Why Expense Policies Fail: A Deep Dive Into Workplace Psychology

"Most company policies are written for a hypothetical, 'best-case' employee: rational, attentive, well-rested, and operating in a low-pressure environment. They assume employees will read the rules carefully, remember them, and apply them consistently at the point of purchase. As appealing as this assumption may be, it bears little resemblance to how real workplaces operate."

"Expense decisions are frequently made at the end of long days, during travel, or between meetings, when time and attention are limited. By the time an expense is submitted, the decision has already been made - often quickly, with incomplete information and little cognitive bandwidth."

Expense policies aim to control costs, ensure fairness, and reduce financial risk, yet many organizations fail to achieve these goals despite having documented policies reviewed annually. Spend becomes unpredictable and enforcement inconsistent, with finance teams reacting to problems rather than preventing them. Rather than employee dishonesty, policy failures typically result from flawed assumptions about how people think and behave. Most policies are designed for hypothetical ideal employees who are rational, attentive, and well-rested. In reality, expense decisions occur during busy periods, travel, or between meetings when time and cognitive resources are limited. Decisions are made quickly with incomplete information, contradicting the policy assumption that employees will carefully read rules, remember them, and apply them consistently.

Read at Business Matters