Even for companies with strategic meetings management departments, cost allocation remains a thorny issue, deeply tied to corporate culture. The debate centers on determining the departmental budget that takes responsibility for meeting charges and pays for internal meeting services. Stakeholders may argue that if they are pressured to use a central meetings department, they shouldn't have to shoulder usage costs. Meetings departments, on the other hand, may view an internal service fee as small potatoes compared with the cost avoidance they can provide.
Most companies choose a hybrid approach to cost allocation, consultants said. A central meetings department may shoulder hotel and air costs, but stakeholders may cover meeting content expenses. A meeting manager's salary may be covered by a procurement department's budget, for example, but temporary staff contracted to assist in a large event may be charged back to the host department.
At Kawasaki Motors Corp.'s U.S. operations, based in Irvine, Calif., manager of meeting services Sherry Drzewicki said her department shoulders the bulk of an event's cost.
"We have our own budget for the meeting, and there are some costs that we charge back to our departments," Drzewicki said. "Very few, though—such as, if they bring a guest to the meeting, they have to pay for the guest to go to certain events."
The central department may cover meeting basics—transportation and lodging—and the stakeholder may cover nonessentials
"If one of our project managers is doing a seminar, we pay for everything to do the seminar, but if they want refreshments or food then they pay for that themselves," Kawasaki's Drzewicki said.
Kawasaki mandates use of the meetings department, a big factor in determining whose budget takes responsibilities for the costs. The cost allocation also gives the meetings department a more strategic role, Drzewicki said, and greater power to determine site selection or make sourcing decisions.
Since the meetings department pays for the event, the department also can claim any loyalty program points or discounts offered by vendors. "Any planner points as a result of a meeting go on cards so that we can use those for site inspections and enhanced programs. None of those are taken on a personal level," she said.
The hybrid approach works well for budgeting, Drzewicki said.
"It works really well. People know what to expect, and anything over and above that will just get charged back to their department," Drzewicki said.
Many companies take a hybrid approach in cost allocation, said Daphne Meyers, former corporate meeting planner for Microsoft and now managing partner of Red Barn Group, a meeting and event consulting firm based in Durbin, N.D. "When I was at Microsoft, the money for the event came out of the team that owned the content for the event," Meyers said. "The events team would work with us and manage those funds, and they didn't charge us back for that, but the money came out of our marketing budget."
The events Meyers were responsible for, however, were not mandated, a key factor in determining whose budget is responsible for a meeting, she said. Cost allocation also can vary by type of event, she said. The more optional a meeting is, the more likely the requesting department would pay for it.
"As I look at my clients now, it really varies," Meyers said. "Oftentimes, there's an alignment with a communications team of some breed—whether you call that marketing or corporate communications. There seems to be some alignment there. Where the bottom-line dollars come from can vary. Sometimes, it's out of a shared services group, or its aligned under finance."
Like human resources, accounting or other corporate overhead costs, meetings management departments may offer their services at no charge within their company, she said.
"I can think of planners at companies where the opposite is true. They take on the meetings, but then there is a fee," Meyers said. "Some of it is a result of where funds have been allocated. If a lot less funds are allocated toward these shared services, then it makes sense for those services to say, 'We need to cover our overhead and consequently we're going to charge back.' "
Any planner at a large corporation would be familiar with the "bucket model" of budgeting, Meyers said. An event's cost may be moved from one department's budget to another, though ultimately payment comes from the same corporate source. A meetings department might only consider an inter-company service charge if it needs to make up some expenses at the end of the year.
"It is to the point of comical sometimes," she said, adding that as budgets are tightened, meeting departments are less willing to shoulder extraneous expenses. "It's all about moving the money around."
After Federal Way, Wash.-based forestry firm Weyerhaeuser Co. mandated meeting registration in 2001, it began using a meetings card to pay for event costs and handle cost-allocation issues, said director of travel and meetings Suzanne Fletcher. The department does not charge back for its services, unless a meeting requires one of the planners to work onsite during the event
(Meetings Today, June 7, 2004).Organizational structure also has an influence on the use of chargebacks, Meyers said.
According to the 2006 FutureWatch survey released by Meeting Professionals International and American Express, 51 percent of client-side organizations have a separate meetings or events department and 25 percent have meeting planners disbursed throughout the organization. Another 22 percent have meeting planners within another specific department. "If you call 20 different planners, you'll get 20 different versions," Meyers said. "People build their programs based on their own needs."
However, there is at least one clear benefit to taking on the costs of an event, she said. "As an event manager, 'Ye who owns the checkbook, makes a lot of the final decisions.' It makes sense," she said.
If meeting costs are spread throughout an organization, strategic meetings objectives still can be achieved, but planners need to effectively communicate with all of the stakeholder departments and keep larger corporate goals as a priority, she said.