American corporations spend at least $30 bil-lion each year on meetings. If you don't know exactly what you're spending on meetings, it's probably too much.
Using a central department to track, if not to plan, every meeting in your company means you know what you spend--and where you spend it. It means you can show, say, Hyatt exactly how much of their business is a direct result of your meetings. It means you can narrow your field of suppliers so that those totals grow and become even more powerful bargaining chips. And it means that every meeting your company holds will be appro- priately scheduled, sited, and paid for, because your meeting management policy will be followed by everyone. Your level of expectation for your company's meetings will not only be raised, but consistently met.
It sounds logical, but only a handful of companies have taken on the considerable challenge of, first, surveying themselves about their meetings and, second, using that information to put meeting purchasing systems in place.
That handful is spreading the word, however. Many of them have worked on consolidation projects with meeting and travel management firm McGettigan Corporate Planning Services of Philadelphia, and now participate in packed-house seminars where they share their experiences with eager listeners. Beth Truett, McGettigan's vice president, strategic, says consolidating meetings is the logical next step after the consolidation of corporate travel, which started more than ten years ago but only peaked in 1990. Also driving the trend, Truett believes, is the continuing need of companies to explore all possible avenues of cost-cutting, along with the general movement in business toward collaboration and breaking down territorial barriers within companies.
At American Express Group Travel Management Services in Atlanta, Lars Holmquist also sees more companies moving toward consolidating their meeting spending. "Companies are talking about it a lot," he says. "The planets are getting aligned for this." Holmquist points out that the American Express Corporate Travel Trends & Forecasts survey released last December offered a "pretty aggressive" prediction that group travel spending would rise ten percent this year--a prediction that's partly based on the meeting consolidation trend. With companies becoming more strict in identifying meeting spending, Holmquist explains, more travel will be identified as "group" travel rather than absorbed into, say, the sales promotion budget.
We talked to four companies--Wyeth-Ayerst Pharmaceuticals, AT&T, Nationwide Insurance, and Bay Networks--that are taking significant steps to track meetings and meeting spending, asking how and why they're doing it, and what the payoff has been so far.
WYETH-AYERST Joe Mahady, president, Wyeth-Ayerst Pharmaceuticals, talks fast and gets to the point. "The bottom line is: We had very high-end marketing and sales people spending an inordinate amount of time on the meeting planning function. And they clearly didn't have the expertise to get the best meetings for the money," he says. "When we created a meeting planning group, we gave these executives back their time to do more important things, we improved our meetings, and we saved money."
Mahady makes it sound simple. The centralized meeting planning and travel department was created about five years ago, when Wyeth-Ayerst Pharmaceuticals was starting to expand, and the meeting planning function was becoming increasingly complex.
The consolidation came not a moment too soon. Since the department was created, the company, based outside Philadelphia, has doubled in size, to 3,000 salespeople, and more than doubled in revenue, with $4 billion in sales in 1996. "So it's no longer a few people planning a meeting. It's broad, interdisciplinary teams planning bigger, more complicated, and more expensive events," Mahady notes. "And senior management involvement has changed from planning the meeting to making sure that what we have in mind happens at the meeting--that we get the most business benefit out of the meeting that we can. Previously, we were bogged down in the details."
A Question of Scope One of Mahady's initial concerns in creating a centralized meeting department was that the people who staffed it would not have enough to do. "What we found out was that there are many, many more meetings being held than those that show up on the senior management radar screen," he notes. "There were hundreds of more moderate meetings that were now pulled into the meeting planning department. So we had no problem keeping them busy. In fact, we were soon challenging them with the workload."
The six-person staff plans all the meetings it can and signs off on those it does not have the time to handle. "We'll give [the meeting host] the option to plan it themselves or outsource. But we also try to control who they outsource it to," explains the department's director, Peggy Notarianni. "Upper management has been very good in supporting us. Every meeting must come through here. We're now developing a form that will require even district managers calling meetings in their districts to send us pertinent information about those meetings so that we can leverage all our spending."
The company has already seen what consolidating its meeting information is worth. "We figure we're saving 15 percent on every meeting we do in house," Notarianni says.
