Lead Forensics

Incentive-Travel Awards vs. Cash: There’s Simply No Comparison

August 20, 2019 Kevin Edmunds

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In early August, an article came out in the Wall Street Journal saying that Charles Schwab Corp. was changing its incentive program, replacing all-expenses-paid trips for qualifiers and their guests with a straight cash award. The company said that the move would “reduce reputational risks” and might also save the company money.

In response to The Wall Street Journal article, the Incentive Research Foundation wrote a letter for the newspaper’s editorial page to remind all the businesspeople who read WSJ about the benefits of travel awards as a motivational tool. The letter also suggested that “reputational risks” can go the other way as well. Here’s how: Employees who receive cash awards are more likely to spend it on necessities rather than using that money for memorable experiences or self-care trip—and they are less likely to discuss their cash awards with coworkers and potential recruits versus travel awards. This can result in decreased loyalty and lower motivation among employees, and in turn contribute to a less appealing workplace for current and potential workers.

What’s more, a reduction in travel awards decreases networking opportunities for employees, especially between departments. Schwab’s Chairman’s Club trips rewarded employees from all areas of the company, including call centers and operational support—not just salespeople. So I’m guessing that cutting the program will weaken people’s relationships across the firm at least a bit.

In my opinion, the IRF’s letter was spot on. When companies spend, say, $5,000 per qualifying employee on a travel award, the quality of the experience the award winners receive is worth so much more in their minds than that $5,000. That’s because qualifiers probably would never spend a $5,000 cash award—and spend all the time required to plan—on such a trip. Also, the memories and goodwill created during an incentive trip far exceeds the actual amount the company spends on the trip. The value is easily greater than $5,000 per employee when you take into account how satisfied the qualifier and his or her companion will be after the trip, and once they have excited conversations with their coworkers upon returning to the office.

If you want to examine this topic further, the IRF has many research studies that support the superior value of incentive travel versus cash. We at AIC Hotel Group also have plenty of anecdotal evidence we can provide you on how strong the effect is of incentive trips versus cash. We’d love to hear from you and discuss this, and provide you with sample itineraries that fit your objectives and fit your budget.


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