Originally posted by Josh Linker on June 24th, 2015 on www.forbes.com.
As an author and professional speaker on innovation and leadership, I contribute to approximately 85 corporate meetings and events each year. As you might imagine, this is a fascinating vantage point to compare and contrast how these things come to life. I see the good, the bad, and the ugly, and more importantly, the impact that these functions have on participants.
Corporate events are held for similar reasons – to energize the sales force, to align senior leaders, to entertain key customers and partners, to rally members of an association to achieve higher performance. Live meetings are critically important in forging relationships, sharing important information, educating team members, and pumping up key stakeholders. Unfortunately, that’s where the similarities end.
In some events, the host does it right. They realize the importance of the meeting, and carefully ensure every moment matters. They realize the impact of how all the little things cascade together into a singular, emotionally charged experience for their audience. Professional meeting planners, who make it their business to create memorable experiences and sweat the small stuff, generally run these top events. These pros can be internal specialists or outside firms who live, breathe, and sleep corporate meetings and events.
In other conferences, often run by internal team members who are not meeting professionals, I see a penny-wise, pound-foolish approach emerge with surprising regularity. In these cases, the corners are cut, the nickels are saved, but the impact is diminished.
Perhaps the biggest cost of little fails is that the focus of attendees is taken off the purpose of the meeting. When the speaker’s volume is too low, the music volume is too high and the audio in the video presentation is unintelligible, the entire message is lost. When a men’s large shirt is left as a gift in the hotel room of a woman who wears a small, her morning now includes the extra task of correcting this mistake instead of focusing on the business reasons for her attendance. When a group of 10 arrives to a restaurant and finds that their reservation was made for 8 and they have to wait 45 minutes for a table to become available, a priceless evening of relationship building is lost, at best. What does the oversight of these details communicate and what wake does it leave behind?
Having witnessed both extremes unfold, I decided to do the math for the same 500 person, 2-day sales event:
Scenario 1: Professional Planning, High quality, do it right
Travel and hotel costs: $750,000
Production, AV, facility rental, staging, décor: $250,000
Speakers, content, materials: $250,000
Professional Meeting Planner Fee: $130,000
TOTAL BUDGET: $1,380,000
Scenario 2: Internal Planning, Cut Corners, Try to Save Money
Travel and hotel costs: $650,000
Production, AV, facility rental, staging, décor: $150,000
Speakers, content, materials: $100,000
Professional Meeting Planner: $0
Internal Team (time, distraction, hard costs): $100,000
TOTAL BUDGET: $1,000,000
Tunnel-vision bean counters would certainly advise curtain #2, which appears to enjoy a substantial savings. The cost difference is black and white, isn’t it?
Let’s re-think. The meeting was held for a compelling business reason in the first place. The investment was made to drive an expected outcome (or you’d never host the event at all). The big picture here isn’t just the costs, it is the return-on-investment and overall gain (or loss).
For this exercise, let’s assume it was a national sales meeting. In scenario #1, the event is perfect. The staging is gorgeous, the content is world-class, the food and drinks are just right. The 500 sales people are charged up, and know their company is rock solid and has the highest standards. The tone for excellence is set, with inspiring and practical speakers. The little things – from the pacing of the agenda to the quality of appetizers to the small gifts in each hotel room – create an emotional experience that is second to none. The sales team returns, motivated and armed for battle, and crushes their $500 million sales goal, returning $100 million in profits and beating Wall Street’s expectations, thereby growing the stock price by 15%. The precision execution, combined with a professional and thoughtful vision, achieved the desired outcome. And some.
What about Scenario #2? This should be better, since we also saved $380,000, right? Unfortunately in this case, the meeting was amateurish since internal team members who are not professional meeting planners assembled it amidst their other daily responsibilities. The team was stretched way too thin on other projects, and didn’t have the experience to double-check the sight lines or request redundant AV equipment. The venue choice and mediocre staging signaled the company doesn’t demand the best. The schedule that started late and ran long communicated the message that details and commitments don’t matter. The boring speakers and sub-par content (which saved a few pennies), made the audience want to nap instead of leap forward. The haphazard nature of the event left the audience off kilter, feeling pressure to save the company or perhaps find a new job, instead of being fired up for growth. Here, the results played out quite differently. The sales team performed significantly worse after the meeting for a number of reasons. Turnover increased, costing valuable time and money. Closing rates fell since the team was neither equipped nor motivated for success. Breakout ideas were few and far between, and the lackluster meeting set the tone for a lackluster year. The sales team missed their target by 10%, driving only $450 million in sales. However, the cost structure remained intact so that drop fell right to the bottom line. Instead of $100 million in profit, earnings took a dive to only $50 million. Further, the analysts were brutal when they heard of the miss. A stock sell off ensued, and the share price fell 8%.
For the sake of this example, let’s say the market cap of our company started at $1 billion. Here’s how things played out in totality:
Meeting Cost: ($1.38 million)
Profit: $100 million
Stock gain (or loss): $150 million
Bottom line: $248,620,000
Meeting Cost: ($1,000,000)
Profit: $50 million
Stock gain (or loss): ($80 million)
Bottom line: ($31,000,000)
So our well-intentioned (yet hapless) penny-pinchers ended up saving $380,000 in meeting expense, but losing over $275 million compared to doing it right the first time. I bet those poor souls – if they still had a job – wished they invested in killer content and a high quality venue.
While this example may be extreme, it illustrates the positive impact that a high-quality meeting can create and the painful regret of a low-quality event. Craig Erlich, CEO of meeting and event planning company pulse220 puts it perfectly, “It takes years of experience planning meeting and events, doing it over and over again to really become great at it. You need rock solid systems to be prepared for anything that might happen, and you need to be able to react in a flash when things take an unexpected turn, which they always do.”
As you plan your own corporate meeting or event, think about the overall impact, not just the expense side of the equation. If you don’t plan to do it right, skip the event altogether since it may end up doing more harm than good. On the other hand, events can be a powerful driver of meaningful results when carefully planned and executed. Cheap out somewhere else. Know the real costs of corporate meetings and events, and realize that a dollar saved may actually be $100 lost.