Why your Expense Policy Should Follow your Business Travelers (Not Just the Other Way Around)

Any corporate leader will tell you that a successful strategy is one that is agile, and can move with the changing tides of business. Competitors come and go, sales are stronger or weaker than anticipated, and macroeconomic issues arise that require strategies to adapt. Contrast this with corporate travel and entertainment expense policies. How often are they reviewed? Probably not much more often than every couple of years, for the vast majority of organizations.

Why is this important? The reason is because business travel also changes, particularly in response to mobile travel technology innovation, and therefore policies need to be flexible both in their ability to respond to these changes, as well as how they allow travelers to use them. An outdated, overly restrictive policy  invites exploitation, and can lead to significant resentment among those who abide by it. On the other hand, a policy which is overly vague can result in confused travelers, and could be difficult to enforce. 

One area where travel and expense policies need to ensure they are in touch with the modern business traveler is shared economy services, particularly ride sharing (such as Uber and Lyft), and shared accommodation (such as Airbnb). With an increasingly mobile-centric workforce, we are seeing a blurring of the lines between business and consumer applications and travel planning tools, and employees expect work-related travel to be just as straightforward as that in their personal lives.

Related: Creating an Expense Policy that Helps, not Hinders Your Employees

Of course, it’s not simply a question of whether your organization should allow employees to use these services or not. While there are certainly significant cost benefits which make to migrating from cabs to ride-sharing, and hotels to shared accommodation, worthwhile, there are several other factors to be considered:

Class of service: Just as a traditional ground transportation policy will outline when a cab or a limo may be used, class-of-service needs to be addressed. Should your travelers always stick to Uber X/Lyft, or could they use an Uber Black/Lyft Lux for certain rides? What are the criteria for this? 

Shared accommodation (like Airbnb) is even more nuanced, as there is neither a star system nor a brand name which can enable travelers and administrators to judge the class of an accommodation. Therefore, it’s difficult to know what is an acceptable rate for any given city. While a policy could be based on GSA per diem tables, offering a nightly allowance that’s the same as local hotels could remove much of the benefit of staying in shared accommodation. This is especially true given that one of the key reasons for adopting shared economy services is lower cost than their traditional counterparts for a comparable service.

Duty of care: Another consideration in the creation of a policy is duty of care. It could be argued that the GPS tracking capabilities and knowledge of who a driver is makes ride sharing services safer than taxis. Other areas do need to be addressed, however. For example, will your policy allow your employees to take an Uber Pool/Lyft Line ride with a stranger? Realistically, the cost saving of allowing/mandating this isn’t worth the risk.

However, shared accommodation presents a completely different duty of care challenge, based on whether the employee stays in a single-room or multiple-room property. Staying in a single-room property should present no issue, but what about multi-room property? Can employees stay in a property where the owner, or another stranger is staying? What about a colleague? Can they be of the opposite sex or must they be the same sex? These considerations should all be taken into account when creating a policy.

Related: How Can You Maximize Expense Policy Compliance and Maintain Traveler Happiness?

If your organization hasn’t yet incorporated these shared economy services into its travel and expense policy, now is time to do so. In fact, according to a survey of finance executives that we recently ran in conjunction with YouGov, three-quarters of medium-large companies have already incorporated shared economy services into their policy. Of those that do have a policy in place, 78 percent allow the use of ride-sharing and 68 percent allow shared accommodation services. Among the companies whose policies explicitly permit these services, about 21 percent mandate the use of ride-sharing services, and 23 percent mandate shared accommodation.

Whichever way your organization decides to go, one benefit is that an expense management system can be easily configured to manage these from a compliance perspective, and can ensure that your policy can be applied just as effectively both for traditional merchants and shared-economy services.