The drive toward smarter commuting solutions

Speaker A: Foreign. Today's episode of Capital H. We're going to explore a topic that many of us are familiar with, can take up a lot of time and energy and maybe sometimes isn't necessarily where we want to spend that time, energy, but perhaps doesn't get the attention that it really deserves, and that is commuting. We're going to break down how organizations can be a bit more, uh, thoughtful about it, more intentional about it, maybe actually use some real data around commuting to, of course, reduce inefficiencies, but also perhaps to turn the time and energy we spend into commuting into more of an intentional investment with perhaps an expected return. To talk with us today about this topic of commuting, I'm excited to have with me Andy Keaton from Commutify. They're a consulting and technology solution provider in the human capital space. Andy, introduce yourself and then tell us a bit about Commutify.

Speaker B: Yeah, thanks, David, for having me. Excited to be here. My name is Andy Keaton. I'm the VP of Global Strategy at, uh, Commutify. I think it's important to kind of talk a little bit about this kind of niche space of commuting and what that means. I have, uh, what's called a TDM cp. It's a Transportation Demand Management Certified Professional. It's sort of the, like, top certification that you can get in this space. I'm on the board of the association for Commuter Transportation. This is something I live and breathe. There's someone doing something and someone doing everything. And, uh, I'm doing commuting and just thinking about all the time. Commutify is. We've been around for about 10 years. We started trying to figure out how do we solve this challenge of commuting. We started with the technology side and slowly came to realize that the expertise of our team, paired with the technology and increasingly the AI solutions is what is helping companies save money. And we're going to get into that on the commuting side. So I'm, um, really excited about this conversation. Thanks for having me.

Speaker A: Sure. On that note, I was introduced to a new term for me which is Commute Capital Management. So that feels to me like we are applying some rigor to this as actually, you know, befits that you got this certification, maybe define that category for us. Yeah.

Speaker B: So Commute Capital Management, it's a term that we coined a couple of years ago to really bring some rigor to this space. What Commute Capital Management does is it reclassifies commuting and commute Spend for organizations as uh, a strategic capital domain within that organization and then ultimately sits that that purview under the office of the CFO and gives it just some real heft said to have the conversation around. It's not too dissimilar to human capital management and how kind of going from thinking about HR activities as these disparate things that happen at each different site and just kind of happen on their own or organically or with some kind of focus on a site by site basis. Once you centralize that human capital, you can start to be a lot smarter with that investment and drive roi. And that's what we're doing with commute capital management. One last thing I think is just important to provide the context on is when we say commute, what does that mean? Because I think people kind of have in their head, well my commute, I drive hopefully less than 45 minutes. That's actually when we start to see that turnover risk. When you hit that 45 minute each way trip, you're uh, more likely to leave your job. But when we're talking about commuting, what we're talking about is all the costs and the expenses that an organization might incur from everything related to getting that employee to and from the office. So that includes things like commute benefits, which we might talk about, but it includes also things like infrastructure, parking, investments, recruitment and retention. All of this we'll kind of get into. But it becomes a pretty big number once you put all that together.

Speaker A: This is maybe an expansion to that. Is there a notion of the cost to the worker embedded in that somewhere?

Speaker B: Yeah, so actually huge number in the United States alone, over a trillion dollars is spent each year on commuting. That's kind of combined between the employees, the people paying, you know, their own gas prices for instance, and, and the actual employer. So we take all of that into account because especially when we're talking about shift workers, frontline workers, a lot of these folks, the biggest expense on their monthly kind of expenses is their car expense, is their commuting expense, sometimes even getting above the cost of housing for those people. So this is something we take into account because that also leads to the recruitment, retention, general employee satisfaction kind of numbers as well. So all of this comes into it and what we see just to kind of put $1 trillion is big. It's kind of hard to think about when you think about a 10,000 person company. On average we're looking at about $25 million being spent on commuting or the kind of the cost being incurred on due to commuting for that organization. So it's two, uh, thousand five hundred dollars per employee per year being spent on the commute.

Speaker A: Well, okay, so that's approaching it from a cost point of view. You said a moment ago, sort of shifting the frame. So what do we get when we reframe this as more of a capital domain that finance should pay attention to?

