by Leo Jakobson | September 01, 2010
Every year, Incentive convenes a panel of experienced professionals from every sector of the industry to talk about the state of the incentive business. This year, our 11 participants gathered at one of the most historic and storied venues in New York City, the 21 Club, to talk about the next round of the incentive industry’s toughest fight ever. Last year, the AIG effect had organizations tossing in the towel on their programs, staggering the industry; this year, the consensus is incentives are up off the canvas, but not out of trouble just yet. 

What follows is a substantially extended version of the article that ran as the cover story in Incentive’s August/September issue, for readers who wish to delve deeper into this year’s Roundtable. To see the original version, see the digital edition of Incentive.


Participants:
Brenda Anderson, CEO, Site
Cherryl Brazier: Director of Global Sales, Carlson Hotels 
Rob Danna, Vice President of Sales, ITAGroup
Jim Dittman, President, Dittman Incentive Marketing
Michael A Fina, Executive Vice President of Technology & Innovation, Michael C. Fina
Jim Keenan, Senior Vice President of Special Markets, Citizen Watch Co. of America
Kathleen Lombardo, Account Executive, Stoner Bunting Gift Card Group
Chris FJ Lynn, Sales & Marketing Director of North America & Long Haul, Visit London
Dave Peer, Executive Vice President, Hinda Incentives
Mike Ryan: Senior Vice President, Marketing and Client Strategy, Madison Performance Group
Melissa Van Dyke, President, The Incentive Research Foundation

INCENTIVE: It’s been a rough year for the incentive business. But has it been better than the year before?

BRENDA ANDERSON: It’s a much better year than last year. Though we never want to recreate the pain of the last two years, I think as an industry we’ve come out of it a lot stronger because we’ve had to organize, we’ve had to get clear on our story. We were really good about talking to each other about what we did, but we weren’t good about having an elevator speech for Washington D.C. or for business partners. We’ve been forced into collaborating in ways that we hadn’t done before to raise the profile of the industry, and to get the right people behind the industry, particularly in Washington D.C. 

We’ve learned how to play nice with others, check our egos at the door. I think we can still do a better job with it—I’m particularly referring to the association world right now—but there is a strong group that’s come up from the U.S. Travel Association, the MIT [Meetings, Incentives and Trade Show Council] group. They are really focusing on getting the value proposition out there, the return on investment of the industry out there, and they are getting the attention of the key lobbyists in D.C. which, again, is not something our industry had been really strong in doing.
  
DAVE PEER: As someone who was participating in some of our [lobbying] efforts in Washington last October, it was very evident that folks there had no clue as to what our industry was, or how some of the [anti-meetings and incentives] commentary was damaging people, damaging jobs. When the President was saying not-so-great things about Las Vegas, it had a definite impact. Just recently I was able to see the evolution and development—we had a meeting with [Sen.] Chuck Grassley, [Republican] of Iowa, [in June], and it was very evident that there has been more education, was more understanding, and as a result there was a greater interest in advocacy for things that are important to our industry.

MELISSA VAN DYKE:  One thing that we definitely heard at our roundtables [at the 17th Annual Incentive Research Foundation (IRF) Invitational in May] is, we still, as an industry, have not found one voice. When we asked, “What is having the biggest impact on your ability to run programs?” 

[Participants said] it had stabilized somewhat on the economic side, it had stabilized somewhat on internal factors, but perception—public perception—still has the biggest impact on whether people can put together the programs that they really want to. I think what we found is, it’s stabilizing, but at this “new normal.” We are not there yet, but we at least have the luxury of having some business come back. 

ROB DANNA:  I think the folks that have gone through this incentive drought realized just how important group events and incentives are to their overall strategy. So in a way, the silver lining became, [company executives saying], “Wow! We did it without, and here are our results and here they are when we did it with them.” It gave everybody a control test against using incentives and not using incentives. The enlightened ones are coming back stronger than ever.

MIKE RYAN: I think there’s a definite elevation of dialog in organizations. There’s definitely an interest in talking about the role incentives can play in optimizing human capital. And it’s not just from the perspective of a trip or any other type of reward mechanism. It’s in terms of, how do we focus our employees on behaviors that are critical to our outcomes? How do we get multiple generations of the workforce aligned? The discussion of recognition as part of the compensation mix, I think, has gotten to the point, right now, where the marketplace is really right for our industry. 


