Travel and Expense (T&E) budgets represent the second largest controllable cost for most organizations. Improving your managed travel program offers a huge opportunity to enhance your company’s bottom line and overall financial wellbeing. One of the most effective ways to accomplish that is through the process of benchmarking. For managed travel, the benchmarking process will compare key components of your travel processes (identified by you) against similarly sized organizations.
When you compare your managed travel program against companies with excellent managed travel programs in place, you will understand your strengths and weaknesses. In addition, any areas that require additional attention are identified so that they can be studied, analyzed and eventually improved by adopting best practices and implementing the results.
Benefits of Benchmarking
There are many benefits to benchmarking. Not only is it a sensible exercise to identify opportunities for improvement, but it also provides insight into what makes a company or process successful.
Benchmarking helps companies:
- Create a healthy mindset and culture of continuous improvement.
- Get an independent perspective about performance compared to other companies and close competitors.
- Identify and prioritize areas for improvement.
- Identify specific areas of opportunity.
- Hold employees more responsible for their performance.
- Accelerate change and create a sense of urgency when performance gaps are revealed.
- Consider "outside the box" solutions for improvement.
- Monitor company performance and manage change.
Phases of Benchmarking
The benchmarking process is made up of phases comprised of defined action steps. The following provides a brief description of these phases:
Phase 1: Planning
This phase forms the basis for the entire benchmarking process so every effort should be made to do a complete and thorough job. Some key questions to consider are:
- What exactly do you want to benchmark?
- Who will make up the benchmarking team?
- Who will you benchmark against? Will your benchmarking partner be another department within the company or competitors who operate “best in class” travel programs?
- What indicators and method of data collection do you plan on using?
Phase 2: Analysis
In this phase, the data collected in the benchmarking study should be used as the basis for comparison. Some important questions to think about in this phase are:
- What are the performance levels of your benchmarking counterpart(s)?
- Is your benchmarking counterpart outperforming your organization? If so, how are they better?
- How can you apply lessons learned to your organization?
Phase 3: Integration
In this phase, you will develop initiatives based upon the analytical work completed during Phase Two of the benchmarking process and integrate them into your current practices. Key questions to ask are:
- Has senior management accepted the benchmarking findings?
- How will you modify goals based on the findings?
- Have the goals been clearly communicated to all involved parties, including senior management and those employees who will be asked to make improvements?
Phase 4: Action
This is when you develop actionable plans to meet your identified goals. The key questions that need to be addressed are:
- Can the action plan achieve the stated goals?
- How will you monitor progress or failure?
- After collecting data on new performance measures, how will you adjust the process if goals are not being met?
Phase 5: Recalibrate
In this phase, you will monitor the process continuously in order to learn about and improve your current process. Some questions to keep in mind here are:
- Have benchmarks been updated based on the most recent performance data?
- What is the schedule for recalibration of the benchmarks?
- How will you keep this recalibration phase activate so as to ensure continuous improvement over the course of not just months, but years?
Identify Travel Trends by Utilizing Benchmarking Reports
Starting in 2012, the annual Certify Expense Management Trends survey was conducted to help finance leaders identify best practices for T&E reporting. For the 2016 report, Certify collected and analyzed responses from more than 500 CFOs, controllers and accounting professionals outside of its customer base. The survey findings provide detailed insights into the state of expense management today, and key T&E trends to watch for among small, midsize, and enterprise companies.
There is a wealth of information for finance leaders who seek to compare their current managed travel processes against those of peer organizations. To get your started, here are some of the questions Certify asked when preparing their report:
- If you have a travel policy, how does your company enforce it?
- How does your company currently manage travel bookings?
- How does your company respond to pressures to improve expense management?
- What are the top five expense management pain points?
- How does your company set T&E policy maximums for meals, hotel and airfare?
- How much does it cost to process an expense report?
- What expense management system features do you currently use?
The findings are reported using graphics, tables and pie charts. Here is an example of one of their questions and findings:
Reviewing prepared benchmark data like this is an excellent way to familiarize yourself with travel management trends and to see where you stack up compared to your competitors.
Do you know how your travel program compares to your peers, competitors or industry averages? If you don't know how to measure your travel program, you can't manage it.
To help you better compare, we've put together a list of 14 questions that address your current travel budget. By answering the questions, you'll be able to:
- Get an overall picture of current spend
- Gain actionable data for measureable improvements
- See if and where you are leaving money on the table
Fill out the Travel Management Benchmarking Tool to receieve comparison results from other companies, information in regards to your current travel program and how you can improve it.