Speaker B: It's really thinking about this as an investment, not just kind of an expense that happens. So traditionally you see the uh, kind of commute expense that's coming through the employer or the employee just kind of happens reactionarily or happens in a reactionary way. When we start to think about it as a capital domain, we can actually start investing in it. I'm going to give an example going back to kind of the shift work. In the United states alone, about 25 to 30% of low income workers don't have access to a car. So what does that mean? That means if you're doing any recruiting, trying to bring in a talent pool, it behooves you to think about the commute as a part of that. And so what we do when we think about this as a capital domain is we think, okay, great, is there an investment I can make as an organization? Maybe I run a private shuttle to an area where there's a lot of potential workers living there that don't have access to a car. And now this is a kind of capital investment. But actually the ROI is quite large because I can recruit more talent, I can get more shifts running through without kind of the turnover that you typically see.

Speaker A: Uh, so all of the things that you've talked about, being involved, this feels to me like as in so many challenges that organizations face, sort of maybe half the problem is just actually knowing what's going on, having actual data, having a clear picture. But it doesn't sound like most organizations have an integrated view on the data. Is that true?

Speaker B: Yeah, yeah, very true. Uh, we like to say less than 1% of data is currently connected into the systems where senior leaders are living. So think the workdays, the uh, saps, the salesforce, et cetera. A very small percentage of the actual pie of commuting is visible there.

Speaker A: Maybe just the benefits you're paying for.

Speaker B: That's exactly right. It's just the commute benefit. And so when you talk to a company and say, hey, what are you spending on commuting? They go into their, their programs and they say, well, not very much because it's just this commute benefit. And then you say, well, let's peel that back.

Speaker A: How much more are you paying for talent? Because you're having to pay extra to get people to travel to you or whatever.

Speaker B: Exactly. Or what's the opportunity cost of. You know, think about health care in the uk. We've worked with NHS sites or hospital sites there that have been considering, do we need to build a new parking garage to have all of our staff be able to park and get to the hospital? Well, if we build that parking garage, not only is that a capital cost, but it's also an opportunity cost because that means we can't build revenue generating spaces like actual hospital rooms. So not only are we losing the money on the cost of that parking, but also the cost of what we could do in that space instead. And so it really is like once you start peeling back the onion a bit, you start to see these costs come in, in a lot of places, but it's just not being centralized at this point.

Speaker A: But I suppose at this point there is at least a rising want to be intentional. I guess that's probably maybe a good side effect of the last few years. The pandemic and all the things that have happened since hybrid and virtual and so forth, is regardless of where organizations have taken a path there. And there's everywhere on the spectrum still these days. I would still imagine that it's raised the question we're thinking more about why we work, where we work. So how is this sort of shifting expectations of the workforce, of leadership, of just new ways of working in person and otherwise collaboration patterns? How is that helping to expose or ask the right questions with regards to how we treat commuting?

Speaker B: It's a really good question. I think it comes down to let's kind of look at the pre pandemic and post pandemic era, which in the commuting spaces, I mean like many spaces is kind of this like really clear line in the sand where there's really two distinct viewpoints and approaches. That happened before and after.

Speaker A: It was all assumed before.

Speaker B: Exactly. Before it was just you go to the office five days a week, you drive in, you park, you have your parking space. It all works. Now maybe you go into the office three days a week, Tuesday through Thursday. What do I do now as a company with my parking assets? Do I need the same amount of parking assets? What do I do on Monday and Friday? Do I just let that sit idle and empty? Maybe I was providing a benefit that was like a monthly pass to a parking garage or to a Public transit system, do I give a monthly pass anymore? Because now they're not using it every day, they're using it two days a week. So it just completely changes kind of that calculus and it makes it something that companies are seeing. Just like you can look out your window and go, well, that's an empty parking lot. That doesn't seem like a good thing. Before it wasn't, you know, it wasn't that way. So it just kind of uh, started to have to raise that question of, well, what does this mean for us?

Speaker A: So to your point about even like parking spaces, that's interesting. Where are organizations likely spending inefficiently, maybe not getting the value out of even the investments that they are making with regards to commuting.

