A travel policy is a company's formal document that details all the procedures for corporate trips. It’s essentially a rule book that outlines how employees should approve, book, and expense business travel, as well as how to maintain safety and duty of care. The following guide will serve as your complete step-by-step manual to travel policies.
What’s included in this guide?
- What is a travel policy?
- Why is a travel policy beneficial?
- What should you include in your travel policy?
- How should it be structured?
- 5 tips for writing an effective corporate travel policy
- What is a risk management policy?
- What problems might you encounter with travel policies?
- 3 tips to avoid these common problems
- The overlap between travel policy and cultural values
- Setting expense limits
- Delivering your travel policy to employees
What is a travel policy?
A business travel policy is essentially a company’s manual for business travel. This document typically contains the rules and budgets for all business travel, safety measures, and travel-related expenses. There are some general rules of thumb common for most businesses, but the parameters of most of these rules are set by the individual company. Over time, these rules are trialed, tested, and improved, growing your travel policy alongside your company. You’re likely to find the following topics covered in a corporate travel policy:
- Booking process – timelines, websites/platforms, approval requirements, etc.
- Budgets – how much you can spend on meals, drinks, accommodations, etc.
- Flights – ticket requirements such as budget, luggage, class, and policy for missed flights
- Ground transportation – rules on taxis, public transit, car rental, and parking
- Emergency contacts
- Travel insurance policy
- Rules for traveling with a spouse, children, or family
- Rules for adding leisure time to a trip
- Expense rules – what can and can’t be claimed
- Safety measures and duty of care rules
Why is a travel policy beneficial?
Clear guidelines mean fairness for all. Travel policies can positively impact both travelers and businesses.
Benefits for travelers include:
- Flexibility and autonomy to book their own travel within guidelines
- Increased safety thanks to travelers’ whereabouts and activities being known
- Confusion about the business travel booking process is alleviated
Benefits for the company include:
- Spikes in travel spending are reduced and easier reimbursement processes are in place
- Increased fairness helps foster a positive company culture
- Travelers have clearly communicated rules on which hotels and flights they can book
What should you include in your travel policy?
Your company’s corporate travel policy will depend on several aspects – how your company travels, who travels, and why they travel. You should consider these aspects before writing your corporate travel policy.
While your policy should reflect the unique needs of your business and employees, you’ll need to establish policies for these fundamental areas:
- Airline, train, hotel, and rental car reservations
- The use of other transportation, such as public transit, taxis, or rides
- Rules for on-site spending, including meals, entertainment, and calls on the company’s phone
- Security relating to travel – both in terms of personal safety and work materials
- Rules for giving and receiving gifts during business travel
- The approval process that employees and managers need to follow
- The payment system for any expenses incurred during travel
How should travel policy be structured?
To be effective, a travel policy must contain everything a traveler needs to know about business travel in general:
- Travel guidelines – means of travel, first or second class, and structure of the stay
- Cost management and expense limits
- Rules of conduct for travelers
- Reimbursement arrangements
Start from the very beginning. It’s essential to include your approved booking process and tool. Do you want travelers to book with one business travel platform so you can consolidate your spending? Do you want travelers to book for themselves according to policy or to submit a request to a travel manager who books all trips?
You should also include an expense policy that clearly lists what purchases can and can’t be expensed. This way, travelers can avoid expenses they won’t get reimbursed for. Limits should be outlined for all business expenses such as entertainment, business meals, car rental allowances, or event registration fees. All expense limits should be clearly outlined in your policy and visible to employees at every stage.
Specifically, travelers will need to be familiar with info on:
- How travel is booked and what the approval process is
- Maximum cost of air travel
- How far in advance travel should be booked
- Whether public transit is preferred
- Maximum transportation costs
- Guidelines for vehicle use and fuel reimbursement
- Guidelines for car rental
- What is and isn’t covered by travel allowance
- How much the travel allowance is, based on the destination
- How much employees receive as a daily allowance
- How expenses related to client entertainment are managed
- How the reimbursement process works – what can and can’t be reimbursed
- How bleisure (business leisure) activities work – how they are handled and what’s included in the reimbursement
- What safety and insurance guidelines should be in place
- Approval steps for travel and expenses
5 tips for writing an effective corporate travel policy
There’s a lot to consider when arranging business travel, so it makes sense to have a robust corporate travel policy in place. Setting out all the relevant procedures will help keep your employees safe while reducing your business’s travel expenses.
