Business travel is a huge expense for thousands of companies everywhere.
And the problem is that it’s not something you can eliminate as a line item. Sure, you can limit corporate travel but that’ not always the right answer. Your employees need to go places and that’s unavoidable in many instances.
So how do you get your employees on-side when it comes to cutting costs? Establishing rigid policy isn’t going to cut it. That can breed resentment.
So, let’s explore what behavioral psychology can teach you about saving on business travel.
In 2006, an experiment using MIT students as participants was conducted.
Market research students were asked to write the final two numbers of their social security ID on a piece of paper. Underneath, the same students were asked to arrive at a figure they’d pay for several items listed, with no knowledge of market costs.
Most of the students bid on the items using numbers which reflected the final numbers of their SS ID. People with lower numbers made lower bids, while those with higher numbers made higher bids.
This phenomenon is known as “anchoring”. First impressions are everything when people are discerning the value of things. And even though social security numbers don’t reflect a monetary value, writing them down immediately before arriving at a valuation of selected items guides the mind to choose those numbers.
When it comes to your employees and corporate travel, anchoring weighs heavily in the decisions made when booking.
Employees come to you knowing the salary they’ve agreed to work for. This is the anchor number. But added to that number are other factors like benefits and job perks (corporate travel).
If your corporate policy demands that employees adhere to a certain budget per trip, it’s human nature that the employee will consume as much of that budget as possible. The budget cap becomes the anchor.
Employees are unlikely to opt for flights and accommodations which come in lower when, as part of the bargain, they’re expected to sacrifice comfort or convenience.
The power of the freebie is well known. People love free stuff. And here’s the kicker – they love the freebie to the point that they’ll sacrifice something they value to get it.
Adding a free benefit to drive behavioral change is a potent way to address anchoring bias. It’s a wild card which shifts the employee’s perspective to something they can obtain for choosing to sacrifice a little of what they believe they’re entitled to for something they didn’t have access to before.
Including a free benefit as an incentive to stay at the lower end of the cost spectrum is a proven antidote to the anchoring which can drive up corporate travel costs.
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