July 30, 2014
To help corporations differentiate between incentive trips and meetings or conferences, and to deflate public criticism, the US. Travel Association, working with the incentive and travel industries, has developed guidelines “to ensure transparency and accountability” for companies receiving federal assistance. The guidelines are being adopted by many corporations. Among the guidelines affecting incentive reward trips:
- All incentive/recognition travel organized by the company must serve one or more specified legitimate business purposes (see below).
- Each proposed meeting, event or incentive/recognition travel with a cost exceeding $75,000 must be supported by a written business case identifying a specific business purpose.
- Total annual expenses for meetings, events and incentive/recognition travel shall not exceed 15 percent of the company’s total sales and marketing.
- The amount spent for an employee performance incentive/recognition event shall not exceed 2 percent of the total compensation of eligible participants or 10 percent of total award earners’ compensation.
- Performance incentives shall not promote excessive or unnecessary risk-taking or manipulation of financial results.
Examples of legitimate business purposes for incentive/recognition travel include:
- Employee recognition programs to motivate and reward employees for achievement and productivity.
- Performance incentives with clear rule structures that are designed to motivate and reward high performers for exceeding established goals that generate incremental revenue growth for their respective organizations and that are beyond the investment in the program.