may soon become irrelevant— a new form of travel or business interaction is very possible.
In the meantime, business travel is likely to continue, whether companies like it or not. Beyond the tangible and intangible benefits to individual companies, business travel serves to further transport, hospitality, and other service sectors, which will continue to seduce business travelers with perks and promotions.
Perhaps the best approach is to pick and choose business travel scenarios carefully. A survey of business publication subscribers published in the Wall Street Journal, for example, found in-person meetings to be most effective for “negotiating important contracts, interviewing senior staff for key positions and understanding and listening to important customers.” A contract or interview could be conducted via video chat or email, but the in-person meeting smooths negotiations and allows brainstorming to flow in a more organic way.
Business travel will continue to thrive, despite the digital era, and find more targeted strategic importance to company’s growth. While video and digital messaging certainly have a place in today’s businesses, when it’s time to close the deal, the negotiator who goes the extra mile—literally—will ultimately win the contact.