by Pádraic Gilligan, Chief Marketing Officer SITE & Managing Partner, SoolNua
Incentive travel is self-liquidating
In the past, when pitching a company on the merits of an incentive travel programme, the clincher would always be that it’s self liquidating, ie, technically it costs you nothing as it’s paid for from the incremental revenues generated by the programme. For show-me-the-money CEOs or CFOs, this was golden.
These days, tangible ROI, clearly, is still the clincher if we examine the results of the 2019 Incentive Travel Industry Index (ITII). When asked to select the most important benefit a company receives from its incentive travel programme, “increased sales and/or profits for the company” is the undisputed the top choice:
ITII is a joint venture between SITE and two other organisations with deep roots in the incentive travel sector, the Incentive Research Foundation (IRF) and Financial & Insurance Conference Professionals (FICP). It merges the three surveys previously undertaken by each individual association and is produced in association with Oxford Economics. In 2019 over 2600 submissions were received from more than 100 countries globally, with responses coming equally from the buyer and supplier side of the spectrum.
Incentive travel – soft power
So profit and productivity rank high when buyers of incentive travel experiences are asked to list their objectives for incentive travel programmes. No surprises there, except that’s not the full story. There’s another powerful narrative emerging here around the “other” objectives that an incentive travel programme sets out to achieve and these have very little to do tangible metrics like profitability or productivity.
As the chart above illustrates, four or the top six objectives are actually intangible, connected with fuzzy terms like “relationships” and “engagement”, terms your average CFO might squirm or laugh at. Yet these are rising towards the top of the rankings to the point that the soft power objectives have now well and truly eclipsed the hard dollar outcomes by a factor of two to one.
And this is not surprising at all to anyone who’s been following the business press for the past couple of years. Stimulated by a variety of factors from changing workplace demographics to a steep rise in what we might call “corporate conscience”, companies are changing their priorities and naturally, respected commentators like Harvard Business Review, Forbes magazine, the Financial Time etc are reflecting this in the content they’re publishing.
It’s all about the culture!
Articles with the following titles have been appearing in HBR: “You can’t fix culture”, “The Culture Factor”, “A Great Place to Work”, “The New Science of Teamwork” and “When work has meaning: How to turn purpose into performance”. The Economist, meanwhile, has had pieces on “Employee happiness and business success are linked” and “Companies, Cultural Values & Success”. Suddenly, the phrase attributed to management guru, Peter Drucker, “Culture eats strategy for breakfast” is everywhere, like prosecco at a festival, creating the impression that it’s something new when, in reality, it’s been around for many years!
Last August, Business Roundtable, an association of chief executive officers of America’s leading companies, issued an astonishing statement about the purpose of a corporation, canning all previous definitions that focused exclusively on ‘”shareholder value” –
Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance that include language on the purpose of a corporation. Each version of that document issued since 1997 has stated that corporations exist principally to serve their shareholders. It has become clear that this language on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable.
The new definition, a manifesto on the nature, purpose and direction of a company or corporation, adopted the inclusive, stakeholder model. Instead of the reductive “the principal objective of a business enterprise is to generate economic returns to its owners”, Business Roundtable released a much longer, more nuanced and elaborate statement:
The statement adds 4 additional stakeholders to the mix – customers, employees, suppliers and wider communities – stating that all are essential, and committing to deliver value for all of them, not just shareholders. This is “corporate social responsibility” par excellence and massively different from the fragmented, compartmentalised, token CSR that characterised previous iterations.
Now, obviously, there’s a sea of difference between what’s said and what’s done and the corporate world, in general, doesn’t exactly have a great track record when it comes to action, particularly when that action impacts on bottom line profitability. But this is definitely going in the right direction.
Incentive travel – what are the implications?
There are also rich pickings here for corporate incentive planners and their agency intermediaries around the value of what they do and how group travel experiences can play a seminal role in fostering and enhancing all the things that make for a great workplace culture.
And therein, perhaps, the key takeaway from this important ITII research. In highlighting how soft power trumps hard dollars, ITII is simply mirroring what’s happening in the corporate world with greater focus on relationships, participation, inclusion etc. There’s a massive opportunity now for corporate planners of incentives and their supporting third party agencies to elevate the conversation beyond travel plans, logistics, hotel choice etc.
Incentive travel experiences contribute practically and tangibly to building positive workplace cultures in ways that other employee benefits simply cannot compete. Cash or merchandise rewards are “here today, gone tomorrow” and ONLY benefit the recipient and his or her immediate family. Incentive travel experiences, on the other hand, take place with work colleagues and create shared memories that bond participants over time and build powerful connections.
Viva soft power!
Pádraic Gilligan, Patrick, Delaney & Aoife McCrum run SoolNua, a specialist advisory working with destinations, hotels, venues, agencies & associations in the Business Events industry on strategy, marketing and training.