A Publication of WTVP

For many companies, travel is an essential part of doing business. The obvious example in Peoria is Caterpillar. As a global corporation, Caterpillar sends people all over the world to sell what it makes and brings people into Peoria for sales conferences and major meetings. A friend of mine who works for a Caterpillar subcontractor and I are involved in an upcoming association meeting. “But I can’t do much until I get back from China,” she said.

This colleague could work for a hospital, medical clinic, bank, college or nonprofit—or she could be a consultant like me with a set of clients to be billed for travel expenses related to specific projects. Business travelers can be given an advance to pay for airfare, hotels, car rentals or mileage, meals and other incidentals, or they can be reimbursed for business expenses they have incurred. In its annual survey of business travel expenses, American Express calculates that in 2008, the average business trip will cost $1,110—and that’s just direct cost, not including the expenses of convention or conference registration, a display booth or a “hospitality room.”

It’s typical for an organization or business to incur such costs. While a lot can be done by email, web conferencing and telephone, “face time” is essential, and direct participation in business activities can be a critical success element in commerce. There are three ethical issues, however, in business travel. They shape external business reputation and internal employee behavior around money. These are different than personal choices and behavior in relationships. On a trip, an employee can drink too much or sleep around, but that person has to answer to spouses, friends and self.

There are larger issues which have to be faced in business travel. Why? Because the finances in business travel are OPM—other people’s money. Sometimes employees think that business travel means they get money to “play” with. Sure, the expenses are monitored and they need to be reported in many businesses, but people are greedy. When headed to Vegas, New York or Paris for business, it is a little different than heading to a less popular or attractive destination.

One issue is padding the expense account. I’ve seen it happen a couple of ways. Sometimes business travelers receive a federal per diem rate. In Chicago, for example, meals and incidentals can cost up to $64. Beyond that, expenses must come out of the business traveler’s pocket, unless the employer or host will pay more. Try to find a really nice set of three meals in Chicago at $64 a day—not including alcohol. I knew one public official who grazed at various vendors’ hospitality rooms and then found a way to bill for reimbursement to the limit. Another person got his employer to pay for rounds of drinks. Others have had their employers pay for spa treatments, sporting events and entertainment. These are not business expenses, but they are billed as such. Go figure.

Another issue is making the business trip a shopping trip. Over the years, I have known people who go to conventions, sign in, go to the plenary session and then disappear for the day to go shopping at fabulous department stores and specialty shops. Occasionally, when I am on the way from one conference room to another, or on break time, I have seen delegates laden with shopping bags—and an embarrassed smile. They have used company money for a wonderful shopping trip. How did the company benefit from the meetings they attended? You know the answer.

One last issue is tacking on vacation time without approval. Businesses have different policies on extra time outside of the purpose of the business trip. Ultimately, the issue is whether the employer is not only giving the employee some vacation time (perfectly appropriate), but whether they also are paying for much of the vacation expenses. Ethically, the employee needs to pay for the appropriate share outside of business expenses. I have known people who flew overseas at great expense and used the trip as an opportunity for a vacation, with many of the travel expenses paid for by their employers.

But business travel is paid for with other people’s money. Employees need to fulfill the purposes of business trips by doing business and being responsible for their own personal costs. That’s a tough financial lesson to understand, but one that healthy businesses need to reinforce and faithful, moral employees need to understand. IBI