3b: Remove Travel and Expense Approvals

Question 1

What is Netflix’s 5 word travel and expense policy?

Answer 1

Act in Netflix’s best interest

Question 2

What is needed for the 5 words T&E policy to work?

Answer 2

Set context up front and keep and eye on spending out back

Question 3

What’s the nub of F&R?

Answer 3

If your people choose to abuse the freedom you give them, you need to fire them and fire them loudly, so others understand the ramifications. Without this, freedom doesn’t work.

Question 4

What must you remember about giving F&R?

Answer 4

Some people will cheat, but the gains outweigh the losses.

Question 5

At what cost does freedom & responsibility come? What do you gain from it?

Answer 5

Even if your employees spend a little more when you give them freedom, the cost is less than having a workplace where they can’t fly. If you limit their choices by making them check boxes and ask for permission, you won’t just frustrate your people, you’ll lose out on the speed and flexibility that comes from a low-rule environment.

Question 6

What are the takeaways from chapter 3b (travel and expense)?

Answer 6

• When removing travel and expense policies, encourage managers to set context about how to spend money up front and to check employee receipts at the back end. If people overspend, set more context.
• With no expense controls, you’ll need your finance department to audit a portion of receipts annually.
• When you find people abusing the system, fire them and speak about the abuse openly–even when they are star performers in other ways. This is necessary so that others understand the ramifications of behaving irresponsibly.
• Some expenses may increase with freedom. But the costs from overspending are not nearly as high as the gains that freedom provides.
• With expense freedom, employees will be able to make quick decisions to spend money in ways that help the business.
• Without the time and administrative costs associated with purchase orders and procurement processes, you will waste fewer resources.
• Many employees will respond to their new freedom by spending less than they would in a system with rules. When you tell people you trust them, they will show you how trustworthy they are.