Mahady agrees. "We very quickly saw payback," he says. "Not just a financial payback, but a more consistent approach to meetings in terms of philosophy, goals, and location."
AT&T If you get a memo from someone in operations suggesting that you could save $20 million by consolidating your meeting planning, pay attention.
When AT&T's vice president of administrative and executive services saw such a projection from Jim Cutropia back in the fall of 1994, a time when AT&T was going through a major cost-cutting exercise, he gave him a call. Congratulations, Cutropia was told, you're on the cost-cutting team.
"At that time, very few companies had group travel and meeting management policies," says Cutropia, then in administrative services. "We had a procedure that said any purchase over a certain amount had to go through the procurement department. But meeting costs are made up of many components, a large number of which are individual employee expenses. The total cost gets spread out among many budgets and is therefore hard to manage--and hard to leverage."
Cutropia's insight got him charged with going after those savings as the company's new manager, group travel and conference services. After more than two years of work--with the breakup of AT&T coming right in the middle of the process--AT&T issued its newApril 1. All outside meetings with 20 or more travelers must be registered with Cutropia's department.
The actual planning can be done by one of the conference managers in the department, too, but it doesn't have to be.Whoever does handle the planning, however, must use an AT&T-approved contracting process and book all travel through American Express, AT&T's group travel agency.
The savings goal for this new policy in 1997? $8 million.
Creating a Policy Cutropia took charge of a group-travel Center of Excellence (COE) in 1994. AT&T's COE concept has experts in a particular subject matter pull together a team of employees from throughout the company who are involved in the same function. The COE's ongoing objective is to define and implement best practices.
Cutropia's 30-member COE team included experienced meeting planners from throughout the company's business units plus travel experts from the supplier management department.
When they surveyed the company--at that time more than 300,000 employees--about its meetings, they found anastonishing 1,500 people dealing directly with hotels and other meeting vendors. And 250 of them were experienced meeting planners, including a large number of certified meeting professionals.
Cutropia's job was to communicate with all of those people who touched meetings--and to get them communicating with each other. He started with the meetings planned out of AT&T's Basking Ridge, NJ headquarters, and focused first on air travel.
"People were using AT&T-negotiated discounts and those were good prices," he says. "But they were not as good as the zone fares they could have been getting."
So in 1995, Cutropia negotiated with American Express to handle AT&T's group travel. "In the first year, we saved $2.5 million off the AT&T transient rates," he says. And because that was just for the 650 events that were registered--out of a companywide total of more like 2,000--more savings are clearly on the way.
Likewise with hotel rates, meetinghad been signed using an AT&T corporate rate--good, but not the best bang for the buck. Meeting planners from the central organization did some hard based on their individual annual room-night volumes, and that effort by itself has already yielded results."Using the corporate rate as a bench-mark, we're seeing ten to 20 percent savings," says Cutropia. So far, that adds up to $4 million. But with a consolidation project under way that aims to leverage the entire organization's room-night spending, he notes, "we've only scratched the surface."
Savings have also come from education. Cutropia's COE publishes a quarterly newsletter that goes to COE members and meeting planners throughout the company. He also sent a hand-signed letter to every vice president in the company explaining how meeting costs differ depending on lead time, seasonality, and arrival/departure patterns. "Just something that simple gets results," he points out. "Two years ago, our average lead time was 44 days. Now, it's 59 days. The real dollars come back through best practices, and that requires education."
Now comes the tough part: spreading the word to the people planning meetings in AT&T's business units nationwide. The September 1995 breakup that cut the total number of employees to about 140,000 also chopped Cutropia's COE team in half. "It's a mammoth undertaking, trying to corral all the interested--or disinterested--parties," Cutropia says. "The toughest part is getting to all the people planning meetings who are buried in the business out there.
"I have to explain that their jobs are not in jeopardy--I'm not out to take business away from professional meeting planners. I want to them to use AT&T contracts, leverage their meeting spending, meet other planners at AT&T, and network with them."
