Travel Friction And The Diminishing Returns Of Cost Savings

By | August 25, 2016

Programs like Rocketrip, Upside and TripActions offer new ways for travelers to save their companies money while earning something for themselves. In some cases they earn such benefits by accepting a lower-quality travel experience. But what are the human and productivity costs of these tradeoffs?

Recent studies tried to get at the influence of business travel on employee stress. Business traveler wellness has become a big focus for some. The latest research comes from American Express Global Business Travel, ARC and travel data firm tClara. To quantify friction and understand implications, they polled more than 700 frequent business. Connecting flights take more physical and mental toll on travelers than nonstops. Same for coach class instead of premium, or five-star hotels versus less comfortable ones. Intuitively, travel managers understand the challenge, according to tClara managing partner Scott Gillespie. In practice, there’s little science behind it.

“The way you save money on travel typically adds friction,” Gillespie said. “Trip quality is positively correlated with all the good things you want out of a travel program other than cost: retention, recruitment, willingness to travel, health and safety and trip outcomes. Yes, you’ll pay more but you’ll get more.”

As a starting point, Gillespie suggested a straightforward exercise: identify the company’s road warriors from the past three years (those away from home at least 35 nights in a year), ask human resources how many of them left the company (attrition rate) and understand the high cost of replacing them. Then ask budget holders if they’re OK with those figures.

tClara managing partner Scott Gillespie

tClara managing partner Scott Gillespie

There are lots of reasons why employees may jump ship. “Today more and more companies are deploying analytics solutions to predict retention, correlating factors such as compensation, travel schedule, manager and demographics to understand why certain people are less engaged than others,” according to a 2015 article by Josh Bersin, founder of the Bersin research firm now part of Deloitte. “But the answers are hard to find.”

Gillespie and Amex GBT VP digital traveler Evan Konwiser presented related findings last month during the Global Business Travel Association convention in Denver. The linkage between travel and retention, Konwiser said, “is so completely obvious yet so not understood in the executive ranks — even at companies with mature, strong travel programs.”

One goal of the research is to arm companies with data so they can make better decisions on travel policy. In the view of Konwiser and Gillespie, most travel policies today are too broad. They often don’t account for how much someone travels or their unique needs. Bigger people, for example, are less comfortable in cramped airplane seats than their more diminutive colleagues.

“It’s incredible to me that while lots of companies have detailed policies, a manager who travels 100 days a year has a crappier policy than a director who travels twice a year,” Konwiser said.

He pointed to one survey finding: 83 percent of travelers said a new employer’s travel policy would be equally or more important than their pay and responsibilities. “Think about the amount of time and attention our HR teams spend putting together a package of benefits for job offers, and think about where travel policy falls in that,” Konwiser said. “It’s kind of amazing when you look at that figure and then know what a rare occurrence that is.”

Should every traveler have his or her own customized policy? Gillespie thinks so. “Let them pick what is important to them,” he said, acknowledging that companies shouldn’t lose sight of costs. He admitted that achieving such granularity, informed by emerging HR and sales productivity data analytics, is years down the road. “We are very early in working with companies in how you have policies that are more nuanced.”

There’s a big picture for travel managers, too. Gillespie said focusing solely on cost annoys suppliers who want credit for the quality of their products. It also “limits your career potential,” he said. “If all you do is focus on savings, it’s not a very strategic role. You are adding some value, yes, but selling yourself short because you are focused on a very tactical objective.”

Feeling The Burn

The ARC/GBT/tClara research found that 15 percent of respondent travelers felt burnt out. Nearly half of those said travel impacts their health, happiness or personal relationships. They are less willing to travel, less likely to adhere to policies when they do and getting a smaller return from their trips. “If someone told an HR manager that 15 percent of their travelers are about to walk out the door, that is cataclysmic, particularly when they are the revenue drivers of the company,” Konwiser said.

Those not experiencing burn-out were more likely to stay in five-star properties and fly in business class. They generally had a more positive view of company policies and took more effective trips. Trip quality and travel culture matter more than trip quantity, according to the study.

