In a new study by the Incentive Research Foundation, 67 percent of respondents said that procurement departments have a negative effect on their ability to plan and implement incentive programs. In addition, 75 percent of participants reported that procurement’s involvement in incentive program planning, supplier selection, and program implementation has increased over the past two years, with 67 percent expecting that involvement to continue to increase through 2010.
When it comes to procurement involvement, respondents reported the following challenges as being the most detrimental to the success of their incentive programs:
- Procurement’s emphasis on cost and savings at the expense of results (39 percent);
- Procurement’s lack of understanding of incentive programs and their objectives (33 percent);
- Procurement’s influence dampens or eliminates creativity and programs become commoditized as a result (16 percent); and
- Procurement creates roadblocks and delays in planning and execution (6 percent).
“Incentive travel planners are driven to create the most effective program and award experience possible for participants while procurement departments are tasked with containing costs,” said Bob Dawson, chairman of the IRF Research Committee. “It’s no surprise conflicts arise.”
The results of the IRF’s new study, The Involvement of Procurement or Purchasing in the Incentive Travel Business, were unveiled during its 15th Annual Incentive Invitational, held May 28 to June 1 at the Atlantis resort, Paradise Island, Bahamas.
The Invitational, IRF’s annual fundraising event, helps to support academic research studies that benefit all segments of the incentive industry. The event drew more than 325 attendees to the Bahamas to participate in golf tournaments, tours, networking receptions, and live and silent auctions for a myriad of travel packages.
For the second year in a row, the event included roundtable discussions, allowing attendees to discuss industry trends and, this year, findings from the new study.
While the majority of attendees at the sessions agreed that working with procurement presents some significant challenges, most believed that involvement was here to stay. “The goal of the incentive program is really about achieving the goals of the company,” said one corporate planner. “We need to educate procurement and remind them that we are all on the same team and that we are both working toward the same corporate goals.”
Another planner agreed: “It can be challenging to try to explain to procurement people that you can’t always use a standard supplier for an incentive program. I have found it takes a lot of education. It has to start with the senior-level finance execs, and they have to push [the concept] down through the ranks.”
Survey participants consisted of incentive travel providers (68 percent), corporate travel buyers (13 percent), and suppliers (13 percent). Results of the study will be available on the IRF’s Web site in the coming weeks. To download this and other IRF research reports, go to www.theirf.org.