Helping Cutropia is the fact that AT&T has just made registering meetings with his department a requirement. And supplying the software to facilitate that registration is Philadelphia-based McGettigan Corporate Planning Services. The software, CORE Discovery, is a key component of CORE(tm), or Consolidated Operating and Reporting Environment, a system McGettigan has created to help companies consolidate their meeting and travel management. (See sidebar, page 53.)
The information from all registered meetings resides on a central server (AT&T meeting managers can input their programs at headquarters or via e-mail) in a database that allows reports to be created showing, for example, how many room nights were booked with a particular hotel chain.
Looking Ahead Cutropia is using technology to keep meeting managers in touch with each other as well. "We are adding a group travel segment onto the Travel Web site on the AT&T Intranet. Planners asked to be able to see who is going where and thereby gain leverage if they're going into the same city as someone else," Cutropia explains.
"I can say, right now, that in some of our buildings with a few thousand people in them, there are two people each planning a meeting at the same hotel, and they don't even know each other. And they're getting different rates."
Cutropia's next innovation is the pre-negotiate small-meetings package. After finding that 60 percent of the meetings AT&T holds are for fewer than 50 people, Cutropia sent RFPs to hotel vendors to come up with a small-meetings deal. The per-person price he negotiates would include meeting space, breakfasts, breaks, delilunches, and basic audiovisual equipment. It would not include sleeping rooms. Cutropia is going through "piles of folders" from hotels submitting bids on the package.
"My personal feeling is when you work in a company, you either make money or you save it," he says. "Or you don't belong there."
NATIONWIDE INSURANCE With about a dozen subsidiaries, several of which are made up of four or five operating divisions, the Nationwide Insurance Enterprise encompasses hundreds of business units. And every business unit has its own slate of meetings.
"We identified hundreds of off-site meetings involving 30 or more room nights," says Steve Johnston, vice president, advertising. "Once we identified the scope of our meeting spending, we knew we ought to get our arms around it, if for no other reason than to negotiate better hotel room rates."
Doing just that has so far saved Nationwide about $2 million a year. "We've seen significant cost reduction and we've become much more efficient," Johnston says.
Another important result of centralizing meeting planning, he points out, was a reduction of the company's liability. "We had many, many situations where administrative assistants and secretaries were signing contracts and obligating us for hundreds of thousands of dollars without any management review. When we considered our potential liability if someone were to cancel a meeting, that really got our attention."
You Own It, We Sign It After a survey of the Columbus, OH- based insurer's operating units revealed more than 150 people who spent at least 40 percent of their time planning meetings, a task force was created to get a handle on all of that activity--and all of that spending.
Shirley Mertz, CMP, a member of the task force and now the meeting services manager, says that while the money was the big issue--the company spent about $12 million on meetings in 1993--it was not the only one. "There was no consistency of meetings. Everyone worked with different budgets, different invitees, different locations. Some meetings were wonderful and some were terrible, because the people doing the planning were not necessarily meeting planners," she explains. "In some cases, they might book a meeting and then get promoted [before seeing the meeting through]."
The task force's solution was to mandate that anyone planning a meeting with 30 or more room nights notify the meeting services department, which would negotiate the room rates and sign the hotel. Whether the department actually planned the meeting would be determined on a case by case basis. For meetings in Nationwide's headquarters city of Columbus, for example, rates have been pre- negotiated at local hotels. Anyone planning meetings there, explains Kelly Stratton, consulting manager, meeting services, can just call the hotel directly.
Before the mandate, Mertz's department handled only meetings called for by the home office. Meanwhile, state and regional offices were all handling their own meetings--big meetings. "I used to call and ask what I could do for them, but we were always seen as a threat," Mertz says. "Now, it's a requirement that they call us. It has not always been easy. We have to continue saying, 'You're the meeting owner, you're our client.'"
From the standpoint of content, Stratton says, "We still want them to own it. They still develop their own invitee list, they still create their own objectives. But it's a lot easier for [the meeting services department] to go talk to a hotel chain's national sales manager and say, 'Let's do business on an annual basis, rather than meeting by meeting.' That way, we leverage our volume on a national level."
It's also been important for the meeting services department to educate suppliers about Nationwide's scope, so that they know an event held by Wausau Insurance, for example, "counts" toward corporate agreements negotiated by Nationwide.
