Survey: Incentive Cutbacks Hurt Morale, Sales, Retention

A new survey from the Incentive Research Foundation and Corporate Meetings & Incentives magazine shows that incentive cutbacks create an immediate negative effect on sales and morale -- and, over years, can cause companies to lose their top performers.

Thirty-two percent of the survey's 109 respondents reported a negative impact on morale from the "lowered quality" of their companies' 2009 incentives, and approximately 20 percent reported a negative impact on sales and retention. Significantly more respondents (30 percent vs. 20 percent last year) expect a negative impact on retention from 2010 cuts.

"It appears that incentive cutbacks have a cumulative effect over time and could end up driving away companies' best people," said CM&I editor Barbara Scofidio.

The majority of companies responding to the survey lowered their 2009 incentive budgets: 65 percent said their budgets were slightly to significantly less than in 2008, and 20 percent said their budgets were significantly less (down more than 25 percent). Of all types of incentives (cash, merchandise, gift cards, individual travel, and group travel), group travel -- the target of endless bad press in 2009 -- was the hardest hit, with 37 percent of responding companies canceling their 2009 incentive trips altogether.

Planners dealt with these tighter budgets by cutting back on their incentive trips: eliminating on-site gifts (59 percent), shortening the stay (41 percent), sending fewer managers on the trips (41 percent), and inviting fewer qualifiers (34 percent). As a result, the survey found that at least one-quarter of attendees were unhappy: 13 percent with program inclusions, 9 percent with the destination choice, and 3 percent with the property, according to respondents.

The cumulative effect of cutting back on incentive travel is expected to continue in 2010. According to the survey, 91 percent of 2010 incentive programs will have budgets that are either the same or less than in 2009 (and 2009 budgets were already coming in at an average of 20 percent less than 2008 levels).

The survey was a joint project between IRF and Penton Media, the publisher of CM&I. The 109 respondents comprised incentive decision-makers within corporations, from meeting managers to directors of sales and marketing; there were no incentive suppliers or consulting firms participating.

For more information, please visit http://meetingsnet.com/incentives/motivation/0104-travel-cuts-hurt-sales/ or http://theirf.org. For a copy of the survey, contact Barbara Scofidio at (978) 448-8211 or bscofidio@meetingsnet.com or Lois Russo at (212) 736-0797 or lrusso@sellingcommunications.com.

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