In turn, we need to treat that argument the same way you would treat any other quest for a business case. When you meet with executives you’ve got to be able to talk about the strategic relevance and how, from a financial perspective, that incentive might rank against some other deliverables. As our industry becomes more comfortable making that argument, we could be viewed in the same light as any other type of business solution. So in a lot of ways, I think, this drought has helped us because it’s helped us recalibrate the way to go to the marketplace.
  
BRENDA ANDERSON: We have to get real clear on how we measure that success, to be able to sit in the C Suite and actually point to a specific ROI. We’ve been talking ROI for many years, but the Site Index showed that less than 50 percent of companies are even using an ROI metrics right now.

VAN DYKE:  There is also an emotional side to what we do. And all of the engagement data is telling us that you’ve got the rational side and the emotional side, and rational is going to get you retention, emotional is going to get you engagement and performance. We are trying to strike that balance as well. We need the data, we need the ROI statistics, while not forsaking the emotional side of what we do that is so powerful and so important to the emotional attachment that people have with an organization. So how do we maintain that story as well as the ROI story?

JIM DITTMAN:  I’ve always believed that from bad comes good. There were times in the last 18 months when it was tough to see it, but when you take the long view, this was an opportunity for each one of us to look at our own businesses and say what do we do of worth, what do we do well, what do we have to do different? And in the process—we have a ton of banks for clients, and virtually all them cancelled their major programs at least for a year—it became a moment of zero-based budgeting [for them]. Now they’re going to go back to redo a big travel program, a multimillion dollar travel program, lets go back and examine from the base, what do we get out of it, what do we get emotionally, passionately, financially? We had better be prepared to answer those things. This is going to present those of us who have used the time wisely, great opportunities in the future.

VAN DYKE:  You heard so many stories of taking programs apart literally piece-by-piece and putting them back together again to determine what was really needed, and how we could deliver the most efficiency but still maintain the same motivational effect. That’s really the trick: If we stripped out everything and left only individual pieces, then it’s not motivational anymore.

DITTMAN: That’s my great fear. That we’ve recalibrated at a lower level that could become somewhat permanent, which would alter forever the definition of incentive travel that I’ve always adhered to for the last three decades: To create an experience that people couldn’t duplicate on their own no matter how much how much money they had. That doesn’t necessarily mean that you have to have Sheryl Crow come in for the final banquet but it means you need to do imaginative things. You need to exercise your creativity and originality because if somebody comes home from an incentive trip and all they can talk about is the hotel, and nice restaurants, and the golf, we failed miserably. Because we want them to remember brilliantly, 10 or 20 years from now, what the experience was like, why they got it, the efforts that they put forth to earn the opportunity. Those are the things that create that human connection to the company and to one’s own sense of self-worth that made me so excited about being in this business.

I think my fear is that people now are going to say, last year everybody was happy to have a job. If they bring the trip back, well, everybody will be happy with the trip and we can save $500 a person by eliminating these things. And if they do, if they take out the things that really create the memory, then the guts of our industry is going to be taken away. We will no longer be creating memorable experiences; we’ll just be creating trips—travel agents.
 
INCENTIVE: Would you agree that Corporate Social Responsibility seems to be the next big thing?

JAMES KEENAN: Corporations want to use incentive and recognition items to show their corporation to be a good community partner and the whole green movement, the ecology movement, is a way to do that.  Citizen has Eco-Drive, the light power technology that never needs a battery. We introduced it over a decade ago.  Not having to replace a battery, ever, was the ultimate convenience and a key selling feature back then for incentive in an award programs, rather than the “Eco” for ecology message.  Now companies want to not only motivate their employees but they want to be seen as doing something that, as Melissa says, has an emotional attachment:  To be able to say “We’re doing something good for the world, we’re doing something good for our company, we are a good civic partner.”

PEER: It’s even being reinforced with the Gulf oil spill. This disaster is resonating emotionally beyond any of the others—[Hurricane] Katrina or any of those. This one really is bringing home some of the fears about pollution, modern technology, the green that you are talking about.

KEENAN: People didn’t think about something like that ten years ago, but now they do. The reaction to the gulf oil spill shows that people are now thinking about the environment more and more.


PEER: It also gets to appealing to different generations in the workforce. We, as consultants, need to be able to recognize what really resonates with millennials. They do behave and think differently than the Boomers or Gen-Xers. We are learning as an industry not only to segment in all of the different channels. For example, in loyalty, the big thing right now is segmentation—targeting audiences, micro-marketing, getting closer to the end-user, understanding what the ultimate objectives are. There is a lot more effort to target specific segments in consumer loyalty programs, and I think that our business is also developing the ability to segment and target specific groups in employee engagement programs.
  

