Employee benefits: no expenses spared

Is being permitted to claim expenses a perk of the job? Many employees and
their managers seem to think so.

Who doesn’t recognise a corporate credit card as a badge of office given only
to those who achieve a certain status within a company along with access to the
company pension plan and a company car? Being given a platinum corporate card is
akin to receiving the keys to the executive floor bathroom.

It would be an unusual employee who doesn’t experience a giddy rush of pride
the first time he, or she is given permission to take a taxi home and charge it
to the company. It’s a sure sign that their work is valued, that their efforts
have been appreciated and that they have been rewarded. In short: a benefit.

There are many stories circulating out there of partners or company
executives that have an expense allowance making more junior employees pay for
the taxi journey to a meeting and claim it back, for example, rather than eat
into their own personal allowance.

The distinction between what is company money and what is ‘my money’ can
become confused. Employees start to see expenses as a right and view them as an
adjunct to their salaries. This blurring of the boundaries is most visible at
the top of an organisation and can have embarrassing consequences, as seen with
members of the House of Commons and European Parliament. Employee expenses are
frequently perceived and treated as a benefit, even if that is not the reality.

Employees not only see expenses as part of their own personal benefits, but
managers and more senior executives with sign-off responsibility can wield their
power to approve or reject their employees’ expense claims as a tool to reward
staff behaviour. Managers may decide to take the team out for a lunch on
expenses as a reward for the completion of a project or winning a contract, for
example.

Employees believe that their managers use employee expenses to reward staff
for a-job-well-done or working long hours, punish staff, favour particular
employees and shape employee behaviour, according to our survey undertaken by
YouGov.

If managers and senior executives treat employee expenses as a personal
money-box and use expenses to reward staff in a way not sanctioned by the HR
department, then is it any wonder that employees consider employee expenses to
be part of the benefits package?

Not surprisingly, it showed that employees are more likely to exaggerate
their expense claims if they feel they are not being treated fairly by their
employer:

• 76% agreed it is acceptable to exaggerate expense claims when the employer
  doesn’t reimburse all the costs incurred by the employee;
• 53% believe that it is acceptable for employees to exaggerate their expenses
  if they are not paid a fair salary;
• 41% believe it is acceptable to exaggerate expense claims if an employer is
  slow at reimbursing expenses; and
• 34% believe it is acceptable for an employee to exaggerate expense claims if
  an employee feels he or she shouldn’t have had to pay out of their own pocket in
  the first place.

Some employees may be tempted to abuse the employee expense system to
compensate themselves if they think the company isn’t paying them their dues.

In these ways, employee expenses can be used as an informal system of
benefits and rewards. Even if employees from the top to the bottom of the
business consider expenses to be a flexible benefit, the accounts department
would beg to differ. Where guidelines are confused, staff will make their own
rules.

To break the back of this culture, companies should set out a clear employee
expenses policy and enforce it.

Organisations could spend hundreds of thousands of pounds with a Big Four
firm to design a fair and rigorous expenses policy, but if the manager with
sign-off responsibility approves the expense claim regardless of the rules, t
hen the money is wasted.

In order to change behaviour the expense rules and the reasons for them must
be explained to all expense claiming staff from the most junior to the most
senior. A positive change in behaviour should be rewarded and persistent
offenders reprimanded.

Most important of all, senior management must be seen to lead by example. In
the survey 16% of respondents said that they think it is acceptable for an
employee to exaggerate his or her expenses if they are following a bad example
set by senior management of wining and dining on the company.

David Vine is managing director of
GlobalExpense