It became known as the “AIG effect.”
The insurance conglomerate held an incentive program at a resort just days after receiving its first TARP payout. Media outlets got hold of the story, called the legitimate event an executive junket, and hundreds of corporate meetings subsequently paid the price for the misrepresentation.
“That recognition program was sponsored by the life insurance division. It had nothing to do with AIG Financial Products, which was the division built on credit default swaps,” notes Chris Gaia, VP of marketing at Maritz Travel in Fenton, Mo. “The life insurance division was profitable. It was profitable because of the hard work of the independent salespeople who were being rewarded at that meeting.”
But that's not the story AIG told when it found itself on the hot seat.
First, the company offered no comment. Soon after, AIG Chairman and CEO Edward Liddy announced that the company would cancel all upcoming events that were “not strictly justified by legitimate business needs.” Apparently in that category were 160-plus meetings, with an $8 million total price tag, that AIG ended up canceling. The move only re-inforced the idea of spending on corporate meetings as wasteful.
“All organizations need to be able to tell the story of how their meetings, events, and incentives create value, beyond the cost, for their businesses,” Gaia says. Here are his tips for doing that:
“Incentive programs have the highest profile,” he notes. Calculating return on investment based on incremental sales increases is easily done. What's new is the question of what behavior is being rewarded. Forward-thinking companies, Gaia believes, will consider designing programs that reward long-term performance and risk management — not just sales volume or new business.
Do you know what gets attendees energized? Yes, you've surveyed them about past programs. But how about including attendee preferences in the program design phase? If you can discover what they find most motivating, Gaia says, you can maximize your program's impact and justify your planning choices. There are a number of predictive modeling tools available to help you do that.
Broaden yourmeasures to include customer satisfaction, investigating whether there is a difference in satisfaction with customers served by those who earn a reward and those who don't. Companies also should measure employee and customer loyalty and retention. As Gaia notes, “There is clearly value in retaining employees in terms of reduced cost for rehiring and retraining, and a reduction in customer that can happen when a sales rep leaves the company.”