Workplace Doctor: watch your dosage on the hospitality

While corporate hospitality is a useful tool in the building or maintenance of key relationships, it is often the first thing to go when budgets get slashed.

Budgets have been slashed and some of the perks of the job such as business lunches and dinners have been put on hold. As the head of sales, corporate hospitality has always been key to the success of my role. It helps me form solid business relationships and can make a client feel they owe me something in return. How can I negotiate this budget exclusion, albeit on a smaller scale? MM, Dubai

I used corporate hospitality a lot when I worked in advertising – both the intimate business lunch or dinner approach and the big event (sports fixture, concert and so on) with lots of clients and prospects busy networking with us and with each other. It’s a valuable business tool – but like any such tool, there are times when it is the right implement to use and times when it is not as appropriate. It cannot be the only way you try to influence relationships. As the old saying has it, if the only tool you possess is a hammer you treat everything you encounter as a nail.

So I think the answer here is to make the business case – either the case for a discretionary business development support activities budget, or the case for each individual activity you want to undertake. If you go the former route, you should think carefully about the form of the hospitality you want to offer and justify why the expenditure is worthwhile. Sometimes this justification will be qualitative – it will talk to the need to build or improve a relationship or relationships with a client, customer, supplier or prospect, for example. But whenever possible, look for the quantifiable angle – you intend to discuss a contract worth US$500,000 that the prospect has in his gift, and you believe it is best to do this on neutral territory in a relaxed environment where an in-depth conversation can have time and space to be nourished.

A discretionary business development support activities budget should be used sparingly and must be carefully targeted. This is not a slush fund and neither is it a way to bribe targets or entice them. You need to show that you know and understand what will appeal to a particular target, and why inviting the target to a lunch, a sporting event or any specific activity or engagement is likely to add to the bottom line. For example, a target may have a particular interest in cricket. Inviting that target to a one-day international match may create the informal setting and generate the amount of face time that you need to open conversations about the future of the relationship, and opportunities to deepen or widen the business connection. But there is then no need to take that same target off to dinner that evening – that would be overkill. Equally, an informal lunch together need not be in that top city centre venue where people go to be noticed – the conversation you want to have can equally take place in a good but not excessive establishment.

An important point about this discretionary budget for me is that it is transparent – you have to show how you have spent the budget and you may be asked retrospectively to justify your choice of entertainment and your choice of target. So, if you do decide to invite 10 prospects to a football match and you plan to entertain them in a private box, you must be able to show why you have chosen the people you select, and why you need the support of the staff members you invite to attend. These activities must be seen as business building and absolutely not as perks (a word you use in your question, and one I would avoid like the plague) either for you and your staff or for the recipients.

Let’s also be pragmatic. Any budget that is available is not there for a return to the excesses of earlier years in the world of corporate hospitality, and that is probably a good thing. Targeted use of hospitality is better than the distribution of general largesse, especially as the recipients swiftly come to expect the hospitality. Before you know it, they treat your hospitality as their right rather than your gift, leaving you in the trap where every year you must do more and more or you look like you no longer value the people on whom you lavished attention the year before.

Sometimes a specific targeted need or opportunity will arise. The need might be to do something to mend a fracturing relationship. For example, while an opportunity might be a chance to attend an event of some prestige or importance. Same principles apply – make a business case, show how responding to the need or opportunity will build or protect business, be transparent about costs and make the request.

Doctor’s prescription

Corporate hospitality is a useful tool in the building or maintenance of key relationships. Do not abuse it, and any sensible organisation will allow you to deploy it from time to time.

Roger Delves is the director of the Ashridge Executive Masters in Management and an adjunct professor at the Hult International Business School. He is the co-author of the book The Top 50 Management Dilemmas: Fast Solutions to Everyday Challenges. Email him at [e-mail] for advice on any work issues

Follow The National's Business section on Twitter