While the economy remains issue number one in the minds of U.S. voters during the 2008 election, insurance giant AIG was criticized publicly for its choice of having an executive sales conference at a posh southern California resort.
The criticism began after the House of Representatives' Committee on Oversight and Government Reform made public that AIG spent $440,000 on the event, which included rounds of golf and spa treatments during a time when the company required a $85 billion bailout from taxpayers.
Reacting to the negative press, AIG executives chose to cancel all non-essential corporate meetings and events.
In fact, Corporate Meetings and Incentives reported that the company canceled a total of 160 conferences and events, an investment of more than $8 million.
To be sure, even though events and meetings may be cancelled, that doesn't eliminate the contractual obligations made with hotels and other venues, and a significant portion of the $8 million may still be paid to those organizations. In addition, an analysis of the AIG event in question identified several opportunities for improvement that the company may wish to consider when making future commitments. Nevertheless, AIG's choices shouldn't be allowed to tarnish an entire industry.
Recently, AIG CEO and President Bruce MacMillan shared a letter with industry magazines to emphasize the important role that meetings and events plays to the financial health of businesses and organizations.
The following reprints that letter in its entirety:
October 22, 2008
I’ve followed with interest the coverage of executive excess at AIG and comments by Attorney General Cuomo that led to the subsequent cancellation of most of AIG’s planned meetings, events, and conferences for the coming year. I, like most of your readership, bristle at reports of extravagant corporate spending especially under circumstances like these, and fully support the forceful righting of a ship that’s gone dramatically off course.
But as the head of a 24,000 member global community of professionals who pride themselves on designing and delivering meetings and events that generate business results in both good and tough economies, I want to offer caution on the hazard of making sweeping public business decisions that might frustrate the rebuilding of AIG as a successful enterprise and also inadvertently establish a new precedent for other businesses to follow.
The bringing together of individuals and organizations to share ideas, learn new skills, co-create solutions and craft new business initiatives are crucial to American business success, even more so in a dynamic, faltering, global economy. In an increasingly faceless world, effective human connections are a powerful business weapon. Meetings and events are valuable to the individuals who participate, the organizations they work in, and the customers they serve. The revenue derived from supplying the infrastructure, products and services employs millions of middle-class workers, including housekeepers, chefs, restaurant, and support staff. These jobs and the opportunities they afford contribute to the overall financial health of both these families and the communities in which they live.
The important role that face-to-face meetings and events play in connecting people and driving business success is undeniable. The Meeting Professionals International Foundation/George P. Johnson EventView study reveals that Fortune 1000 Chief Marketing Officers view meetings and events as having the highest ROI (Return on Investment) of any marketing channel. In an increasingly competitive global economy, the ability to create and deliver strategically-focused events contributes to business value, and helps organizations deliver results.
Tough economic times demand thoughtful and transparent examination of how money is spent. The unprecedented shift in marketplace fundamentals means that business leaders must evaluate the ROI of every investment decision. But even in these tough times, or maybe especially now, to remove meetings and events from the business strategy playbook is short-sighted and ignores the role meetings, events and incentives play in business and community success.
So cancel the senior executive spa getaway and royal hunting retreat, but hold on to that sales event, educational conference, trade show and performance incentive program … the future of our businesses and communities around the world depends on it.
Bruce M. MacMillan, CA
President & CEO
Meeitng Professionals International