Trip approval in global companies

Transcription

1 Trip approval in global companies

2 Contents 1. Executive summary Introduction Travel approvers Trip approval process Outcome of the trip approval process Conclusions Bibliography

3 1. Executive summary The return on investment (ROI) of business travel is a fundamental topic in the travel industry. The first estimations of a trip s ROI are typically made by travelers and travel approvers before the trip - at trip approval stage. This paper discusses several key aspects of the trip approval process. The research presented here is based on a wide-scale traveler survey (almost 10,000 respondents) administered by Carlson Wagonlit Travel (CWT) between May and September A quarter of the travelers surveyed declared they are also travel approvers, which allows us to obtain insight into the approval practices from both the traveler s and the approver s perspective. With regard to the composition of the approver group: Travelers direct managers make up 83% of all approvers, and the higher levels of management account for an additional 13%. Compared to the regular business travelers, approvers occupy higher levels in the organization, travel more frequently, are older on average and are more likely to be male. When looking at the trip approval process: 70% of travelers need approval for every trip they take, and most approvers process 2-10 trip requests every month. In 60% of the cases, the approval process takes place via a tool. exchanges are the next most widely used practice, accounting for 25% of the responses. Approvers declare it is both quick and easy to follow the approval process: on a scale of 1 to 5, the average ratings are 4.0 (speed) and 3.8 (ease), respectively. Challenging trip requests is common in the approver group: 11% of approvers challenge all requests received, while another 68% challenge the requests only when the trip costs are too high or the trip booked is non-compliant with the travel policy. The outcome of the approval process is mostly positive: Approvals are granted for 90% of the trip requests processed. The approval rate drops to 84% for those approvers who always challenge trip requests. The approval rate also depends on the traveler s department, and, to a smaller extent, on the approver s job level. These results, gathered from a large respondent base, offer a useful framework to better understand trip approval. In a future publication, we will report results from studying the ROI of a business trip. The knowledge of what makes a trip successful will give travel approvers another handle in making their decisions, and will shed light onto the direct link between a company s travel program and achieving its strategic business objectives. 3

4 2. Introduction In our 2013 Travel Stress Index publication [1], we presented a framework to quantify the hidden costs of business travel, which may result in significant loss of productivity. For a business trip to be successful, these hidden costs and the real expenses, such as transportation or lodging costs, must be offset by the gain, or return on investment (ROI) the trip achieves. The exercise of balancing costs and return is first done before the trip, during the trip approval process. At that stage, neither the return nor the costs of the trip are fully known, and the approvers must make a number of assumptions in order to decide whether to approve or reject the request for travel. In this new publication we present results from studying trip approval in seven global companies served by CWT. More specifically, the research relies on the responses provided by almost 10,000 business travelers who took an online survey during May-September A section in this survey was dedicated to trip approval alone and it allowed us to explore this topic in detail. In what follows, the content is structured around several key questions regarding trip approval. These questions are given below along with the section in which they are answered: Section 3: Who are the travel approvers? How are they different from regular business travelers? Section 4: How is the approval process conducted in large companies? How much effort is required from approvers to approve or reject trip requests? How often are trip requests challenged and on which grounds? Section 5: What is the average approval rate within the approver group? What does this rate depend on? Do approvers feel there is room for improving the decision process? The results presented here help to create a useful framework to understand the different facets of trip approval; as such, this study could be used as a reference for any large company interested in an up-to-date review on this subject. 4

5 3. Travel approvers Seven global companies operating in different industries and geographical regions have participated in this research. In order to receive this survey, an employee must have travelled by air at least once in past one-year period. A total of 9,900 travelers have completed the survey. Who are the travel approvers? Travelers were asked who approves their trips: Direct manager (78%) Top management (18%) Someone other than management, or unknown to the traveler (4%) Thus, management is responsible for approving trips for 96% of the travelers. The remaining 4% could be, for example, administrative assistant personnel who may or may not travel. 1 Our survey was used to isolate an approver group composed of those travelers who have declared trip approval responsibilities. This group was made up of 2,400 respondents (24% of all travelers). Thus, one in four travelers is also a travel approver. This statement can be used a rule-of-thumb to estimate the size of the approver population in a large company. on average, one in four travelers is a travel approver How are approvers different from regular business travelers? To put it very simply, an approver is a traveler with management responsibilities. This fact manifests itself along several demographic dimensions: Job level: Approvers job level distribution, compared to the general traveler distribution, is skewed toward higher responsibility levels. This is illustrated in Figure 1. Age: Approvers are, on average, older than the general travelers. For example, the millennial (Generation Y) group represents roughly 6% of the approvers and 13% of the all-traveler population surveyed. Gender: Approvers are, on average, more likely to be male than general travelers. 78% of approvers are male, compared to 70% of the all-traveler group. Amount of travel: Approvers travel more than the regular travelers. As an example, 36% of the approvers take more than 12 business trips a year, compared to 25% for the all-traveler group. 1 Note: Our survey was only administered to travelling employees. For this reason, our analysis and results do not include the segment of non-travelling personnel who are also approvers. This segment is estimated to approve trips for less than 4% of all travelers. 5