Some key steps to creating your ideal company travel policy include:
1. Defining your objectives
These could include keeping costs down, ensuring employees are safe and comfortable, and helping them make travel decisions.
2. Ensuring your travel policy reflects the needs of both the travelers and the business
Consider the most common destinations for your business travelers and the best ways to get there. Are there specific needs or considerations related to your company’s activities?
3. Giving your employees options
Everyone likes to have a choice, so try to give your employees a selection of hotels or airlines. You can keep costs down by capping the hotel star rating or the class of the airline ticket.
4. Setting clear guidelines for all aspects of travel
Your travel policy needs to be all-encompassing so it leaves no room for doubt. This includes everything from airline booking rules to the policy on things such as additional expenses and the acceptance of gifts.
5. Making sure everyone knows about travel policy
All relevant documents need to be readily available to everyone in your company via the intranet or a travel platform. The policy needs to be clearly communicated to everyone, including to managers so they can enforce it.
In terms of writing style, it’s important that the language used is clear and effective. Travel policies are often difficult to understand or too bureaucratic. They can be simplified with the help of technology, making them more user-friendly for employees. Here are a few points you should always keep in mind:
- Info on accommodations, meals, and mileage should be easy to understand and remember
- Specifics regarding expense claims delivery and whom to contact in the event of problems should be made clear
- Everything concerning exceptional and unforeseen expenses—or how to behave when taking a customer to lunch or dinner—must be clearly outlined
- A traveler has to feel safe, so including travel insurance or reimbursement for medical expenses is a way of making them feel comfortable – this is known as risk management
What is a risk management policy?
A risk management policy aims to ensure the safety of travelers throughout the trip. It should be tailored to meet your specific business needs and typically includes several items like:
- Policy scope
- Roles and responsibilities
- Planning and approving travel
- Travel risk assessment
- Incident reporting and traveler support
What travel policy problems can you encounter?
You don’t want your travel policy to go unused. Unfortunately, this happens. Here are some common problems travel policies encounter:
- They’re difficult to understand
- **No one reads ** or remembers them
- Travel policies aren't enforced with technology
- Travel policies come across as overly bureaucratic
- Travel policies are unrealistic or unrepresentative of current global situations
- Travel policies aren’t introduced properly or communicated well
- Travel policies aren’t data-driven or based on a company’s previous experience or travelers’ surveys
3 tips for avoiding these common problems
1. Your travel policy should be visible and accessible
First, if employees can’t easily access your corporate travel policy document, they’re likely to make travel bookings without referring to it. Making sure employees can easily access the document via your HR or employee portal is an important first step.
The second step is making sure the policy is concise and easy to read. Avoid using too much jargon and explain travel guidelines clearly. You can even divide the policy into separate sections according to employees’ roles.
Finally, consider creating a checklist where employees can check off booking or expense submission steps as they go.
2. Create a comprehensive FAQ
Even the most concise, well-written travel policies won’t cover every eventuality or question an employee might have. Plus, if you make changes to your travel policy, they’ll need to be reflected.
If you find yourself answering the same set of questions over and over again—or if you were asked a question that others may have—start a FAQ page so travelers can access solutions easily.
3. Encourage employee feedback
The most common reason behind employees failing to adhere to policy guidelines is that they don’t enjoy the process, or the process is too complicated.
Soliciting feedback on booking and expense processes not only lets your employees know you care about their experiences, but also ensures the most useful suggestions are incorporated into your policy.
