Strategy

Fear of Flying? Corporate Travel Policies Changing

In light of the recent terrorist attacks, some CFOs are taking a long hard look at their company travel policies.
Jennifer CaplanSeptember 26, 2001

Even before the terror attacks of September 11, many CFOs were revisiting their T&E policies. Generally, such revisits involved streamlining expense reporting and nixing the use of travel agents. But now, with the unsettling knowledge that a commercial jet can be turned into a weapon of mass destruction, finance chiefs are worrying as much about minimizing risks as minimizing costs.

Indeed, the attacks moved a number of CFOs to change their corporate travel policies. Immediately following the attacks, managers at sneaker and sporting apparel maker Saucony suspended all air travel by employees. Michael Umana, CFO and senior vice president at the Peabody, Massachusetts-based company, notes that Saucony management has also been looking into some ”creative options” for worker travel.

One of those possibilities: prohibiting employees from taking longer nonstop flights. For trips to the West Coast originating in Boston, for example, the company’s managers may require workers to take connecting flights only. The thinking? Shorter trips don’t require as much fuel as nonstops, and hence, are less attractive to hijackers seeking to turn passenger planes into bombs. Along the same lines, Saucony executives have also been thinking about making Asia-bound workers fly through Europe rather than California.

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James McDevitt, CFO at Clarus Corp., says managers at the Suwanee, Georgia-based software company are also rethinking their corporate travel policies. Minimizing the hit in case disaster strikes is at the top of the list. Explains McDevitt, “We will try not to put a number of executives on the same aircraft, so that if something were to happen, we would lessen our losses.”

Remarkably, employees seem less spooked than their employers by the prospects of terror in the sky. Umana reports he struggled to restrict Saucony employees who wanted ”to get on the road” the week following the attacks. Lynn Atchison, CFO at Hoover’s Inc., says she’s seen a similar response at her company, which canceled some appointments last week and early this week out of respect for clients that were affected by the attacks. ”But we are already starting to rebook appointments and get back out there,” she said last week. “We will shortly be back to business as usual.”

Maybe so. But if the campaign against terrorism sparks more terrorism, corporate managers will need to weigh business needs against the preservation of assets — namely, their workers. “There is a heightened sensitivity to employees right now,” concedes Atchison, “but I don’t believe that companies will or should change the way they fundamentally do business as a consequence of these events.”

Being There

Of course, some corporations have little choice but to keep employees traveling — whatever the scenario. Workers at J.D. Edwards, for instance, spend a large chunk of their time training customers and installing and maintaining software at client sites. While some of that work can be done virtually, most requires the human touch. “We will definitely put a finer screen around all travel,” says Rick Allen, the company’s CFO. “But the business we are in requires us to be at customer sites frequently.”

That’s no exaggeration. Fully half of the software vendor’s 4,800 employees travel on a regular basis. Allen notes that employees who feel uncomfortable getting on an airplane will be given the choice of driving to the location — if that option is reasonable. “We are also fairly well distributed throughout the country,” he adds, “so wherever possible, we will have resources closer to the location handle the business issue.”

Besides looking after the well-being of employees, employers will also have to deal with the realities of airline travel post-September 11. Managers at J.D. Edwards are beginning to assess what heightened airport security will mean for corporate travelers. A reduction in flights by airlines is another concern. “It is our understanding that United is cutting back flights significantly enough to make us look for other alternatives,” says Allen.

That’s understandable. J.D. Edwards is based in Denver — a hub for United Airlines. A reduction in flights by that carrier, as well as others, will make it a lot harder to book flights at the last minute. The problem is worrisome enough that management at the software specialist is considering leasing a private jet. “We would use it in situations where commercial travel may not be able to get us where we need to get, in the time we need to be there,” explains Allen. Travel at the software company was suspended for 48 hours following the terrorist attacks but has since resumed.

For her part, Atchison admits that managers at Hoover’s have not yet fully figured out how the events of September 11 might alter business travel. “We haven’t stopped to create new restrictions or regulations on employee travel, and I don’t know whether those will come in the future,” she says. Unlike at J.D. Edwards, travel is not a big part of the job for most Hoover’s employees. In fact, only about 5 percent of the company’s 250-person workforce travels regularly. The company’s sales representatives — typically a big chunk of frequent fliers at most corporations — use the telephone to conduct sales.

In fact, some observers believe the attacks will prompt more companies to conduct sales over the phone and the Internet. Atchison doesn’t see it that way, although she acknowledges that managers may now be more inclined to experiment with videoconferencing technologies. ”If you need to meet with clients face-to-face to sell them a high-dollar product or service, I think companies will still do that,” she insists. ”Maybe now you do a better job making sure that a lead is good before you jump on a plane.”

But McDevitt of Clarus believes Webcasting could prove to a viable alternative to travel. Clarus employees have been using Webcasting as a sales and marketing tool for some time. While he admits that the initial push for rolling out the technology was to cut costs, ”the less employees we have traveling, the safer everyone will be,” he says.

Still, McDevitt doesn’t think the terrorist attacks will have a sizable impact on how most companies conduct business. ”While there might be some short-term blips in our ability to close some deals,” he says, ”I think business will come to terms with the new reality.”

Right now, the new reality looks an awful lot like the old one. Back at Saucony, for instance, CFO Umana reports that the company has lifted its ban on employee air travel. ”We’re back in the skies,” he says. Just how safe those skies are remains to be seen.