Telkom recently flew 393 clients with spouses, senior executives and management to Mauritius for a strategy session. Although Telkom did not disclose the amount spent, based on the average cost per person of a three-day corporate trip to Mauritius, including flights and activities, it would have cost in the region of R7-million.
While many might gasp at what seems like flagrant corporate excess, Lulu Letlape, group executive for corporate communication at Telkom, counters that “this type of engagement is customary practice for leading companies that are intent on remaining at the forefront of the industries within which they operate”.
Although other telecom companies declined to comment, Dimension Data’s head of communications, Michelle Atkins, indicated surprise at the size of the trip and said that “common sense and moderation prevail in Dimension Data’s approach to customer entertainment. The company entertains customers in line with acceptable and appropriate governance.”
Public relations firms that represent large corporates said companies, especially those with international operations, did entertain key customers abroad. However, none had heard of a trip of this magnitude and said spouses are very seldom included.
Tony Dixon, executive director of the Institute of Directors, said overseas trips as staff incentives are not unusual, especially in the sales environment, but a trip for customers that included spouses did seem excessive.
In Telkom’s case nearly 70% of invitees were clients and spouses. But, what counts against Telkom the most is that it is not an ordinary company fighting it out in a competitive environment, despite its assertion that “the telecommunications industry within which Telkom operates is a highly competitive one”.
Telkom is a monopoly protected by government and South Africans suffer from one of the highest costs of telecommunications in the world, which has been identified as an obstacle to global competitiveness. Its unique position is clearly illustrated by the fact that, although a listed company, Telkom falls under the Public Finance Management Act and is beholden to certain government guidelines around fruitless and wasteful expenditure.
The department of communications, which oversees Telkom, was unable to provide comment before going to press. Telkom’s response to the Mail & Guardian‘s query about the necessity of such a lavish trip was that this was a strategic engagement between companies and their key decision-makers.
“Interacting strategically with top-level customers at the highest level often results in enhanced efficiencies that produce positive results for customers, the organisations themselves, as well as the industries within which they operate … Such engagement impacts positively on product innovations, pricing strategies, service efficiencies, as well as business growth,” said Letlape.
However, Dixon points out that, even if there were definite benefits to the bottom line from such an exercise, one has to consider the risk to reputation of being seen to be throwing money around, especially when you are a company whose services many people are forced to use.