Travel freeze in business – saving on travel expenses?

Welcome to the Finance Storyteller series! The topic in this video is the Q4 corporate
travel freeze. What are the pros and cons? And if you are the CFO, should you put one
in place? Let’s take a look! Business results are not what was expected,
revenue and margin are coming in below the plan, and management decides to take cost
action. To stop part of the discretionary spending,
they put in a travel freeze. It’s important to be aware that travel freezes
are largely symbolic: it sends a message to employees that cost control is important. In the short term, a travel freeze might save
a bit of money on the line item in the P&L called “travel and living expenses”, but it
doesn’t mean you will hit your overall profitability target, as there are both short term and long
term side effects that might be bigger than you think. If the Q4 corporate travel freeze is a ritual
in your company, that comes back almost every year, then employees will start to expect
and anticipate it. If my meeting was cancelled last year in November
due to a travel freeze, then this year I will make sure I have it in September, before the
travel freeze takes effect. That makes this year’s travel freeze a lot
less effective. If travel expense cost control is really important
to you, then why not put in place actions that work on a year-round basis? Are you using online collaboration tools? Is reducing your environmental footprint part
of your corporate values? Is cost-consciousness shared in the organization? Let’s zoom out to the bigger picture…. As a company, you probably have a strategy
in place, and you have translated it to goals and objectives, at the team level, or the
individual employee level. What happens to the chances of achieving the
long term strategy, and the individual goals and objectives when you put a travel freeze
in place? They go down dramatically! So is the travel freeze really worth it? Putting in a travel freeze may be penny wise,
but pound foolish! There’s a dark side to the message you send
out when putting a travel freeze in place: I don’t trust you, as an employee, with making
the right decisions, so I, the manager will make the decision for you! Is that really the way you want to treat the
talent in your organization? Speaking of trust: a travel freeze certainly
does’t establish finance as a valuable business partner that helps the business to grow! When you put an “exception policy” in place
for getting travel approved during the travel freeze, you open up a can of worms with office
politics and bureaucracy. Are only the “management favorites” getting
travel approved now? You might be wasting a lot of valuable time
having people fill in forms and participate in review meetings, when you should be working
on the bigger purpose of your company. Human connection is key in building a successful
business. Building up a relationship with customers,
suppliers and colleagues doesn’t just happen on the phone or in online meetings. Face-to-face meetings are important to build
that connection. And in order to have that meeting, travel
might be necessary! In summary: while a travel freeze could save
you some costs in the short term, it might put your longer term strategy at risk, and
weaken the level of trust and connection. It probably does more harm than good! What is your opinion on the pros and cons
of a travel freeze? Please comment below!

2 Replies to “Travel freeze in business – saving on travel expenses?

  1. Philip, I can not agree more about your views about the Corporate travel freeze. However I think it is a rather  Dutch view, optimistically an European view but certainly not an American view. Why do we differ so much in the different continents?

  2. I completely agree! It's common practice for people to schedule more expensive meetings or trainings in Q1 and Q2….which reduces the impact of a travel freeze.I also like the point that it demonstrates lack of trust in the employees' decision making abilities.  This is very frustrating for many people.

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