Policy Points

It was quite a challenge, admits Ernest Guerra Jr. (right), director of travel and meeting management for Piscataway, N.J.-based manufacturing giant American Standard Companies. Last year, Guerra spent six months analyzing data, consulting suppliers, holding myriad focus groups with the company’s numerous administrative assistants, and forging alliances with senior management, accounting and corporate communications. It was all in an effort to create an orderly structure to govern meetings at American Standard, which has about 60,000 employees in 28 countries, with 22,000 based in the United States.
    When the dust cleared, Guerra was able to roll out a formal policy that imposes control on a $65 million annual travel, entertainment and meetings spend while following rigorous federal guidelines. “We have had three audits so far, two outside and one internal, and they have deemed the policy successful,” he says.
    About 4,000 miles away, in Irvine, Calif., Bill Layton faced a similar situation one that led him to become the unlikely hero of his company’s meetings department. As director of finance for Irvine, Calif.-based Allergan, a global pharmaceutical company and manufacturer of Botox, Layton admits he never gave much thought about the role of meetings in the company’s day-to-day operations.
    That all changed one day in fall 2002, when one of the company’s planners knocked on his door with two contracts in hand one that she had negotiated, and another that had been signed by an administrative assistant. While the contracts were for two different groups, both were with the same hotel, over the same dates. The problem? The administrative assistant’s meeting had a room rate $75 higher than the meeting planner’s rate.
    Being a “numbers guy,” says Layton, his interest was immediately peaked, and he decided to take a look at Allergan’s meeting planning process. “There wasn’t any,” he recalls. “We had 50 different people booking meetings, including 21 third-party planners, and we were missing out on huge savings opportunities.” The solution? Similar to Ernest Guerra’s mission, Layton knew it was time to create a management-sanctioned meetings policy to control and track Allergan’s $5 million annual meeting spend.
     “We needed to have everyone in one place, on the same page, doing the same thing,” says Layton, who last November debuted the formalized guidelines. “I honestly think that with this standardized process in place, I am looking at 20 to 30 percent in savings. That represents millions of dollars.”
    A good meetings policy might drive cost savings, but that is not the only benefit or incentive for creating one, say experts. Corporate reckoning with the Sarbanes-Oxley Act, also known as SOX, is playing a significant role. The measure, which was passed by Congress in 2002 with a mandatory compliance deadline of Nov. 15, 2004, requires CEOs and CFOs to sign off on the accuracy of their companies’ filings with the U.S. Securities and Exchange Commission (for more details, see “SOX at a Glance”).
    This means keeping a closer eye on meetings spend, which typically represents the second or third largest item in a company’s total revenue, notes Mark Williams, managing consultant for Tampa, Fla.-based IBM Business Consulting Services. Meeting planners should be taking the lead in pushing management to endorse standardized practices in their departments, he says, adding, “You need to know the level of spend you are responsible for and align yourself with the person in the company in charge of SOX compliance.”
    For many firms, that means turning closer attention to the meeting planning process. In fact, a recent study by Northcross, Ga.-based Windward Marketing Group found 42 percent of companies surveyed intend to create a meetings policy, with 20 percent citing “reduced exposure to financial and security risk” as the reason. The small-scale study queried 20 U.S. corporations with an average annual meeting spend of $19 million.

Getting started
A good meetings policy requires a lot of research, fact gathering, communication and often painful choices. Expect to step on toes, to be constantly challenged and to spend a great deal of time explaining why having a meetings policy is a good thing. Begin with the following five-step process.
    1. Define a meeting. This is perhaps the most subjective part of the whole policy, says Bill Layton. For Allergan, a meeting is defined as a gathering of 25 or more people, requiring overnight accommodations and meeting space. At American Standard Companies, the benchmark is 10 or more people.
    2. Involve all meeting coordinators. Because administrative assistants are the ones who are going to be living and breathing the policy, it is important to get their input. Explain to them why a policy is being implemented and the benefits of adhering to the policy. Being open to their concerns and feedback will help secure their buy-in and compliance.
    3. Use corporate communications. You can never overcommunicate, says Ernest Guerra. “Involve corporate communications from the very start so you can get a communication plan in place,” he advises. Once the policy is written, be sure to post it on the company’s intranet.
    4. Get senior management support. Without management backing, the meetings policy will be ineffective. “When you’re spending millions and looking to save 30 percent, you’ll get their attention,” says Layton. “And if you mention Sarbanes-Oxley, they will definitely be on your side.”
    5. Have a system in place. Critical to the success of the meetings policy is a system that will track every facet of the planning process, from site selection to final expense reporting and reimbursement.
    “You want software that will allow you to enter information into the system, so you can see where and when the dollars are being spent,” says Stanley Chin, president of Santa Clara, Calif.-based OnVantage, which provides spend management solutions to meeting buyers. Chin recommends software that includes a calendar, so planners can see at a glance where all scheduled meetings are taking place, which in turn gives them the opportunity to piggyback on the same property rather than negotiate with a new one from scratch. Likewise, the calendar also highlights any canceled meeting space, allowing other meetings to plug those holes, limiting financial liability for the company.

