Though no one wants to mislead or disappoint incentive winners by switching the rewards or even canceling, market changes or unforeseen economic woes might leave little choice.
As a protective measure for the program sponsor, Chicago-based attorney Jonathan T. Howe, Esq., right, of Howe & Hutton Ltd., recommends including an adjustment clause in the fine print of the program plan or anywhere the incentive is promoted, such as in the contest rules or on a website that promotes the incentive.
Howe suggests the following wording: “This incentive program is designed to provide you, the potential award winner, with an outstanding experience. Conditions, unfortunately, might change for many different reasons, some of which are beyond our control, and might require the company to alter or even cancel the program as a result.
“Additionally, management might find it necessary to change the rules for eligibility and participation levels. It is necessary for the company to retain and reserve the right to amend or otherwise change these rules or to terminate the program without liability as the company solely deems appropriate.” -- L.G.
In these fiscally challenging
times, with so many companies under the gun to keep
spending down, it would seem like a no-brainer to eliminate any
costs except those essential to the firm’s bottom line. At first
glance, incentive programs would seem like one of those expenses
that could painlessly be put on a back burner or even
That was the case for troubled mortgage
lender Countrywide Financial Corp., which canceled two incentive
programs that were slated to take place this spring in Hollywood,
Fla., in the wake of a financial meltdown earlier this year. And at
Citi Commercial Business Group, a Harrison, N.Y.-based division of
Citigroup that handles commercial real estate, plans for this
year’s incentive program are on hold due to companywide
belt-tightening, according to Barbara Blumhof, manager, trade shows
On the other hand, not all incentive
professionals regard such cutbacks as inevitable -- or advisable.
“Fifteen or 20 years ago, there was a knee-jerk reaction to cut
programs when the economy looked bad,” says Karen Renk, executive
director of the Naperville, Ill.-based Incentive Marketing
Association. Companies today, she adds, are far less likely to
respond this way, because they have learned how important it is to
keep employees engaged and productive through motivation and
recognition, even (or especially) in the face of downsizing.
Following are the examples of two
firms -- both in hard-hit industries -- that feel incentive
programs, now more than ever, are essential to their survival, as
well as advice from pros on how firms can keep their programs up
and running during a bumpy economy.
Keeping rewards in
Michael J. Kennedy, manager, retail
development, at Cerritos, Calif.-based Isuzu Commercial Truck of
America Inc., has kept the company’s Winners’ Circle program for
sales reps active despite a merger, a sell-off and a run of three
CEOs since he began to oversee the travel-based incentive program
in 2000. He’s now planning the trip for 2009.
“If you polled our salespeople, it
would be right up there as one of the reasons they want to work for
us,” Kennedy says of the incentive program. “There would be a
revolt or coup if we took it away. It would be devastating to
business. We are, after all, a small fish in a big pond [of
commercial trucking firms]. We have the annual program in order to
keep the attention of salespeople and managers, who also sell other
brands of trucks.”
The Winners’ Circle is a tiered
program, with platinum and gold winners earning a lavish tropical
getaway each February; silver winners win a travel reward to a
domestic destination, such as Las Vegas; and bronze winners are
rewarded with merchandise.
Though Kennedy says the program ends up
paying for itself in increased
sales, he does have constraints. His yearly budget has not
increased since 2001, and if sales projections go down, he says,
the program budget similarly shrinks, which translates to fewer
“It is a big challenge to provide the
type of service and innovation our winners have come to expect,”
Kennedy says, noting that a majority of them are repeat winners. He
credits the team at Ambassadors International, the incentive and
meeting firm based in Newport Beach, Calif., for their negotiating
skills in getting his group value-added extras such as comped
receptions and room upgrades, as well as for their ability to find
lesser-known or new hotels that dazzle attendees but are less
costly than some bigger-name properties. For example, the
just-opened Agua Caliente Hotel and Spa in Desert Hot Springs,
Calif., will host the silver winners in 2009.
The key, says Kennedy, not only is to
take winners to a great destination, but to prevent them from
having to “dig into their pockets” for anything during the trip, to
help make the program more enticing than his competitors’.
Kennedy demonstrates return on
investment for the program with a report that goes to higher-ups at
Isuzu Commercial Trucks. “We do a recap of sales for the year and
show what the percentages are from winners,” which, he adds, are
While the company’s business
projections for 2008 are mixed -- shortfalls were expected the
first half of the year, followed by more upbeat predictions for the
third and fourth quarters -- Kennedy is planning ahead for his 2009
trip and beyond. “It’s shortsighted to cancel programs,” he says.
“I won’t say the spending won’t be reduced, but it won’t be
canceled. It’s all about how you present the program and its street
value -- the enjoyment participants get from it.”
WAYS TO CUT
Following are smart ways to trim the expense of
an incentive trip without sacrificing the impact of the reward.
* Shorten the program.
Just one day fewer can result in huge savings for the
structure. Does every meal or activity have to be hosted
by the company? Increasingly, participants appreciate some free
time and unplanned meals.
tier. If you traditionally use a five-star property,
switch to a four-star or hold the trip during a shoulder season
rather than peak.
Piggyback.Hold the incentive just before
or after another event, such as a sales meeting or industry
conference, to cut down on travel costs.
“Just be sure to maintain the integrity
of the event, making sure it’s a once-in-a-lifetime experience and
the recognition remains in place,” says Lynn Randall, strategic
meetings consultant for Fenton, Mo.-based Maritz. -- L.G.