Company culture is one of the most important factors for attracting and retaining talent. 46% of job seekers claim it’s very important when applying for a role and employees who don’t like their company’s culture are 24% more likely to quit.
A strong company culture directly impacts employee performance and wellbeing. In fact, as you’d expect, the positives don’t end there. When the shared values, practices, and beliefs of a company are reinforced in all areas of a business, from people management to everyday processes such as expense management, the benefits are far-reaching. 50% of CEOs and CFOs say it influences productivity, profitability and, critically, growth.
This article focuses on company spend culture and the importance of aligning it with company culture for the benefit of the business, from its people to its bottom line.
What is spend culture?
A company’s spend culture refers to the processes and practices that define how, why, and when the organisation spends or saves money.
As with company culture, spend culture consists of shared beliefs and values that employees are expected to uphold. This can include expense policies, guidelines for defining team budgets, and the way in which employees should act when spending company money.
Why is spend culture important?
Quite simply, if you don’t pay attention to your spend culture, the risk is that employees will incur costs unnecessarily which then impact profitability. Formal expense policies often end up leading to confusion and frustration. Whilst they should provide clear guidance on limits for spending, how reimbursement works, and the procedure for completing an expense report, they don’t take into account reasons for spending in the first place.
Instead expense policies constrain employees from being successful and the resulting approval battles contribute to a poor spend culture that in turn leads to a negative workplace culture, both for employees filing expense reports, and for the finance team at month-end.
By contrast, a more dynamic expense policy that considers the reason and potential ROI of any spend, can lead to a positive workplace culture by reinforcing a company’s commitment to empowering its employees, not holding them back.
Make your expense management culture fit your company culture
There’s no one size fits all solution when it comes to building an expense management culture. What is clear is that your spend culture should align with your company culture, support your strategic goals, and drive value for the business.
A common trend is for big businesses to give employees the autonomy to make decisions for themselves. Netflix’s expense policy, for example, simply states ‘Act in Netflix’s best interest’ in line with their company culture of freedom and responsibility. This policy worked – it led to significant cost savings.
Another big business to discover that autonomy equals savings was Basecamp. Empowering employees to manage their own expenses with no spending limits or pre-approvals led to a spend of less than $1,000 per employee each year. Other businesses choose to reward employees for money-saving behaviour, such as a free upgrade on a future flight in return for selecting the lowest airline cost over time.
Whatever your approach to expenses may be, it’s vital that it applies to everyone and senior management lead by example. For example, a culture of honesty and openness can be damaged if it comes to light that some members of management are enjoying first-class travel when everyone else is expected to fly economy.
The benefits of a strong travel culture
Sticking on the theme of travel, research has shown that having a strong travel culture can lead to improvements in profitability, customer retention, employee satisfaction, and market share.
The study found that when aligned with a company’s strategy, a well-managed travel program can deliver a tangible competitive advantage.
- 58% of business leaders said that having a strong travel culture produced better business results
- 35% of companies with a strong travel culture said it contributed to improved employee satisfaction
- 61% of companies with a strong travel culture have executive buy-in for travel as an investment
One important finding was that executive buy-in was partly informed by effective reporting from a well-implemented and comprehensive travel management platform.
Expense management and company culture in the new normal
There’s no denying that the coronavirus pandemic has had a huge impact on both company culture and spend culture. A mixture of remote working and reduced spending meant businesses were forced to adapt to meet the needs of employees based from home.
With a hybrid work model likely to be the new normal in the future, now is the perfect time to review and improve existing processes – both cultural and financial – that were created for a pre-Covid workplace.
For example, employee perks such as catered lunches and happy hours are currently on hold for many businesses. Some companies, such as Salesforce, have already evolved to support the new way of working by offering employees $250 towards tools and equipment for their home office, and six weeks paid vacation for employees who are working from home whilst caring for their children.
Redesigning expense management processes is especially important moving forward with company spend now under intense scrutiny as a result of the pandemic. That is why many businesses are moving to a new way of working when it comes to managing their expense and travel spend, using customer relationship management (CRM) systems to gain a better understanding of expenditure and the return on investment (ROI) expenses bring to the business.
The same technology also helps to ensure that every department within a business (from finance and sales to HR and marketing) has live access to their team’s expense spend against their budget. This allows each department to make data-driven decisions for revenue growth.
The benefits of expense management software
Traditionally, expense management can be costly and time-consuming. The average cost to complete an expense report for a one-night hotel stay is $58 and takes 20 minutes to process – and that’s if it’s free from errors. 19% aren’t, which leads to an additional cost of $52 and a further 18 minutes to make the corrections.
There’s also the issue that for most companies and in most expense management systems, expenses submitted by employees remain hidden to the wider business. They can be seen by the submitter, their manager, and finance teams, but no one else. Having expense management in your CRM system, however, allows for transparency of spend, available to those companies whose culture embraces it.
Why you should align expenses with business outcomes
There is an easier solution that will allow you to monitor your company-wide spend culture, discover the return on investment of your expense spend, and much more.
Having an expense management system that aligns expense spend with specific business outcomes means you can create a culture of openness, transparency, and empowerment. If you’re confident that spend to close a big deal (e.g. travel to meet the prospect face to face) is necessary, you can be trusted to book and expense that trip because all expenses go against that opportunity. As a business, you could even set a specific budget against each opportunity for travel and expense spend and give your sales team the freedom to travel to secure that revenue.
Also, having spend in one place and trip requests against specific revenue data, allows you to see spend beforehand, not after it’s been incurred. And you can see it against your existing pipeline or customers. It’s all open, transparent, and clear for finance and management. Everyone can see the potential or real return on investment from expense and travel spend. Plus, if teams can see each other’s deals and expenses, it encourages honesty. After all, no one wants to be that person who booked a business class flight when their colleagues all take economy.
Companies that prefer to have a specific policy and not to work based on expense budgets can build the necessary processes into the CRM to ensure compliance. There is also the option to automate expense reimbursement so employees get paid faster and to prevent duplicate or fraudulent expenses being processed, which is particularly important when 85% of UK employees admit to lying on an expense report.
Combining your company culture and spend culture
If you have an open culture within your business, your expense management processes and systems should support the same culture. By aligning expenses with business outcomes, companies can empower employees to make the right decisions on spend and employees can prove that the spend leads to tangible business growth.
For more details on how a CRM can unlock the science behind spend by revealing the value to your business of your employees’ expenses, click here for our latest guide.