Using trips as rewards for star employees makes a comeback
(from USAToday.com)
The Texas Roadhouse meat cutters and managers
descended on New York City in April, courtesy of a company-paid trip for a job
well done.
While many companies have pushed their perks
under the radar, the restaurant chain planted a Texas Roadhouse flag on the Waldorf
Astoria, set off fireworks on Ellis Island, and posted the company mascot — an
armadillo named Andy — on top of Radio City Music Hall.
And
why not? Says Texas Roadhouse CEO G.J. Hart, "Our biggest asset is the people
that run our restaurants and that work there. And like any asset, if you want
a return on that asset, you need to invest in it."
Trips
like the one organized by Texas Roadhouse were rare during the depth of the recession,
casualties of the so-called AIG effect which made companies fear appearing extravagant
in the midst of the steep downturn. But companies increasingly are emboldened
to once again reward their best employees and representatives with motivational
trips, incentive travel experts say.
This
time around, though, the excursions are likely to be shorter, less expensive and
more focused on public service than pampering.
There's
"the realization that you've got to reward your top performers if you want your
company results to remain strong," says Brenda Anderson, CEO of Site, an organization
of incentive and travel executives. "It's common sense. ... It's about rewarding
your employees, making them feel connected to your company, your culture, your
values."
Industry executives expect the uptick this
year to greatly accelerate in 2011 as workers reach the targets that would qualify
them for rewards.
"Typically the company would have
to develop the program almost the year before the trip," says Christine Duffy,
CEO of Maritz Travel, which runs incentive travel programs for many of the nation's
largest corporations. So far this year, her firm has seen a 63% increase in proposals
for such initiatives over last year.
For every dollar
spent on incentive travel, a business typically reaps $3 to $4 in revenue, according
to Site. And while some incentive programs offer solo trips, larger gatherings
can be particularly valuable because they give attendees the chance to connect
with one another as well as top executives, experts say.
"They're
in one place talking and networking and learning informally," says Paul Hebert,
managing director of the Greenville, S.C.-based I2I, which consults with companies
on the design of their incentive programs. "You end up elevating everybody's skill
level."
But in fall 2008, reward travel became vilified
when it was revealed that American International Group (AIG) spent roughly $400,000
on an incentive meeting at a St. Regis resort not long after it received an $85
billion bailout from the federal government.
In the
wake of the controversy, spending on incentive travel plummeted 35%, says Anderson,
and businesses canceled trips they feared would trigger negative publicity.
"It
basically put the brakes on the whole industry," Hebert says. "I know companies
I deal with (that) shut down almost all their travel because they couldn't handle
the scrutiny."
But he and others say it's a mistake
to see incentive travel as a corporate boondoggle for wealthy executives. "The
preponderance of workers in America don't get these opportunities, so they automatically
will see it as the elites getting this," he says. "They don't realize it's probably
the sales guy down the street from them earning this trip, and it cost them a
couple of weekends meeting with clients and not going to their son's baseball
games."
Inspiration is the key
The
financial and automotive sectors, hit particularly hard by the recession, were
among the industries that pulled back the most on incentive travel. Now that the
economy is improving, experts say, many of those businesses are trying to expand
and they see an inspired workforce as the key.
"Companies
have to grow again, and you need an engaged, motivated and retained sales force
to do that," Duffy says.
In March, Marsh Inc., the insurance
brokerage subsidiary of professional services firm Marsh & McLennan, held
its first incentive retreat for its salespeople in three years. The meeting treated
the top performers and their partners to a stay at a Phoenix dude ranch.
Long
before the AIG backlash, Marsh decided such trips might appear wasteful at a time
when the company was trying to pare its budget. "It's hard to tell employees that
we're watching costs ... when you're then going to say, 'We're going to take our
top sales performers and their spouses for four days to some resort,' " says Josh
Friedlander, Marsh's head of human resources. "It's a disconnect for most employees
that is hard for them to really grasp."