Even when the meeting services department is not directly involved in planning an outside meeting, its staff's skill and experience are still being shared. The department has created a meeting planning guidebook accessible to any Nationwide employee via LotusNotes.
"It has been a huge PR challenge to sell ourselves and what we can do," say Mertz and Stratton."But with the support of senior management, it's working."
BAY NETWORKS Carolyn Bajarin Pund, CMP has been with Santa Clara, CA-based Bay Networks for almost a year, engaged in what she calls "an archaeological dig" for well-buried meeting information. Her tenacity is paying off for the company. "After the first three months, I'd saved $170,000," she says. By the nine-month mark, she'd saved nearly half a million.
And these savings are being counted before Bay Networks, a worldwide leader in the internetworking market that was created out of the merger of Boston-based WellFleet and Santa Clara-based Synoptics, has even determined what its meeting consolidation plan will look like. "We haven't decided exactly how we're going to do it," Pund says. "It's political and it's emotional, having been so decentralized. When I first came on, I requested information from everyone on the meetings they were planning. I got about a three percent response.
"So instead, I got the information from accounts payable. I also worked with people on two key meetings, and let them see that I wasn't there to take their jobs or their air miles or their perks. I'm a resource and an ally for the success of their events."
The question is, to what extent will the company's far-flung planners be required to tap that resource? For now, Pund is approaching people planning meetings and offering to create budgets for them--a shocking exercise for some, she's discovered. For example, she asked one administrator planning a meeting to provide her with the estimated budget for that meeting. The administrator's figure: $60,000. But when Pund did the math, she came up with a total meeting expense of $238,000.
"Each department that hosts a meeting only pays for what comes out of that department," Pund explains. "So the $60,000 was just for food and beverage and audiovisual rental. The other $180,000 was hidden in travel and operational expenses."
The administrator was unconvinced. "She said, 'But that's not my expense,'" Pund reports. "And I said, 'Yes, but it's Bay Networks's expense.' In the past two months, seven meetings didn't proceed beyond the budgeting process because, I think, [the meeting hosts] saw what the costs were up front."
Pund is also using her meeting planning expertise to educate some of the other planners in the company. "There are administrators in Boston, for example, who work with particular hotels all the time. I'm not trying to move them [to other properties]," she explains. "On the other hand, someone planned a customer event at a hotel at the Denver airport at $159 a night. It was to their advantage that I understood regional seasonal values: That meeting went to the Ritz-Carlton Aspen for $60 less a night because it was the shoulder season. We saved $8,000 and they stayed at the Ritz."
An expert in meeting purchasing sees cost savings that others miss--but those opportunities can only be exploited when all meetings come under that expert's critical gaze. Add to that the leverage that comes with tracking all your meeting spending, and the case for a central meeting department is compelling.
"Most everyone in the company knows what my position is now," Pund says. "And people pretty much call me first. I walk them through the process. What is the objective? The agenda? Who are the attendees? Then I put together a quick-and dirty business plan for the meeting. From that, I create a budget and send it back to the executive vice president for approval with the estimated total cost and cost per-person." Then Pund is the one who signs the meeting contracts.
Do the Right Thing There are a number of related projects now on her docket. One involves limiting the number of meeting service vendors the company regularly works with and creating an incentive plan for in-house meeting organizers to use those preferred vendors. "Otherwise why should they get a new vendor up to speed just to save $2,000? I want to give them an incentive to make that choice," she says.
Because Pund has discovered that small meetings make up "the greatest percentage" of Bay Networks's meetings, she, like AT&T's Cutropia, will soon ben asking some hotel vendors to submit proposals for a small meetings package.
Also, like Cutropia, Pund is using the company's Intranet to make meeting planners and administrators aware of what their counterparts are planning and where. "A master Web calendar is in development that will post all company and industry-related events.Say someone is planning a meeting on the East Coast and someone else is plannin a meeting on the West Coast, and the same people are invited to both meetings. Why not have back-to-back meetings on the same coast and leverage airfare costs?"
Why not, indeed. But unless Pund knows about all the company's meetings-regardless of who actually plans them--this and other ways to increase efficiency and cut costs slip away.