Incentive Travel During a Recession – What Are the Benefits?


Whenever there is an economic downturn, many companies automatically cut non-cash incentives such as incentive travel. This is short sighted. When times are tough, it’s challenging for your team to make their numbers. For this reason, it’s even MORE important than EVER to design and implement strategies to motivate your team and reward top performers.

Incentive Travel Pays for itself

Incentive travel is particularly effective because it pays for itself. Incentives are given at the end of the year AFTER successful results have been produced. It just takes some careful planning to ensure that you get the most mileage out of non-cash incentives. At the beginning of your fiscal year:

set your target, the minimal level of corporate financial performance both in terms of profits and earnings per share
identify the level of sales that each member of your business development team needs to reach for your organization to achieve its targets

Individuals should qualify for specific incentives based on 2 criteria:

the company’s level of performance
the individual’s level of performance

Why companies Cut Incentive Travel

So if incentive trips pay for themselves, why do companies tend to eliminate them when the going gets tough? The answer to that question is complex but part of what may be going on right now is the AIG effect.

Sometimes it’s as if some organizations forget that incentive trips and luxury corporate events are rewards for EXCEPTIONAL performance, not entitlements to be bestowed even when there is failure of epic proportions There has been justifiable negative publicity because some of the companies that received bailout money in 2008 have STILL organized luxury junkets and lavish corporate events. We’ve all read the headlines:

-AIG executives receive spa treatments after Bailout -AIG Executives Help Themselves To $ 86000 Hunting Trip -Reps blast Bank of America over Super Bowl fan fest -Wells Fargo defends, then cancels Vegas junket -B of A’s Super Bowl Bash -Bailout firms ‘just don’t get it’

For the life of me, I don’t understand how Morgan Stanley could have been planning an incentive to Monte Carlo when 7,000 employees were laid of last year and more lay-offs are planned for 2009. Clearly, some organizations have displayed poor judgment. Now, due to the risk of negative publicity, even organizations that are doing well are hesitant to spend ANY money for incentives. This is throwing the baby out with the bath water.

If You’ve Earned it, why Cut it?

When your company and the members of your team have beat the odds and produced outstanding results, they deserve to be rewarded. However, make the rewards proportional to individual and company performance. One size does not fit all and it should not have to. You can set up a simple matrix to determine the non-cash incentives to which each member of your team will be entitled.

For example, if some members of your team have gone above and beyond the call and your company is still struggling, by all means reward them. However, this is not the time for gambling junkets or stays at lavish resorts. Keep it simple. Maybe a dinner at a really nice restaurant for the team members and their spouses will have to suffice for this year. If the company has met its targets, it’s perfectly appropriate to have an awards banquet for your team in your home town and give top performers and their spouses an overnight stay at a local hotel and spa treatments.

Companies that are doing well should not be afraid to pull out all the stops. Have your awards banquet for your team and make it truly memorable. Go ahead and reward employees who have gone the extra mile and produced exceptional results. Overseas incentive travel is perfectly appropriate for team members who have exceeded their targets. Also, don’t be afraid to show appreciation to your best clients with a customer appreciation event or short get-away. This will encourage everyone to do even more next year. The key is to ensure that your organization is also doing its share in terms of giving back to the community and contributing to local charities. Your PR department should get the word out about your company’s outstanding performance and the success strategies that you and your team used to produce results. Heaven knows, we could all use some encouraging news when times are tough.

Incentive Travel: A Triple Win

Incentive travel and events such as awards galas can be viewed as a triple win. The company wins because a motivated team produces higher results. The individual sales professionals win as they reap the rewards of their efforts and receive recognition from their peers. The economy also wins. Even if you simply have an awards banquet gala in your hometown, your investment will produce a ripple effect and provide work for:

event planners
restaurants, caterers or banquet halls
waiters, waitresses, hosts, and hostesses
transportation companies if you use busses or limousines
the drivers
the printers who produce the invitations, signage and programmes
grocery stores that supply the food
retail stores that sell the clothes that members of your team will wear to the banquet
hairdressing parlors and barber shoppes
AV companies

In addition to producing work for those professions and sectors, overseas incentive travel will also produce work for:

airline crew, staff and suppliers
travel agents
luggage stores and manufacturers
the stores at the airports
customs and immigration officers
hotels and resorts
companies that manufacture and supply linen, cutlery, etc.
dry cleaners
uniform supply companies
landscaping companies
tour operators
local attractions

So, Should you Eliminate your Incentive Travel Budget?

If your company is facing challenging times, postpone the parties and luxury junkets. This is just not the time. Instead, take a portion of the money you would have spent for an incentive and invest in consultants and business facilitators with a proven track record that can help you get your company back on track. When company performance improves, there will be plenty of time to celebrate.

If your company is doing well, don’t be afraid to splurge a bit. Don’t feel obligated to cancel incentive travel because times are tough. You’ll actually be helping the economy. After all, you and your team have worked hard and you’ve earned it.