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 travel for business, and 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 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 to 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 that are common for most businesses, but the parameters of most of these rules are set by the individual company. Over time, these rules will be trialled, tested and improved, growing your travel policy alongside your company. In a corporate travel policy you’re likely to find the following topics covered:
- Booking process – timelines, websites/platforms, approval requirements, etc.
- Budgets – how much you can spend on meals, drinks, accommodation, etc.
- Flights – ticket requirements such as budget, luggage, class and policy around missing flights
- Ground transportation – rules around taxis, public transport, 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
- Travelers’ whereabouts and activities are known to increase safety
- Confusion about the business travel booking process is alleviated
Benefits for the company include:
- Spikes in travel spending are reduced and you can achieve easier reimbursement processes
- Increased fairness and foster a positive company culture
- Travelers have clearly communicated rules about which hotels and flights they’re able to book
What should you include in your travel policy?
Your company’s corporate travel policy will depend greatly on several aspects – how your company travels, who travels and why they travel. These aspects should be considered 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, rail, hotel and rental car reservations
- The use of other transportation, such as public transportation, 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 around giving and receiving gifts that may be bought or received 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 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 booking tool: do you want travelers to book with one business travel platform, so you can consolidate your spend? Do you want travelers to book for themselves within policy or do you want them to make a travel request to a travel manager who books all trips?
Your policy should also include an expense policy that clearly lists what purchases can be expensed and what can’t. In that way, your travelers can avoid expenses that they won’t get reimbursed for. Limits should be outlined for all business expenses such as entertainment expenses, business meals, car rental allowances or registration fees for events. All expense limits should be clearly outlined in your policy and visible to employees at every stage.
More specifically, travelers will need to be familiar with information on:
- How travel is booked and what the approval process is
- Maximum cost of air travel
- How far in advance travel should be ideally booked
- If public transport is preferred
- Maximum costs for transportation tickets
- 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 cannot be reimbursed
- How bleisure (business leisure) activities work – how they are handled and what is 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 working to reduce your business’s travel spend.
Some of the 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 decisions on their travel.
2. Ensuring your travel policy reflect both travelers’ and business’ needs
Consider the most common destinations for your business travelers and the best way 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 class of 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 – that includes everything from airline booking rules to the policy on areas 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 within your company whether via the intranet or a travel platform. The policy needs to be clearly communicated to all, including line managers, so they can enforce it.
In terms of writing style it’s important that the language used is clear and effective. Very often, travel policies are difficult to understand or too bureaucratic. They can be simplified with the help of technology, making them more user-friendly for employees to put to use. There are a few points you should always keep in mind:
- Information regarding accommodation, meals and mileage should be easy to understand and remember
- Specifics regarding the delivery of expense claims and who to contact in the event of problems should be made clear, so that everybody knows what to do if any situation arises
- Everything concerning exceptional and unforeseen expenses or how to behave when taking a customer to lunch or dinner must be specified in an unambiguous way
- A traveler has to feel safe, so including travel insurance or reimbursement for medical expenses can be a way of making them feel comfortable – this is also known as risk management
What is a risk management policy?
A risk management policy is aimed 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 problems can you encounter with travel policies?
You don’t want your travel policy to go unused. Unfortunately, this usually happens to them. Here are some common problems travel policies encounter:
- They are difficult to understand
- No one reads them or remembers them
- Travel policies aren't enforced using 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 well-communicated
- Travel policies aren’t data-driven or based on a company’s previous experience or travelers’ surveys
3 tips to avoid these common problems
1. Your travel policy should be visible and accessible
Firstly, if employees can’t easily access your corporate travel policy document, they’ll likely continue to make travel bookings without referring to it. Making sure employees can readily access the document via your HR or employee portal is an important first step.
The second step is making sure that the policy is concise and easy to read. Avoid using too much jargon and explain clearly the guidelines for travel. You might even consider dividing the policy into separate sections according to employees’ roles.
Lastly, consider creating a checklist that employees can use to tick off each booking or expense submission step 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, these too will need to be reflected.
If you’re finding yourself answering the same set of questions over and over again, or you’ve been asked a question that you think others may have too, start creating an FAQ page, so that travelers can readily access solutions.
3. Encourage employee feedback
The most common reason for employees failing to adhere to your 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 that you care about their experiences, but you can also incorporate the most useful suggestions 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 cultural values of the organization. It might be that the travel policy is at odds with your company culture or that the culture has evolved and the policy hasn’t kept up with changes. But understanding your cultural values is one of the key ways to build greater engagement and synergy between your employees and your travel policy.
Failure to acknowledge the importance of your cultural values for your travel policy will impact the choices that business travelers make – everything from the accommodation they choose, the ground transport they take and their willingness (or otherwise) to even adhere to the travel policy.
Here are four types of cultural values, including the typical traits of these cultures and what this can tell you about mapping your travel policy for them.
1. Result-driven culture
These are organizations that priorities results and high-performance over everything else – they often want to change the world. This is the type of organization where employees will challenge the status quo, if they think things can be improved, and will work hard to get the job done.
The travel policy needs 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 together to achieve shared goals. This is the type of place where the CEO makes their own coffee and people get involved in a wide range of projects.
Travel policies for these organizations need to reflect this flat organizational structure. It has to be one rule for everyone, with no exceptions.
3. Progressive culture
These are organizations that are looking to challenge the traditional working norms. They value diversity in the workplace and offer flexible working 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 isn’t going to go down well.
4. Established corporate culture
In these types of organizations, there are clear policies and processes for most parts of the business – and travel is no exception. Major decisions about the company’s direction are almost always made by the senior leadership team. People working here will have very clearly defined roles, which don’t tend to evolve over time.
Travel policies for established corporate cultures will be direct. There won’t be any doubt about what the correct process is for booking and managing travel. Also, travelers will expect clear guidelines. Often travel policies in established corporate cultures will include sections about what happens if you don’t keep within policy.
Setting expense limits
When it comes to corporate travel policy best practices, it’s essential to consider and include expense limits for every aspect that may be claimed back by employees. These must include an accommodation expense policy, a car allowance policy, a transportation policy, a meal reimbursement policy and a general expense policy, that could be applied for any and all activities and needs for a business traveler. These expense limits should be transparent and clearly communicated with employees at every stage.
For the most part, business travelers want to do what’s right for their company – and many companies find that giving employees control over their own spending can actually reduce waste. Find 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 accommodation, 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 journey time. Most business travelers will accept being restricted to flying economy on short-haul trips. The expense policy should depend on the destination as 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 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
Be 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’ve written your corporate travel policy, you need to make sure your employees read and understand it. Whether you choose to deliver the policy in a printed document, via intranet or in an email – these are some good ways to make sure it’s communicated as effectively as possible.
A travel policy is an essential document for your company, considering the rules and budgets for all business travel, safety measures and travel-related expenses you can find within.
There are some general rules of thumb that are common for most businesses, but the parameters of most of these rules are set by the individual company. Just be sure to test, improve and grow your travel policy alongside your company.