PER DIEM VS. ACTUAL REIMBURSEMENT FOR TRAVELLING EMPLOYEES
Do you give your employees a per diem for their trips — a max daily amount they can spend on things like lodging and entertainment — or do you offer them actual reimbursement for expenses incurred? If you run a per-diem organization, consider the following story.
For years after college, I worked part-time for a catering company. When I wasn’t tending bar, I was slicing a 20 pound chunk of smoked brisket at the end of a very attractive Texas barbeque buffet. Standing down there at the end of the serving line, I learned something: If you open the food line as a buffet and let people take whatever they want, you will actually serve less food overall than you would if you stationed a person next to each dish and told them to give every customer a scoop of this or a spoonful of that. Very few people will be unreasonable about this kind of situation. Sure, somebody will eventually ask for a to-go box and stuff it with the most expensive thing they can find, but that’s why you would never invite them back to the next event.
As a frequent traveler who’s worked under both types of policies at different companies, I ask myself all the time, “Why do companies spend so much time and effort setting per-diem rates that their travelers must abide by for basic things such as food and lodging while on business trips?” Travelers tend to police themselves.
For example, long before I will call a manager for a policy clarification, I’ll call a fellow traveler who I respect and ask, “Hey Lori, I’m in San Francisco for a week and the breakfast buffet costs a ridiculous $35. Did you expense that while you were here or what?” When Lori told me, “There’s a coffee shop around the corner that has good hot breakfast sandwiches for $8 and their croissants are fresher anyway,” that’s all I needed to hear. Employees should be encouraged to do this at every opportunity.
The fact is, if a department head tells me that I have a limit of $200 per day to spend on meals, lodging, and incidentals, whether I’m in Midtown Manhattan or in Waco, Texas, I’ll go out of my way to turn in expenses of $199.99. Heck, I’m liable to eat an $8 dinner at McDonald’s, sleep in the street, and buy my wife an “incidental” pair of shoes for $191.99! On the other hand, if you tell me to eat, work, and live like I normally do and to turn in the receipts, I’ll stay at a reasonable hotel, I’ll eat simply, buy my own newspaper, coffee, and Coke, and turn in less than $50 per day for food and incidentals. It boils down to a simple matter of convenience and of being treated with respect by my management team.
As for the few bad apples that ruin this policy by expensing lavish and ridiculous meals, I’d like to hope that at the right moment, a manager will step in and do whatever is necessary to curtail their extravagance. Limiting that employee to $30 per day for meals and incidentals would work nicely. I worked with one of these “bad apples,” and I heard my boss ask him once, “Chad, how is it that all of your peers can work, sleep, eat, and fly to Chicago for a week for under $2,000, and you can’t seem to do it for less than $2,500?” He learned very quickly that it wasn’t cool to order himself expensive bottles of wine and table-side desserts.