Why you may need fresh look at ‘per diem’ policy

The issue of per diem is often a contentious one. It is misunderstood and also abused. Even though this daily allowance an organisation gives an individual to cover expenses when on official trip is intended to motivate employees, sometimes it breeds discontent. PHOTO/FILE 

In Summary

• Even though this daily allowance an organisation gives an individual to cover expenses when on official trip is intended to motivate employees, sometimes it breeds discontent.
• Trouble sets in when an organisation offers unreasonably low per diem, or have policies that lead to inexplicable differences in the amounts offered to staff headed the same destination.
• Indeed, some organisations have a standard framework of how much they pay across the different grades. Often, such organisations would restrict where their employees spend the night while on a formal trip.

By PAULINE KAIRU
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Joe, the CEO of a state corporation, was attending a strategic planning workshop at a Five Star hotel in Mombasa, facilitated by consultants from a firm he held in high esteem.

On the second day as he stood by the entrance of the conference hall to make a call before the start of the morning session, he spotted the lead consultant alighting from a rickety motor cycle taxi, commonly known as boda boda.

Taken by surprise, he scurried back into the hall. He didn’t want the consultant to notice the shock on his face. To him, it was a travesty of this consultant’s stature and what he represented.

That the senior consultant from such a ‘big’ organisation should arrive at such a high level meeting on a boda boda was something he just could not wrap his brains around.

Joe was to further learn from one of his junior employees that the consultant was actually putting up in the modest hotel that they (Joe’s junior staff) stayed in.

Instantaneously, Joe started getting a different picture of the consultancy firm he only a few minutes back held highly. The reputation of the consultant’s employer was apparently at stake.

Guess what the culprit was: per diem. Yes, that daily allowance that the organisation offers staff on a working trip carries with it some serious weight. That’s why knowing organisations spend a good amount of time working out the figures.

The issue of per diem is often a contentious one. It is misunderstood and also abused.

Even though this daily allowance an organisation gives an individual to cover expenses when on official trip is intended to motivate employees, sometimes it breeds discontent.

And if poorly worked out, it can dent the image of an organisation image.

Patricia Nyokabi, an organisational psychologist, explains that the whole issue about per diem boils down to the age old question of making the employees feel that the organisation takes their interest at heart.

OBSESSION WITH BOTTOM LINES

“Make the employee feel he is taken care of and he will reciprocate by taking care of the company’s interests,” she says.

Trouble sets in when an organisation offers unreasonably low per diem, or have policies that lead to inexplicable differences in the amounts offered to staff headed the same destination.

When designing per diem, argues Nyokabi, responsible managers must focus on maintaining a good company image as much as they are eager not to overshoot the budgets.

Some obsessions with bottom lines, says Nyokabi, might end up costing the company huge in the long run. For instance, she suggests, “Joe’s company may decide that the consulting firm it is working with is not of the calibre it wants to do business with.”

Ideally, per diem should be designed to sufficiently comfort staff away from home on official duty. By extension, it also demonstrates how well an organisation takes care of its employees.

In many cases, employees from the same organisation attending the same meeting are allocated different per diem depending on their job grade and responsibility.

A lot of times, the differences court controversy, as the managing consultant of Inspiration Management Consultants Elisha Odhiambo, agrees.

He explains though that this arises from the perceived differences in the needs of the staff in different job grades.

“The level of mannerisms and grooming is different between the different cadres of employees,” he reckons. “It is the natural law of things.”

Last year, Boston University School of Public Health released the findings of a study investigating the perceptions of per diem in the health sector.

It revealed that there were concerns about the ways in which per diem policies were affecting work practices, among them being the distrust that lower-level workers felt toward their superiors. Allowances were perceived to provide unfair financial advantages to already better-off and well-connected staff.

Among other issues raised, the study recommended that organisations should control discretion in the application of per diem and increase transparency in policy implementation.

Indeed, some organisations have a standard framework of how much they pay across the different grades. Often, such organisations would restrict where their employees spend the night while on a formal trip.

This is where image comes in. It is to avoid a situation in which employees go in search of cheaper than par accommodation to save money. And where expensive equipment is concerned, the restriction in selection of accommodation facilities helps to further ensure that the security of company property, and sometimes even information, is not compromised.