Speaker B: The biggest space is in parking. It's an uh, incredibly large cost for a company. Whether they're building their own parking lot or they're buying space or they're renting or leasing space. It's always a large cost. I'm going to use an example about a 10,000 person company, kind of global tech. We were doing, you know, analysis with them to just say, well, where are you? Let's do a baseline of what this looks like, right? You have 1% of your data connected. Let's go connect the rest and see what's going on. And we kind of expected, oh, there's going to be a huge ROI in their large, like their main headquarters where 70% of their employees work. Well, it turns out actually that one's okay, just based on kind of luck how they were structured. But they had one satellite office that had, I don't know, maybe 400 people at it. And it turned out they were overspending on parking by about one and a half million a year on that one small satellite office. And we noticed, well, this is a really easy first roi. Well, why were they overspending? Because pre pandemic they had a thousand people there in that office. Post pandemic they decided, actually we're going to move people around and we're just going to have 400. But they didn't right size their parking investment. And that's because it was buried in a lease somewhere deep in and actually relatively easy to get out of. And great. All of a sudden now we have just saved money in a place we didn't actually think, well, if this is a small office, there can't certainly be that much to save here. Pretty significant savings just with like a one, uh, kind of action.

Speaker A: I mean rationalizing savings, I suppose makes sense for the organization and I expect for you all and what you do, that's kind of like the easy door opener, I guess. But beyond that sort of cost savings, what are some of the ways that there's just thinking more intentionally about commuting, optimizing the experience? How is that returning value back to some of the workers? How is it helping to influence their behaviors in desirable ways, for example?

Speaker B: Yeah, I mean, it comes back to the recruitment point I made earlier, just thinking about one, how do we get the right talent into the right places? How do we make sure that we can truly recruit from the largest pool? But then the retention piece I think is really important, especially when we're talking about sort of the white collar office workers who are going in on average three days a week into an office. Pre pandemic commuting was actually pretty high, pretty high up on the list of reasons that people would leave a job. But it wasn't certainly like top five, but it was something that would get brought up. Post pandemic, it's number one or two, depending on kind of where you're looking for reasons why people are saying, no, this isn't for me anymore. And that might be because they moved to a new, you know, during the pandemic, they moved out to the country to get a bigger place and now they're, oh, now I'm an hour and a half away. That's just not going to work. So you end up having this. As you increase return to office number of days in the office, you're going to see this kind of flow of employees starting to, well, let me think about something else. Let me go somewhere else. So just thinking about the commute in a smart way allows you to say, okay, well, yes, you have a long commute, but what can we do with that? Maybe we can run like you see these in the San Francisco Bay area, in Seattle, in L. A A lot, these kind of private corporate shuttles that say, well, we're just going to go to this neighborhood, we have a lot of employees. We're going to run this shuttle. It's going to have WI fi. It's going to be great. You can get a little work done. Maybe instead of getting in at 9am you get in at 10, but you're doing work for that hour. So you kind of can still get all the same work done, but you're able to get into the office. So there's a. There's a lot of really interesting things that you can do to just keep workers happy, keep them engaged and make it, so it's not just like, oh, I'm sitting in my car angry at the world during rush hour before I get into the office.

Speaker A: So the kind of ideas, the solutioning there, I assume that's a lot of the expertise that you all bring. You said you start off the top though, that you started sort of more in technology. I'm guessing that's probably more related to the data. So maybe talk about sort of how you help bring a, ah, kind of an integration, a consistency to data pulling from different systems and so on.

Speaker B: Yeah. So from a data perspective or from a technology perspective, it is about the data. It's being that system of record for commuting. There's, there's no system of record for commuting right now. There's no place where data lives. And you know, as we talk about the rise of AI and AI agents and, and, and what that could mean from an uh, enterprise, you know, investment perspective, AI is only as good as the data. So if there's no data, you can't point an AI agent at it and say, hey, tell me how to save money here. They're gonna, I mean it might make something up but it certainly isn't going to have any real context. So that's what the technology is about primarily. And there's elements of the technology as well that's about how do we streamline the distribution of benefits and programs and things like that just to make it easier. But the expertise around how do we structure the programs once the data is in place and how do we actually build an investment around commuting through this commute capital management process to make, you know, commuting an asset to the organization, not just a uh, line item.