Among all respondents, half wanted to travel “significantly less.” Half said they feel more stress in the days before a business trip and aren’t as effective during or after them. Just over half said they struggle to stay healthy while traveling. Nearly seven in 10 said they sleep much better at home. Sixty-four percent said they could find a good job elsewhere that doesn’t require a lot of traveling. Eighty-four percent would be interested in a job elsewhere with a similar amount of travel under “a very attractive travel policy.”

When asked which among 24 possible policy improvements they most wanted, respondents offered no consensus. The most popular option was nonstop flights when available (selected by 18 percent). That was followed by business class for flights over six hours and choice of “better” hotels (each 13 percent). For whatever they selected, 65 percent of respondents said policy improvements would have a very or extremely positive impact on whether they would stay with current employers.

Just Rewards

Travelers no doubt view discomfort or inconvenience differently when they volunteer for it.

“When employees get to keep half of what they save, they’re motivated to spend company money as carefully as their own,” Rocketrip asserts on its website. “They go above and beyond to spend below company policy and save in extraordinary ways.”

Careful spending pleases CFOs. But just how far above and beyond is appropriate before such behavior becomes self-defeating? Rocketrip indicates clients can decide “which cost-effective options employees can choose and which are out of policy.”

Officials from Upside and TripActions in June interviews also emphasized employee choice. TripActions co-founder and CEO Ariel Cohen said business travelers “should be professional enough” to make the right decisions. Upside chairman and CEO Jay Walker suggested most of the tradeoffs are “at the margin. You shouldn’t do anything to make your trip less successful. In many ways, the least effective use of an employee’s time is to pretend to be a travel agent.”

Konwiser said it’s early days in determining exactly how rewards programs should fit in corporate travel.

When travelers decide to save company money by choosing a less desirable itinerary to earn a gift card or some other reward, “you have now taken a friction point that has negative consequences on the company in exchange for personal profit for the employee,” he said. “That is a weird juxtaposition. Taking coach on your flight to Europe saves $2,000 and the employee gets a $400 gift card but the company doesn’t have the benefit of someone who slept the night over the ocean. The company clearly was willing to make the trade-off, and spend the money in order to make that employee better off on the job.

“It doesn’t mean these programs don’t have significant role in the industry,” Konwiser continued, “but travelers making these decisions for themselves can have complicated and adverse consequences.”

Even if it’s their choice, the tensions from more stressful travel may catch up with frequent travelers. Then you have burnt out employees and everybody loses.

Additional info: MMGY Global in May conducted the study for ARC, GBT and tClara. It collected 757 responses from workers who spent at least 35 nights away on business during the past 12 months. The report also referenced stats from the ARC/tClara Trip Friction database. It included information on 110,000 travelers randomly picked from 50 large firms. The top 10 percent on average spent 267 hours in flight in the prior year. Of those, 236 hours were in economy class and 147 were outside normal business hours.

CWT’s Travel Stress Index calculated that travelers during trips on average “lose” 6.9 hours during which they can’t work or rest. The company found that the most common “stress triggers” were lost or delayed baggage, poor/no Internet connection, flying in economy class on medium- and long-haul flights and delays.

In 2015, researchers from the University of Surrey in the United Kingdom and Sweden’s Linnaeus University published “The Darker Side of Hypermobility.” The study spelled out the physiological, psychological, emotional and social ramifications of frequent travel. “Increasingly, business travelers are forced to take economy class, exacerbating physical and mental fatigue and the overall severity of the physical toll,” according to the authors. “This ‘creeping tiredness,’ repeated jet lag and accumulation of travel stress may turn chronic, and has been described as frequent traveler exhaustion.”

FlightGlobal this week announced it acquired airline marketing intelligence firm Diio, including Diio’s stake in tClara. Gillespie retains his pre-existing stake in the partnership. FlightGlobal also acquired FlightStats.

This content is protected by copyright. Link sharing is encouraged but duplication and redistribution is illegal.