6 The above characteristics can be used to obtain an initial overview of the approver population. Reassuring for an organization is the fact that approvers tend to be significantly more experienced than the travelers whose requests they approve; not only in regards to job seniority, but also in the amount of travel they undertake. Respondent Breakdown by Job Level 60% 40% 20% 0% Administrative Associate Manager Director VP or higher Travelers Approvers Fig. 1. Percentage of respondents by job level in the traveler and the approver groups. Increased job seniority is apparent in the approver group. Having discussed the high-level characteristics of the approver group, we now turn our attention to the approval process itself. 6

7 4. Trip approval process How many trip approval requests are generated by travelers? Knowing the amount of trip requests in an organization is a necessary step when looking to better understand the work load of trip approvers. The number of requests was investigated from both the traveler s and the approver s perspective, as explained below. From a traveler perspective, 70% of respondents reported they need approval for every trip they take. An additional 22% of travelers need approvals occasionally, when the trip costs exceed a certain price or when the trip is not compliant to the travel policy (Figure 2A). Thus, the number of approval requests generated by travelers is significant. From an approver perspective, the number of trip approval requests processed monthly is shown in Figure 2B. A conservative estimate has approvers treating between 2 and 4 requests per month, depending on geographical region. For example, in Europe and Asia the average is 3, while in North America and Latin America the estimations are 2 and 4 requests per month, respectively. As an order-of-magnitude example, a company with 4,000 travelers will have about 1,000 approvers treating 30,000 trip requests yearly. This is a considerable number, which illustrates the importance of having a streamlined and flexible process of trip approval. a company with 4,000 travelers will have about 1,000 approvers treating 30,000 trip requests yearly Is approval needed for your bookings? Approval requests received monthly Yes, when trip is not complaint with travel policy Yes, only when cost exceeds certain amount requests Over 20 requests 1 request No, never (A) (B) Yes, always 2-10 requests Fig. 2. How widespread are trip approvals in an organization? (A) Traveler breakdown by the need to have their bookings approved. For 70% of the travelers, an approval is required for every trip. (B) Approver breakdown by the number of approval requests received monthly. Most approvers treat between 2 and 10 requests per month. 7

8 How is the approval process conducted in large companies? The approval process may be conducted in several different ways, as illustrated in Table 1. As shown in this Table, more than half of the approvers use a tool (such as the online booking tool), while one in four conducts the approval process via . Given the large number of approval requests, special cases are expected to emerge; which is indicated by the 9% of approvers who declared using a mix of approval channels in most cases a combination of tool and exchanges. Furthermore, approvers have been asked to rate the speed and the ease with which they reach an approval or rejection decision. The rating goes from 1 to 5, with 5 corresponding to the speediest / easiest scenario. Table 1 shows these results, which are encouraging and reveal that it is both easy and quick to approve or reject trips: most of the scores are close to 4 out of 5. The lowest scores are reported for the Other category, which typically includes some form of paper-based request. Approval process % of responses Ease to approve/reject Speed to approve/reject Via a tool 60% By 25% Verbally 4% Other or not known 2% Combinations of the above channels 9% Overall 100% Table 1. The channel used for trip approval, along with the reported ease and speed of the decision process. Scores range from 1 to 5, with 5 corresponding to the easiest/quickest decision process. Beyond simply using a tool to approve and reject trips, the approvers might sometimes challenge the trip requests in order to obtain further information necessary to decide whether to approve the trip. How often are trip requests challenged and on which grounds? In relation to challenging approval requests, the responses collected revealed that: 11% of approvers always challenge the trip requests they receive 68% of approvers challenge some of the trip requests they receive 22% of approvers never challenge the trip requests they receive 79% of approvers challenge trip requests Of the approvers who never challenge trip requests, three out of four report that this is because they are the ones requesting employees to travel, or because their subordinates have the autonomy to make their own travel decisions. Another 10% of 8

