Corporate governance scandals, the 2000-2001 recession, new legislation and regulations — all have left incentive industry professionals wondering if the “pure” incentive was dead, or at least in critical condition. In fact, CMI's 2006 Annual Incentive Trends Survey found that 52 percent of respondents always include meetings, and 33 percent include them sometimes. Only 15 percent of respondents exclude meetings from their incentive trips.
However, talk to some incentive pros and they will say that their clients wouldn't have it any other way. What's really going on?
The Right Mix
Ann Godi, CMP, president of Benchmarc360° Inc., a conference and event company in Atlanta, feels that the pure incentive is becoming a thing of the past, replaced by “hybrid” programs.
“These are programs that have some nonincentive component, like face time with executives or an opportunity to be privy to new product development plans,” she says. “They could include a half-day meeting, for example — that's become pretty standard. Corporate executives see they have their high performers in one place, and they want to reach them with their key messages. They see it now as part of the trip.”
There is no question that, in certain industries — specifically financial services and pharmaceutical — stringent laws and regulations are pushing companies to add more in the way of business, education, and training to their meetings. Increased regulatory scrutiny by the NASD (formerly known as the National Association of Security Dealers) has financial services planners wary of how they structure incentive contests, where they hold meetings, and the kind of content that they include.
Mike Foster, client services director, Ford Group, for Maritz Canada Inc., has seen his clients in the automotive industry making some changes. “I would say there is definitely a movement toward business content being added to incentive events … for taxable benefit reasons, and for increasing the return on investment for these incentive program expenditures. With a captive audience of high-performing people, it's a perfect opportunity to cascade corporate messages.”
However, Foster argues that there is a danger in companies going too far. The incentive, he warns, “cannot be viewed as a seminar.”
Vicki Juntti, CMP, event manager for Sagebrush Corp. in Minneapolis, agrees a company should not go overboard. Sagebrush has always built a business element into its annual incentive, “It just makes sense,” Juntti says, “to use the opportunity to poll your highest achievers.” At the same time, she adds, she has to be “respectful” of attendee's time.
Her company's five-day trip includes a short business session, an awards dinner, and one group activity. She schedules the business session either midmorning or late afternoon so that it doesn't interfere with recreation. She also surveys attendees at the end of the trip about the business/pleasure mix — so far, so good.
Michael Leibowitz, national sales manager for Craft-Bilt Manufacturing Co., Souderton, Pa., also listens to his attendees — and has turned his event in the opposite direction. The annual dealer event was originally a three-day, business-only meeting held near the factory in Pennsylvania. It was moved to a resort when attendees “began asking for more free time,” he says. Now, in addition to the general session, business breakouts, and an awards dinner, Leibowitz has added free time, recreational activities, and a themed dinner. “I think the mix we have now is working for us,” he says.
Bill Boyd, president and CEO of Sunbelt Motivation & Travel Inc., Irving, Texas, and former president of the Society of Incentive & Travel Executives, believes that the increased corporate emphasis onmakes it difficult to keep incentives pure. “A company spends all of this money, and they want to further acquaint their people with the goals and objectives of the company,” he says.
In addition, according to Boyd, corporate governance laws such as Sarbanes-Oxley have corporations “trying to improve the look of their incentive programs” in the eyes of inquisitive stockholders. In other words, it is hard to justify an incentive trip without a meeting — at least for public companies.
Industry lawyer Jonathan Howe, of Chicago law firm Howe & Hutton Ltd., has a different take. “Incentives are deductible to the corporation or the sponsor because they are done to advance the trade or business of the organization,” he explains in “Read Between the Lines,” a May 2006 CMI article about taxes and incentives (visit our archives at meetingsnet.com). “In this era, in which you need to have even more business justification for what you are doing, a good, true, pure incentive program is going to have a little bit easier jump over the bar of Sarbanes-Oxley,” he says.
Not Dead Yet
The pure incentive is anything but a thing of the past, says Mark Bondy, Partner/President Viktor Incentives & Meetings, Traverse City, Mich. “The talk around the industry seemed to support that trend a few years ago, but frankly I haven't heard of any major shifts in the last couple of years,” he says. “We haven't seen it happening with our clients, now or in the past. My gut feeling is that it hit a peak and tapered off from there.”
Jim Dittman, president, Dittman Performance Marketing, New Brunswick, N.J., agrees. He believes that the dawning of the information age created such a rapidly changing business environment that businesses, “with a sense of urgency,” began to look for ways they could consistently communicate with their employees. Meetings provided that kind of opportunity. “We've got our people together, let's get the message out,” Dittman says about how the thinking went.
Now, corporate executives are realizing the enormous pressure that their employees — particularly sales personnel — have been under. “The recreational aspect of the incentive is needed now more than ever, as is the need for recognition,” he says.
He also argues that the upcoming struggle in corporate America will be the battle for talent. This, too, supports the importance of the pure incentive, he argues — a trip that “welds together a group of people who understand the importance of the contribution they make to the company.”
Daphne Meyers, CMM, who runs Red Barn Group, a Durbin, N.D. — based meeting planning company, was a program manager for partner events for Microsoft until 2004. She planned two incentive trips annually, and says “asking [qualifiers] to attend a half-day meeting would not have been appreciated — or well-attended.” Yet, the ability of these attendees to meet and interact informally, away from the office, is part of the value of the trip, she says.
Meyers questions whether you can ever entirely eliminate business from even the purist incentive. “Sometimes I think the only way you are going to have a pure incentive is to have one agent alone on an island,” she says. “Even if there is no business element, attendees are going to get together to do business.”
The goal should be to take this desire and channel it in a “planned, yet informal way,” Meyers says. Whether it's having a drink with a key executive or engaging in a funevent, Meyers adds, in the end, there's “a ton of value” to both the attendees and the company.
A Qualifier's Perspective
Jim Dittman, president, Dittman Performance Marketing, New Brunswick, N.J., learned a lot about being an incentive organizer — and about the value of pure incentives — through his experiences as an incentive qualifier when he worked in business equipment sales.
He recalls an experience from years ago. “Our product fell woefully behind the competition. Most people in their right mind would have abandoned a sinking ship.” But the sales force, as a group, decided to stick it out a few months until after the company's sales incentive meeting.
“Everyone went on the trip, experienced that great sense of camaraderie, and loved being part of the unit,” Dittman says. “It single-handedly kept together a great sales force two years beyond the time it should have had no reason to exist.”
Dittman says an incentive should cement the fact that the attendees are working with a common purpose toward a collective goal. Running a bunch of meetings during the incentive “can work at cross purposes” with the effort to get that message across, he says. “That's why I've always been a strong believer in maintaining the purity of an incentive program.”
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