The overlap between travel policy and cultural values
It’s easy to fall into the trap of having a travel policy that doesn’t fit the organization’s cultural values. The travel policy might be at odds with your company culture, or the culture might have evolved and the policy hasn’t kept up. Understanding your cultural values is key to building greater engagement and synergy between employees and your travel policy.
Failure to acknowledge your cultural values will impact the choices business travelers make – everything from the accommodations they choose, the ground transportation they take, and their willingness to adhere to the travel policy.
Here are four types of cultural values and what they can tell you about creating your travel policy.
1. Results-driven culture
These organizations prioritize results and high performance over everything else – they often want to change the world. This is the type of organization where employees challenge the status-quo if they think things can be improved – they work hard to get the job done.
Their travel policy has to be results-driven too, so having plenty of data to back up the travel decision-making process is essential.
2. Horizontal culture
In these organizations, job titles aren’t important. Instead, everyone collaborates to achieve shared goals. This is the type of organization where the CEO makes their own coffee and people get involved in a wide range of projects.
Their travel policies need to reflect this flat organizational structure. There has to be one rule for everyone – with no exceptions.
3. Progressive culture
These organizations look to challenge traditional working norms. They value diversity in the workplace and offer flexible work options. Trust is a key part of working in a progressive culture.
Travel policies at progressive culture organizations are often very flexible, with a lot of autonomy given to business travelers. In progressive cultures, punishing travelers for going slightly over budget doesn’t go over well.
4. Established corporate culture
In these organizations, there are clear policies and processes for most aspects of the business – and travel is no exception. Major decisions about the company’s direction are almost always made by the senior leadership team. Workers have very clearly defined roles that don’t tend to evolve over time.
Travel policies for established corporate cultures are direct. There’s no doubt about what the correct process is for booking and managing travel. Also, travelers expect clear guidelines. Travel policies in established corporate cultures often include sections about what happens if you don’t follow policy.
Setting expense limits
When it comes to corporate travel policy best practices, it’s essential to consider and include expense limits for everything the employees might claim. These must include an accommodations expense policy, a car allowance policy, a transportation policy, a meal reimbursement policy, and a general expense policy that can apply to all business travel needs and activities. These expense limits should be transparent and clearly communicated to employees at every stage.
Generally, business travelers want to do what’s right for their company – many companies find that giving employees control over their own spending can actually reduce waste. Find the middle ground by giving employees control while setting key limits. For example, meal expenses can be set as an overall allowance per day, giving the employee the choice of how much to spend individually on breakfast, lunch, and dinner.
When it comes to booking accommodations, give employees the choice of a standard room in any hotel of a certain star rating, or a maximum price per night.
For ground transportation, a corporate travel policy should clearly advise employees to choose the most cost-effective method considering the trip time. Most business travelers accept flying economy on short-haul trips. The expense policy should depend on the destination, since some countries are more expensive than others.
Handling expense claims
It’s important that business travelers have a clearly defined method of claiming back their expenses. Ask them to fill out an expense report for the date, amount, category, location, and business purpose of their claim – and decide whether you’d like them to file receipts for all their expenses or just the ones that exceed a certain amount.
Give your employees a time frame for submitting expenses – this will help your business maintain a stable and accurate cash flow. Similarly, let them know when they can expect money to be credited back into their accounts. Depending on the amount spent, it might be a good idea to clarify who will approve their expenses in each case.
Data collection and travelers’ feedback
Make sure to create a survey, an email with an open response box, or a conversation/feedback session with travelers after their trips. This way, you’ll be able to collect feedback and data from your employees to optimize your processes and policies continuously.
Delivering your travel policy to employees
Once you write your corporate travel policy, you’ll need to make sure your employees read and understand it. You can choose to deliver the policy in a printed document, via the intranet, or in an email – these are good ways to make sure it’s communicated as effectively as possible.
A travel policy is an essential document for your company that considers the rules and budgets for all business travel, safety measures, and travel-related expenses.
There are some general rules of thumb common to most businesses, but the parameters of most rules are set by the individual company. Make sure to test, improve, and grow your travel policy alongside your company.