Not so long ago, if a company director had offered to take a client, out to lunch to discuss business or cement the relationship, the client would have been justified in looking askance at the invitation.
Corporate hospitality was not the norm in days gone by.
Now, however, companies spend vast sums of money on corporate entertaining, creating an industry worth between £625m and £1bn depending on whom you talk to. Grand Prix racing, Ascot and tennis at Wimbledon represent only the conventional end of the scale, and those cost from around £600 per person. The heady end is exemplified by a package available last year, embracing both the motor racing Grand Prix at Silverstone and the football World Cup finals in Paris at £8,000 a head.
But it is interesting to look at the reasons behind this relatively new phenomenon.
When Britain was a manufacturing-based economy, the goods being sold were physical. Now the service sector has grown, client relationships have come to the fore.
Jon Sullivan, director of corporate events consultancy, KPee, says: ‘When we are selling our services to clients, we are selling ourselves and this puts an emphasis on personal relationships that was not necessary before.
With it comes the increased use of first names.
‘Years ago, no one would have dreamed of addressing a stranger by their first name. These days, most people do.’
Although corporate entertaining is largely put to positive use, it is vital the intentions of both host and recipient are made indisputably clear. Corruption has been the subject and inspiration of many dramas, but in reality it is a serious national and international phenomenon, one which there is a growing determination to combat.
This is reflected in the UK by the publication of a report by the Law Commission, proposing to update the Prevention of Corruption Acts 1889 to 1916 and the common-law offence of bribery.
The dates say it all: the law is more than 100 years old and needs bringing into line with life in the late 20th century. And corporate hospitality plays a large part in late 20th century business life.
According to documents issued by the Law Commission, the proposed new offences would involve replacing the existing law of bribery with a modern statute creating four breaches of law comprising: corruptly conferring, or offering, or agreeing to confer an advantage; corruptly obtaining, soliciting or agreeing to obtain an advantage; corrupt performance by an agent of his or her functions as an agent and receipt by an agent of a benefit which consists of, or is derived from, an advantage that the agent knows or believes to have been corruptly obtained.
An agent is defined as anyone who has agreed to perform functions for another.
However, according to law commissioner Stephen Silber QC: ‘We started with the view that an advantage is conferred corruptly if it is intended to influence an agent. We realised, however, that a definition in these terms was too broad because it would – wrongly – catch, for example, all corporate hospitality.’ So the commission has sought to differentiate between acceptable and unacceptable corporate entertaining by looking at the intentions and expectations of those providing the hospitality.
It recommends that a person who confers an advantage should be regarded as doing so corruptly if he or she intends that an agent should do (or omit to do) something in return. The commission also believes that ‘if the agent so acts, it would probably be primarily in return for the advantage, rather than for some legitimate reason’.
On that basis, if a large corporation is about to put out to tender a multi-million-pound contract, and the chief executive is suddenly inundated with ludicrously generous invitations from potential suppliers to spend weekends in Le Ritz, Paris and other luxurious establishments, the timing speaks for itself. But the problem runs deeper than merely the awarding of a contract in return for favours.
Chris Hill, marketing director of ACE Corporate Event Management, says: ‘If a company is prepared to give another company business on the basis of corporate hospitality, they are fundamentally corrupt. It has nothing to do with the entertaining,’ he says. ‘There is no room for confusion.
The objective of the offer must be clear, and what both parties expect from it.’
Since corporate entertaining is already an important part of the marketing mix, one way of making the messages unequivocal – and keeping them in line with the general business objective – is to take the decision-making out of the boardroom and either give it to the marketing department or employ an outside source, so that decisions on whom to entertain and how to do so are made independently.
But recent research undertaken by NOP Business on behalf of caterer Gardner Merchant Leisure suggests this is far from the norm: 73% of those polled said they did not use a specialist agency; 23% said the managing director or chief executive officer made the decisions, and 21% gave the responsibility to the marketing department.
Where entertaining is combined with a conference or some kind of educational exercise, there can be little doubt as to the intention of either host or guest. And the problem is not that straightforward entertaining is fraught with pitfalls; it is simply, by nature, open to wide interpretation.
Many companies have strict guidelines for employees on what is acceptable.
Randle Stonier, managing director of Motivforce Group, says: ‘There should be clearly published principles stating what is allowable, and anyone accepting entertainment should need to clear approval with their department head. Such transparency removes all question.’ Stonier gives as an example, financial services company Ventura, where employees cannot accept hospitality unless they reciprocate to equal value. This may be difficult to quantify but at least the principle makes the messages clear.
Marrying up the event with the person is more challenging than is at first apparent. An event that might be appropriate for entertaining the head of a Top 100 plc might be inappropriate for a purchasing manager.
And although spectator sports spring most readily to mind in connection with corporate hospitality, if the object of the day is to talk, they may be least suitable.
The event or occasion should also give the right messages about the host.
A young, innovative computer software company could more appropriately take clients abseiling than could a financial services firm that wanted to project a more serious image.
The advantage of doing something unusual is that your invitation will stand out from the others. ‘If someone receives four invitations to Wimbledon, not only will they not distinguish one host from another, but the guest may simply accept the one offering the best seats, rather than the commercially most important one,’ says KPee’s Jon Sullivan.
This means there are times when a specially created occasion makes a lot of sense. Each year, National Power entertains 12 regional electricity companies in order to maintain good relationships, not least because the buyers are making their choice of supplier on the basis of the best price available at the time of renewing contracts, so relationships are influential in the decision making.
It approached KPee with a view to putting together an evening for clients and their partners. ‘Last year National Power held a wine tasting, so pursuing the idea of the fine art of living, we organised an evening of dance,’ says Sullivan. ‘There were demonstrations by amateur dancers, and Angela Rippon hosted the evening. They were taught steps by professionals.’
The event was a success as it took an unusual approach. It had the additional advantages of having clear objectives and of representing the true intention of corporate hospitality: an opportunity for hosts to make an impression – and dance attendance on their guests.
HOW TO SUCCEED IN CORPORATE ENTERTAINMENT
Corporate hospitality is as competitive a marketplace as any other, so it is important to ensure your invitation is so imaginative it stands out from the others, and the event needs to be enjoyable, stimulating and memorable.
There are five key ingredients for a successful event: matching the event and guests; ensuring the right mix of people; quality of venue; good planning and organisation; and quality of food and wine. The rationale – to say thank you, to retain business or to gain business – may dictate whether you go for something adventurous (established clients) or play safe (first-time guests), but the target audience may mean a mixture of ages, men and women, and seniority, which will also influence your choice. Getting the right mix of people is also important, as is being wary of entertaining your guests’ competitors. Clients may not want to be confronted with the fact that you supply their rival. Also keep track of the numbers – too large a group becomes impersonal.
Finally, the whole undertaking must appear to be seamless and effortless. The tireless planning and double-checking of arrangements must happen behind the scenes, not with furrowed brow in front of clients. If you do not appear relaxed, your clients cannot enjoy themselves – and that defeats the whole object of the exercise.
– The Gardner Merchant Leisure guide Corporate Hospitality, Best Practice is available on 0181 601 2013.
Catherine Chetwynd is a freelance journalist
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