9 respondents cited situations in which the ticket had already been bought, and cancelling or changing the reservation may not be preferred from a financial standpoint. Conversely, for the approvers who do challenge trip requests, there is a balanced set of reasons as shown in Figure 3. The usefulness of the trip, the cost of the trip, and the trip s dates and duration motivate two out of three challenges. Usefulness of the trip Price Travel dates or trip duration Compliance with the travel policy Trip not aligned with the company's strategic objectives Too many participants 0% 10% 20% 30% % of Respondents Fig. 3. The most common reasons approvers use to challenge trip requests. The horizontal line measures the percentage of responses relating to each reason. 9

10 5. Outcome of the trip approval process Having discussed the different features of the approval process, we are now in position to review the results of the trip approval process, e.g., whether a business trip request is approved or rejected. We first aimed to measure the trip approval rate defined as the percentage of trip requests that are granted approval. To our knowledge, the approval rates are little known today across the business travel spectrum. What is the average approval rate? A first hint at the answer is obtained from the travelers perspective: half of the travelers reported they have never had a trip request rejected. This observation points toward high approval rates, which is also confirmed by the approver group, as explained below. The 2,400 travel approvers who completed the survey were asked how many trips they approve out of every 10 requests they receive. The result is indeed high: for every ten approval requests, only one is rejected. Thus, the average approval rate is 90%. approvers reject one of every ten trip requests they receive, on average What does the approval rate depend on? To answer this question, we have measured the approval rate in various subgroups of approvers. This analysis produced the following conclusions: Request challenge: The approvers who always challenge trip requests report the lowest approval rates, at 84%. The approval rates increase to 88% for those approvers who occasionally challenge, and 97% for those who never challenge trip requests. This factor has the largest impact on the approval rate. Division: When the approver s division is considered, the approval rates vary between 86% and 94% as illustrated in Figure 4. This is partly correlated with the request challenge factor; for example, approvers working in purchasing are the most likely group to always challenge trip requests. Job level: A small drop (2 percentage points) in approval rates is observed when the approver s job level increases from Manager to Vice President or above. Gender: Trip approval rates are gender independent. In conclusion, the largest variations in the approval rate correspond to the following factors: the level to which approvers challenge requests, approver s division, and to a smaller extent, approver s job level. 10

11 Sales and account management Engineering Research and development Marketing/communications IT Production Technical support Human resources and training General management Accounting and finance Purchasing Distribution and logistics Legal Other Trip approval rate (%) 100 Fig. 4. Trip approval rates broken down by approver s division. Note: Statistical uncertainty in this measurement is 1 to 2 percentage points, depending on division. Do approvers feel there is room for improving the decision process? For this last question, we wanted to probe how approvers perceive the value added by business travel. To this end, approvers were asked to estimate, for every 10 business trips they approve, how many add value to the company s success. The responses provided show approvers believe that on average, 8 out of 10 business trips bring value to the company. To summarize the situation, approvers accept 90% of the trip requests they receive, while estimating that 20% of the trips taken are not necessarily vital to the company s success. This finding reflects the belief that there is still room to make better decisions regarding trip approval. Partly responsible for this is the hindsight effect: approval decisions are made before the trip, while the value-added statement incorporates after-the-trip knowledge. 11

12 6. Conclusions The research reported in this publication draws on the 10,000 responses received in a large-scale survey administered by CWT. The results presented here bring into focus several key aspects related to trip approval, as summarized below. First, we studied the characteristics of the travel approver group. We found out that 24% of travelers are also travel approvers, and that management (direct managers or higher) makes up 96% of the approver group. Second, we analyzed the approval process. The results showed that this takes place mostly via a dedicated tool or by , and that the processes used to approve trips are both quick and easy to use. The approval process may include a certain amount of challenging the trip request, often on the basis of trip usefulness, cost, dates, and compliance to the travel policy. Finally, we measured trip approval rates across different classes of approvers. The average approval rate is close to 90%. Compared to this average, there is a -6 point difference measured for the approvers who always challenge trip requests, and a +7 point difference measured for the approvers who never challenge trip requests. When asked about the estimated value-added contribution of the trips to the company s success, approvers believe that there is still room to improve. In an upcoming publication [2] we will report qualitative results on the value of travel, with the aim to understand what makes a trip more or less successful, and how the value of travel is perceived depending on the trip purpose. These new results are expected to enlarge the knowledge base in the business travel industry and provide travel managers and trip approvers with another handle on optimizing travel programs or approving trip requests, respectively. 7. Bibliography [1] CWT Solutions Group, Travel Stress Index: The Hidden Costs of Business Travel - A New Industry Direction to Improve Traveler Wellbeing and Corporate Productivity (2013). Study available for download at: [2] CWT Solutions Group, The Value of Travel: A Traveler s Perspective (2014). Publication expected November

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