The makings of a policy
Vendor compliance, contract requirements, and reporting and reimbursement rules are the linchpins of any meetings policy. If a travel agency is involved in planning and executing meetings for the company, agency personnel, too, must be assigned a copy of the policy and be required to follow it. And the less bureaucratic the process, say industry insiders, the greater the chance of acceptance and compliance.
    Steps to follow:
    " Evaluate and budget. Whoever has been asked to plan the meeting must meet with a company-designated party i.e., internal senior meeting planner, finance, senior management and present what the meeting hopes to accomplish and the proposed budget. If the meeting is a reoccurring one, now is the time to compare the previous budget to the current one. If this meeting comes with a higher dollar figure, investigate why. Determine where savings can be made, and adjust the budget accordingly before signing off.
    " Implement spending-level sign-offs. If an event has a particularly large expenditure, such as a big-name speaker or a high-priced entertainer, require the chief financial officer to sign off before the booking can proceed. The preapproval process will eliminate any reimbursement concerns or questions on the part of procurement.
    " Designate a point person. Every meeting must be assigned a primary contact, whether it be an administrative assistant, meeting planner, travel agent or independent planner. Not everyone will be happy about a new person taking this role. “People are very personal about their meetings. They don’t want to give them up,” says Layton. Nevertheless, this is the person who must control the budget, make decisions and ultimately to whom all financial questions and concerns must be directed. This is also the person who will have to answer to any noncompliance issues. With formal ownership comes implied responsibility, which is an effective self-policing tool.
    " Take control of contracts. Spell out who has authority to sign contracts and any specific language that must be included. At both Allergan and American Standard Companies, all contracts must contain company-specific language that limits the company’s potential financial exposure. And both companies require all contracts be signed in-house. “We do not allow any middleman to sign off on our contracts,” says Layton. “That way we know we have negotiated every aspect of the contract.”
    At American Standard, the company’s shorter contract version can be used for meetings of 75 people or fewer, while a longer version must be applied to any larger meeting.
    And when it comes to third parties, remember “you are the customer,” says Layton. “It’s your interest the contract must protect.”
    " Steer groups to preferred vendors. If saving costs by driving volume to preferred vendors is important, include this in the policy and provide a list of specific properties with whom the company has negotiated a favorable rate. If preferred vendor status extends to various suppliers, such as third-party planners, audiovisual companies, caterers, etc., include a specific list of those approved by the company. “If you can move volume to fewer vendors, notes Chin, “you will get a better rate.”
    " Manage expenses and reimbursement. The best way to record expenses and create a paper trail, says Guerra, is to mandate that all expenses be charged and reimbursed to a corporate meetings card. “We require that payment be made directly to the card,” says Guerra. “When you are talking about a $1 million meeting, that’s a big payment, and you want to make sure it goes to a card, not an individual.”
    " Confront ethical issues. If the acceptance of vendor incentives such as fam trips, merchandise and frequent-flyer miles is a concern, make declining them a requirement. And to ensure that preferred vendors are aware of the company’s policy on freebies, communicate it directly to them so they can avoid dangling temptation.
    " Be a diligent enforcer. Where the policy springs leaks, be sure to confront violators with a firm hand. That includes outside vendors as well as in-house employees. When suppliers are well-versed on your policy, they will be quick to let you know when someone in your company is shirking policy guidelines.