Advancing the Science of Motivation
and Incentives Through Research

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Travel Incentives Boost Performance, Retention

• Executive Summary
• Background
• Objectives of the Project
• Methodology

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Executive Summary

Many organizations use rewards and recognition programs to help them achieve their goals and objectives. Critics of these management tools fail to understand how they can drive desired behaviors and help improve business performance. The Incentive Research Foundation (IRF) commissioned this research to document the “anatomy” of an incentive travel program (ITP) and provide a better understanding of a successful ITP.

Motivating employees is always one of management’s biggest concerns. During an economic downturn, such as the one affecting the United States at present, the retention of excellent employees becomes even more important.  Organizations that develop cultures based on employee recognition and rewards programs will be better positioned to survive, and even thrive, because their employees remain motivated and engaged.

It is clear from the case study presented here that employees are motivated by both the incentive travel award they can earn and the recognition afforded to them by the corporate leaders when they participate in the travel event.  They are also excited about the opportunity to network with other high performers and share best practices.  They are very proud of their achievements and the fact that they are recognized as being the best of the best.  Their overall contributions to the organization’s success are considerable.

Managers in the company are also convinced of the value the incentive travel program provides.  They believe the organization’s culture is built on these management tools and they are responsible for the financial success of the company.   The ITP is key to the attainment of financial goals and objectives in the eyes of top management, including the CEO.

The success of the ITP offered by the company in this case study is predicated on several elements.  First of all, the earning and selection criteria for the reward are clearly tied to business objectives.  Communication about the program and the progress the participants are making toward goals is clear and consistent.   Anticipation builds throughout the year and keeps employees motivated to achieve their objectives.  The design of the travel program itself also adds to the overall excitement.  Desirable destinations are selected, interactive sessions are offered, and leisure time is included for the earners.  Managers act as hosts to reinforce the company’s commitment to the reward program and recognition.  Finally, the company keeps detailed records that prove the productivity of the earners and their contributions to the company’s financial performance.

The importance of incentive travel to the hospitality industry is widely accepted.  The hotels, destination management companies, audio-visual suppliers, and other vendors who support the ITP all reported  this type of business is essential to the achievement of their own financial objectives.  While it may be difficult to estimate the overall economic impact of an ITP, it is clear that many suppliers suffer when companies cut back on incentive travel.

The case study presented here provides objective proof that a well-designed incentive travel program can help a company achieve its strategic goals and objectives.  By creating an organizational culture built on rewards and recognition, corporate leaders motivate employees to be successful, thus ensuring the success of the corporation.  From the design of the earning criteria to the blueprint of the travel program to the metrics used to measure corporate performance, this report provides a template that other organizations can implement to drive desired employee behaviors that will contribute to overall profitability.

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Background

The meetings, incentive, conventions, and exhibitions (MICE) is one of the most important segments in the travel and tourism industry.  In the United States alone, the economic impact of this industry is estimated at over $110 billion annually, with incentive travel responsible for approximately 5% of this total (CEIR, 2008).  Hotels, event venues, attractions, restaurants, and other service providers are dependent upon incentive travel for a significant portion of their revenues.

Despite the importance of the incentive market to the hospitality industry, many lawmakers and media figures in 2009 criticized the use of corporate funds for group travel designed to motivate employees.   While the criticism may have been directed at particular companies, the overall tone in the media caused some companies to cancel and/or eliminate group incentive travel.  Employee morale in those companies may be suffering as a result of these cancellations, causing a decrease in productivity.  And the overall effect for destinations that normally host incentive travel has been devastating as evidenced by the layoff of hospitality employees throughout the industry.

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Objectives of the Project

The aim of this study is to provide evidence-based and objective insight into an incentive travel program and its benefits. Specifically, the objectives of the study are to:

• Define incentive travel programs, their purpose, and specifically explain the components of the program, e.g. how the program works, selection criteria and allocation for different divisions, program design, role of hosts, and budget.
• Identify the impact incentive travel has on participants, earners, and hospitality industry service providers.
• Evaluate success indicators from a business perspective both from qualitative interviews from the Chief Executive Officer and Management and quantitative analysis of Net Operating Income based on a comparison of earners and non-earners.
• Identify the perceptions of the incentive travel program for participants, earners, management, and the CEO of the company and determine if there is a difference in management’s perspective and the employees’ perspective.
• Determine the incentive travel program’s value to the destination and other product and service providers.

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Methodology

To meet the objectives of the research, a case study was determined the most appropriate method to investigate and analyze an incentive travel program.  According to Yin (2009), the more your research questions are asking why and how a particular phenomenon works, the more a case study analysis becomes most appropriate. The next step in the process was to identify an appropriate company who has an incentive travel program in place and request participation in the study. By being a part of the study, the company who agreed to participate  benefits by having an objective, external evaluation of their program. The research team assured confidentiality and anonymity for the company, and thus will be referred to as XYZ Corporation. The company has several thousand employees, is well established,  and has had an incentive travel program for over 10 years. This case study represents the analysis of the 2008 incentive travel program. Table 1 indicates each study objective and the related methodology to determine the overall components of the program, employee perceptions of the program, and how the program is used to meet business objectives.

In order to capture the employees’ overall perspectives about the incentive travel program and determine its impact, employees from the different interview groups were selected in conjunction with the sponsoring company to ensure a wide variety of interviewees. For example, it was important to make sure all the earners interviewed were not all repeat earners. Therefore, first-time earners and multi-year earners were divided and then selected. The interviewees were also selected based on number of years with the company and availability for interview.  This process was used to eliminate group bias. The sponsoring company scheduled interviews. Since the interviewees were nationwide, phone interviews were conducted over a 3-week period from September 1-22, 2009. Interviews ranged from 13 minutes to 47 minutes in length.

After a review of current literature, interview questions were written for each interview group. Interview questions were prepared by the research team and approved by the sponsoring company before interviews were conducted. In addition, three other academic and professional advisors reviewed the interview questions to ensure face validity of the questions. The questions were used as a guideline for the interviews; however, the researchers probed for additional insight into key statements made by interviewees.  All interview participation was strictly voluntary and confidential. All interviews were digitally audio-taped, transcribed, and then analyzed.  Although quotes from interviews will be reported, individuals will not be identified.

Corporate historical data was also investigated to determine the effect of the incentive travel program on performance levels and termination over a period of time. Statistical analyses on ranking data over a 5-year period were used to determine if there was a statistically significant difference between earners and non-earners for one financial metric.

Table 1.  Research Objectives and Methodology Overview for the Case Study

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