Speaker A: Obviously then that's going to raise questions. How do you present the right questions and the right data back to a leader.

Speaker B: Mhm.

Speaker A: To actually surface an opportunity to surface a decision. They could make a different investment they could make or a change in something they're already doing.

Speaker B: It's all about how do you get the data to speak the same language. That's, that's step one. Data is in uh, a thousand different places. Right now you probably have 40 vendors as a, as a 10,000 person global company, which seems crazy. How would you have 40 different commute parking vendors? But you do getting all of that into your system, having it speak the same language and then presenting it back. And increasingly that might be through agentic AI solutions or it's just through reporting, it's through mapping and it's through visualization to Be able to show to that leader, here's what matters matters to you. So when we see the most successful commute programs in the world around enterprise commute and commute capital management, they've got buy in from senior hr, senior finance and usually someone from like uh, a senior real estate or facilities management type person. And the reason that you have all of those people is because they're all needed. You need someone from the benefit side from a policy perspective and you need someone from kind of boots on the ground, actually real estate to get it done and then the finance overseeing that to make the strategic decisions. Every single one of those people needs cares about something different. And that's where it's getting all that data, making it speak the language of that senior leader who, what do they care about? Is it recruitment and retention? Is it compliance, uh, and making sure we are maximizing roi, or is it

Speaker A: just we back to whatever their objective?

Speaker B: Exactly, exactly.

Speaker A: Makes sense. You mentioned earlier though, substantial ROIs. Where does that come from? What are the things that maybe short, medium, long term, they're actually realizing the greatest savings?

Speaker B: Yeah. So short term it's, I mean usually within three to six months you're finding those little snippets like I talked about earlier where okay, here's an expense that just is unnecessary and is very easy to cut out. Great. I don't think anyone has a problem with that. We just cut an expense that no one wanted and it wasn't useful. That's short term, medium term is thinking about how do we change how we think about commuting and invest in new commuting programs so that we can mostly increase the retention of our employees and meet things like legal compliance requirements. There's a growing number of compliance rules both in the United States and globally that you need to meet. And, and frankly a lot of companies just kind of pay the fine right now because it's too hard to figure out what to do. So that's kind of that medium term and then long term is really thinking about the recruitment side because the recruitment side is a rethinking how do we approach talent and talent acquisition and talent management. And that's, that's a big investment. And sometimes it also means if you're a large enough organization, it means partnering with the public sector as well. We have, you know, organizations we work with who say hey, let's work with the public transit agency to run a new bus line from this region to this region because it'll help with job acquisition. And I think generally people are really happy to do that. But it takes quite a bit of data to be able to make that point and go about doing kind of that, uh, public private partnership.

Speaker A: India. This has been a fascinating conversation about a topic that I think we probably don't think about enough, considering how much time we spend doing it. Maybe just to wrap things up, like just a kind of a quick sort of parting thought, word of wisdom, like, best place to get started. If someone's listening to the first time and thinking, yeah, we probably should do something here, what's the first thing they should do?

Speaker B: Yeah, I think it's about setting your baseline, so figure out how you can find that data. So certainly happy to have that conversation about how we can help with that. But it's something you can do as well. Just collecting that data and putting that in one place is really important. And then you can see where you are today, what does that cost per employee on all of your programs. And it's going to surprise you what it ultimately comes out to. And then from there the path starts to illuminate a bit and can really help you kind of get to that point. But, you know, it's all about just build that team and put that data together in one place and it can start to make sense.

Speaker A: That definitely makes sense to me. Well, audiences, organizations do think about how they can better bring their people together and get them to work and manage the experience of doing it. Obviously, commuting is a pretty critical lever for both where we might save some money, but also where we might actually improve the worker experience in in real ways. Commute Capital management as a new domain does sound like it offers a new way to think about that challenge. Thank you very much, Andy for coming today and great to have you in capital. Hi.

Speaker B: Uh, yeah, thanks David. It's been fun conversation, listeners.

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