Event horizon
Travel remains a major tool for companies looking to motivate staff, but there are still many companies who seem unable to get the best results from these trips.
Incentive trips are logistically difficult to organise, but also contain the seeds for much dissatisfaction among staff – the very people one is trying to please. So, how should a company prepare for organising a trip?
Firstly, decide what the reason is for the trip. Is it an incentive, a reward, or is it designed as an “educational” event? Your decision could have huge tax ramifications. Having decided on a rationale, the next decision is the destination. The destination will have to motivate a variety of people; the managing director may enjoy Mauritius, but wouldn’t a young salesforce prefer Ibiza?
And can the winners afford this incentive or reward?
One international carrier company took a group of 25,000-a-year sales people to Bermuda. Breakfast and dinner were included, but not lunch and drinks. The trip was a disaster for a number of reasons. Firstly, anyone working in sales for less than a year did not qualify for the trip, even if they hit their target. This proved to be a huge demotivator for new sales people, and some large orders were deliberately held over to the next year. Secondly, Bermuda is beautiful, peaceful and conservative. It is ideal for golfers and divers, but offers little in the way of nightlife and the number of tourist attractions is limited.
Thirdly, the cost of eating and drinking out is relatively expensive, and many of the delegates found that a round of drinks could break the bank.
Additionally, organisers need to consider what constitutes acceptable travelling distances. There is an increasing temptation to go further afield. So it is possible to do Australia for a week – but expect to lose another week to jet lag. And what about vaccinations? Are staff given time off to obtain these – and if they react badly, what about more time off?
There is also an issue for staff who already travel extensively with their work – if they are entitled to fly business class for business purposes, how motivated will they feel if, on this incentive trip, they have to turn right when boarding the plane? Costs – and also availability – will prevent you considering any other way of moving large numbers.
Many of the practicalities of organising an incentive trip are usually delegated to an individual within a company. In a relatively large organisation, the communication process can be convoluted. You will need to include human resources (on how best to motivate people); sales (the recipients of the trip); marketing (who may have to sell the concept effectively); legal (because such an event is a contractual nightmare); finance (how is this all going to be paid for plus currency issues); and administration (who holds the fort while everyone is away).
On top of that, expect to deal with internal issues, as many departments will no doubt be highly demotivated by what they will see as another great perk for the few.
Inevitably, launching such a programme is a logistical nightmare. For example, airline seats do not obey the usual laws of supply and demand; you may be able to get a great price on 100 transatlantic seats well in advance, but when another qualifier scrapes through, ticket number 101 on a packed airline will cost you substantially more. As soon as you announce the destination, expect to be inundated with people wanting to know if they can fly out/back a little earlier/later than the rest of the group, to squeeze in a visit to great aunt Maude. And there will be many for whom the trip has no appeal; some will ask for a cash alternative. And beware if you offer that alternative; the taxman will be after his share.
If, as in many cases, 80 per cent of your revenue comes from 20 per cent of your salesforce, you need to be sensitive about discouraging those who don’t qualify.
To avoid this, some companies use different events with increasing qualifying thresholds – a weekend in France, a short week in New York, and a cruise around the Caribbean; the best performers would qualify for all three. Additionally, many companies choose to set lower targets for first-year employees, to encourage staff to come back in future years.
This is one of the most important factors about incentive travel; it is not just about going to exotic destinations, but about being seen to go, to be part of the élite Tigers/Achievers/Perfomers Clubs (companies usually opt for such macho names) which give members the kudos of being amongst their peers. And, as many of the major users have discovered, this is one of the biggest motivators.
You also need to revisit the great motivation theorists, such as Maslow and Herzberg. Their work showed that money is not the great motivator; many top sales people learn to sell to an income.
This means that, once you have decided on the destination, and the qualifying level, you may need to offer other “jollies” to keep some sales people striving for more. For example, offering the five highest earners the opportunity for a club or first class seat to the chosen destination may work wonders.
Expect to spend far more than you first imagined on such a programme, and don’t forget to identify all the relevant costs. These will include the actual event fees, time spent researching, devising and planning the programme, specialised printing, numerous agency fees, the opportunity cost of the lost labour and, of course, the taxman.
The taxman is taking a closer look at these types of events and, although the rules remain hazy, expect to end up paying something. A recent survey showed that 25 per cent of the surveyed users of incentive travel had no idea who was paying the tax bill.
A further 22 per cent left it to the participants to pay the taxable value, while the remaining 43 per cent “grossed up” the value of the event and paid the tax bill. (Source: Meetings & Incentive Travel Magazine Survey 1997).
To minimise the tax bill, educational and training events along with motivational speakers can also be included in the programme, although this will add to the organising costs.
There are also some new considerations which have emerged in this industry. Aside from providing a social programme which meets the requirements of a diverse group, there are also political issues, of the type that kept apartheid South Africa off the incentive map for decades.
More recently companies have had to address the issues of same-sex partners and, while “live and let live” is usually an acceptable credo, some countries retain strict laws against homosexuality; you may want to think twice about deliberately flouting such cultural views.
Having chosen a programme, there is also an issue of keeping the staff motivated until such time as it actually comes off. It is not uncommon for companies to be planning events two or three years in advance – many people are content to move jobs after 18 months; how motivated will they be by such a distant carrot?
Apart from trying to motivate staff for events in the future, there is also the issue of paying for it. While Britain has all but conquered the problem of inflation, it remains a scourge for many countries, and consequently, forward payment for many parts of the programme can be a problem. Usually the answer is to agree a price in a stable third currency which involves the forward buying of large quantities of foreign cash. While you need not be an expert in this area – your finance division or bank can handle the technicalities – it is an important area to consider.
Health and safety are other issues, as the recent tragic events in Egypt proved. Contingency plans are essential. Consequently insurance is another major consideration; this will need to cover cancellations, delays, warfare (or acts of “civil insurrection”) and even a reduction in quality of event.
This will also add several thousand pounds to your bill.
Finally, it is also important to budget for importing technology; standards of AV equipment – and even room sets – can be poor in many parts of the world, and may need to be brought in.
Additional communication systems might be needed to allow senior management to keep in touch, and the organiser will need to be aware of the issues of equipment compatibility – or lack of it – around the world.