But the firm
reversed course when its sales force explained the importance of such rewards.
They said, "The celebration of success is an important part of what motivates
us," he says. "The recognition of the individuals who support those people at
home is also a big component."
Rudi's Organic Bakery,
a private company based in Boulder, Colo., doesn't offer incentive trips to its
employees but does reward the outside sales representatives who sell their goods
to grocery stores for a commission, says Mark Delbridge, the company's vice president
of sales.
The company offers trips every other year
to those who meet certain sales targets, Delbridge says. In November, those who
qualify will go to Costa Rica.
Since the representatives
sell products made by dozens of companies, rewards for exceptional work are crucial.
"They have 50 (product) lines in their briefcase," he says "and you'd like to
get their attention more than the next company."
Keeping
things reasonable
Yet many incentive trips are
now reflecting a new frugality.
Companies are "being
very diligent in making sure it doesn't come across as over-the-top," Hebert says.
"They're double-checking that how you earn the trip is smart. ... They're spending
more time on the design" of the qualifying targets.
Businesses
are choosing more cost-effective locations, such as an all-inclusive resort in
Mexico, says Anderson, and spending less per participant. "It's keeping in mind
(that) in the worst economy we've seen in many of our lifetimes, you have to be
conscious of matching that."
The luxury travel industry
has taken notice.
Simon Cooper, who runs the Ritz-Carlton
luxury hotel chain, says that fewer businesses are paying for daily spa treatments
and other treats during such excursions. "The excesses of two, three years ago
are less prevalent today."
And increasingly businesses
are adding a corporate social-responsibility component to reward trips.
"Instead
of just golf and spa activities, (people) have opportunities to participate in
a team-building event. That may be ... working on a Habitat for Humanity home
or cleaning up a park in the community," Duffy says.
"Some
of it may have been done initially for perception or PR," Duffy says, "but I think
the reality is people that do those programs actually love it. And they get more
out of it than had they just done an individual recreational activity."
When
Texas Roadhouse held its 12th annual "managing partners" conference in New York
last month, 1,200 employees and vendors were treated to a stay at the Waldorf
Astoria Hotel, an evening at Radio City Music Hall and a closing-night concert
by the Charlie Daniels Band on Ellis Island.
But attendees
also carved out time to stuff 10,000 gift bags with cookies and iTunes cards for
soldiers overseas, serve meals to the homeless at a local church, and paint ceiling
tiles to be sent to children's hospitals across the U.S.
Community
outreach has been part of the restaurant chain's reward excursions for several
years. "If we could get more companies to do what we did, I think the greater
community at large would be less critical of companies (awarding) ... incentive
travel," says CEO Hart. "And ... we'd maybe be making a little difference in some
peoples' lives."
A gift that keeps on giving
Texas
Roadhouse spent roughly $3 million on this year's conference, which in addition
to recognizing the managers of its 337 restaurants and their spouses, included
the chain's top meat cutters, servers, bartenders and other employees who won
various competitions to qualify for the trip.
Jose Miranda,
25, a meat cutter from Tyler, Texas, was one of seven finalists to compete in
one last cut-off. And he won the $20,000 prize.
"It's
one of those things that I like about this company," says Miranda, who has worked
for the restaurant chain for eight years.
New York was
the third incentive trip he's won. And the thought of those trips makes him want
to keep improving his skills.
"It motivates me for the
whole year," says Miranda, who prints out a photo of each destination and posts
it at work. When the incentive conference was held in Grand Lakes, Fla., "I put
up the picture of a nice hotel and the beach. Every day I used to walk into that
cold meat room, and I put my mind on being on a nice warm beach. And then I made
it."
The year he won a trip to San Francisco, it was
a shot of the Golden Gate Bridge that kept him going. And a photo of the Statue
of Liberty reminded him of his desire to get to New York.
Next
year's incentive conference will be in Naples, Fla.
"I've
already printed my picture," he says.