KATHLEEN LOMBARDO:  With so many boomers coming out of the workplace in the next 10 years, there’s just going to be a huge opportunity for connection with the other generations. As we know, they’re tied into the planet and what’s happening to the planet in a very different way then even the boomers are, so I agree completely that we can engage them and connect that to us.

VAN DYKE:  It’s interesting to see how corporate social responsibility is becoming a part of the fabric of how we develop and deliver programs. My feeling is that it’s not just the [newer] generations that are driving that. Once participants take part in [a CSR program], everybody has an aspect of it that they really take to.

PEER: That’s an important part of the marketing, but it’s not paying the bills. People haven’t changed that much, we’re simple, Pavlovian creatures. What’s important is that you frame things in a way that’s current, that does connect to the fabric of our society now, but doesn’t lose sight of what we’re here to do: We’re business people, we need to make money, and what really drives behavior isn’t necessarily the fact that’s is a green item or non-green items, it’s whether [the award] drives the behavior that people want.

CHERRYL BRAZIER: Do you feel that some of the trips are being done now are not quite as flamboyant as they used to be? Maybe they’re not getting the “wow” factor for a particular event, but they’re that getting the emotional engagement with the company from doing a CSR event—rather than having something particularly flamboyant, and spending a ton of money on something that might not be as relevant to those particularly attendees.
ANDERSON: I’ve actually been asked by several reporters, “Don’t you think the community outreach is just a way to get around of the five-star experience that everyone is trying to down play right now?” I honestly don’t believe that’s part of it, because I think right now people are looking to connect into something bigger than themselves. We’re all about creating memories and memorable experiences. [CSR] adds something that touches [participants] hearts in the deepest way and it matters so much to them. So they’re walking away from our programs with a very different feeling, perhaps, than they did 10 years ago.


RYAN: One of the things that drives engagement is the sense of mutuality—that an employee feels that the organization they work for has their values and commitments. When you have an event like that, I think there is definitely that connection and mutuality. An organization is going to look upon it and say “That was a very positive experience for our employees, not only as a motivational experience but also in terms of reaffirming what we, as an organization, value and what the employees value.” 

MICHAEL A FINA: When you are in front of those clients, they want to see it—the same sense of social responsibility. So makes it more incumbent upon us [incentive providers] to show them that we believe in the same things, [that we have] the same values, the same morality that they do. Everything else being equal, you are going to want to partner with the company that views the world the same way you do.
  
INCENTIVE: Several recent studies found that employees’ trust for their bosses and for their co-workers is at record lows. Is this something incentive and recognition programs can help companies deal with?

RYAN: Yes and I’ll tell why. One of the byproducts of a bad economy is a lingering sense of anxiety. The old expression that you shouldn’t bring work home with you—I think employees are now bringing home to work with them. And with the sense of anxiety that comes from the economic problems is a change in mindset. You become less cooperative at work because your sense is that you need to become more defensive. And what's happened is, when you have an environment where people don’t share ideas, they don’t share best practices, you can only succeed if others fail.  People are going to be less likely to help one another. 

Recognition, in terms of telling a story, is actually a very good exercise for organizations to recreate that cooperative culture, because you are sharing how somebody helped the client or helped a co-worker or went the extra mile or came up with a better idea. You are recreating that environment and everybody else learns from that. 

I think there is a definite void in the trust factor that’s been driven by the bad economy. I think recognition can help organizations change just by telling stories, recreating that sense of being on the same page, and giving people an opportunity to learn from each others’ experiences.


DANNA:  I think the good news is trust can be rebuilt. The bad news is it’s very hard to do and it takes experts in recognition to do it. And I think the folks at this table are the ones who can help carry that out for our clients.
  
 
INCENTIVE: Is there any difference you are seeing in channel sales programs from what’s happening with internal employees?

DITTMAN: I think when it comes to channel programs, the challenge, to a great extent, over the last couple of years in particular has been, how do you actually hold on to your margins selling through a channel? Because the pressure, on a daily basis, is for a lower and lower and lower price and any fool can subtract. So, the role of incentives in channel programs, in my mind, is to add value to the process, to add value to you and to your set of offerings so that they gain a disproportionate share of mind.


The one thing that is common amongst all the audiences we are talking about is the importance of being consistent with your message. It’s a lot easier to build relationships when there is a culture of trust.

But I do believe that in channel programs there are relationships that can be built through travel incentive programs and through other relationship strategies that we feed directly into. The major purpose of it is to build relationships and make the price less important. At a time when everybody is competing on price, we can be the difference in the implementation.