expenses

Expenses and company culture in the new normal

by Josephine McCann October 27, 2020

A documented corporate expense policy should remove confusion about what employees should submit for reimbursement. In the context of the current pandemic, travel and meetings have substantially decreased, while other categories that support employees who work from home (such as home internet and home office equipment) have increased. This shift provides companies the opportunity to create expense programs that go well beyond travel and expense, and shape the broader company culture moving forward. 

Traditionally, companies think of their expense program as “travel and entertainment” programs, and indeed that has historically made up the bulk – but not all – of employee expenses. However, if your expense policy focuses on how the company can save as much money as possible, that’s only a part of the policy objective. Your corporate expense policy is an effective way to communicate how you value your employees’ time and happiness. 

When designed with a clear direction in mind, your expense policy can strengthen your organization’s values and avoid unintended consequences, resulting in higher employee job satisfaction and productivity.

The need for updated expense policies

In August, we surveyed 1,000 professionals from the US and UK who submit expense reports. We discovered that the employees who worked at organizations that updated their expense policy at the start of the pandemic were 50% more likely to understand the new expense policy and were three times more likely to feel their compensation was equitable.

With COVID-related workforce reduction, the need to do more with less mirrors our new reality. These changes are driving organizations to focus on spending and require on-demand available reporting. 

The spectrum of expense policy guidelines

Expense policies at organizations can range from very strict to the very lax. A rigid expense policy may require manager approval on each expense and refuse reimbursement on anything out of policy scope, no matter how small the dollar amount. 

On the other hand, some expense policies are extremely open-ended. For example, one policy, written in a high-trust environment, reflects and advances the company culture. It’s only five words: “Act in our best interests.” This company expects its employees to spend company money thoughtfully as if it were their own. After implementing this policy, this company found they saved money on employee expenses. Employees spent company money extremely carefully because of their high-performance environment. Also, by letting employees book their travel without using travel agencies, they found better deals on flights and hotels. 

Although this works well for some companies, a very or unclear expense policy may result in unwanted behavior in other cultures. Another Silicon Valley company came under scrutiny after reports of engineers expensing lavish meals at the office, including lobster tails and sashimi, dubbed by media outlets as “Entitlement Syndrome.” A sports apparel manufacturer was criticized for “being run like a frat house” after it was revealed that executives regularly expensed strip club visits, gambling, and limousines. 

Design the expense policy that fits your company culture

A carefully crafted expense policy reinforces company values and commitment to employees, providing a competitive advantage. For example, one global retailer organization offers 100% tuition coverage, promising to reimburse any out-of-pocket tuition costs its employees accrue at the end of the semester. A San Francisco-based biotechnology company offers a range of perks ranging from tuition assistance to counseling and legal advice. Other companies reward their employees for spending money wisely – for example, if an employee usually selects the lowest airfare cost, they’ll be rewarded with a free upgrade on a future flight. 

Expense policies can also be critical to attract and retain talent. Another tech giant headquartered in highly competitive Silicon Valley, has very generous benefits, including education reimbursement, donation matching, student loan repayments, house cleaning, and personal trainers.

Related Content: How AI Automates the Expense Audit Process infographic

Employee perks in the “new normal”

These types of perks are even more critical to employee happiness in today’s environment, where the majority of office employees will be working remotely for the foreseeable future. Many of these tech giants announced that they will allow employees to work from home through June 2021, and other tech companies even allow their employees to work from home permanently. 

This huge change in the way we work has forced companies to rethink company perks. There’s been a dramatic shift due to the pandemic, and most previous company policies are irrelevant now that employees are working from home. As an organization, how do you make sure your policy is resilient to the changing climate? 

Companies that usually bolstered morale with happy hours and catered lunches now need to rethink the needs of their employees at home. Some companies are offering food delivery services to their employees via services like GrubHub and DoorDash to replace the catered meals in the office. One social media giant offers a $1,000 stipend to each employee to use at their discretion. Other organizations offer childcare reimbursement to employees with children, who are now juggling working full-time with their kids at home. Some companies allow their employees to expense keyboards, monitors, desks, chairs, and office equipment to build their home offices. An enterprise software provider is giving an extra six weeks of paid vacation for employees with children, to acknowledge the challenge of having to work from home full time while also caring for their children.

Related Content: Expensing in a crisis: employees seeking reimbursement for COVID-19-related expenses video

Another important consideration is tracking these new types of expenses. With artificial intelligence (AI) solutions, companies have better visibility into where employees are spending. Is there a sudden, unexplained spike in Starbucks or food delivery expenses that don’t reflect your policy guidelines? AI conveys near real-time and up-to-date information on expense policy trends so you can make accurate, timely decisions and update your policy as needed.

Conclusion

Setting clear expectations and guidelines around expenses is critical for fostering a healthy company culture. Expense policies created around what’s allowed to be expensed reflect the company culture. Building an atmosphere of trust, transparency, and efficiency around expense reports helps contribute to a similar atmosphere throughout your organization. To learn more, check out our webinar.

Josephine McCann
Product Marketing Manager

Josephine is a Product Marketing Manager at AppZen, where she loves crafting content and telling interesting stories.

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