The psychology of travel policies

by Prof. Dr. Armin Trost

The alignment of management and organization in companies can be seen mostly in how everyday things are dealt with. A great example is the following case:

A team consists of five employees. An analysis of their travel expenses shows that four out of five employees spend $1,000 per month. However, one of them spends up to $6,000. The total is $10,000 per month. The company is surprised about the latter employee (the black sheep) and adopts a new system of travel expenses for all employees. The travel costs per month per employee is now capped at $2,000. This curbs the “expensive” employee and keeps the good ones untouched, or so the assumption.

Now to my question: What will the travel expenses be in the future after the new rule comes into force?

  1. $6,000 (savings of $4,000).
    Those employees who previously spent only $1,000 will not feel affected by the new rule and generally maintain their present behavior. The only employee who is affected is the one that used to previously spend $6,000. He will in the future spend only $2,000 because he will comply with the new rule.
  2. $10,000 (no savings)
    All employees will from now on spend $2,000 per month. Those who were formerly content with $1,000 will now consider $2,000 their available budget and budgets should be used, otherwise it will be reduced in the following year. This results in expensive hotels – five-star instead of four-star, etc.
  3. $14,000 (additional cost of $4,000) Those employees who previously spent $1,000, now spend $2,000 (as described in alternate B above). The employee who previously spent $6,000 is not complying with the new rule. He decides he’d rather confront the looming conflict.

If assumptions 2 and 3 are true, what would be a suitable alternative? What should travel policies be to actually cut costs, if that is what you actually want? It pays to think about such a case. The discussion will automatically bring you to the topic of human traits and the responsibility of the employee or the company.

I look forward to the discussion.